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Santa Monica Wins First Conviction in Battle to Stop Illegal Short-Term Vacation Rentals
Santa Monica Real Estate Company, Roque and Mark
Roque & Mark Real Estate
2802 Santa Monica Boulevard
Santa Monica, CA 90404
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Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

Convention and Visitors Bureau Santa Monica


By Niki Cervantes
Staff Writer

July 13, 2016 -- A man who boasted that Santa Monica could never enforce a 2015 crackdown on the booming business of illegal short-term vacation rentals has become the first local operator convicted under the law, regarded as the nation’s toughest.

Scott Shatford, who rented five short-term vacation units in Santa Monica, was charged in May by City prosecutors with operating his business without City permits and refusing to comply with City citations, officials said Tuesday.

Shatford pleaded “no contest” on July 5 to a misdemeanor charge of operating illegally. Under a plea deal, Shatford agreed to cease operating in Santa Monica, pay the City approximately $3,500 in fines and investigative costs and pay hundreds of dollars more in criminal fines and restitution, City authorities said.

He was also placed on probation for 24 months and agreed to begin complying with the law, they said.

Online, Shatford says he is an entrepreneur who manages multiple short-term vacation rentals on sites such as Airbnb. He has also written a book on the subject and offers a database called AirDNA that helps potential hosts be successful.

His prosecution by Santa Monica is meant as a warning to others.

“The message is: We will enforce the law,” said Denise Smith, a City code enforcement analyst and one of three employees whose full-time task is finding violators as part of a task force crackdown.

“We want the public to know that this is serious,” said Deputy City Attorney Yibin Shen. “It’s our job to seek justice and in this case I think justice was served.”

But Shatford, who manages multiple short-term vacation rentals on sites such as Airbnb, said the law has made “criminals out of longtime residents trying to figure out how to afford to say in the city.

“I’ve decided to move my family to Denver Colorado, a more progressive city that isn’t in the back pocket of the hotel lobby,” said Shatford, a Santa Monica-based entrepreneur.

“I still believe enforcement of short-term rental ordinances are completely unpractical,” he said. “The City has spent hundreds of thousands of dollars hiring City enforcement officers, and spent $1,200 alone booking my vacation rental to be able to prosecute this one case.”

Smith said Shatford was “one of the more egregious” violators of the “home-sharing” law, as Santa Monica terms it, adopted by the City in May of 2015.

The Council’s vote was a reaction to an explosion in short-term rentals through Airbnb and other online operations. As of last year, about 80 percent of the estimated 1,700 such rentals in Santa Monica violated a City law that had been on the books for years -- but was not well known by the public and not enforced by the City itself.

Some of those renting space said it helped make ends meet. One such host, an 81-year-old retired school teacher living in Santa Monica, filed a class-action lawsuit against the City last month over the ban ("Lawsuit Claims Santa Monica's Short-term Rental Ban Unconstitutional," July 12, 2016).

Meanwhile, other residents said the boom in short-term rentals had overwhelmed their normally quiet neighborhoods with strangers, noise and congestion.

The Council in May 2015 voted to get tough. It explicitly outlawed the rental of an entire unit for less than 30 days, required City business licenses and payment of Santa Monica’s 14 percent hotel tax.

The primary resident is also required to live on-site during a visitor’s stay ("Santa Monica City Council Bans Short-term Rentals Despite Protests," May 14, 2016).

Initially, the City started with a public education campaign. Warnings and fines followed. Shatford was the first completed prosecution, although Shen said there are “numerous” other cases bound for the courts because education and warnings have not worked.

That was the case with Shatford, Smith said.

The City task force “attempted to work with and educate Mr. Shatford for many months, issuing multiple warnings and citations with fines. However, these efforts were unavailing,” she said.

Instead, he continued to operate in the same manner. Moreover, “he boasted publicly that he was 'not concerned' about local law because it would be 'difficult' for the City to enforce the law,” Smith said. “As a result, the City Attorney’s Office commenced prosecution."

Santa Monica’s law on short-term vacation rentals goes further than regulations by other cities suffering similar problems, such as Los Angeles -- which is still formulating a plan of attack --, San Francisco and New York City, the nation’s top tourist spot.

Los Angeles City is considering a law allowing hosts who use sites such as Airbnb to only rent their primary residence, and for no more than 90 days a year. The property could not be under rent control.

Hosts would be legally accountable for nuisance violations, be required to register and pay a hotel tax as well.

In New York City, the law only allows permanent residents to sublet their property for less than 30 days -- and even then, only if they're still living at the property. San Francisco’s law is similar. Rentals are capped at 90 days.

Santa Monica also makes a distinction between "home-sharing" and "vacation rentals."

Home-sharing requires the primary resident of the space to live "on-site during the visitor's stay." Vacation rentals, as defined by Santa Monica, are any rentals 30 days or less in which the guest "enjoys the exclusive private use of the unit."

The ordinance also says vacation rentals are illegal if the property is only approved for permanent residence.

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