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Pacifica for Responsible Tourism is a group of homesharers who make our public coastlines accessible and affordable to a broader group of people by offering alternative accommodations — “short-term rentals” or STRs — to groups, primarily families. In addition to facilitating lifelong memories in our wonderful city, we represent nearly $2 million per year in revenue for the city.

Pacifica City Council
170 Santa Maria Avenue
Pacifica, CA 94044

Dear Members of the Pacifica City Council and Residents of the City,

Because we have not received complaints for our STRs, we were blindsided by the sentiment of the council meeting in June 2024 and are writing to present much-needed facts and a representation of the reality of the vast majority of Pacifica's STRs. We have attempted to speak with the anti-STR group Pacifica Homes Are Not Hotels and city council members on multiple occasions but have been largely ignored (huge thank you to the few who have engaged with us). We hope to have more communication in the future.

We are thoughtful hosts: we respectfully connect with our neighbors, aggressively reject guests who may create nuisances, and stand against disrespectful STR hosts who create nuisances for Pacifica. We have even contacted Airbnb's corporate team and the city of Pacifica to offer our help in weeding out bad hosts.

99% of homes in Pacifica are not STRs. And only four homes out of Pacifica's 15,000 contribute 50% of all STR complaints1 (Pacific Coast TV, 2024, 31:30). These hosts must be summarily dismissed, and Pacifica can succeed by changing its ordinance in a few simple ways while protecting the enormous benefits of STRs. You can rein in bad actors while protecting:

  1. The $2m that STRs contribute to city revenue contributes to every Pacificans' well-being. The vast majority of these funds are contributed by unhosted STRs or STRs where an entire home is rented out.
  2. Affordable access to the beach: the California Coastal Commission's vision is for the coast to be available “for all to enjoy,” and it is usually much cheaper per person to book an STR. Many of our guests are families from inland California cities who come to escape the heat. For reference, a three-bedroom AirBnB costs about the same per day as a hotel room but can accommodate a whole family with three generations who cannot afford three hotel rooms and can therefore no longer visit our town.
  3. Housing affordability: Every actual analysis we have seen, whether by Pacifica's STR office, UC Berkeley, or the Harvard Business Review, shows with hard data that STRs have zero to no effect on rental prices. The reality is that the bulk of the factors driving rental prices are exogenous to Pacifica.

Banning all unhosted rentals or putting day limits on them would significantly overreact to the very few bad STR hosts, destroying the benefits above. Smart, simple regulation and enforcement tools exist to keep neighborhoods peaceful while preserving the above benefits and one's right to host. Curtailing all unhosted STRs would go much too far, significantly harming or even bankrupting hosts, and leaving Pacifica with a long-lasting anti-outsider NIMBY brand. All Pacificans and city workers would suffer from a reduced city budget. Unlike large rental corporations, most STR hosts depend on the income they earn from hosting and would suffer financially. Families looking for affordable accommodations in our community would no longer be able to spend their time and money in Pacifica.

Cutting the sizable STR tax revenue from the city budget would hurt all Pacificans, and Pacifica is already a low-revenue city per capita compared to some nearby towns.

  1. At nearly $2m (projected), the STR tax income plus increased sales taxes from tourism revenue represent close to 5% of the city's budget. The majority of STR tax revenue comes from unhosted STRs.
  2. The average tourist spends more money on Pacifica's businesses than the average resident: Airbnb estimates that for every $100 spent on an Airbnb stay, guests spend about $264 on other goods and services, such as local businesses, restaurants, attractions, shops, and more.10
  3. Local jobs (cleaning staff, repair people, spa maintenance, etc.) would be eliminated.
  4. Half Moon Bay is paying the price of eliminating its STRs, and Pacifica is in a far worse position if we do the same. Eliminating STR revenue drops Half Moon Bay's lodging tax revenue by just 4%, down to $8.6m, thanks to its many more hotels. Pacifica would drop its total lodging tax revenue by over 50%, down to just $1.5m1 (Pacific Coast TV, 2024, table at 39:36). Furthermore, the city of Half Moon Bay already collects 3x the overall revenue per capita revenue than Pacifica. Still, Half Moon Bay is now facing a significant budget deficit of $4m as its “underperforming hotel tax has created serious structural problems.11” According to its staff report, “Without increased ongoing revenues, the city will need to make significant cuts that will affect valued programs and services, and potentially impact the health, safety, and quality of life in Half Moon Bay.”

