Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Daly city short term rental White Paper

Daly City Short Term Rental White Paper

Related Books

Free with a 30 day trial from Scribd

See all

Related Audiobooks

Free with a 30 day trial from Scribd

See all
  • Be the first to comment

  • Be the first to like this

Daly city short term rental White Paper

  1. 1. S H O R T T E R M R E N T A L - R E P O R T 2 0 2 0 D A L Y C I T Y , C A
  2. 2. D A L Y C I T Y - S H O R T T E R M R E N T A L I N T R O D U C T I O N P A G E 0 3   | I N T R O D U C T I O N Short-term rentals have been around since the 1950s, but their astronomical rise into the mainstream is a key defining factor of the hospitality industry over the past decade. In a fast-moving world, long-term conventional rentals are expanding whereas short-term rentals are exploding. Our research estimates that the total consumer market for short-term rentals totalled $107 billion in 2019. It was expected to grow at 7% year- over-year, pre COVID-19 economic conditions. The impact of COVID-19 has been widely witnessed in the short-term rental industry as well. The short-term rental ecosystem goes far beyond major platforms and is even thriving during the economic crisis. COVID-19 has increased the scope of guests who were typically only travelers, but now also include numerous millennial working crowd such as gig economy workers, blue collar workers, and ones who get paid wages on a daily basis, all whom are starting to utilize such facilities to secure a roof. The short-term rental sector is increasingly converging with other travel accommodation sectors. Real- estate investors and property landlords are also increasingly interested in the potential of the short-term rental market. Though, the hotel sector at an estimated $600 billion gross bookings, is still considerably larger. There is an ongoing discussion about the impact of the short-term rental sector on housing availability and house prices, especially in the urban areas. This discussion is largely marred by limited information and data, and strongly opinionated opposing camps. The short-term rental sector can provide an interesting alternative to long-lets for landlords and property managers, but the data on the overall impact of short-term rentals on housing stock and prices is still limited. Daly City is one of the fastest growing housing markets in the Bayarea with new residents moving in every day. Daly City has the potential to house residents from every income section of the society. Short-term rental as an option for affordable housing will be discussed here in detail. This report seeks to explore the history of short-term rental, understand how its public pronouncements deviate from observed facts, and identify the tangible and intangible effects that this model is having on our housing market, neighborhood cohesion and public revenues. A key component of this report is its analysis of the short- term rental market in Daly City based on a snapshot of available listings on September 15, 2020. Through the application of freely available code, we have collected a comprehensive set of data[1] that includes information on hosts, prices, listing locations and listing types and guest types. These data provide a great deal of insight into the contours of the operations and effects on Daly City housing market. [1] - all the data used in this document have been sourced from AirDNA.ca, City of Daly City's official website and public and privat e reputed statistical organizations and neews agentcies. but not limited to publicly available online resources. We have cited all the arguments and definitions possibly and have justified them throughout the document. P A G E 0 1 © Copyright Reserved by iCapital Management Inc PREFACE This report is prepared on behalf of Crashpadz Inc, Daly City by iCapital Management Inc. In this report, we have provided our findings about the short term rentals market and the impact of the ordinance and our recommendations after understanding the overall short term rental industry. All the information published in this report is a copyright of Crashpadz Inc. Please contact us for any clarification info@icapitalmanagement.com.
