HomeMy WebLinkAbout4/18/2018 - STAFF REPORTS - 4A U.46
City Council Staff Report
DATE: April 18, 2018 UNFINISHED BUSINESS
SUBJECT: UPDATED IMPACT ANALYSIS RELATING TO "MEASURE C" — A
CITIZENS' INITIATIVE TO PROHIBIT THE VACATION RENTAL OF
SINGLE FAMILY RESIDENCES IN THE CITY'S R-1 ZONES
FROM: David H. Ready, City Manager
BY: Community and Economic Development Department
SUMMARY
This item updates and clarifies the City's impact analysis report related to Measure "C"
which will be before the voters at the consolidated election June 5, 2018. The report is
prepared and filed pursuant to California Elections Code Section 9212.
At its February 21, 2018 meeting, the City Council adopted various resolutions calling
and giving notice of the holding of a special municipal election to be consolidated with
the Statewide Primary Election on June 5, 2018, for the submission to the voters a
question relating to the prohibition of vacation rental of single family residences in R1
zones in the City. This ballot initiative scheduled for the June 5, 2018, election is
identified as "Measure C."
Subsequent to the February 21, 2018 Council meeting, staff has performed additional
analysis on the impact relating to the ballot measure and has determined the economic
impact vis-a-vis a reduction in TOT revenue is $900,000 more than originally reported —
and should be adjusted to reflect a decrease in TOT revenue of $7.2 million (rather than
$6.3 million) for a total loss of local revenue estimated at $10.5 million (rather than $9.6
million).
RECOMMENDATION:
Receive and file the supplemental information to complete the City's staffs impact
report related to Measure "C", a ballot initiative that would prohibit the vacation rental of
single family residences in the City's R1 zones.
fiEM NO. . A.
City Council Staff Report
April 18, 2018--Page 2
Measure"C" Impact Report Update
BACKGROUND:
A citizens' initiative petition to prohibit the vacation rental of single-family residences in
R-1 zones in the City of Palm Springs has qualified for placement on the ballot. On
January 24, 2018, the City Council ordered a report analyzing the impacts of the
initiative measure, pursuant to Elections Code (EC) 9212. Subsequently, on February
21, 2018, the impact report was submitted to the Council for its review in its initial form.
In that staff report, the following information was provided to the Council:
Tourism is a significant part of Palm Springs' economy. As vacation rentals have grown
in popularity, they have increased in number. There are currently 1,986 registered
vacation rental and "homeshare" properties in the City. This secondary use of these
residential properties, pursuant to a decision by their respective owners to secure a
permit and comply with the City's ordinances, generates approximately $7.6 million in
Transient Occupancy Tax (TOT) revenue. In addition, the use and enjoyment of these
properties by visitors to the City of Palm Springs has economic consequences.
Evaluation of potential impacts upon tourism in the City and the local economy will help
ensure that the likely results of this initiative becoming law are analyzed and understood
by the City and its residents and businesses.
Pursuant to state law, the Council directed staff to secure a report analyzing the
potential economic impacts of the voter initiative proposing to prohibit short term
vacation rentals in single-family residences, defined as single-family units on property
with any R-1 classification. The City contacted six (6) economic consulting firms with a
request that they submit proposals to conduct the analysis. The firms were CBRE
Hotels, Pannell Kerr Forster, TXP Economic and Public Consulting, Development
Management Group, Dean Runyan Associates, and Tourism Economics. Dean Runyan
Associates and Tourism Economics submitted proposals for $20,000 and $15,000
respectively. Tourism Economics, which specializes in the economic dynamics of
tourism, has over four (4) decades of experience among its principal consultants, and
provided the lowest responsible bid, was selected. Tourism Economics also recently
completed a similar study on the economic impacts of vacation rental visitors for the
Greater Palm Springs Convention and Visitors Bureau (September 2016).
The analysis prepared by Tourism Economics evaluated how the prohibition of single
family residential vacation rental units impacts the likely volume of future visitors to the
City, Transient Occupancy Tax receipts, visitor spending, and associated employment,
payroll, and tax receipts. The analysis involved a review of current data pertaining to
vacation rentals, and a review of previous studies of tourism and vacation home impacts
for Palm Springs and the Coachella Valley. The consultant utilized an Input-Output
model (1-0) to measure the relationships among industries and consumers. Information
produced by this model was segmented by industry-including those industries which
benefit indirectly.
02
City Council Staff Report
April 18, 2018--Page 3
Measure"C" Impact Report Update
The employment of this methodology affords the City insight into how various industries
benefit from visitor activity. For example, the 1-0 model tracks a visitor's expenditures at
a restaurant, as well as the wages of the restaurant workers. It also tracks owner profits,
capital, taxes, and suppliers. In this way, the 1-0 model allows measurement of the
direct and indirect sales generated by a restaurant meal. The model also calculates the
induced impacts of tourism. These induced impacts represent benefits to the economy
as employees of tourism sectors spend their wages in the local economy, generating
additional output, jobs, taxes, and wages. The source of data used by the analysis is
from IMPLAN which is recognized as a standard in local level 1-0 models. Other types of
input-output models include the U.S. Department of Commerce, Regional Input-Output
Modeling System (RIMS 11), and Regional Economic Modeling, Inc. (REMI).
Key industries in Palm Springs that would be impacted by the decrease in visitors likely
to arise from adoption or passage of this initiation include Finance, Insurance and Real
Estate ($692 million loss); Retail Trade ($50.1 million loss); Recreation and
Entertainment ($17.4 million loss); and, Food and Beverage ($14.5 million loss). These
categories are each considered an "industry," and are related as parts of the tourism
"cluster." Industry clusters are geographically concentrated and inter-connected by the
flow of goods and services. These groups of industries drive wealth creation in a region,
primarily through export of goods and services.
