Los Angeles officials are considering a pair of Airbnb-backed proposals that would temporarily loosen city regulations on short-term rentals and allow the company to pre-pay a portion of the lodging taxes it collects from tourists.
If approved by the City Council, the first proposal would allow Airbnb hosts to rent second homes and investment properties on the platform through 2028 — something the home-sharing giant has long sought, but the city of L.A. has prohibited since 2018.
The second proposal would involve Airbnb paying some portion of the transient occupancy tax it collects from tourists to the city of Los Angeles ahead of time to assist with the city’s budget troubles. That could generate tens of millions of dollars more for the city per year, according to the company.
"Airbnb is a committed partner to Los Angeles and its long-term prosperity with not just words, but with action,” said Justin Wesson, Airbnb’s senior public policy manager in California. “That’s why we have offered to provide tax revenue we already collect on behalf of hosts up front to help fund essential city programs millions of Angelenos rely on."
Both plans appeared in Mayor Karen Bass’ budget proposal for the next fiscal year, which starts in July, and were first reported by L.A. Material. Both were initially suggested by Airbnb, according to the company.
Bass’ budget proposal instructs the city’s Planning Department to develop a limited vacation rental program that would sunset by Dec. 31, 2028.
It also instructs city staff to report back with recommendations “to allow the pre-payment of transient occupancy tax in advance of the 2028 Olympics from any payer that wishes to assist the City in accelerating critical infrastructure projects.”
Councilmember Monica Rodriguez, who opposes expanding short-term rentals, told LAist she has concerns about the prepayment plan.
"I don’t know anyone in the country running to prepay their taxes, especially any corporations, and it begs the question as to why,” Rodriguez said.
Pre-paying TOT
Airbnb has discussed this pre-payment concept with city officials, but has not settled on specific terms, a company spokesperson confirmed to LAist.
The company told LAist it would work with city officials to come up with the amounts and timelines for any potential prepayment after the City Council approves the mayor’s budget.
Bass’ office did not respond Thursday to questions about the proposal.
In the current budget year, the city will collect about $297 million in transient occupancy taxes, including $34.5 million from short-term rentals and $262.9 million from hotels, according to the L.A. city controller’s revenue forecast.
The Hotel Association of Los Angeles told LAist that hotels, the main driver of bed-tax revenues, have not been part of any conversations about possible pre-payment.
“City leaders have not engaged hotels on the concept of pre-paying transient occupancy taxes in advance of the 2028 Olympics,” Jackie Filla, the association’s president and CEO, said in a statement. “We learned of this issue for the first time while reviewing the proposed budget.”
The Mayor’s Office first briefed members of the City Council’s Budget and Finance Committee shortly before the Monday release of Bass’ proposed budget, according to one member’s office.
According to the mayor’s budget proposal, the prepaid tax revenue would be used for curb and sidewalk repairs, park maintenance, street cleanliness and tree trimming.
Airbnb entered into an agreement with the city of L.A. in August 2016 allowing the company to collect and pay the transient occupancy tax on behalf of Airbnb hosts. The company said it has collected and paid more than $370 million in lodging tax to the city of Los Angeles between 2016 and the end of last year, for an average of about $39 million annually.
Before L.A.’s 2018 law restricting Airbnbs, there were nearly 29,000 estimated active short-term rental listings in the city of L.A., according to the city’s Planning Department. L.A.’s transient occupancy tax revenue totaled nearly $319 million in the 2018 budget year, according to the city administrative officer. That total includes tax remitted by hotels and it’s unclear how much was generated from short-term rentals specifically.
Last budget year, there were fewer than 5,000 homes officially listed on short-term rental platforms, according to the city. L.A. collected $305.8 million in transient occupancy tax. About $272 million of that came from hotels. The other roughly $33 million came from short-term rentals, according to the city controller.
Bass’ budget proposal projects $313.5 million in transient occupancy tax in 2026-2027.
More Airbnbs?
Airbnb has long sought to change L.A.’s short-term rental rules to allow more homes on the platform.
Last year, Airbnb launched a public campaign for its "Vacation Rental Revenue Plan.” The company argues that increasing L.A.’s short-term rentals will generate more tax revenue from tourists and expand housing options during the Olympics.