  3. 3. P A G E 0 2 B U S I N E S S R E V I E W MISSION Outlining a reasonable dialogue to demonstrate the short-term rental's current operational condition, the effects on community and hosts responsibilities and also how regulations can create a positive environment for all the stakeholders and regulators. VISION Explore potential opportunities to solve the housing crisis of Bayarea and to redefine housing for multiple sections of society. GOALS Regulating and Licensing 100% Host Compliance Civic Responsibility Transient Occupancy Tax Revenue Affordable Housing Temporary living solutions Host Accountablity DEFINITIONS Here are some basic definitions that all the researchers have mutually agreed upon and considered throughout this report and each definition have been cited to its source. For purposes of this division, defined terms appear in italics. The following definitions apply in this division: “STR or Short Term Rental” - Short-term rental describes furnished self-contained apartments that are rented for short periods of time, usually less than 30 days as opposed to annual commitment in the unfurnished Single Family House/ Apartment rental market. “LTR or Long Term Rental” - A long-term rental is typically considered rental of a residential property for anything six months or longer. “Single Family House” -  A single-family home is an independent residential structure that sits on its own land and is designed to be used as a single dwelling unit, having just one kitchen, unshared walls and unshared utilities, © Copyright Reserved by iCapital Management Inc
  4. 4. “Host” - Host means an owner or tenant of a dwelling unit who rents his/her primary residence for home-sharing throughout this document. “Guests” -  means any person who exercises occupancy or is entitled to occupancy by online reservation, walk in bookings, right of access, license or other agreement for a period of thirty consecutive calendar days or less. Any such person so occupying space in a home shall be deemed to be a guest until the period of reservation as per the agreement in writing between the host and the guest. “Property Managers” - Owner himself or the representative of the owner living in the particular house/apartment which is offering short term rental accommodation. Property Manager usually takes care of the estate and guest relations and facilitate support. Property Manager will usually act as the first point of contact for any concerns related to the particular short term rental property METHODOLOGY: Being a service provider in the Data Analysis and the consulting domain, we reach out to organizations facing enforcement challenges in the short-term rental industry. iCapital Management Inc has developed a line-up of proprietary analytical tools and proprietary data-set that enable us to gain deep insights into the market-scope and the scale of short term rentals in various social communities. This allows us to provide our clients with the means of implementing effective and economical enforcement of short-term rental regulations. For this report, we’ll share our market insights for the City of Daly city. Our data, that has been continuously collected ranging over weeks of accumulation, was aggregated after extensive sorting, duplicate entries ranging over multiple platforms were filtered. Reviews, calendar information and pictures were organized from the 50 leading short-term listing online platforms. Our estimation tells us that this report blankets over 99% of total short-term rentals in the City of Daly City jurisdiction. The research was conducted mid-August of 2020 and the integrity of the data within this report can be highly vouched for, to accurately represent the market-scope and scale of short-term rentals in the City of Daly City as per the day of this report. With this addressed, we need the reader to understand that this data is a momentary reflection of the short-term rental market during the period this data was collected. Data collection over multiple online platforms does provide comparatively easier access, but convolutes the process of organization, sorting and filtering of the raw data collected. For example, one renter may want to provide their rental unit advertisement over multiple online platforms, or even multiple entries on the same platform. Our approach is to remove the duplicate entries to provide a more accurate representation of the market scenario of the short-term rental units of each area in the City. The data integrity in this report is achieved after a break-down of active listings, listings which are categorized as short-term rental listings and unique rental units. We also covered unidentified categories of short term rental which was never discussed before in  previous research papers. P A G E 0 3 © Copyright Reserved by iCapital Management Inc
