HomeMy WebLinkAboutAdditional Material (Hedrick)A recent case where out of town owners of a vacation rental property (the “Owner”) had assigned responsibility
for licensing and management of their short-term vacation rental (the “Unit”) to a local professional short-term
rental management company (“the Company”) raised some issues worth exploring. In this particular case, the
Company’s contract with the Owner stated that it “shall act as the Owner’s Representative for the Property”.
A few suggestions for consideration of the Board for possibly referral to Council that may assist with future similar
cases include the following:
• Establish rules, standards, and guidelines for Companies.
• Have Companies that manage Units in Palm Springs register with the City and agree to follow the City’s
Short Term Vacation Rental Ordinance (the “Ordinance”). This would exclude internet companies who are
only involved in advertising and booking clients based upon the direction of the Owner/Company.
o Companies that manage Units in Palm Springs must be licensed on an annual basis.
o Companies that fail to manage contracted Units can have their license suspended or revoked
permanently.
• Define in broad terms, how short term rentals are managed.
o Owner Management – Owner takes full responsibility for registering the Unit with the City and
for the managing and renting the Unit. Owner is responsible for all violations of the City’s
Ordinance.
o Split Management – Owner splits the responsibility for managing the Unit with a Company, but
controls the booking calendar and the selection of the tenants. The Company may/may not greet
the tenants upon arrival, but acts as the local contact in the event there is an issue with the Unit.
Owner is responsible for all violations of the Ordinance.
o Agent Management—Owner assigns responsibility to the Company. The Company may or may
not assume responsibility for licensing, but it controls the calendar and tenant selection, plus
other issues that may arise with the Unit. The Owner expects the Company to manage the Unit at
an acceptable standard and adhere to the Ordinance.
• When an Owner registers or renews the Unit’s registration, the licensed Company involved with the Unit
must be identified and the type of management offered.
A concern is the assignment of responsibility when there is an Agent Management Agreement with the Owner. In a
recent case, the Ordinance infers that the even though the Owner had assigned by contract the management of
the Unit to a Company, the Owner is still liable for any infractions. Therefore a solution may be:
• Require any Company before placing advertisements for a Unit to make sure the license is in place and in
full compliance with the Ordinance.
• If a Company advertises an Unit that is not license and in full compliance, the penalty goes to the
Company, not the owner. The first violation by the Company on any Unit managed will be $TBD. The
second will be $TBD, and the third, will be $TBD plus a lifetime suspension of the Company and its
principals from managing Units in Palm Springs.
o The Owner will have the option to select a new Company and complete the process for the
license.
• If the Owner has an Agent Management Agreement with a Company, whereby the Company is
responsible for advertising and the selection of tenants, the first infractions by the tenants that results in
violations of the Ordinance should be the responsibility of the Company. Sequent fines will be the
responsibility of the Owner.
• If a Company receives:
o Three violations times the number of units it manages within a one-year period, then the City
Manager has the option to suspend the Company’s license to manage Units in Palm Springs for a
period of two years.
o Five violations at one Unit within one year, then the City Manager has the option to suspend the
license of that Unit for a period of two years.
• If a Company has its license suspended/revoked, the Owners will have to engage a new Company and
notify the City within 30 days of such change.
• The City will maintain a website listing the registered Companies eligible to provide Unit services under
the Ordinance.
o The website will show the compliance performance of each Company
Number of Units under management
Number of Violations in a year.
Number of Units that have had their respective license suspended