The original report concluded that total job losses, across several industries, would be
approximately 1,158 due to the loss of visitors and visitor spending. It also concluded
that a total of $35.9 million in income would be lost from the Palm Springs Economy on
an annual basis. Revenue losses to the City would be approximately $6.3 million in
Transient Occupancy Tax (TOT) revenues; $2.5 million in sales tax revenues; and
$900,000 in other taxes and fees for a total of$9.6 million.
A copy of the original impact report, entitled "An Assessment of the Proposed Change in
Vacation Rental Regulations in Palm Springs, CA," is included as Attachment 1.
STAFF ANALYSIS:
The original impact report prepared by Tourism Economics evaluated the potential
reduction of TOT revenue generated by single-family residential units (SFRs) by using a
pro rata share of vacation rental condo units to vacation rental SFR units. Currently,
26.1% of all vacation rental units are condo units and 73.9% are SFR units, which was
the basis for the City's consultant, Tourism Economics, to allocate 26.1% of the total
TOT revenue of $7,580,000 to vacation rental condo units (approximately $2 million),
and allocate 73.9% of the total TOT revenue to vacation rental SFR units
(approximately $5.6 million). As further indicated herein this staff report, this
assumption is incorrect.
Y 03
City Council Staff Report
April 18, 2018--Page 4
Measure"C" Impact Report Update
Staff has compared the pro rata distribution of TOT revenue between SFRs and condo
units with actual TOT revenue receipts for vacation rentals from condo units. Based on
actual TOT revenue receipts from SFR units and condo units, staff has determined that
TOT revenue generated by SFR units amounts to $7,235,322 — or 95.5% of the total
TOT revenue from vacation rental units of $7,580,000. Conversely, TOT revenue from
vacation rental of condo units amounts to $344,678 making up 4.5% of the total TOT
revenue from vacation rental units of $7,580,000.
At the March 7, 2018, City Council meeting, the City Attorney commented on a
discrepancy with the Ballot Initiative Language, explaining that the proponents included
language in the proposed ordinance that is internally inconsistent with regard to the
prohibition of "homesharing" in R-1 zoned areas. It was determined, given the
ordinance's definition of "homesharing," that the prohibition of renting a portion of a SFR
unit effectively prohibits homesharing in those SFRs. Despite language in the notice of
intent to circulate petition, and a ballot measure "finding" that indicates homesharing in
SFR units will remain legal, the ballot measure as a whole, inclusive of the prohibition
language above, is internally inconsistent on this point. As drafted, the ballot language
for Measure C arguably prohibits operation of homeshare units in R-1 Zones.
Homeshares, which account for sixty-two (62) units, or 3.3% of the overall inventory of
homes with permits under the vacation rental ordinance, would have an unclear status if
Measure C should pass.
Staff also explained that the estimated 382 vacation rental condo units expected to
continue operating if Measure C should pass, should be revised to 254 vacation rental
condo units. The reduced number of condo units reflects the fact that most, if not all,
condo units are regulated by a Home Owners Association (HOA), and the City is now
enforcing the requirement of written HOA approval of vacation rental operation within
each condominium complex. Staff anticipates a 2018 reduction in vacation rental
permits issued for condo units of 33% (128 permits) due to the necessity for applicants
for new and renewal permits to furnish a written approval from the HOA. In addition,
seventeen (17) apartment units registered as vacation rental units will phase out of the
vacation rental program at the end of 2018 based on the City's current vacation rental
regulations. It is important to note that these changes are not related to Measure C, but
also that the impact report overstated the assumed revenue generated by existing
vacation rental condo units.
The TOT revenue produced by the 254 vacation rentals condo units totals $344,678
and is 4.5% of the $7,580,000 TOT revenue produced by all vacation rental units
(condos and SFRs). Based on this analysis, the amount of total vacation rental TOT
revenue the City will lose if Measure C passes is 95.5% of the total TOT revenue
generated by vacation rentals, or $7,235,322. Staff opines that this analysis is a more
accurate representation of TOT revenue generated from condo units as it is based on
actual TOT receipts for the "owner managed" condo units. The calculations for this
analysis are shown in the table on the next page.
04
City Council Staff Report
April 18, 2018—Page 5
Measure"C" Impact Report Update
Condo Vacation Rental TOT Receipts
2017
Number % All TOT
VR Type of Units Condos Revenue
Owner Managed Condos 130 51% $ 175,786
Agency Managed Condos 124 49% $ 168,892
Total Condos 254 $344,678
Total VR TOT $7,580,000
Condo VR TOT as%of Total VR TOT 4.5%
Non-condo VR TOT as%Total VR TOT[1] 95.5%
Non-condo VR TOT($) $ 7,235,322
[1] It is estimated 2% - 5% of the SFR vacation rental units may be located outside of R-1
zones.
One important difference between this updated analysis and the analysis included in the
original impact report prepared by Tourism Economics, is that the new TOT revenue
data allows staff to distinguish between the TOT generated by condo vacation rental
units and SFR vacation rental units. This information was not yet available when the
original impact report was prepared. Consequently, Tourism Economics incorrectly
assumed that a condo vacation rental unit and an SFR vacation rental unit produced an
equal amount of TOT revenue. In doing so, the percentages of the numberof vacation
rental condo units and vacation rental SFR units were used to calculate the percentage
of TOT revenue generated by each. As 73.90% of the total vacation rental units are
SFRs and 26.1% are condos, it was assumed each generated the same percentage of
TOT revenue. However, as can be seen in the charts below, the percentage of the
number of condo units and SFR units by type is quite different than the percentage of
TOT revenue by unit type.