  5. 5. The concept of renting rooms or homes on a temporary basis is not new. Vacation rentals have long been common in beachfront communities, resort towns, and other destination hotspots. But with the recent rise of the internet platforms the number of short-term residential rentals (usually defined as rentals of less than 30 days) has grown dramatically and elevated the awareness of this practice within more communities. In addition to more traditional, commercially focused vacation rental properties, more and more homeowners (and in some cases tenants) are offering the use of their residences — or rooms within their residences — as temporary rentals, either sporadically or on an ongoing basis. SHORT TERM RENTAL Vacation Rentals Hostels Coliving  Coliving STR (Hybrid) Residential Hotels  Currently the most popular practise in the market is where the homeowner lists their property on multiple online platforms like Airbnb and Homestay that offer listing services for daily or weekly reservations usually less than 30 days. On the other hand the market for affordable housing also tapped into the short term rental market, where multiple businesses that are redefining the housing market by adopting affordability and convenience to target the millennials entering the job market. We will understand the types of short term rental in existence and explore the facts and figures in details to understand the subject in depth. TYPES OF SHORT TERM RENTALS VACATION RENTALS: A vacation rental is the renting out of a furnished apartment, house, or professionally managed resort-condominium complex on a temporary basis to tourists as an alternative to a hotel. These are the ones which are directly listed by the homeowners themselves in online platforms like Airbnb and Homestay. There are around 560 active vacation rentals listed online as per AirDNA.co, a website that shares collective market data about short-term rental listings from publicly available sources. There are various types of vacation rentals in itself. Many properties are listed on an entire house basis without any host for the rental period where the guests could treat the property as their home during the stay. There are few that offers private rooms in a house which is occupied by the resident or even shared accommodations where guests have to share the entire facility. Both of these are typically hotels where either the homeowner, master-tenant or the property manager physically resides in the premises. P A G E 0 4 © Copyright Reserved by iCapital Management Inc
  6. 6. HOSTELS: Hostels are commercial establishments that provide affordable food and lodging for a specific group of people, such as students, workers, or travelers. The concept of hostels is quite prevalent across the world and has a presence even across America. Hostels are usually seen in big cities and tourist towns. COLIVING: Coliving is a type of intentional community providing shared housing for people with shared mindset. This may simply be coming together for activities such as meals and discussions in the common living areas, and even may extend to shared workspace and collective endeavours such as living more sustainably. There are multiple coliving facilities operating in Daly City since 2016. Coliving STR These coliving accommodations are usually organised by a businesses as a service to its guests who range from locals, newly moved residents and even working group people. A lot of tech workers, gig workers and millennials in general prefer such shared living arrangements nowadays to avoid the hassle of year long leases and security deposits. In the recent days there are hybrid coliving accommodations have started giving flexibility to guest with membership services where guest have the comfort of choosing the location and duration of stay. RESIDENTIAL HOTELS: An apartment hotel is a serviced apartment complex that uses a hotel-style booking system. It is similar to renting an apartment, but with no fixed contracts and occupants can "check out" whenever they wish. It is very famous in Europe where houses are typically converted into a hotel and offered to guests on a per night basis and these generally tend to be family owned. Source: Data Collected from AirDNA as of 09/12/2020 about vacation rentals and data about coliving spaces/hotels from publicly available search engines and collected market data. CURRENT MARKET PRACTICES & TRENDS The rise of coworking is a natural predecessor for widespread coliving: the concept that people can live in a shared space without recreating the feeling of living in a college dorm. Taking advantage of large houses and lonely millennials, coliving has become the newest disruption of surplus space in the real-estate industry. While there are certainly bumps on the road ahead for the new coliving industry players, only equitable legislation and proper governance would help organize the businesses for the betterment of host, guest, community and city coffers. P A G E 0 5
  7. 7. DALY CITY The City of Daly City is the largest city in San Mateo County with an estimated population of 106,472 as of July 2016. Daly City is a coastal community located at the northern edge of San Mateo County, approximately 7.7 square miles of substantially developed area. The City is known as the "Gateway to the Peninsula", and its area extends to the Pacific Ocean on the West, and nearly to San Francisco Bay towards the East. Daly City is also the gateway to Silicon valley, home for many tech companies. Daly City is located perfectly in-between SFO Airport and San Francisco city and is also accessible to San Jose and other parts of silicon valley. The City offers some of the best conditions for the residents, and has attracted a horde of millennial population leading to a diversified group of residents from differing demographics. SHORT TERM RENTAL IN DALY CITY There are multiple short term rental options available at Daly City at any given point of time. The graph below shows the concentration of Airbnb type vacation rentals. There are also coliving spaces which provide daily/weekly accommodations.  In the past few years coliving accommodations have flourished in Daly City considering its demographics, and the convenience it offers has become paramount. These facilities house a considerable number of people that includes tourists as well as locals. The below graph should give a pictorial representation of the conjunction of different types of short term rentals available in Daly City https://www.airdna.co/top/us/california/daly-city P A G E 0 6 © Copyright Reserved by iCapital Management Inc