Debunking Myths About The City's Budget

Critics argue that the $2 million Transient Occupancy Tax (ToT) generated by short-term rentals (STRs) is less than what would be collected if those 150 housing units were occupied by long-term residents. They suggest that each home would contribute approximately $13,333 in taxes ($2 million ÷ 150 homes). Based on this calculation, Pacifica's 15,000 homes would theoretically generate a city budget of $200 million ($13,333 × 15,000). However, the actual city budget is less than a quarter of that amount. This calculation also ignores the fact that the city budget relies significantly on contributions from businesses and other non-residential sources, which means each STR generates more than four times the tax revenue of a home occupied by a long-term resident, ultimately reducing the tax burden on residents.

  1. Sales Tax Revenue Misconceptions Opponents also claim that permanent residents in these 150 STRs would generate more sales tax revenue than the ToT. In reality, the total sales tax from all of Pacifica's 15,000 homes is only $3.5 million, averaging just $233 per home. If permanent residents instead occupied those 150 STRs, they would contribute a mere $35,000 in sales tax — far less than the $2 million ToT revenue.
  2. Tourist Spending Boosts the Economy Moreover, studies show that tourists spend significantly more during their stays than permanent residents in their daily routines. The city's research indicates that tourists spend about $200 per day, while Airbnb's data suggests a much higher average of $264 per day. This increased spending by visitors provides a substantial boost to the local economy that permanent residents simply do not match.
  3. Protecting Our City's Finances The city manager has warned the city council that restricting non-primary-resident, unhosted STRs could force cuts to essential city programs.12 We urge residents and council members to support policies that preserve the benefits of our successful STR program. By implementing intelligent changes to eliminate a small number of problematic hosts, we can continue to generate vital revenue that benefits all Pacificans.

Join us in advocating for responsible STR regulations that support our community's growth and prosperity. Together, we can ensure that Pacifica remains a vibrant and economically strong city for everyone.

Extensive Data Shows No Effect on Long-Term Rental Prices

It is relieving news that the extensive data on STRs show an undetectable impact on rental prices. Every actual analysis we have seen, whether by Pacifica's STR office, UC Berkeley, or the Harvard Business Review, shows with hard data that STRs have no impact on rental prices. We strongly encourage the council to look at the hard data before concluding the inaccurate trope that the 150 STRs in a 15,000-home city can meaningfully affect rental prices. The counter-intuitive hard data is that:

Rental prices in Pacifica have actually fallen in inflation-adjusted dollars since Pacifica's short-term rentals grew from 2021 to today.

Rents in Pacifica have decreased by 8% in real dollars after the STR program took shape.
Over the past three years:

  1. Average national rents increased by 21%.2
  2. Inflation has been 15%.
  3. Pacifica rents have increased by a mere 7% in nominal dollars2, representing a decline of 8% in real dollars over the time its STRs took shape. It should not be surprising that the few STRs do not affect rental prices in any measurable way.

Countless studies looking to prove that STRs increase rental prices return no to negligible findings.

Pacifica's own investigation found that “STRs impact [is] minimal when below 1% of housing stock” (STRs are currently at or below 1% of housing stock). Further, note that national rental prices are not fixed; they increase by roughly 5% every year. Against this background, it's difficult for researchers to find the nearly imperceptible effects of STRs, especially when considering that STRs bring a number of positive benefits to a town's finances and quality of life. At best, eliminating STRs could decrease rental prices by a negligible 0.36% (many studies show zero change). Keep in mind that annual national rental growth has been 20x that. We encourage readers to view our table of studies integrated into this analysis in the appendix.

Consider that Half Moon Bay banned STRs, and their average rent has not changed compared to Pacifica. The only change is that middle-income families can't afford to visit Half Moon Bay anymore, and the city faces large cuts to municipal programs.11

If it seems counter-intuitive, remember that 99 out of 100 homes in Pacifica are not STRs, so it's unsurprising that STRs have a negligible impact on prices (but an outsized positive impact on city revenue). Against these data, it is not reasonable to be certain that banning STRs would make a detectable improvement in rental prices. However, it is certain that banning STRs would cause a deleterious impact on the city budget that benefits all Pacificans, suppress business activity, and eliminate access to the beach for many families.

We Need Legislation That Removes Bad Actors

  1. Three strikes and you're out: founded complaints should be used to eliminate bad actors. Consider fines as well.
  2. Require that all STR hosts be reachable by a registered phone number within 30 minutes if an issue arises and be able to physically respond within 60 minutes if necessary.
  3. Implement designated quiet hours from 10 pm to 7 am to ensure that STRs are not disruptive to neighbors. Hosts must track decibels on their properties.
  4. Even Half Moon Bay, whose council was aggressively against STRs, grandfathered in their unhosted, non-primary residence STRs as the financial injury would be catastrophic to many hosts, even triggering bankruptcy.

We are lovers of Pacifica and create more lovers of our town via our lovingly curated STRs. Happy, lively towns have tourists. Only four listings are responsible for 50% of complaints; we can eliminate them with thoughtful, reasonable regulations. Blunt-force banning unhosted STRs would have no positive impact on rental prices, cripple the city's budget for all residents, and prevent affordable access to the beach all in the unchecked, overreaching interest of a small number of those wealthy enough to own homes near Pacifica's beaches.

