Daily Regulatory Notes 03/30/2026

New Jersey

As the World Cup approaches, short-term rental activity in New Jersey is facing a dual push of incentives and tightening local regulations.

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Airbnb is offering a $750 bonus to attract new hosts in select areas, anticipating a surge in demand and millions in potential earnings, but municipalities are simultaneously reinforcing restrictions and enforcement. Because STR rules vary by town, some jurisdictions require owner occupancy or minimum stay lengths, while others have moved to outright bans, with fines reaching up to $2,000 per day and possible jail time for violations.

Hawaii

Hawaiʻi lawmakers are advancing House Bill 1590, which would require short-term rental platforms like Airbnb and Expedia to collect and remit state taxes on behalf of hosts, signaling a renewed push to close compliance gaps in the sector.

The bill would make platforms liable for unpaid taxes if they fail to register as collection agents, targeting both legal and illegal vacation rentals amid evidence of millions in unpaid transient accommodations taxes.

Chicago, IL

Chicago has approved a new 1.5 percent surcharge on downtown hotel stays, raising total lodging taxes to 19 percent, the highest reported rate in the U.S.

The measure, tied to a Tourism Improvement District, is expected to generate over $40 million annually to fund tourism promotion and major events. Supporters, including hotel operators, argue that reinvesting visitor taxes will boost demand and strengthen the city’s competitiveness. However, critics warn that higher costs could deter price-sensitive travelers and smaller conventions.

South Lake Tahoe, CA

South Lake Tahoe is adjusting its regulatory approach to short-term rentals, opting to expand access while stepping back from more aggressive housing controls.

Vacation Home Rentals | South Lake Tahoe, CA - Official Website

Permitting and enforcement information for vacation home rentals

South Lake Tahoe California HomepageGovernment Websites by CivicPlus®

The City Council has approved changes removing spacing requirements between vacation rentals and implementing a 900-unit cap in residential zones, potentially increasing the number of permitted properties. Meanwhile, a proposal to cap second homes did not move forward.

Hermosa Beach, CA

A court ruling against Hermosa Beach’s short-term rental ban is reshaping local policy, limiting the city’s ability to enforce restrictions in the Coastal Zone due to missing Coastal Commission approval.

Following the decision, which also halts fines against STR operators in the zone, the City Council has begun adjusting its approach by expanding its Transient Occupancy Tax to apply to all STRs, not just permitted ones. Officials are now positioned to collect revenue from a much larger pool of rentals, as hundreds of units are believed to be operating despite limited permits.

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Santa Barbara, CA

Santa Barbara’s proposed short-term rental ordinance is advancing despite significant unresolved concerns raised by the Planning Commission, which voted 4–2 to move the measure forward.

Short-Term Rental Ordinance

Housing Element Program HE-19 The 2023-2031 Housing Element, Housing Element Program HE-19, directs the City of Santa Barbara to develop a short-term rental (STR) ordinance to regulate the location and permitting of vacation rentals to incentivize long-term housing over transitory use.

City of Santa BarbaraCommunity Development

The proposal would heavily restrict STRs and shift toward a homestay model in the coastal zone. Stakeholders warn the ordinance could conflict with Coastal Act requirements to preserve affordable coastal access, exposing the city to potential legal challenges or intervention from the California Coastal Commission.

Breckenridge, CO

A Colorado appeals court has upheld Breckenridge’s short-term rental fee, ruling that the town’s $756 per-bedroom charge is a regulatory fee rather than a tax, and therefore does not require voter approval under TABOR.

The fee, introduced in 2021, is intended to offset housing impacts linked to STR activity and fund affordable housing initiatives. The plaintiff argued the charge was unconstitutional, claiming STRs already generate more tax revenue than the cost of related programs, but the court rejected that reasoning.

Cathedral City, CA

A pair of short-term rental cases in Cathedral City could set a statewide precedent on how high cities can set administrative fines for code violations. The city is appealing a ruling that reduced a $5,000 STR penalty to $750, after a judge found the original fine excessive.

Excessive Penalties: A Case Involving a $5,000 Cathedral City Short-Term Rental Fine Could Lead to a Statewide Precedent Regarding Exorbitant Fees - Coachella Valley Independent

The city of Cathedral City is appealing a decision by Riverside County Superior Court Judge Manuel Bustamante Jr., which ordered a $5,000 penalty levied by the city against resident Richard Levik for a short-term rental (STR) code violation to be reduced to $750.

Coachella Valley IndependentKevin Fitzgerald

The case builds on a similar challenge where courts acknowledged constitutional concerns over steep penalties but did not rule on the merits due to procedural issues. The outcome may clarify whether local governments can impose fines exceeding $1,000 under state law, a question with broad implications as several Coachella Valley cities currently enforce higher STR penalties.

Simi Valley, CA

Simi Valley officials are continuing to evaluate short-term rental policy after a surge of public support contrasted with prior recommendations to ban STRs.

The Planning Commission has already called for a prohibition, citing enforcement costs and community concerns, but recent testimony underscores the economic role of STRs for residents and local businesses. With about 100 rentals currently operating without regulation, the City Council is gathering further input through an independent survey before determining next steps.

Salem, OR

Salem City Council has approved an ordinance extending its 2% Tourism Promotion Area (TPA) fee to short-term rentals, aligning them with hotels that already contribute to tourism marketing.

The measure requires online platforms to collect and remit the fee on behalf of hosts, expanding a program that generates about $1 million annually for Travel Salem. City officials say the change ensures parity across accommodation types, though some STR operators warn that added costs could impact participation and small business activity.

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