Palm Springs Partners with MuniServices to Tighten Vacation Rental Rules

With revitalization efforts in full swing over recent years, the City of Palm Springs has renewed its crown as a destination hub for Hollywood stars, hipsters and everyone in between.

The Coachella Valley welcomes over 12 million visitors each year, and many of those individuals have their sights set on the streets of Palm Springs. In the age of the sharing economy, that means Palm Springs faces both opportunities and challenges as property owners seek to turn heavy tourism into additional streams of income in the desert city.

This is a major challenge affecting communities across the country, and a problem that was highlighted in a recent New York Times article. But the question remains, what can cities and counties do to retain the spirit and integrity of their communities?

“Vacation rentals aren’t bad, but they need to be regulated like any other business,” says Julia Erdkamp, a client services manager with MuniServices, one of the nation’s leading consultants on municipal tax auditing and vacation rental ordinance development. “Municipalities, especially those that rely on tourism, need to spell out exactly what is acceptable and what is not to ensure they do not negatively impact the livelihood of local residents.”

In Palm Springs, the City Council passed an ordinance limiting the number of times a residential property can be rented in a year. In addition, they increased the permit fee to operate a short-term rental from $234 to $900 a year per home. Anyone found operating a short-term rental without a permit can be fined up to $5,000.

“When communities create well-defined ordinances it makes overall compliance much easier in terms of revenue and also code enforcement areas such as zoning, health and safety, noise abatement and traffic control,” says Erdkamp. “Cities have a lot of power. They just need to take a series of ‘right’ steps to avoid problems.”

When Airbnb was founded in 2008, municipal administrators and elected officials didn’t think much of it. While it went mostly unnoticed, MuniServices was paying attention and figuring out how it would impact cities and counties. Last year alone, MuniServices worked with more than two dozen cities and counties across California to address this new market, and to offer options and best practices that empower communities to manage and collect taxes on vacation rentals.

“MuniServices will continue to advance this work,” says Erdkamp, “by collaborating with both the League of California Cities and industry leaders such as Airbnb, VRBO/HomeAway to ensure transient occupancy taxes are being collected and remitted properly.”