  8. 8. RATE OF HOME OWNERSHIP We would like to display a few data here sourced from public and reputed private statistical organizations which would stitch a scenario for us to understand the industry further. Current Population of Daly City: 106,598 Total Number of Houses in Daly City: 32,765 Owner Occupied Homes : 18,054 Renter Occupied Homes: 13,566 Total Number of Vacation rentals: 368 Total number of beds/ rooms listed per night in Daly City: 560 Median rent for a Single Family Home in Daly City: $1,898 Newly Developed Houses in last 10 years- 341 F A C T S & F I G U R E S 57.1% MEDIAN RENT $1,898 https://worldpopulationreview.com/us-cities/daly-city-ca-population | https://datausa.io/profile/geo/daly-city-ca/ http://population.city/united-states/daly-city/ | https://www.towncharts.com/California/Demographics/Daly-City- city-CA-Demographics-data.html P A G E 0 7 © Copyright Reserved by iCapital Management Inc
  9. 9. More than 480,000 economically insecure households pay on average $9,000 more than they can afford on rent annually—adding up to $4.4 billion that they could be spending on their family needs and in the regional economy.  Between 2000 and 2016, rents increased 24% while renter incomes rose just 9%. Six of every 10 economically insecure residents are renters and 75% of them pay unafforable levels of rent for housing (more than 30% of their income).  BAYAREA HOUSING CRISIS California’s housing crisis has reached epic proportions in the Bay Area. From displacement and homelessness to employers struggling to find workers who can afford to live anywhere near their place of work, housing has become the Achilles' heel of one of the strongest economies in the world.  More than 6 of every 10 households are now at risk of displacement, according to the University of California–Berkeley’s Urban Displacement Project. And despite the booming economy, 3.2 million residents are economically insecure and do not have enough income to make ends meet. The twin forces of a housing shortage—particularly affordable housing—and uneven wage growth have converged to create a regional crisis. Between 2011 and 2015, the Bay Area added 500,000 jobs but built only 65,000 new homes. As high-wage knowledge- economy workers bid up the cost of homes, low-income families have been pushed into deep housing and economic insecurity, and out to the edges of the region and beyond. A family of two workers each making $15/hour that adds up to a yearly household income of $62,400 can afford the median market rent in only 5% of the Bay Area’s 1,500-plus neighborhoods.  92% of the neighborhoods affordable to these working-class households are rated “very low opportunity” on a comprehensive index of neighborhood opportunity. source: https://www.policylink.org/sites/default/files/SFF%20Housing%20Crisis%20Report%20201 8%20Digital%20fnl_0.pdf IMPACTS OF COVID-19 If this pandemic has taught us anything, it’s to prepare for the unexpected — whether that is a global health crisis or what comes after. Having smart regulations and the right technology can help you care for the community and ensure that short-term rental controversies do not surface and derail other important initiatives that are critical to our community’s recovery. While the world feels different during the pandemic, we can look at home-sharing trends throughout the last century to see what is likely to transpire post crisis. While few may be renting during the pandemic, the negative effects on the economy leads us to believe that the number of STRs will grow with time, as trends suggest that many would seek supplemental income sources and require cheaper short term housing options with flexibility and comfort. P A G E 0 8 © Copyright Reserved by iCapital Management Inc
  10. 10. During the Great Recession in 2008, the pendulum swung back in favor of shared living arrangements inspiring people to search for creative methods to make ends meet. Airbnb was officially launched during the 2008 crisis. As COVID-19 restrictions are lifted during the upcoming months, cities and counties are expected to face a barrage of challenges relating to short-term rentals if they don’t preemptively adopt and enforce thoughtful regulations, that ensures community-level functioning of short-term rentals. According to the latest analysis of weekly US Census data, as federal, state, and local protections and resources expire, in the absence of robust and swift intervention, an estimated 30–40 million people in America could be at risk of eviction in the coming several months. Many property owners who lack the credit or financial ability to cover rental payment arrears, will struggle to pay their mortgages and property taxes and maintain properties. The COVID-19 housing crisis has sharply increased the risk of foreclosure and bankruptcy, especially among small property owners; long- term harm to renter families and individuals; disruption of the affordable housing market; and destabilization of communities across the United States. source: https://granicus.com/news-press/ Source: https://www.aspeninstitute.org/blog-posts/the-covid-19-eviction-crisis-an-estimated-30-40-million-people-in-america-are-at-risk/ P A G E 0 9 © Copyright Reserved by iCapital Management Inc
