Ocean Beach landlord allegedly using loophole for more short-term rentals

There is a growing perception that the City’s new Short-Term Rental Ordinance, which took effect May 1, contains an exploitable “loophole” that some landlords are taking advantage of.

A case in point involves Ocean Beach landlord Michael Mills, who owns numerous rental units in multi-family structures ranging from two to 37 units. Mills is presently being allowed to gradually convert those multi-family units into short-term rentals under the current terms of the City’s new Short-Term Rental Ordinance.

“Mills has a reputation in Ocean Beach among our renter population and he owns over 300 rental units exclusively in the beach community and is purchasing more,” said Kevin Hastings, vice chair of the OB Planning Board speaking for himself. Hastings noted that, in 2017-18, “no evidence of short-term rental activity was found at his (Mills) properties, except for some apparent home-shares by tenants.”

But Hastings said that situation has changed. “Recently, some of his tenants had leases terminated in order to convert their unit to a short-term rental,” he said adding, “Research of property records and the city’s Short-Term Rental Ordinance database reveals the extent of his transition into the short-term-rental business. And this all appears to be legal under the new ordinance, assuming he lists a different host name on each license.”

That jives with the City’s take on the wording of the new Short-Term Rental Ordinance.

“The Short-Term Rental Ordinance allows one license per host and the host may not operate more than one dwelling unit at a time within the City,” said Perette Godwin, the City’s communications program coordinator. She added, however, “The ordinance does not mention the term ‘owner.’ The ordinance defines a host as ‘a natural person who has the legal right to occupy the dwelling unit and the legal right to allow short-term residential occupancy.’”

Godwin pointed out a Short-Term Rental Ordinance host may be the owner or a lessee if the lease allows for subleasing for less than a month. “A corporation, entity, LLC, etc… cannot be the host of a Short-Term Rental Ordinance license,” Godwin added.

The distinction between host, and owner, and the exact wording about and for both within the ordinance, appears to lie at the heart of the public perception that this constitutes a loophole that needs to be worked out as the ordinance, and all its provisions, progress.

Venus Molina, chief of staff for Councilmember Jennifer Campbell whose District 2 crafted the Short-Term Rental Ordinance, talked about this “glitch” that emerged during the early stages of the ordinance’s implementation.

“There are certain things you can anticipate, and certain things you cannot,” she said about formulating the ordinance. “And there will always be people who try to skirt the system, really try to find a way around the system. We did know this was possible. We just didn’t know to what extent – or how much.”

Reacting to the Mills situation, Molina noted: “When this came up we said, ‘Oh my, is this a loophole? Is this something that we can fix through administrative regulations?’ So we’re now looking closely at what he’s (Mills) doing. And we’re asking ourselves, ‘How do we prevent this from happening again?’ I would hate for something like this to fly under the radar and us not to know about it, so we can fix it – or deal with it,” Molina concluded.

Godwin said the city treasurer is currently following up with hosts on the properties owned by the Mills family regarding documentation that demonstrates they meet the definition of a host. “If the documentation is found to not be valid or true, regulatory action, up to and including license revocation, may occur,” she said, adding the City has been made aware of concerns about Mills and his properties through complaints, emails from the community, and media inquiries.

Godwin said the Building & Land Use Enforcement (BLUE) division of the Development Services Department, which investigates complaints and handles enforcement of the Short-Term Rental Ordinance, has been in contact with the Mills family. “They have been reminded of the requirements of the ordinance including the host operating requirements,” she said adding, “BLUE has not issued any letters or Notices of Violation as it relates to enforcement, to the Mills or any of the hosts associated with the Mills at this time. BLUE will continue to monitor all short-term rentals in the City including the Mill’s licenses in partnership with the city treasurer’s Short-Term Rental Ordinance team.”

Mills and his property manager, Ana Mills, were unable to be reached for comment for this story by the Peninsula Beacon.