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Cathedral City to phase out vacation rentals

  • Sep 15, 2020 | Jennifer Sokolowsky

Cathedral City, California

Cathedral City, California, approved a new law that will phase short-term rentals out of the city, with a few exceptions, by 2023. The city also passed new resolutions on enforcement, fees, and penalties. The new measures go into effect October 9.

Under the new law, short-term rentals may operate after the phase-out period within homeowners associations that allow them, or when hosts are on-site during the rental.

The new measures require short-term rental guests to book a minimum of three nights and they also set new license fees: $1,950 for single-family homes and $525 for hosted rentals.

The city also outlined stiff penalties for breaking the law. Hosts who operate without a permit can be fined $5,000 for a first violation, $10,000 for a second, and $15,000 for a third.  Other violations, including disobeying rules related to noise, occupancy, trash, and parking, can result in fines of up to $5,000. Individuals who make a false report to the city’s short-term rental complaint hotline may be fined up to $500.

Palm Desert, La Quinta approve short-term rental moratoriums

Meanwhile, nearby Palm Desert passed a 45-day moratorium on new short-term rental permits in planned residential zoning districts. The moratorium was passed September 10 and went into effect immediately.

In 2017, Palm Desert banned short-term rentals in residential R-1 and R-2 neighborhoods, except when hosts remain on-site. However, vacation rentals were allowed in planned residential (PR) zones, which can include developments such as condominium projects, gated golf course communities, and single-family communities.

The City Council voted to pass the moratorium after a rise in complaints about vacation rentals in these zones. Under the moratorium, new vacation rental permits will not be issued in PR-zoned districts unless they’re approved by a governing homeowners association. The city may eventually consider changing the rules for planned residential neighborhoods that don’t have homeowners associations.

In August, the La Quinta City Council voted for an immediate 90-day moratorium on vacation-rental permits. The moratorium includes 16 permits that were filed the day of the council’s vote on August 4.

Complaints about short-term rentals had increased by 267% over the past three months as vacation rentals have risen in popularity during the COVID-19 pandemic, according to the city. Between April and June, La Quinta issued 93 new vacation rental permits.

In response to rising complaints, City Manager Jon McMillen issued an executive order in July that short-term rental licenses would be suspended after two code violations. Since then, the city has issues 31 citations to vacation rental owners and suspended the permits of 12 properties.

During the moratorium, the city’s STVR Ad Hoc Committee plans to discuss issues with noise, parking, and other problems at vacation rentals and recommend solutions to the council.

Short-term rental operators in Cathedral City, Palm Desert, and La Quinta are required to collect occupancy tax from guests and file monthly occupancy tax returns with their respective cities. While Airbnb and Vrbo collect occupancy taxes on behalf of their hosts in several California cities, they don’t collect occupancy taxes in Cathedral City, Palm Desert, or La Quinta, so hosts there are responsible for tax compliance.

MyLodgeTax can help short-term rental operators comply with occupancy tax requirements. For more on California lodging taxes, see our state Vacation Rental Tax Guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers. 

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.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.
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