05
City Council Staff Report
April 18, 2018--Page 6
Measure"C" Impact Report Update
Percentage by Unit Type Percentage by TOT Receipts
2/21/18 26.1% 4/4/18 °
4.5/
41AP
73.9% 4955%1
W Condo W SFR
■Condo ■SFR
In regards to sales tax revenues, the Tourism Economics report estimated that the loss
of sales tax revenue to the City would be $2.5 million. The report, however, did not
provide the potential replacement of sales tax revenues should those unused SFR
vacation rental units be sold and re-occupied, or rented on a long term basis. To
determine the economic impact of those new residents would require information on
how many of the unused SFR vacation rental units would be re-occupied the average
size of such homes (number of residents), the expenditures of the new residents, and
the time it would take to sell or rent the unused SFR vacation rental units. As this
information is not known, Staff is unable to determine the economic impact of potential
new residents.
Another important consideration is a comment letter submitted by the Agua Caliente
Band of Cahuilla Indians, dated February 6, 2018, included as Attachment 2, relating to
Measure C. In their letter, the Tribe states:
"The Tribal Council...strongly objects to a complete ban on vacation
rentals, which includes Allotted Trust land. The Tribe is concemed that
this ban is an onerous and unnecessary restriction of the use of Allotted
Trust land that will further restrict allottees from achieving 'highest and
best use' of their trust land. The complete prohibition of vacation rentals in
R1 zones is an extreme action that will likely only serve to drive this
activity 'underground."'
06
City Council Staff Report
April 18, 2018--Page 7
Measure"C" Impact Report Update
Staff estimates that 770 of the total 1,986 vacation rental units (39%) operating in the
City are on Tribal allotted land. It is difficult at this time to estimate the economic impact
associated with the passage of Measure C relating to the Tribe's opposition of it.
Conclusion
The additional information provided in this report concludes that the original impact
report overstated the TOT revenues generated by vacation rental condo units — and
should be based on actual TOT revenue receipts which amounts to 4.5% of overall TOT
revenues (not the pro rate share of 26.1% originally assumed). This fact increases the
economic impact through a reduction of TOT revenue by $0.9 million.
The original impact report concluded that with passage of Measure C, TOT revenue
generated by vacation rentals would reduce by $6.3 million, and when included sales
tax and other fees, the total revenue reduction is $9.6 million. As a result of the updated
analysis, these figures should be revised to report a TOT revenue reduction $7.2
million, and an overall loss in local revenues of$10.5 million.
ENVIRONMENTAL IMPACT:
Section 15061 (b)(3) of the California Environmental Quality Act ("CEQA") Guidelines
exempts activities that are covered under the general rule that CEQA applies only to
projects that have the potential to cause significant effects on the environment. Where it
can be seen with certainty that there is no possibility the activity in question may have a
significant effect upon the environment, the activity is not subject to CEQA. The
requested action requests the City Council receive and file an updated economic
analysis report related to the passage of Measure C, which itself will not result in any
new direct physical impacts to the environment. Therefore, the requested action is
considered exempt from CEQA.
FISCAL IMPACT:
As noted in this report, the City estimates a loss of $7.2 million in TOT revenue, and a
loss of $3.2 million in other local revenue, for a total loss of $10.5 million, with the
passage of Measure C.
07
City Council Staff Report
April 18, 2018—Page 8
Measure"C" Impact Report Update
SUBMITTED:
Jay W irector Marcus L. Fuller
Comm and Economic Development Assistant City Manager
David H. Ready, Es
City Manager
Attachment:
1. Tourism Economics Economic Impact Report
2. Agua Caliente Band of Cahuilla Indians Letter, February 6, 2018
08
ATTACHMENT 1
Tourism Economics
Economic Impact Report
09
i
io
I.
` ProposedAn Assessment of the
Change in Vacation Rental
Regulationsr
lm Springs, CA
4 .
February 20 •
Prepared for: Ct TOURI S M
�a�vw
p� ���a� ECONOMICS
AN OXFORD ECONOMICS COMPANY
O
a-=+
CU
O
11
Introduction and definitions How visitor spending drives employment
and income in the local economy.
This study examines the proposed change to regulations Reduced visitor spending would flow through the Palm
governing vacation rentals in the City of Palm Springs, California. Springs regional economy and generate indirect impacts
through supply chain and income effects.
Current regulations allow the short-term vacation rental of single family
dwellings in the City. The proposed change to City regulations would prohibit _
short-term vacation rentals in single family dwellings located on property with
any R-1 zoning. The prohibition would go into effect 24 months after the Sector Impact Effect
adoption of the regulation change.
The City has a total of 1,986 units registered as vacation rentals and Transportation Production
homeshares that hosted an estimated 467,000 visitors in 2017. In order to !� '—'—
assess the potential impacts of the proposed change, this analysis estimates I Entertainment
the number of units that would be affected by the rental prohibition,the visitor
volume and direct spending associated with those units, the total economic Jobs
impacts, and the impact on tax revenues generated. Recreation
Direct
Annual impacts are measured in terms of lost business sales and reduced
Indirect
employment, income, and tax revenues associated with fewer visitors. Total Retail Induced
economic impacts include lower levels of direct visitor spending, and lost { Wages
indirect and induced impacts. Direct visitor spending creates economic —11
value in specific visitor-related sectors such as lodging, recreation, and *Food & Beverage
transportation. This supports a relative proportion of jobs, wages, taxes, and j
GDP within each sector. Indirect benefits accrue to those sectors that I Taxes
provide goods and services as inputs into production, such as food Accommodations
wholesalers, utilities, and financial or legal services. Induced benefits are
generated when employees whose incomes are driven directly or indirectly by
visitors, spend a portion of that income in the local regional economy.Without
the direct visitor spending, none of the indirect and induced benefits would be
realized in the local economy.
�-+ I Tourism Economics
M
g
i
N
13
Summary findings The prohibition of vacation rentals in single
family units zoned R-1 would reduce visitor
spending and all the associated benefits.
The proposed change to vacation rental regulations would
prohibit rentals in single family units with any R-1 zoning,
which would affect nearly three-quarters of the vacation
rental market.
