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Pacific Grove approves new short-term vacation rental rules

  • Nov 30, 2017 | MyLodgeTax

Pacific Grove

The rules for short-term vacation rentals in Pacific Grove, California, are changing. On Oct. 17, 2017, the City Council voted to replace a former short-term rental law with another that regulates vacation rentals more strictly.

The new ordinance allows a maximum of 250 short-term vacation rental licenses in the city at a time. The new rules will also limit the density of short-term rentals on any given block. Existing holders of licenses on blocks that exceed the density limits will take part in a lottery to determine which licenses will be extended. Details on density limits, the lottery, and sunset rules for current license holders are still being worked out.

The city estimates that short-term vacation rentals generate more than $1 million a year for Pacific Grove, which, according to Mayor Bill Kampe, is needed for the upkeep of city infrastructure.

The council also voted to enter into a tax collection agreement with Airbnb. The online vacation rental platform will collect lodging taxes from guests for all its Pacific Grove listings upon booking and turn those funds over to the city.

Short-term rental owners who use platforms other than Airbnb for bookings are responsible for collecting the city’s Transient Occupancy Tax (TOT) from guests and remitting it to the city themselves. The TOT rate for short-term vacation rentals in Pacific Grove is 10 percent.

Pacific Grove’s regulations differentiate “home sharing” (where part of a property is rented out for the short term) from “short-term rentals,” in which an entire unit is rented. Different types of licenses are required for each.

Pacific Grove is taking a different path than its neighbors Monterey and Carmel. In Monterey, any rentals shorter than 30 days are banned in residential zones, except for owner occupants who are temporarily away from their homes; they may rent out their properties for periods of less than 30 days only once in any 12-month period.

Carmel also bans short-term vacation rentals in residential areas, and is cracking down on violators. This summer, the city conducted a sting operation — possibly the first of its kind by any city in California — and filed a lawsuit in Monterey County Superior Court against a couple who had rented out their home via a vacation rental website.

As some communities seek to take advantage of short-term rentals to fill their coffers and others fight against allowing short-term rentals at all, it’s becoming increasingly important for vacation-rental operators to keep current on their local compliance requirements. Vacation-rental owners who want to avoid trouble from local authorities need to be aware of their responsibilities and take rules and regulations — from licensing to lodging tax collection — seriously.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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