WHAT COULD BE THE ECONOMIC IMPACT OF A VACATION RENTAL BAN ON THE CITY AS A WHOLE?
- With a phase-out of vacation rentals, 6,061 currently permitted bedrooms in 1,930 homes would be eliminated.
- Palm Springs has 6,134 hotel rooms and 6,061 vacation rental bedrooms. That’s 12,195 sleeping accommodations.
- If vacation rentals were banned, nearly 50% of sleeping accommodations would be gone.
- Reducing almost half the tourists to our City means eliminating over $100M of annual tourist spending to restaurants, shops, homeowners and other tourist dependent businesses.
WHAT WOULD BE THE ECONOMIC IMPACT TO THE CITY’S BUDGET IF VACATION RENTALS WERE BANNED?
- It would eliminate virtually all of the $10.7M in vacation rental Transient Occupancy Tax that goes to the City’s General Fund.
- A reduction in sales tax revenue (9.5%) collected in Palm Springs from which the City derives 1.5% from vacation rental guests.
WOULD A BAN ON VACATION RENTALS IMPACT EMERGENCY SERVICES, ESPECIALLY THE POLICE DEPARTMENT?
If there was a ban to reduce or eliminate vacations rentals, these would be the outcomes:
- Vacation rental compliance does not use tax payer dollars to enforce the City Ordinance. This City department is paid for by the annual $944 vacation rental permit fee.
- The $1.8M from these permit fees funds the Office of Special Programs/Vacation Rental Department which employs 9 city staff who respond to any complaints or issues and write citations that range from $500 to $10,000.
- If vacation rentals are banned, there will be no fees to fund the Vacation Rental Compliance Department resulting in job losses and no direct oversight of illegal vacation rentals.
- Issues related to illegal vacation rentals will have to be handled by the police department or other city employees that are paid from the General Fund.
HOW WOULD A VACATION RENTAL BAN HARM ALL HOMEOWNERS?
It is inevitable that the City will face a budget deficit from the loss of nearly $10.7M in Transient Occupancy Tax as well as sales tax revenue. To stem the loss, the City could be forced to impose a parcel tax which is essentially an increase in everyone’s property taxes. This is a flat tax and by law, would be applied to all property homeowners irrespective of property value.