VNC postponed the motion affecting short-term rentals until next month’s meet. Motion asks Councilman Mike Bonin to investigate “conditions surrounding” these dwellings by appropriate City Departments, that an ordinance be drafted regulating such rentals, and that the ordinance be submitted to a vote prior to 15 Feb 2014.

What is a short-term rental? According to Los Angeles Department of Finance, it is any rental for 30 days or less.

An incentive for doing short-term rentals is not only that one makes more money but one also is not subject to the small, yearly rent increase provided for long-term rentals that are under rent control.

On one hand, short-termers are taking long-term rentals off the market, and on the other hand, the City coffers are greatly enriched by added revenue. But many short-term rentals are under the radar for at least short-term taxes, and maybe, long-term taxes.

Mike Kerns who owns short-term rental property at the beach said this is long overdue. “It’s about time they did this,” he emailed. “I have been registered with the city and paying the 14% transient tax on all my rentals for over 8 years now, but there are many here in Venice who also do the short-term rentals and don’t pay the transient tax.

In looking into this, Update came up with several regulations governing rentals and a few loop holes … or until caught. All information is for City of Los Angles, not Santa Monica or any other city.

Note: Facts regarding taxes for rental units were obtained from a representative from the Department of Finance.

First of all–If you rent a unit or units-short- or long-term, you must have a business license and be subject to a “gross receipts” tax of 1.2 percent per 1000 on a yearly basis. If it is a short-term rental, you are–in addition–required to pay a 14-percent transient tax on income. This tax is collected monthly. Update did not investigate the scrutiny that motels and hotels are under to compare it with one-room rentals.

Second--If you have a unit short- or long-term in City of Los Angeles that was built prior to November 1978, it must be registered with City of Los Angeles and registration is an additional cost. If it is a short-term rental, it is not subject to rent control increase rates because of vacancy decontrol. If it is long-term, it is subject to a small (3 percent this year) increase in rent each year.

Loop hole--How does City find out whether a unit is short- or long-term. If short and not found out, City is out the 14-percent monthly transient tax. (City has ways to find both the short- and the long-term landlord. Takes time and there are fines.) Long-term is easier to discover because of residential zoning.

Short-term rentals in Venice and close surrounding areas have been growing. One concern lists 679 available rentals in area. A representative from Westside rentals says they have 300 to 400 rentals listed. Everyone, it appears, wants to become a motel with a one-room rental. Others rent rental units, such as apartments, on a short-term basis and make more money on a short-term basis than they would if they rented on a monthly, long-term basis.

Short-Termers Take Units off Market?

People claim it is taking rental units off the market for long-term renters. True, it is a good business. It makes extra money for owner (and work) and extra tax income for the City. It also avoids the minimal yearly increase for those under rent control. Short-term rental rates are supply and demand. Perhaps, it is the long-term rental under rent control that is the culprit causing a market shift.

The R-1 Saga

Right now, all rental units built before November 1978 must be registered with the City per Section 151.05 of Municipal Code. It does not specify whether they are short-term or long-term rentals. Section 151.02 specifies two or more rentals on a lot.

So if one is living in a home on an R-1 lot and rents out a room, is he “two rental units on a lot”? A “single family home on a lot” is exempt. Just renting out a room and sharing all amenities is not subject to rent control. But if not sharing amenities and with a separate entrance, it would be. A duplex is if owner lives in one unit and rents out a single even. An R-1 lot should be only one unit with no rentals.

Loop hole–Many “single-family homes on a lot” have a rental and the rental is a separate building. Because they are single-family and not zoned as multiple units, they are not suspect as rentals.

Remember, owner should have a business license, whether short- or long-term rental, and be paying taxes. Unit should be registered with rent control if property was built prior to 1978 and no shared amenities.

What if unit was built prior to 1978, not registered with rent control, owner did not declare income, and tenant complained? Who would get to owner quicker–tax man or rent control? Who would inflict the larger fine?