Los Angeles officials are weighing whether to temporarily roll back part of the city’s short-term rental rules while also exploring an unusual tax proposal from Airbnb as the city confronts budget pressure ahead of the 2028 Olympics.
Both ideas appeared in Mayor Karen Bass’ budget proposal for the next fiscal year, which starts in July. According to Airbnb, the company first suggested both plans.
At the center of the debate is a proposed limited vacation rental program that would let hosts rent out second homes and investment properties through Dec. 31, 2028, if the City Council approves it. Los Angeles has prohibited that type of listing since 2018, allowing homeowners to list only their primary residences on platforms like Airbnb while also barring units protected by the city’s rent stabilization ordinance.
The budget proposal also asks 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."
Airbnb says the tax prepayment could help the city while the larger rental expansion could boost revenue from tourism.
"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."
Two proposals in one budget fight
Bass’ budget instructs the Planning Department to develop the temporary vacation rental program and says the tax prepayment idea could help fund infrastructure work before the Olympics.
According to the mayor’s budget proposal, any prepaid tax revenue would go toward curb and sidewalk repairs, park maintenance, street cleanliness and tree trimming.
Airbnb has discussed the prepayment concept with city officials but has not settled on specific terms, a company spokesperson confirmed. The company told LAist it would work with city officials on 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, Los Angeles expects to 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 city controller’s revenue forecast. Bass’ budget proposal projects $313.5 million in transient occupancy tax in 2026-2027.
Airbnb said it has collected and paid more than $370 million in lodging tax to Los Angeles between 2016 and the end of last year, averaging about $39 million annually. The company entered into an agreement with the city in August 2016 allowing it to collect and pay the transient occupancy tax on behalf of hosts.
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Pushback from councilmembers and hotel groups
Not everyone at City Hall is convinced by the tax plan or the rental expansion.
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.
The Hotel Association of Los Angeles said hotels, which are the main source of bed-tax revenues, were not part of discussions over possible prepayment.
"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."
Councilmember Bob Blumenfield, a member of the Budget and Finance Committee, said Airbnb has been pressing members for years on vacation rentals. He said he remains opposed and wants stronger enforcement against illegal listings.
"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 has not said whether he backs either proposal.
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, also called for closer review.
"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.
A renewed fight over short-term rentals
Airbnb has long sought changes to Los Angeles rules to allow more homes on the platform. Last year, the company launched a public campaign for its "Vacation Rental Revenue Plan", arguing that more short-term rentals would generate more tourist tax revenue and expand housing options during the Olympics.
The company estimates that lifting restrictions on second homes could bring in more than $100 million annually for the city in added transient occupancy tax and other tourist spending, though it did not provide a further breakdown or say exactly how many new listings it expects.
Before Los Angeles adopted its 2018 restrictions, the city’s Planning Department estimated there were nearly 29,000 active short-term rental listings. Last budget year, city officials said there were fewer than 5,000 homes officially listed on short-term rental platforms. The city collected $305.8 million in transient occupancy tax that year, with about $272 million coming from hotels and roughly $33 million from short-term rentals, according to the city controller.
There are now about 5,500 units already operating on home-sharing platforms under existing rules and thousands more operating illegally, according to city officials. The city’s Housing Department estimated in 2024 that 7,500 properties were illegally operating as short-term rentals in Los Angeles. Since 2021, Los Angeles has issued an average of 125 home-sharing citations per year across all enforcement departments, according to city planning records.
The Planning Department initially recommended on April 2 that the city reject Airbnb’s proposal to allow second homes, saying it was unlikely to produce much revenue and likely to pull long-term housing off the market. On April 15, the department reversed course in a second report, saying the earlier analysis had looked only at a permanent program and that a temporary program tied to the Olympics was worth considering.
Labor and housing critics object
Airbnb’s opponents in the hotel industry and among tenant advocates are also criticizing the 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., said a temporary policy change would still have lasting effects on renters.
" 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.
Political spending adds another layer
The debate is unfolding as Airbnb and its opponents spend heavily in city politics.
Airbnb is the third biggest spender in L.A. city elections so far this year, after the Los Angeles Police Protective League and UNITE HERE Local 11. A committee funded entirely by Airbnb spent nearly $300,000 in support of Jose Ugarte, one of six candidates running to replace Councilmember Curren Price in District 9. Records filed with the city show the committee paid $298,832.00 to Street Level Strategy LLC for "canvassing, consulting, doorhangers, data, and office supplies."
"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.
UNITE HERE Local 11 is also active in city races. A committee sponsored by the union has raised $515,000 and spent more than $440,000 in independent expenditures opposing District 11 Councilmember Traci Park and supporting challenger 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.
The City Council began budget hearings Friday, and the panel is expected to hold its first vote on the budget May 21.