Executive Summary: Are Short-Term Rentals Allowed?

Short-term rentals are explicitly allowed in Menlo Park, CA, but with significant regulatory requirements and tax obligations. The city has established a framework for STR operations through its Transient Occupancy Tax (TOT) system, with an active registration and enforcement program targeting both hotels and short-term rental operators.

Key Takeaway for Investors: Menlo Park permits STR operations subject to compliance with TOT collection, registration requirements, and state-level restrictions under SB 9 for newly developed units.

How to Start a Short-Term Rental Business in Menlo Park

Phase 1: Pre-Registration Assessment

Before commencing operations, investors must:

1. Verify Property Eligibility

   • Confirm zoning compliance for residential STR use
   • For SB 9 units: Verify that units were not created through SB 9 urban lot splits (these have minimum 30-day rental requirements)
   • Review any HOA restrictions or lease provisions that may limit STR operations

2. Tax Registration Preparation

   • Obtain business identification numbers
   • Prepare for monthly TOT collection and remittance obligations
   • Set up accounting systems for tax tracking

Phase 2: Official Registration and Setup

1. Register for Transient Occupancy Tax Account

   • All STR operators must register through the city's official portal
   • Obtain transient occupancy registration certificate
   • Registration is mandatory before accepting guests

2. Compliance System Implementation

   • Establish monthly TOT filing procedures
   • Implement guest billing systems that include TOT collection
   • Create documentation systems for tax remittance records

Phase 3: Operational Launch

1. Marketing and Guest Acquisition

   • Note: No platform agreements exist between Menlo Park and major STR platforms (Airbnb, Vrbo)
   • Hosts must self-collect and remit taxes - platforms will not automatically handle this
   • Prepare for manual tax collection and remittance

2. Ongoing Compliance Maintenance

   • Monthly TOT returns and payments
   • Maintain accurate guest and rental records
   • Monitor for regulatory changes

Required Documents, Permits, Licenses, and Guidelines

City of Menlo Park Requirements

Essential Documents:

• Transient Occupancy Registration Certificate (required before operations)
• Monthly TOT returns (due each month)
• TOT remittance payments (14% of gross rental revenue)
• Business identification for tax purposes

Registration Portal:

• Official registration through: menlopark.hdlgov.com
• All operators must create accounts and obtain certificates

Filing Obligations:

• Monthly TOT returns with payment
• Complete details contained in Municipal Code Chapter 3.16

State-Level Requirements (California)

SB 9 Compliance:

• Units created through SB 9 urban lot splits cannot be used as short-term rentals
• Minimum rental term of 30 days applies to SB 9 units
• Owner-occupancy requirements for SB 9 projects (3-year minimum)

Specific Regulations by Jurisdiction

City of Menlo Park Regulations

Transient Occupancy Tax (TOT):

• Current Rate: 14% of gross rental revenue (effective January 2025)
• Future Increases: 15.5% effective January 2026
• Collection Requirement: Must be collected from guests by all transient lodging providers
• Registration Requirement: Mandatory for all hotels and STR operators
• Filing Frequency: Monthly returns and payments required

Historical Context:

• Ordinance enforcement began January 2021
• Prior to 2021, enforcement focused only on hotels
• Estimated 396-524 STR units operating as of 2020, with low registration compliance

County Regulations

No specific San Mateo County STR regulations identified in provided sources. City-level regulations apply.

State of California Regulations

SB 9 (Senate Bill 9) - Urban Lot Split Projects:

• Minimum Rental Period: 30 days for units created through SB 9 urban lot splits
• Short-Term Rental Prohibition: SB 9 units explicitly prohibited from STR use (Airbnb, etc.)
• Owner Occupancy Requirement: 3-year owner-occupancy affidavit required
• Applicability: Applies to R-E-S, R-E, R-1-S, R-1-S (FG), R-1-U, and R-1-U (LM) zoning districts

Municipal Code References:

• Chapter 15.31 (Urban Lot Splits)
• Chapter 16.77 (Two-Unit Developments)
• Chapter 3.16 (Transient Occupancy Tax)

Local Authority Contact Information

Primary Tax Administration Contacts

Administrative Services Director

• Brittany Mello
• Email: bkmello@menlopark.gov
• Phone: 650-330-6675

Interim Finance and Budget Manager

• Rani Singh
• Email: RMSingh@menlopark.gov
• Phone: 650-330-2513

General City Contact Information

City of Menlo Park

• Address: 701 Laurel St., Menlo Park, CA 94025
• Main Phone: 650-330-6600
• SMS: 650-679-7022
• Website: www.menlopark.gov

Planning and Community Development

Senior Planner (SB 9 Projects)

• Chris Turner
• Email: CRTurner@menlopark.gov
• Phone: 650-330-6724

Source Links and References

Official City Resources

1. Transient Occupancy Tax Information

   • www.menlopark.gov/Government/Departments/Administrative-Services/Finance/Transient-occupancy-tax

2. Municipal Code Chapter 3.16

   • www.codepublishing.com/CA/MenloPark/#!/MenloPark03/MenloPark0316.html#3.16

3. Online TOT Registration Portal

   • menlopark.hdlgov.com/

4. SB 9 Projects and Regulations

   • www.menlopark.gov/Government/Departments/Community-Development/Planning/SB-9-Projects

5. Municipal Code (Full)

   • www.codepublishing.com/CA/MenloPark/

Third-Party Resources

6. STR Tax Enforcement Article (Avalara)

   • www.avalara.com/mylodgetax/en/blog/2020/09/menlo-park-california-to-enforce-short-term-rental-tax-law.html

7. STR Ordinance Project Documentation

   • hiago.sfo2.digitaloceanspaces.com/2/%3CD1584A24-F623-471C-A0B9-4CAF41423D5C@me.com%3E/Attachment.A_Project.on.a.Page_Short.Term.Rental.pdf

Critical Compliance Notes for Investors

Tax Collection Responsibility: Unlike many California cities with platform agreements, Menlo Park STR hosts must personally collect and remit TOT - major platforms do not automatically handle this.

Registration Gap: Historical data indicates low compliance rates among STR operators, making proper registration and tax collection a competitive advantage for compliant operators.

State-Level Restrictions: New development under SB 9 creates units that cannot be used for STR, requiring investors to verify any unit's development history before purchase.

Regulatory Evolution: The city actively enforces STR regulations and has increased TOT rates, indicating ongoing regulatory attention to this market segment.

Due Diligence Requirements: Given the complexity of local and state regulations, investors should conduct thorough property and regulatory due diligence before acquiring STR properties in Menlo Park.