  11. 11. Source: https://julianalee.com/daly-city/daly-city-statistics.htm Source: https://julianalee.com/daly-city/daly-city-statistics.htm The graph below shows how the bidding wars have reduced since 2016 and the short term rental has very negligible amount of effect on it. P A G E 1 0 © Copyright Reserved by iCapital Management Inc
  12. 12. Source: https://www.rentcafe.com/average-rent-market-trends/us/ca/san-mateo-county/daly-city/ The chart below shows the average rent of houses in Daly City haven’t skyrocketed after the occurrence of short term rental. It's not the short term rental which drives the prices of the houses. It's the impact of the whole housing crisis. Source: https://www.rentcafe.com/average-rent-market-trends/us/ca/san-mateo-county/daly-city/ Source: https://www.rentcafe.com/average-rent-market-trends/us/ca/san-mateo-county/daly-city/ P A G E 1 1 © Copyright Reserved by iCapital Management Inc
  13. 13. Source: https://www.bestplaces.net/economy/city/california/daly_city If you see the above graph hardly 1% of the housing in rental market is below $1,000-1,500. But a big percentage of the population makes less than $40,000 a year and they cannot afford to rent houses from the long-term rental inventory, as they wouldn’t be able to commit to lease for a year without job security and higher pay rise. The current unemployment rate of Daly City is 2.2% whereas the amount of available houses for rent is less than 1% for the affordable housing category. On 12/10/2018 City of Daly City adopted inclusionary housing act where they discuss about “The City Council desires to provide and maintain affordable housing opportunities in the community through an inclusionary housing program for both ownership and rental housing. “ P A G E 1 2 © Copyright Reserved by iCapital Management Inc
  14. 14. No credit checks or lease agreements required: simply submit your debit or credit card at check- in. Minimum 1 day to maximum 28 days. Helps new residents and potential homeowners to test the waters and understand the neighborhood before making a commitment or investments. No lengthy leases. Guests are termed as licensee's, it becomes easier to deal with the nuisance and problems.  Property managers can help local Police in ensuring 100% compliance and accountability. Transparency in the reservation rates available online. Socializing and sharing space help build friendship, brings harmony and peace in the community. SHORT TERM RENTAL REDEFINING HOUSING Modern day hybrid Coliving relieves the burden of wasteful consumption of resources, by maximizing the efficiency of utilization of the space per capita. Thus, contributing towards a greener planet. In the current times, this aspect cannot be overlooked as taking consideration of the skyrocketing rents in Bay Area that is already encouraging many millennials and local residents to seek other available options for housing. Hybrid Coliving offers a lot of convenience and comfort within budget for people, hence, freeing up their time to focus on working and saving-up capital and enabling them to move up to their desired position in lives. We can say that Airbnb provides accommodation for transient guests, but on the contrary hybrid coliving offers accommodation for people who are transient in their life. There is a common opinion that the most of the nuisance occurs in the Airbnb that are rented out as an entire property without any host presence, and are generally used for parties and loud music. Many have also emphasized the problems in parking.  Our research team has put together an extensive analysis to understand what the actual complaints are, how many of them occur and how frequently they occur in the latter part of this report (See page 15). BENEFITS OF SHORT TERM RENTAL: Short term rental in housing have lot of benefits: How Butte County, CA benifited from their short term rental law? Butte County in California passed a short term rental ordinance on April 25, 2019 where they also took into consideration the use of short term rental accommodation for housing displaced people during disasters. During the recent California fires, Airbnb helped house thousands of locals in Airbnb properties and also opened a hotline for people evacuated or displaced by wildfires. Many hosts supported this initiative and welcomed many guests during hardship. source: https://www.airbnb.com/openhomes/disaster-relief/ https://nypost.com/2020/08/25/airbnb- offering-free-housing-to-california-wildfire-evacuees/ https://www.buttecounty.net/Portals/10/Docs/BS/2019/ShortTermRentalsOrdinance.pdf?ver=2019- 03-27-164757-210 P A G E 1 3 © Copyright Reserved by iCapital Management Inc
  15. 15. Daly City Community center Shelter in Place Housing: The Daly City Community Center was able to utilize short term rental accommodations for many displaced people who otherwise would not have had a roof over their head during the pandemic. Coliving and short term rentals housed many people during the shelter in place order. Foreign Embassy's and Diplomatic Missions were able to house many travelers and workers who were stranded and unable to reach their home cities due to the lock down. Tourism in Daly City: Visitors of Daly City will find many great attractions and things to do in this Bay Area community. This municipality is not far from San Francisco and other major cities in the Bay Area. Since being in the close proximity of San Francisco and other major cities of Bay area, the preferred choice of accommodation for tourists and travelers in recent years been Daly City. Since tourists and travelers are considered active spenders, with the right environment and support, short-term rental owners can cater to the market which is high in demand and encourage local employment and business opportunity. P A G E 1 4 © Copyright Reserved by iCapital Management Inc
