Hunton Retail Law Resource

A local newspaper, The Desert Sun, has reported that downtown Palm Springs is in the midst of an economic revitalization. Locals have noticed an increase in foot traffic with the opening of several new stores (including Starbucks, MAC Cosmetics and H&M), and further development is planned. The city held a “grand opening” for the area in late 2017, and Palm Springs city council member Christy Holstege has even referred to a “Palm Springs renaissance.”

However—according to a new report from international tourism consultant, Tourism Economics—this retail revitalization may be under threat. The report claims that a proposed ban on short-term vacation rentals in certain residential areas of Palm Springs could result in a loss to the greater Palm Springs area of $199 million in economic activity per year. According to the report, the City of Palm Springs itself is looking at a loss of $12.9 million in tax revenue per year. The report explains that this loss of economic activity would result from fewer tourists spending money (including at gas stations, shops and restaurants). The report claims that approximately 1,200 jobs would be lost, with “retail, recreation and entertainment, and food services” bearing the brunt of these losses.

The proposed ban on short-term vacation rentals is the product of a citizen petition, and is scheduled to be considered by the Palm Springs city council on February 21. According to the meeting agenda, the city council is obligated to either adopt the ban or put it to a popular vote.

Regardless of what action the city council ultimately takes in Palm Springs, cities and municipalities across the county will continue to grapple with the question of short-term vacation rentals. On the one hand, there is the promise of greater tourism and retail spending. On the other, there is the fear of unaffordable housing costs and a certain loss of civic engagement. One might suspect that the weighing of these trade-offs will remain particular to each community.