Who Can Hold a Palm Springs Vacation Rental Permit? Do they Have to Live in Palm Springs?

[This article is a supplement to “The Basics of Vacation Rental Regulations in Palm Springs.”]

In discussions around vacation rentals in Palm Springs, we occasionally hear from people who insist that people who hold vacation rental permits, but primarily live somewhere else, are not eligible for a vacation rental permit. They imply that the Vacation Rental Compliance Department is issuing vacation rental permits to people that they should not.

They may also state or imply that owners of second homes in Palm Springs who use those homes seasonally, recreationally, or occasionally are not part-time residents. Further, since the Vacation Rental Ordinance says something about “full time” residents and “part time” residents and these people are neither, they should not have access to a vacation rental permit.

People who make this claim are confused. The source of their confusion is often the first parts of the Vacation Rental Ordinance where various “Findings” are expressed. We’ll get to that in a second.

What’s a Part-Time Resident?

But first: Someone who owns a home in Palm Springs and lives there some of the time — whether they’re lounging in the pool, attending a City Council meeting, doing some fixing-up around the house, having a business meeting, spending some weeks escaping from the terrible weather somewhere else, or what-have-you — is what we call a “part-time resident.” When they do these things, they are living in their home.

Such part-time residents have been a part of the fabric of life in Palm Springs since the very founding of the City. In fact, Palm Springs became what it is today in part because a lot of people, many of them associated with the film industry over in Hollywood, established second homes in the City as a place for weekend or vacation getaways. As this practice became more popular and established Palm Springs as a tourism destination, more businesses and full-time residences sprang up to serve those visitors. (Travel and tourism, of course, continue to be the main industries in Palm Springs.)

Census data estimates that there are, in fact, more than 10,000 residences of this type in the City. The homes are used for “seasonal, recreational or occasional” use. The people who own and use them have their primary residences elsewhere.

Note: These should not be confused with vacation rentals (short-term rentals). Most permitted vacation rentals (of which there are 1,944 at the time of this writing) are a subset of this category, of course.

In contrast, there are more than 23,000 full-time resident households in Palm Springs.

Is this Person a Part-time Resident?

There may, of course, be individuals who own property in Palm Springs, but never reside there. For example, I’m sure there are long-term rental properties in Palm Springs that are owned by individuals who reside somewhere else. Their relationship to the property is one of being its owner and landlord to the tenants who reside there. They may never actually enjoy that property for themselves.

Census data also tells us that there are a small number of homes that are owned and simply held (for whatever reason) by their owners. These homes are not occupied, not for rent, and not for sale. They are simply not used. (The latest census data estimates there are about 1,000 such homes in the City.)

Would we call the owners of such homes part-time residents? I suppose not. However, they certainly have the right to reside at their property if they choose to do so.

The question is: Is it legal for such an owner to obtain a Vacation Rental Registration Certificate? If such a person applies for one, will it be issued to them? (And further, is that issuance in accordance with the Ordinance?)

What Does Ordinance 1918 Say About this Issue?

The “Findings” section of Ordinance 1918, our current vacation rental ordinance, attempts to address several issues, some of which are further addressed in subsections of the ordinance. These are:

First: Confirm that the “primary use” of residential properties in the City is to “provide permanent housing for full time and part time residents who live and/or work in the City.” This confirmation of “primary use” is done partly to set the stage for a second issue, described below.

But it also sets forth a bit of the rationale for the restrictions around what types of entities may hold vacation rental permits (called Vacation Rental Registration Certificates). Those restrictions include that it is the owner of the home that can hold a permit (and an owner may have a permit for only one property at a time unless they are in the small subset of folks who were grandfathered in).

Further, a permit holder cannot be just any legal entity — the permit-holding owner must be a natural person (an actual human being) or a legal entity composed of natural persons (for example, two actual human beings that together own the home under a legal structure such as an LLC or Trust).

This regulation was established is so that something like a REIT or corporation or other business entity cannot literally buy up a neighborhood of residential homes, acquire VR permits for them, and run them exclusively as vacation rentals.

