UPDATE (9/1/22):
Dear Councilmember,
As you know, the issues surrounding the proposed Highrose development are complex and encompass health and safety, environmental concerns, traffic congestion, lack of parking, noise, social justice, and concerns over short term rentals. We’d like to hone in on two topics today, social justice and short term rentals.
The State Confirms Health & Safety Issues With Housing Near Refineries and Will Impose 3200’ Buffer Zone
New laws, AB2011 and SB1137, about to be signed by Governor Newsom, will limit affordable housing development within 3200’ of an oil refinery. This is a personal victory for one of our Manhattan Beach residents and member of the Chill The Build Team as he witnessed the explosion at Chevron’s Richmond refinery in Northern California a decade ago and therefore understands first hand the risks of building housing, especially including low income units, so close to a refinery. California’s environmental justice movement has grown from this horrific tragedy to become a driving force behind the 3200’ setback that adds some measure of protection for historically disadvantaged brown and black communities who are frequently located in affordable housing.
https://grist.org/equity/apen-richmond-bay-area-environmental-justice/
While these new laws may not take effect until next year, the state has clearly noted that there are health and safety concerns with building housing near oil refineries and that fact alone should give City Council reason, under the DBL provision, to at a minimum, require a full independent environmental study of the development site, or to proactively oppose the entire project in support of the direction the State is moving with regard to the 3200’ buffer zone. This is even more pressing to prevent low income housing residents from once again being put literally in the line of fire.
https://www.theguardian.com/us-news/2022/aug/07/chevron-fire-richmond-pollution-activism
Some of our City Councilmembers and candidates are insisting on playing word games — stop the leadership from behind. Your community overwhelmingly wants you to use all of the city’s resources to oppose this project and defend the city.
Is MB Being Duped Regarding Short Term Rentals?
If profit is the motive of HighRose, then it is highly likely that short term rentals (STR) or flexible term rentals (FTR), such as Airbnb, will be part of the mix for HighRose units, and thus the project will not contribute as many long term rental (LTR) units to the community as proposed. Residents are expecting long term rentals. What happens when they discover many units are set aside for higher priced STR or FTR? Are the City and residents being set up to support a STR/hotel rather than long term housing? Let’s have a look:
1. STR were in the original proposal. Hildy Stern asked the right question about whether the project is now significantly different from when it was first presented. The original plan for Verandas development, submitted December 2020, was for a 90-unit mixed-use development and included 36 units for STR/hotel, 44 market rate LTR apartment units, and 6 low-income units.
2. The revised proposal changed to LTR. The City must have requested the developer change the proposal and make it solely for housing to help meet the state mandates. The current revised plan shows the configuration of units has changed to 79 units along with some structural modifications and removes STR/hotel. However, with the laws now permitting STR in MB, the changes made to the the original submission to take STRs out, essentially makes the current proposal “the same,” but with fewer overall units.
3. Does the developer have experience with STR development? Mayor Napolitano asked, “Why are you doing this to my city?” Upon discussing the developer’s experience, Frank Buckley mentioned he worked on a number of projects in Hollywood during the 1990’s. Note the 1992 LA Magazine article (link below) that indicates a Frank Buckley worked on a chain of youth hostels called “Banana Bungalow” in a number of locations, including Hollywood and West Hollywood. www.bananabungalow.com Is this the same Frank Buckley? These STR utilize popular apps, such as Booking.com, Expedia.com, etc. to advertise and secure clients. While it is stylistically a much nicer version and targets a more upscale market, the Verandas development has the potential to support a STR business.
4. Current trends in housing include increased demand for STR and FTR, catering to digital nomads, people who travel for work or pleasure, and temporary workers (i.e., actors, traveling nurses). Venture-backed companies, such as ZUMPER, are creating new online portals for FTR. Airbnb also sees trends for multiple day, weekly, and monthly rentals increasing since the pandemic. Airbnb is also partnering with developers to create Airbnb hotels and partnerships in popular high-end destinations, such as Nantucket, Massachusetts.
Some highlights from Airbnb’s 2022 Strategy:
- While demand has boomed, Airbnb’s supply has not grown as fast. It needs more hosts.
- It is also reactivating its Airbnb for Real Estate program to help make multi-family housing buildings more Airbnb-friendly.