��>w
The prohibition would likely reduce visitor volume to Palm
Springs and result in lower levels of direct visitor
spending.
The visitor volume associated with the units that would be
affected by the policy change amounts to more than t
349,000 visitors to Palm Springs, after accounting for ti
visitors likely to shift over to hotels. The loss of these At
visitors would lead to a reduction in visitor spending
estimated to be $154.1 million.
Lower levels of visitor spending would lead to negative
indirect and induced impacts in the Palm Springs
economy, and the total economic impact would be a loss of
$199 million annually.
Lower levels of sales would correspond to 1,158 fewer jobs
and $35.9 million in lost annual income.
Annual local revenues lost would amount to $9.6 million.
M ( 1 wism Economics
3 . Vacation rental trends
cn
Vacation rental registrants are Vacation rental registrants have steadily
on the rise increased since 2009.
In 2009, just under 1,000 units Vacation Rental Registrants
were registered as vacation
rentals, with individual registrants 2,500
accounting for approximately one Individual
quarter of all registrants.
2,000
Agen cy
_
During 2017, total registrant —Total registrants
exceeded 2,000 units, and 1,500
finished the year with 1,986
registrants. This rate of growth in
registrants is nearly 10% per year 1,000
since 2009, a substantial
increase in eight years. � Ill�i j
500
0
091 10 11 12 13 14 15 16 17
Source: City of Palm Springs Finance and Treasury
M
Cn I Tourism Economics
Individual registrants account Individual registrants account for more than
for an increasing share half of the total, up from about 25% in
2009.
In 2009, individual registrants Share of Individuals Registrants is Increasing
amounted to roughly 250, about a Share of total, %
quarter of the total. 60 -
Total registrants grew rapidly, 50
and individual registrants grew
even faster. In 2017, individual 40 -- —
registrants totaled over 1,000 and
accounted for more than half of
the total. 30
20
10
0
09 10 11 12 13 14 15 16 17
Source: City of Palm Springs Finance and Treasury
"`� I Tourism Economics
Vacation rentals generate Vacation rentals generated $7.6 million in
significant TOT revenues Transient Occupancy Tax revenues in fiscal
year 2017.
In fiscal 2009, the City collected Transient Occupancy Tax Revenues
just under $15 million in Transient
Occupancy Tax (TOT) revenues. 30
The vacation rental segment of =Vacation rentals $mils
the market accounted for 11.1%
of total TOT, bringing in $1.6 25 Other TOT, $mils
million. —VR share of total, %
20 - -- -- -
Since fiscal 2008, total TOT .
revenues expanded 8.2% per 15
year on average, while TOT
revenue driven by vacation 10 —
rentals grew 18.9% per year.
5
In fiscal 2017, vacation rentals
accounted for$7.6 million in TOT 0
revenues, or 25.8% of the total, 08 09 10 11 12 13 14 15 16 17
more than doubling its share
since fiscal 2008. Source: City of Palm Springs Finance and Treasury
�' I Tourism Economics
5 . The proposed change
Q
The proposed change would The prohibition would reduce the inventory
prohibit vacation rentals in most of available vacation rental units by about
single family units 74%.
According to the proposed initiative, the term "vacation In order to assess the economic impact of the regulation change,
rental" is defined as "occupancy for dwelling, lodging, or visitor volume associated with the single family units that would
sleeping purposes without the presence of the owner for a be prohibited was estimated along with their annual spending in
period of twenty-eight consecutive days or less." the Palm Springs local economy.
The 1,468 single family units are estimated to have hosted 387,982 visitors to
Current city regulations prohibit the vacation rental of apartments after the City in 2017. These visitors engaged in spending across various sectors
1/1/2019, neither prohibit nor allow vacation rental of condo units as of the local economy, such as food and beverage, retail shopping, recreation,
such, and allow the vacation rental of single family dwellings. The and local transportation.
proposed change would maintain the prohibition on the vacation rental
of apartments after 1/1/2019, allow the vacation rental of condo units, It is assumed that there is likely overlap between the vacation rental market
and prohibit the vacation rental of single family dwellings on property and the hotel market, and absent a vacation rental option some visitors would
zoned R-1. seek lodging in hotels. For purposes of this analysis it is assumed 10% of
vacation rental visitors would shift over to hotels, and as a result their
Palm Springs currently has a total of 1,986 vacation rental registrants spending would not be lost from the local economy. Therefore, the estimates
of visitors and visitor spending actually lost from the local economy amount to
as of the end of 2017, including 1,521 single family units, accounting 349,183 and $154.1 million, or 90% of the total volume and spending
for 76.6% of the total. Other registered units are condos, home shares, associated with the affected single family units. There is upside and downside
or multifamily units. According to City staff, approximately 96.5% of risk to this assumption and actual losses to the regional economy would
single family vacation rental registrants are zoned as R-1, meaning depend on the extent of overlap between the vacation rental and hotel
that nearly all would be affected by the prohibition. markets: more overlap would translate to less losses, and less overlap
between the markets would mean greater losses to the local economy.
This would mean that an estimated 1,468 single family units on Not incorporated into the analysis is any reduction of condo units that could
property zoned as R-1 would be prohibited from registering as be taken out of the vacation rental market due to home owners association
vacation rental units. This accounts for 73.9% of the current inventory rule changes that may come about as a result of the proposed regulation
of vacation rentals. change, if it were to be adopted.
Economic impacts are reported on an annual basis and a long-term
summation of potential ten-year impacts are also presented.
N I Tourism Economics
O
Lost visitor spending Taking most vacation rental units offline
would likely result in significantly lower
visitor spending.
Vacation rental visitors spend across Vacation Rental Visitor Spending per Trip
various sectors in the local economy. Transport
Lodging and food and beverage (local) i
account for more than half of direct
visitor spending,followed by retail,
recreation, and local transportation.