Sincerely,
Anna Tong, Alexandros Vardakostas, Elda Kong, Wayne Thai, Russell Jones and Albert Zhang
founding members of Pacifica for Responsible Tourism

Appendix

Study Findings
Pacifica's own analysis of STRs1 (Pacific Coast TV, 2024, slide deck at 40:52) “Housing and Financial Impacts: STRs impact minimal when below 1% of housing stock”
Regulation and the High Cost of Housing in California.3 Price elasticity is 0.36%, meaning Pacifica's AirBnBs, at worst, increased rent by 0.4% which is in the noise of detectability. For comparison, the national average rent rise every year is nearly 15x higher.
Airbnb and Rents: Evidence from Berlin.4 STRs in Berlin may have increased the average monthly rent by $5.76
Is home sharing driving up rents? Evidence from Airbnb in Boston.5 STRs in Boston may have increased the average monthly rent by $7.75
What Does Banning Short Term Rentals Really Accomplish?6 Of the amount that rental prices increased, “Airbnb contributed to about 1% of aggregate rent growth”
Airbnb Activity and Rental Markets in Canada.7 “at most less than 1 percentage point can be attributed to increased Airbnb activity.”
Do short-term rental platforms affect housing markets? Evidence from Airbnb in Barcelona.8 Barcelona data indicates that 1% of housing stock used as STRs increases rents by 1%
Four months later: An update on New York City's short-term rental rules.9 “Analysis reveals no significant decrease in rents or boost to rental inventory four months after New York City's strict short-term rental rules went into effect”

Sources

  1. Pacific Coast TV. (2024, June 24). PCC 6/24/24 - Pacifica City Council Meeting - June 24, 2024 [Video]. YouTube:
    https://www.youtube.com/watch?v=SeNRHmdVtOo
  2. Point2Homes. (n.d.). Average Rent in Pacifica, CA. Retrieved August 20, 2024, from
    https://www.point2homes.com/US/Average-Rent/CA/San-Mateo-County/Pacifica.html
  3. Quigley, John, M., and Steven Raphael. 2005. “Regulation and the High Cost of Housing in California.” American Economic Review, 95 (2): 323 - 328.
  4. Duso, Tomaso and Michelsen, Claus and Schaefer, Maximilian and Tran, Kevin Ducbao, Airbnb and Rents: Evidence from Berlin (August 2020). DIW Berlin Discussion Paper No. 1890, Available at SSRN:
    https://ssrn.com/abstract=3676909 or http://dx.doi.org/10.2139/ssrn.3676909
  5. Horn, K., & Merante, M. (2017). Is home sharing driving up rents? Evidence from Airbnb in Boston. Journal of Housing Economics, 38, 14-24.
    https://doi.org/10.1016/j.jhe.2017.08.002
  6. Calder-Wang, S., Farronato, C., & Fradkin, A. (2024, February 15). What does banning short-term rentals really accomplish? Harvard Business Review.
    https://hbr.org/2024/02/what-does-banning-short-term-rentals-really-accomplish
  7. The Conference Board of Canada. (2023, October 11). Airbnb activity and rental markets in Canada.
    https://www.conferenceboard.ca/product/airbnb-activity-and-rental-markets-in-canada/
  8. Garcia-López, M.-À., Jofre-Monseny, J., Martínez-Mazza, R., & Segú, M. (2020). Do short-term rental platforms affect housing markets? Evidence from Airbnb in Barcelona. Journal of Urban Economics, 119, 103278.
    https://doi.org/10.1016/j.jue.2020.103278
  9. Airbnb. (2024, January 18). Four months later: An update on New York City's short-term rental rules. Airbnb News.
    https://news.airbnb.com/four-months-later-an-update-on-new-york-citys-short-term-rental-rules/
  10. Airbnb. (2024, April 3). Travel on Airbnb generated $85B in economic activity in the US. Airbnb News.
    https://news.airbnb.com/travel-on-airbnb-generated-85b-in-economic-activity-in-the-us/
  11. Rusch, H. (2024, June 26). Half Moon Bay facing $4M structural deficit: Council's budget seeks to make up difference with unassigned funds and economic uncertainty reserve. The Daily Journal.
    https://www.smdailyjournal.com/news/local/half-moon-bay-facing-4m-structural-deficit/article_703013f2-3362-11ef-96a9-ff542625a5a4.html
  12. Pacifica City Council Meeting - August 26, 2024. Pacific Coast TV, YouTube, https://youtu.be/ucaQngUJpA0?si=bLcLBwlNEWVyndwx