- The goal is to increase the adoption of hosting among landlords. It means that some buildings will host side-by-side short and long-term tenants in a “Live Anywhere on Airbnb” world.
- https://www.rentalscaleup.com/2022-airbnb-strategy/
5. Lawsuit permits STR and pricing supports STR. The developer has publicly stated that he intends to offer rates below market for some units. Does that imply that there will be a discount to the nightly rate for weekly and monthly terms? Also, when asked if they would allow STR, he replied that they would “follow the law, whatever that is.” When asked about this, the City Attorney stated there could be a covenant to ban STR. Will there be a covenant banning STR in the project and is that enforceable since it goes against the ruling of the lawsuit?
6. The developer said he will hire a management company / agent. Typically their objective is to maximize occupancy and profit. The agency would be responsible for operating STR, FTR, LTR, as well as the long term low-income units. The agency could utilize sites such as Airbnb, VRBO, Booking.com, Expedia, or ZUMPER to advertise and attract renters. So when the developer says he won’t operate STR, technically he won’t, but the management company could. Plus, the developer and investor may have stated that they want to keep the property long term, but are under no legal obligation to do so. What happens if the property is sold or they partner or joint venture with another party who has controlling interest and wants to include STR?
7. STR and FTR offer the potential to generate a higher revenue stream than long term leases. Mayor Napolitano asked whether this was altruistic or about maximizing profits. Since rates per night or month are typically higher than a long-term lease and allow the landlord to capitalize on seasonal demand and higher rates, profit is a motivating factor. Density Bonus Laws provide a path to build larger and increase potential profits. Based on comparable local hotels, rates for STR can go as high at $650 per night (Westdrift) for a 1-bedroom. Some people are willing to pay a premium for flexibility, but want fewer amenities than a hotel offers. But does this help solve the problem of local residents who need long term housing?
8. STR or FTR attract people who live part-time in a location and allocating units for those purposes does not alleviate the housing problem for locals who work full time to support the community. Granted, some locals seek temporary housing, for example when they are renovating their home or in the case of a divorce where a partner wants to continue to reside near their children. However, Manhattan Beach has enough demand for long term rental units to fill the Verandas project. And what about the potential for noise given vacationing partygoers or weekend revelers? The balconies create an indoor/outdoor living situation which lends itself to noise reverberating throughout the neighborhood, similar to and potentially worse than the noise situation with Shade Hotel.
9. Is it possible that LTR tenants will rent the rooms out via Airbnb or VRBO or other sites? The developer stated they would include a provision in the lease that would prohibit individuals from subletting. Are they protecting their interests in the units they plan to use for STR and FTR? Can they prevent LTR tenants from doing STR given the recent lawsuit that permits STR within the Coastal Zone?
10. Airbnb has lobbied the City and sponsored a group that has made a contribution to MB City Councilmember Montgomery’s election campaign. Councilmember Montgomery, please explain the objective of this donation and how it squares with the lobbying disclosure made by Airbnb and M Strategic Communications before the city. Especially explain this in the context of what Airbnb means by seeking “procurement opportunities” and describe your involvement and the CIty’s involvement fully.
https://www.manhattanbeach.gov/home/showpublisheddocument/48280/637708463126500000
https://public.netfile.com/Pub2/RequestPDF.aspx?id=165556474
CONCLUSION:
From a strategic business perspective, a mix of STR/FTR/LTR makes economic sense especially in a highly desirable location where demand exceeds supply. Don’t be duped. This isn’t just about legal certainty or being opposed to the State of California or being altruistic about low income housing. It could be about falling for a ruse for the sake of profit veiled in a scheme to sneak in a short term rental hotel that doesn’t solve the affordable housing problem. It could likely cause rental prices to increase and push out the many middle-class residents who work hard to live in Manhattan Beach. It will also forever shatter the small-town character of our town which the City Council is charged in its mission statement to defend.
New laws awaiting the Governor’s signature will support opposition to this development. The new laws also open up a path for developing other parcels of land formerly designated as commercial for housing. Perhaps the City can create an alternative solution for the developer within the City or by partnering with other communities in a regional solution that offers even more low-income housing. Then, garner input from residents to identify potential public uses for the Verandas property.
Be proactive. Get creative. Protect residents.