Recreation
Total direct visitor spending likely to Lodging
be lost from the economy would 36.7016
include:
$54.4 million in lodging Per person
$33.1 million on food $424
$25.9 million retail
$21.0 million on recreation 17.5016
$13.8 million on local transport
Retail
These visitors also spend on air
transportation, a portion of which,
$6.0 million, stays in the local Food
economy and generates jobs.
Sources: DK Shifflet, CIS, Tourism Economics
Total visitor spending lost from the
local economy would amount to
$154.1 million per year. i
i Tourism Economics
'2
Key metrics: affected share of
the vacation rental market
Vacation Annual Visitor
Rental Units • - : Spending
Vacation 19986 4679094 $206.2 million
Rental mkt
Affecte • 19468 387,982 $171 .2 million
R-1 units
Lost from
Economy -- 3499183 $154.1 million
Sources: CIS, D.K. Shifflet, Tourism Economics
N
N
Cn
U
Q
E
U
O
O
U
W
23
Total lost business sales A total of $154. 1 million per year in direct
visitor spending would be taken out of the
local economy.
Gross Output (Business Sales) Impacts
Fewer visitors to Palm Springs (US$ Million)
would correspond to a loss of
$154.1 million in direct visitor
spending, primarily in real estate Agriculture, Fishing, Mining - 0.1 0.1 0.2
rentals, retail, recreation, and Construction and Utilities - 2.8 0.8 3.6
food and beverage. Manufacturing - 0.4 0.2 0.6
Wholesale Trade - 0.5 0.6 1.1
Adding direct, indirect, and Air Transport (local) 6.0 0.1 0.1 6.2
induced impacts together, the Other Transport 2.2 0.6 0.2 3.0
total loss to the economy would Retail Trade 47.5 0.2 2.4 50.1
be $199.3 million in lost business Gasoline Stations 10.4 0.0 0.2 10.6
sales annually. Communications - 1.5 0.4 2.0
Real Estate, Rentals, Finance, Ins. 55.6 6.6 6.9 69.2
Business Services - 5.8 1.3 7.1
Education and Health Care - 0.0 4.5 4.5
Recreation and Entertainment 16.3 0.7 0.5 17.4
Lodging - 0.2 0.2 0.4
Food & Beverage 11.5 1.1 1.9 14.5
Personal Services 4.7 1.0 1.3 7.0
Government - 1.3 0.6 1.9
TOTAL 1 154.1 1 22.9 22.3 199.3
Direct sales include cost of goods sold for retail sectors
N ( Tourism Economics
A
Lost sales by industry Indirect impacts would come primarily in
real estate rentals, finance and insurance,
and business services.
Lost Gross Out ut RE, Food and B
I' RE,Fin, Ins: Financncee,, In Insurance,Real Estate
$ million Bus. Services:Business Services
Gas: Gasoline Stations
$0 Other Transp:Other Transportation
Manu.: Manufacturing
70 Personal Serv.: Personal Services
Comm:Communication
60 Significant indirect
50 losses
■ Induced
40 Indirect
30 ■ Direct
20
10
0
c -0 0 06 CU n c o 0 0 (n s=
f0-
chO E M U O
ii d fL o w c U
ui o
m Q U p
N I Tourism Economics
Ell
Employment impacts Lower levels of sales would correspond to
1 158 fewer jobs in Palm Springs.
Employment
Lower levels of visitors spending
would sustain the equivalent of
808 fewer direct jobs. There is Agriculture, Fishing, Mining - 1 1 2
likely variation surrounding the Construction and Utilities - 9 2 11
jobs impact since employers Manufacturing - 2 1 3
could adjust payrolls and Wholesale Trade - 3 3 6
maintain staffing levels in some Air Transport(local) 20 - - 20
cases. While all of these jobs
may not actually be lost in the Other Transport 11 5 2 18
economy, the estimate provides Retail Trade 250 2 31 283
an order of magnitude impact on Gasoline Stations 10 - 1 11
jobs proportionate to the reduced Communications 8 2 10
level of business sales. Real Estate, Rentals, Finance, Ins. 120 30 19 169
Business Services 62 14 76
Direct impacts would come Education and Health Care - - 46 46
primarily in retail, recreation, and Recreation and Entertainment 196 10 6 212
food and beverage. Lodging - 2 2 4
Food& Beverage 150 17 30 197
Including indirect and induced Personal Services 51 10 18 79
jobs, the total jobs impact in Palm Government - 8 1 3 1 11
Springs would be 1,158jobs ITOTAL 808 1 169 1 181 1 1,158
potentially lost after prohibiting
vacation rentals in single family
R-1 units.
N I Tourism Economics
O) 17
Employment impacts by Indirect and induced impacts would occur
industry across sectors.
Employment Impacts
300
250
■ Induced
200 , Indirect
150 ■ ■ Direct
100
50
0 — il — I M - I I I - I
U U C +_.
U) L U
a (a O 7
ELCn -a p N C
N Q' tll ui LLJ Q- L O
Of CO U
� COO�
L
L
Q
N I Tourism Economics
ri 18
Income impacts A total of $35.9 million in income would be
lost from the Palm Springs economy on an
annual basis.
Labor ,
Lower levels of visitor spending (US$ Million)
would drive fewer jobs and less
income earned.
