Pacific Grove tweaks its vacation rental law just in time for the Pro-Am.
Thursday, February 11, 2010
The stick-swinging celebrities and designer kicks planted on Pebble Beach’s panoramic greens illustrate the obvious: People who attend the AT&T Pro-Am aren’t broke. That means money flowing to local restaurants, hotels, markets and boutiques. The Jan. 6 passage of a new law in Pacific Grove adds short-term vacation rentals to that list.
A quick Internet search shows plenty of cottage rentals are available for the Pro-Am – but many of them are under the legal radar. Both the city of Monterey and the unincorporated county enforce 30-day minimums for vacation properties, with one short-term exception per year. Carmel-by-the-Sea’s stricter policy doesn’t even allow the one-off.
That doesn’t stop people from renting out their homes; it just keeps local governments from collecting the hotel tax (officially the transient occupancy tax, or TOT). One online ad offers a luxurious two-bedroom guesthouse off Highway 68 at $525 per night, $5,950 for the week of the U.S. Open. But the property owner, who asks not to be identified, admits she doesn’t collect the TOT.
The tune is different in P.G., where the City Council recently changed a 1993 law prohibiting short-term rentals. Under the new deal, vacation rentals are legit if landlords collect a 10 percent TOT and pay a $200-per-year licensing fee. The cash-strapped city expects about $200,000 annually out of the deal.
Marie Favaloro is taking advantage by renting out the two-bedroom flat above her restaurant on Lighthouse Avenue – and just around the corner from a free shuttle to the golf course. “I’m in the process of filling out the forms to get legal,” she says. “I’m happy to charge the tax and give it back to the city.”
The city has issued 21 short-term rental licenses in the law’s first month, according to City Accounting Assistant Lori Frati. She expects the number to grow as more property owners come clean. “There are tons of vacation rental websites people are advertising on, so we’re using those to let everybody know the new law went into effect and to” – she pauses tactfully – “welcome them.”
Long-time P.G. vacation rental owners have amnesty if they apply for licenses, according to City Planner Sarah Hardgrave. But those who don’t may face stiff penalties, including forfeiture of all rents collected. Ads for vacation rentals must now include the license number, giving city staff an easy way to identify law-breakers.
Andrea Sutherland, a long-time cheerleader for the new law, scored the city’s very first license. “I hate being a scofflaw. I want to pay my fair share,” she says. “People simply came to accept that there has been money on the floor that’s been ignored for a long time.”
The numbers back her up. More than 700 of P.G.’s houses – and some 10,000 countywide – are vacant, according to the 2000 Census.
Despite its game-changing law, P.G.’s payout isn’t immediate. Favaloro says her flat is still available for the Pro-Am, though it’s already booked for the U.S. Open. “Everybody says there’s a lot of vacancies at the hotels,” she says. “The vacation homes tend to book afterward.”
Monterey Bay Property Management broker Jan Leasure says the sluggish bookings reflect the economy, “and the general feeling about golf right now. There certainly is a Tiger effect.”
And, she adds, visitors may not realize that P.G. isn’t so prudish about vacation rentals anymore: “It’s gonna take awhile to change that perception.”