L.A.’s current short-term rental regulations allow homeowners to list only their primary residences on platforms like Airbnb. It also prohibits housing units protected by the city’s rent stabilization ordinance from being listed.
But existing Airbnb laws are rarely enforced. There were 7,500 properties illegally operating as short-term rentals in Los Angeles, according to the city’s Housing Department’s 2024 estimates. Since 2021, L.A. has issued an average of 125 home-sharing citations per year across all enforcement departments, according to city planning records.
Airbnb estimates that lifting restrictions on second homes could generate more than $100 million annually for the city in additional revenue from transient occupancy tax and other tourist spending. The company did not provide a further breakdown of those projections or indicate the exact number of new listings it expects would follow.
There are currently about 5,500 units already operating on home-sharing platforms under the existing rules and thousands more operating illegally, according to city officials.
On April 2, the city of L.A.’s Planning Department recommended in a report that the city reject the Airbnb proposal to allow second homes, finding it was unlikely to generate much revenue and likely to remove long-term housing from the market.
On April 15, the department released another report, reversing its earlier position. It clarified that the previous report had only only analyzed a permanent program but that a temporary program tied to the Olympics was worth considering.
Officials react
Councilmember Bob Blumenfield, part of the Budget and Finance Committee, said Airbnb has been talking to members about vacation rentals for years. He said he opposes the company’s desired changes and wants to see more enforcement of illegal Airbnbs.
“I didn't support vacation rentals when it was before us years ago because I feared it would take long-term housing units off the market,” Blumenfield said. “I'm still concerned about it. I still haven't seen a proposal that I would support.”
Councilmember Tim McOsker, also on the budget committee, did not say whether he would support the Airbnb-backed proposals.
A spokesperson from his office said in a statement that Osker “will evaluate the entirety of the proposal, including the pre-payment mechanism, within the budget hearings process before taking a position.”
Councilmember Nithya Raman, who is running for L.A. mayor against Bass, said the city needs to properly consider the impact of the proposals from Airbnb.
“The idea that the City would entertain speculative tax prepayments tied to expanding short-term rentals, while we are in an acute housing affordability and availability crisis, needs to be properly vetted to consider its full ramifications,” Raman said in a statement.
Airbnb’s political opponents tied to the hotel industry, including hotel workers’ union UNITE HERE Local 11, have consistently fought against efforts to expand Airbnbs. Now they’re also crying foul on the company’s pre-payment plan.
“ This is just a ruse to to build a larger short-term market, which means less housing for Angelenos in our city,” said Kurt Petersen, co-president of UNITE HERE Local 11.
Noah Suarez-Sikes, an organizer with Better Neighbors L.A. — which advocates for stronger limits on short-term rentals — said even if the change is temporary, renters will be permanently displaced.
“ I would hope that council would see that this is a Trojan horse and take it out before it starts harming working class people,” he said.
Campaign contributions
Airbnb is the third biggest spender in L.A. city elections so far this year, after the Los Angeles Police Protective League, which represents officers, and UNITE HERE Local 11.
A committee funded entirely by Airbnb spent nearly $300,000 in support of Jose Ugarte, a former aide to Councilmember Curren Price who is now one of six candidates running to replace him in District 9.
The committee paid $298,832.00 to a company called Street Level Strategy LLC for “canvassing, consulting, doorhangers, data, and office supplies,” according to records filed with the city.
"Across the country and at all levels of government, we back causes and candidates that champion home sharing and tourism and Los Angeles is a top focus for us," Justin Wesson of Airbnb told LAist.
Meanwhile, a committee sponsored by UNITE HERE Local 11 has raised $515,000 and spent more than $440,000 in independent expenditures opposing District 11 Councilmember Traci Park and supporting her challenger, civil rights attorney Faizah Malik.
“ We want to support candidates who want to raise wages so that people can live in Los Angeles and lower rents so that people can afford to live in Los Angeles,” said UNITE HERE 11 co-president Kurt Peterson.
What's next?
The City Council will begin budget hearings Friday. The panel is expected to hold its first vote on the budget May 21.