Agriculture, Fishing,Mining - 0.0 0.0 0.1
Direct income earned would be Construction and Utilities - 0.7 0.2 0.9
$21.9 million lower annually. This Manufacturing - 0.1 0.0 0.1
includes income earned at Wholesale Trade - 0.2 0.2 0.4
restaurants, retail shops, and Air Transport(local) 1.1 0.0 0.0 1.1
other businesses where vacation Other Transport 0.8 0.3 0.1 1.2
rentals visitors spend. Retail Trade 6.7 0.1 1.0 7.8
Gasoline Stations 0.5 0.0 0.1 0.6
Indirect impacts would include a Communications - 0.3 0.1 0.4
loss of$6.9 million in indirect Real Estate, Rentals, Finance,Ins. 2.4 0.9 0.5 3.8
income, and $7.2 million in Business Services - 2.3 0.5 2.9
induced income benefits that Education and Health Care - 0.0 2.5 2.5
would not be realized. Recreation and Entertainment 4.8 0.2 0.1 5.2
Lodging - 0.1 0.1 0.1
The total impact on income Food& Beverage 3.3 0.4 0.7 4.5
earned in Palm Springs would be Personal Services 2.2 0.5 0.6 3.4
a loss of$35.9 million per year. Government - 0.7 0.2 0.9
TOTAL 21.9 1 6.9 1 7.2 1 35.9
Tourism Economics
00
Impact On tax revenues A total of $9.6 million in local tax and fee
revenues would be lost per year.
Vacation rental visitors and their
spending generate significant tax
revenues. A total of$9.6 million
in local revenues would be lost if AnnualRevenues
single family vacation rentals
were prohibited.
Local tax revenues lost would $ millions
include $2.5 million in sales tax,
$6.3 million in Transient Local taxes
Occupancy Tax (TOT) revenues, Sales tax 2.5
and $0.9 million in other taxes
and fees such as permitting and Lodging (TOT) 6.3
licensing. Other excise and fees 0.9
Total local revenues 9.6
tV I Tourism Economics
� ?0
Long-term impacts If the prohibition of vacation rentals is on-
going the long-term losses to the economy
would accumulate.
Assuming just 3% growth per
year, the 10-year cumulative
losses to the Palm Springs
economy would be significant.
A total of$1.8 billion in direct • ' Impacts
visitor spending would be taken
out of the economy, more than
$2.3 billion in total business sales umulative
lost, more than $411.9 million in
lost income, and more than
$110.3 million in lost local Direct spending (mils) $ 1 ,766.8
revenues. Total business sales (mils) $ 2,285.3
Income (mils) $ 411.9
Local tax (mils) $ 110.3
Note: Assumes 3% growth per year
W I Tourism Economics
O
5 . Data Sources and Methods
W
r
Methods and data sources
Estimates of the economic impact of vacation rental visitors to Palm These previous analyses provide context for this assessment of
Springs, and the losses likely to be incurred if the proposed vacation rentals in the City of Palm Springs and many of the estimates
regulations change is adopted, were based on several sources: in this report were generated by sharing down from totals for the
• Visitor profile data and spending estimates produced by the broader Greater Palm Springs Region, which includes nine cities.
Greater Palm Springs CVB.
■ Volume and segmentation data from DK Shiftlet and Associates, a An IMPLAN input-output (1-0) model was constructed for Riverside
consumer research firm. County. The model traces the flow of visitor-related expenditures
■ Smith Travel Research (STR) data on the hotel sector, including through the local economy and their effects on employment, wages,
supply, demand, revenues, average rates, and occupancy rates. and taxes. IMPLAN also quantifies the indirect (supplier) and induced
• Data on Transient Occupancy Tax (TOT) for Palm Springs were (income) impacts of tourism. Tourism Economics then cross-checked
available from the City and from Visit California. these findings with employment and wage data for each sector to
ensure the findings are within reasonable ranges. Adjustments were
made to model output to ensure the capture of indirect economic
Key metrics incorporated into the analysis based on survey data impacts in the city only, and not a wider geographic area.
include an average length of stay of 5.1 days and average party size
of 5.4, based on rental contracts data maintained by City staff in the
Vacation Rentals department. The IMPLAN model uses industry averages for gross output, value
added, and income, based on data from various government sources,
such as the Bureau of Economic Analysis and the Bureau of Labor
A total effective local sales tax rate of 2.5% was used and includes Statistics. The I-O model accounts for inter-industry relationships and
Measure J and Measure D rates, and a TOT rate of 11.5% was captures how much additional demand in supplier industries results
incorporated. from additional final demand in a directly affected industry.
This analysis is based on previous work completed on behalf of the
Palm Springs CVB, including overall economic impact analyses of the
broader tourism industry in the Greater Palm Springs region, and an
analysis of the vacation rentals segment of the market, also for the
Greater Palm Springs region. In these studies, total visitor volume and
spending were estimated based on survey work completed by DK
Shifflet and Associates, and the survey firm CIS, along with additional
data sources such as city level TOT, data covering the city hotel
markets in Greater Palm Springs including metrics on room demand
and supply, room revenues, occupancy rates, and average room
rates.
W I Tourism Economics
N
About Tourism Economics
Tourism Economics is an Oxford Economics company with a singular
objective: combine an understanding of tourism dynamics with
rigorous economics in order to answer the most important questions
facing destinations, developers, and strategic planners. By combining
quantitative methods with industry knowledge, Tourism Economics
designs custom market strategies, destination recovery plans, tourism
forecasting models, tourism policy analysis, and economic impact
studies.
With over four decades of experience of our principal consultants, it is
our passion to work as partners with our clients to achieve a
destination's full potential.
Oxford Economics is one of the world's leading providers of economic
analysis, forecasts and consulting advice. Founded in 1981 as a joint
venture with Oxford University's business college, Oxford Economics
enjoys a reputation for high quality, quantitative analysis and
evidence-based advice. For this, its draws on its own staff of 30
highly-experienced professional economists, a dedicated data analysis
team; global modeling tools, and a range of partner institutions in
Europe, the US and in the United Nations Project Link. Oxford
Economics has offices in London, Oxford, Dubai, Philadelphia, and
Belfast.