  16. 16. Nuisance & Party House Parking Strangers in neighborhood Policing PROBLEMS REPORTED ON SHORT TERM RENTAL NUISANCE: The most common complaint received by law enforcement from the neighbors of short term rental is nuisance. Range of complaints from loud music, smoking or drinking on the sidewalk . Every Short term rental should operate under the presence of the host 24/7 and the property host/ manager should be available for communication to the law enforcement to mitigate and work hand in hand to ensure 100% compliance. Since short term rental guests only have the license to use the property and are not considered as tenants it would be easy to terminate a reservation when a guest has displayed unruly behavior or broken host rules. PARKING: It has been observed that majority of the guests do not own car. For the cases where they do own a vehicle, the guest could utilize the parking available on the property and the public parking around the property as any other guest's or residents would be entitled to. STRANGERS IN NEIGHBOURHOOD: In a recent interview a group of San Francisco based home owners complained about the short-term rental near their house. The complaints ranged from many unknown guests arriving all day in Uber and there are a lot of strangers living together. Many times the neighbors complain about ringing wrong doorbells. Every short-term rental should collect the ID from the guest and the guests should sign a registration card with the terms and conditions to abide by the local law and policies of the property. Every new person moving to a new place is a stranger and every one of us would be a stranger at the place we recently moved to. Also the city may consider recommending some signs (non-marketing purpose) to be placed in front of the doors to guide the guest to the right entrance. POLICING: Every short term rental operation should be in 100% compliance to the city’s short term rental laws and also help police in making Daly City safe for all residents and visitors. P A G E 1 5 © Copyright Reserved by iCapital Management Inc
  17. 17. MYTH BUSTERS Misinformation about how the short-term rental is destroying the inventory of the long-term rental market is widespread. But the economics behind housing through short-term rentals rather displays a positive economic impact on the average renters and the overall market. In California alone more than 24% of the houses are occupied by a single person which also reduces the housing inventory since the household is under occupied. The average monthly income of age group 18-35 is between $2,065 - $4,136. The average household rent in Daly City for a single family house $2,605/month. In the struggling economic conditions, a lot of young people stepping up in their life relying on gig work and rideshare jobs are daily wagers who get paid on a daily basis. Short-term rental provides a network of support for such gig workers. They get the comfort to pay their rent on a daily basis and afford a decent place to stay. The economy with a growing gig culture and sharing mindset, when a person cannot afford to pay $2,605 rent, they opt for short-term rental options till the time they could afford to get their own long-term rental accommodations. Even if a group of people got together to chip in and rent a house together, they would all have to be bound together under the lease, making it a highly inflexible long-term setting and rendering such an option virtually unfeasible. FICTION: Short term rentals are popping up everywhere and taking over our neighborhoods! FACT: The 460 unique properties used as short term rentals in Daly City (as reported in the Host Compliance study the City of Daly City paid for in August 2019) represent less than 5.8% of the 8245 rental housing units in Daly City. Reference: https://www.towncharts.com/California/Housing/Daly-City-city-CA-Housing- data.html#:~:text=Daly%20City%20indicates%20it%20has,other%20places%20in%20the%20area.htt p://www.dalycity.org/Assets/Departments/Economic+and+Community+Development/planning/Shor t-Term+Rentals/March+11$!2c+2019+Study+Session+Staff+Report.PDF FICTION: Regulations do not work! FACT: Equitable regulations that gives equal weight to host, guest and community have the propensity to make great traction towards an agreed upon solution. For example business and host's currently hosting should be allowed to to apply for permits in a streamlined process in order to not disrupt the current operation which would negatively impact not only the host but the guest staying there. Guest are expected to follow the rules of the host and city. Failing to follow them, their reservation will be terminated and they will be removed of the property, this will mitigate any disturbance in the neighborhood. FICTION: Short term rentals attracts dangerous strangers, criminals and sex offenders! FACT: We didn't find anything other than scattered anecdotes among the millions of short-term rental stays concerning any criminal behavior, sexual deviancy or crimes against children. These are unfounded fears and any actual problems are more of a reflection of our society at large than a by- product of short term rentals. P A G E 1 6 © Copyright Reserved by iCapital Management Inc