(This is not a thing, by the way, that ever happened, but the restriction makes sure it cannot happen. I think it’s a good rule.)

Second: The Findings go on to attempt to resolve the complaint — made by certain short-term rental prohibition groups — that vacation rentals violate the City’s Zoning Ordinance. On the contrary, says the Ordinance:

The Ordinance declares that Vacation Rentals and Homesharing are, in fact, “ancillary and secondary” uses of residential property in the City. Since our zoning allows for ancillary and secondary uses in single- and multi-family residential zones, says the Ordinance, Vacation Rentals and Homesharing are allowed there and this does not contravene our zoning codes.

This definition of Vacation Rentals and Homesharing as an “ancillary and secondary” use of residential property seems to be intentionally misconstrued by vacation rental prohibitionists. It is sometimes also misunderstood by folks with no bias against vacation rentals.

It is easy to misread this section of the ordinance as saying something like this:

• If a home is to be used as a vacation rental, such use must be “ancillary” or “secondary.”
• They might further misunderstand and think, “Oh, this is some sort of prohibition on homes that are mainly used as vacation rentals, rather than, say somebody’s residence.”

Folks who read the Ordinance this way are mistaken. What the Ordinance is actually saying is this (1) for the practice of vacation renting to not violate our zoning code, we must legally define this practice as “ancillary and secondary” to the “primary use” of residential property (2) therefore, we confirm that vacation renting is such a use. By including this language, the Ordinance makes itself consistent with the City’s Zoning Ordinance.

That’s it. That’s all that means.

Of course, certain prohibition groups take issue with the Ordinance being so uppity about its authority to declare that renting a property for short-term stays is an “ancillary and secondary use” and there’s a lawsuit about that. I’ve not heard an update on that legal activity in a while.

What Does any of that Mean in Terms of Permit Eligibility?

So, back to who (or what) can hold a permit:

If the Ordinance can be said to have “desires”, one of the things it desires is that permit holders be literal actual human beings, that they own the permitted property in question, and that they may be either full- or part-time residents of the City. The Ordinance requires permit holders to real human beings. It also requires them to be owners of the property.

The Ordinance desires that an owner who lives in some other city be someone who loves spending time in Palm Springs, but it does not require such a person to meet any sort of commitment in terms of how many days they reside in Palm Springs. There are no provisions in the ordinance about this and no mechanism defined for enforcing such a provision.

It’s entirely reasonable to ask: “Should the Vacation Rental Ordinance have a provision that further refines who can hold a permit? Should such a provision require that a permit holder be someone who resides in the City of Palm Springs for [X] days per year?”

Such restrictions were considered and discussed as the Ordinance was hammered out. What the Vacation Rental Subcommittee chose to do was to make permits available to human owners regardless of whether they live in Palm Springs full-time, seasonally, for a week or two, on the occasional weekend, or not at all. The spirit behind that was fairness (“owners should have the opportunity if they choose”) and making the ordinance enforceable (“how would one enforce such an residency requirement, anyway?”).

Do not get further confused on this point: The Palm Springs Vacation Rental Ordinance allows both common types of short-term rental activity: Vacation renting (where the owner of the home is not residing in the home while guests are present) and Homesharing (where the owner shares their home with a paying guest and is present during the guest’s stay). Some other cities allow one, but not the other.

Of course, it would also be natural to ask: “Are there a lot of permit holders who don’t spend any time in Palm Springs?”

I do not have data on this and am not aware of any source for such data except asking around. Anecdotally, I can tell you that every permit holder, that I know personally, visits Palm Springs on a regular basis. Many, of course, hold such properties as potential homes for retirement, want to use them on a regular basis, but also do not just want them to sit idle, and so enjoy the flexibility that short-term rentals provide.

Most property managers around town will tell you that their clients are, in fact, not “absentee owners”, but are often in Palm Springs for a bit of sun and, while there, will often make improvements or perform maintenance on their homes.