TOURISM
ECONOMICS
AN OXFORD ECONOMICS COMPANY
Cd Tourism Economics
W ��
ATTACHMENT 2
Agua Caliente Band of Cahuilla Indians Letter
34
AQUA CALIENTC, BAND O) CAMILLA INDIANS
PLANNING & DEVELOPMENT DEPARTMENT
CONSTRUCTION DIVISION - ECONOMIC DEVELOPMENT DIVISION fill
PLANNING & NATURAL RESOURCES DIVISION • TRIBAL HISTORIC PRESERVATION OFFICE ''ar
February 6, 2018
HAND DELIVERED
David Ready, City Manager
CITY OF PALM SPRINGS
3200 Tahquitz Canyon Way
Palm Springs, California 92262
RE: Initiative to ban vacation rentals in the City of Palm Springs
Dear Mr. Ready,
The Tribal Council of the Agua Caliente Band of Cahuilla Indians reviewed the above
referenced Initiative at its meeting on February 6, 2018 and strongly objects to a
complete ban on vacation rentals, which includes Allotted Trust land.
The Tribe is concerned that this ban is an onerous and unnecessary restriction of the
use of Allotted Trust land that will further restrict allottees from achieving "highest and
best use" of their trust land. The complete prohibition of vacation rentals in R1 zones is
an extreme action that will likely only serve to drive this activity "underground".
Please contact me should you have any questions at 760-699-6960.
Rospectfylly submitted,
Tho as . Davis, AICP
Chief Planning & Development Officer
AGUA CALIENTE BAND
OF CAHUILLA INDIANS
C: Tribal Council
John Plata
S401 DINAH SHORE DRIVE, PALM SPRINGS, CA 92264 35
760/699/6800 . AGUACALIENTE-NSN .GOV
Cindy Berardi
From: I Jeffrey <izayahps@gmail.com>
Sent: Wednesday, April 18, 2018 10:10 PM
To: Frank Tysen •_; davidl819@yahoo.com;treno@treno.com;
tammy@canyoncommercialservices.com; stephenmrose@gmail.com;
savat.khamphou@palmspringsca.gov; sunriseparkno@gmail.com; riploss@gmail.com;
Robert Moon; rjuliansf@aol.com; mrimber@aol.com; rich.tarpening@kesq.com;
info@pspreservationfoundation.org; info@psmodcom.org; info@oldlaspalmas.org;
nicktanc@yahoo.com; nick@nickhaierealty.com; info@modernismweek.com;
info@mizelI.org; canyon2186@yahoo.com; kathy.weremiuk@icloud.com;
kathie.hart@palmspringsca.gov;judydeertrack@gmail.com;jmcsweeney@dc.rr.com; Jim
Zicaro;jimking5000@yahoo.com; contact@inglesideinn.com;
henry@louisehampton.com; George Farago; Geoffrey Kiehl; genosexton@gmail.com;
munari@msn.com; Diana Shay; info@desertaidsproject.org; David Newell; David Newell;
dskroes@gmail.com; Cindy Cairns; Cindy Berardi; info@christyholstege.com;
christina@hnmgroup.com; Christina Chartier; annactnow@yahoo.com;
and rewcharleshirsch@gmail.com; ameenahfuller@ymail.com; wieseps@gmail.com;
twinpalmsps@icloud.com;twinpalms@icloud.com;Thomas Nolan; shemaitis@me.com;
roger.tansey@post.harvard.edu; roberhaus@dwa.org; richardbow@aol.com; rclapp75
@yahoo.com; rckbrg@me.com; pswiese@yahoo.com; pswarmsands@yahoo.com;
psmesa@gmail.com; pshistoricalsociety@gmail.com; nwatson@pschamber.org;
mark.krause@dwa.org; Library Info; Ken Lyon; keith@classic-carauction.com;
karen.devine@kesq.com;jwhite@kesq.com;jimgazan@gmail.com;Jeannie Kays;
jdonenfeld@sidley.com;jcioffi@dwa.org; gefjoy62@hotmail.com; ervenops@gmail.com;
dprell@gmail.com; colin.atagi@desertsun.com; cewing@dwa.org; Cathy Van Horn;
casacody@aol.com; bsmith@kesq.com; ashely@dwa.org; arenhovanessian@yahoo.com
Subject: Yes on Measure C
ID � w � a� � � • . r
► ► AV • • • Ir
ei i l! I
1
2018 APR 18 All 11: 53
VIA HAND DELIVERY
April 18, 2018
Mayor and Members of the City Council
City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Subject: Vague, Ambiguous, and Unworkable Provisions Contained in Measure C
Honorable Mayor and Councilmembers:
We are writing to bring to your attention certain aspects of Measure C, which if adopted, would
present serious difficulties for the City in terms of implementation due to certain vague,
ambiguous, unfair, and unworkable provisions contained in that initiative measure.
As you know, Measure C's provisions change many of the central terms of the City's existing
vacation rental ordinance. These modifications include amending some provisions and
replacing other sections in their entirety. If passed, Measure C will change the meaning of
"Apartment", "Estate Home', "Property" in the "Definitions" section of PSMC§ 5.25.030, and a
new definition of"Single Family Residence" will be added. Notably, the term "Vacation Rental"
will be restricted to mean only "an individually rented unit in a multi-family structure, including
without limitation Condominium units." (Measure C § 5.25.030 (definition of"vacation
rental").)
Under these new definitions, a "Single-Family Residence" (SFR) can no longer be considered a
"Vacation Rental-" However, according to Measure C's "new" Section 5.25.075(f), owners of an
SFR that currently has a Vacation Registration Certificate will still be allowed to continue to
operate the SFR as a Vacation Rental for 24 months after the effective date of the new
ordinance. Yet, because the definition of"Vacation Rentals" in Measure C's "new" Section
5.25.030 does not include SFRs, this will essentially make SFRs not subject to any regulation.
Thus, under Measure C, SFRs will in effect be exempt from all regulations that apply to
"Vacation Rentals," i.e. noise, bedroom limits, cars per bedroom, etc. Moreover, there is no
guidance in the entirety of Measure C, including its "findings" section, as to what regulations
the authors intended to remain in place for SFRs continuing to operate as "Vacation Rentals"
during that 24-month period pursuant to the "new" Section 5.25.075(f).