  18. 18. FICTION: Short term rentals are mostly owned by big investors taking over large swaths of neighborhoods! FACT: According to the Host Compliance study the City of Daly City paid for and released in August 2019 “over 69.40% of STR operators in Daly City have only 1 property”. Impacts if current proposed short term rental ordinance's FACT: The ordinance would make over 90% of existing short term rentals illegal where the vast majority of which do not even have any complaints lodged against them. FACT: Many law abiding citizens who rely heavily on their short term rental to make ends meet would be uncomfortable with violating the law and would feel pressure to shut down and by doing so face some really tough choices. -Like Michael who recently moved to the Bay Area before COVID-19 struck. His short term rental accommodation means that he doesn’t have to take another job for survival but is able spend more time working on his passion for photography. -Robert is a Doordash delivery driver and he earns $ 100 -$150 a day after 8 hours of work and the only way he could put a roof on his shoulder is by choosing to live in a short term shared rental. He likes the flexibility of his rental option where he gets to pay $ 30 a day and able to use the whole house. - Or MJ who lost his job due to COVID-19 and surviving on the social security benefits. He didn’t have any income for 3 months but his short term rental property owner worked with him to ensure he doesn’t go homeless till he got his unemployment check. Positive economic impacts of short term rentals in local economy Short-term vacation rentals brings a positive economic impact to a city or county in several ways. For example, they provide a city with an additional income through tax revenues. At the same time short-term vacation rental guests can benefit the community as a whole in terms of economic benefit because guests will spend their money in other visitor related amenities such as restaurants, bars and grocery stores. Research in San Diego showed that $86.4 million was spent on such activities by visitors staying in short-term vacation rentals. The total economic impact in San Diego has been estimated at $285 million. Additionally it can help local residents make ends meet or enable young families to go on a holiday while retirees stay in their homes. source: http://www.nusinstitute.org/assets/resources/pageResources/NUSIPR_Short_Term_Rentals.pdf P A G E 1 7 © Copyright Reserved by iCapital Management Inc
  19. 19. The current draft of the Daly City's short term rental ordinance proposes "Short-term rentals shall not be advertised for or used by more than two guests per bedroom plus two additional guests at one time" This would force the hybrid coliving short term rental accommodations to under utilize the house for rental purposes. This would result in the increase in the price per bed which would become a price burden similar to the long term rental and those who relied on these short term rental for temproary residence would be highly affected. Amnesty period Sept 22, 2021 - for the existing unpermitted use of short term rentals. During this period City of Daly City should consider giving priority to the existing unpermitted use short- term rentals to apply for the necessary licenses and permits to have uninterrupted operation during the transition period. This would encourage the stake holders to become 100% compliant to the new ordinance. "Short-term rentals shall be limited to one booking per property per day." - This would be practically impossible for the hosts to limit reservation to 1 per day since many hosts depend upon multiple guest reservations per day and their business model would be highly hampered. The City council should reconsider the occupancy and reservation allowed per day to support operators. For example Butte County, City of Arlington and few other cities and counties have passed their short term rental ordinance in the past where the occupancy is determined by the properties size and number of beds made available for guests. Source: https://www.arlingtontx.gov/common/pages/DisplayFile.aspx?itemId=15539230 Short term rental have a huge potential of revenue for the City of Daly City - The current business license annual tax model for short term rentals is gross receipts x .005 and for example: One of the short-term rental Crashpadz Inc. disclosed that they had a gross revenue of $361,323 in the year 2019 alone. With the current business license annual tax the company paid $1991.27, Placing transient occupancy tax of 12.5% would have netted the city a whopping $ 45,165.37 in tax collection Daly City is failing to tap into the potential revenue stream. With the new short-term rental ordinance with a TOT of 12.50%, the city would be able to increase tax revenue and utilize it for spending for inclusionary housing. RECOMMENDATIONS TO THE CITY OF DALY CITY FOR THE SHORT TERM RENTAL ORDINANCE The following are the case study of few cities which benefited both socially and economically from short-term rental revenues. How a city brought 200 short term rentals into compliance in 6 months with host compliance https://granicus.com/how-one-village-increased-str-compliance-by-38-leading-to-673k-collected- in-taxes/ P A G E 1 8 © Copyright Reserved by iCapital Management Inc

×