611 S Palm Canyon Drive, Suite 7-120 Palm Springs, CA 92264(760)422-3096
In addition, Measure C's language will in effect only allow one Vacation Rental per Homeowners
Association complex. Under Measure C, a "Cluster or Compound" is defined as "any two or
more Vacation Rentals that operate on a unified or shared basis where residents of
such Vacation Rentals have exclusive access to more than one Vacation Rental and/or the
facilities of such Vacation Rentals, including by way of example, a swimming pool, tennis court,
or cooking facilities." (Measure C § 5.25.030 (Definition of"cluster or compound").) At the
same time, Section 5.25.070(c) of Measure C states that "renting one or more Vacation Rentals
as part of a cluster or compound is prohibited." Since almost all condominiums share a
common area with "pools, tennis courts, and cooking facilities", the effect of these provisions in
Measure C will be to limit the number of Vacation Rental permits per complex to just one.
Thus, an individual owner of a condominium unit will not be able to obtain a Vacation Rental
permit if another owner in the same "cluster or compound" already has a permit. This result is
unfair and unworkable.
If you have any questions, please contact us at your convenience.
Sincerely,
�—
ruce Hoban David Feltman
Co-Founder Co-Founder
cc:
Edward Kotkin, City Attorney
David H. Ready, City Manager
611 S Palm Canyon Drive, Suite 7-120 Palm Springs, CA 92264 (760)422-3096
PO Box 23430
mediagroup Green Bay,WI-4578/Fax
30
76
Tel:760.778-45781 Fax 760.776A731
>nx:ortvrvs�noreerrxoyr Email:legals@thedesertsuu_com
PROOF OF
PUBLICATION ,� '
CITY OF PALM SPRINGS
STATE OF CALIFORNIA SS. NOTICE OF ELECTION
Notice is hereby given that a General Municipal Election will be held in the City
COUNTY OF RIVERSIDE 4 of Palm Springson Tuesday,June 5,2018,forthe following Measure
:
MEASURE C:PROHIBITION OF VACATION RENTAL OF SINGLE FAMILY
RESIDENCES IN THE CITY OF PALM SPRINGS
Shall the City of Palm Springs prohibit vacation rentals in single
family residences]
CITY OF PALM SPRINGSILEGALS
Ye
PO BOX 2743 No
The polls will be open between the hours of 7:00 a.m.and 8:00 p.m.
PALM SPRINGS CA 92263
Anthonyy.Melia
Anthoy 1.Melia,MMC
City ofClerk
Pa e
City of Palm Spring Published:April 62018
I am over the age of 18 years old,a citizen of the
United States and not a party to,or have interest in
this matter. I hereby certify that the attached
advertisement appeared in said newspaper(set in
type not smaller than non panel)in each and entire `
issue of said newspaper and not in any supplement v
thereof on the following dates,to wit: r''t 90 07C+
O A "a n
04/06/18 y tern
rr 3rn
C? 1+ Ln t"
I acknowledge that I am a principal clerk of the36
o
printer of The Desert Sun,printed and published n r
weekly in the City of Palm Springs,County of m T a
Riverside, State of California.The Desert Sum was
adjudicated a Newspaper of general circulation on
March 24, 1988 by the Superior Court of the
County of Riverside, State of California Case No.
191236.
1 declare under penalty of perjury that the foregoing
is true and correct. Executed on this 6th of April
2018 in Palm Springs,California.
DECLARANT
Ad#:0002840215
P O:June 5 Municipal Election
#of Affidavits:1
7 PO Box 23430
mediagraoup Green Bay,W154305-3430
Tel:760-778-45781 Fax 760-7784731
Email:legals@lhedesertsun.mm
PROOF OF
PUBLICATION
STATE OF CALIFORNIA SS. auDAD DE PALM SPRINGS
AVISO DE ELECC16N
COUNTY OF RIVERSIDE Se notifica por el,eye se celabrara una Elecci6n Municipal General en Is Ciudad
de Palm Springs , manes 5 de junio de 2018, con respecto a Is sigulente
Medics:
MEDIDA C:PROHIBIC16N DEL ALQUILER VACACIONAL DE RESIDENOAS
UNIFAMILIARES EN LA CIUDAD DE PALM SPRINGS
CITY OF PALM SPRINGS/LEGALS �Deber6 pmhibir Is Ciudad de Palm Springs el alquilar de vivienclas
PO BOX 2743 .inifamiliares para vacationed
Si
PALM SPRINGS CA 92263 No
Las castles estarhm abiertas desde las 7:00 a.m.a 8:00 p.m .
IYAnthonyy Melia
Anthony 1.Melia,MMC
Secretario Municipal
Ciudad de Palm Springs Published:April 12018
I am over the age of 18 years old,a citizen of the - - - . .....—
United States and not a party to,or have interest in
this matter. I hereby certify that the attached =" r —'
advertisement appeared in said newspaper(set inC13o A.
type not smaller than non pariel)in each and entire o
issue of said newspaper and not in any supplement T
thereof on the following dates,to wit: 3'r
i
04/06/18 -'n
C—
I acknowledge that I am a principal clerk of the -
printer of The Desert Sun,printed and published
weekly in the City of Palm Springs,County of
Riverside, State of California. The Desert Sun was
adjudicated a Newspaper of general circulation on
March 24, 1988 by the Superior Court of the
County of Riverside,State of California Case No.
191236.
I declare under penalty of perjury that the foregoing
is true and correct. Executed on this 6th of April
2018 in Palm Springs,California.
T1�11�1 Q V,DA
DECLARANT
Ad#:0002840224
P O:June 5 Municipal Election(Spanish)
#of Affidavits:1