There's no question that short-term rentals are a booming industry in Palo Alto, which routinely boasts more than 500 listings on Airbnb and where some "superhosts" control clandestine empires of more than 20 homes.

But as the City Council considered on Monday clamping down on the rental market, members and residents offered different takes on whether the trend is, on the whole, beneficial or detrimental to the well-being of locals. Proponents pointed to the fact that they create a great opportunity for homeowners to make money when they go off on vacation or when, say, their children leave the house for a few months.

Council member Alison Cormack, who opposes a crackdown on short-term rentals, noted that some families come to Palo Alto to be close to a relative who is being treated at Stanford Hospital. They may need extra room for children, as well as a kitchen and laundry facility, she said.

"If we remove this option, we're really going to be limiting the people who live here and the people who have a pretty legitimate need to come here," Cormack said.

But she proved to be in the minority on Monday, with the council voting 5-2 to explore a host of new restrictions on short-term rentals, including limitations on short-term rentals that are not owner-occupied and new enforcement mechanisms to strengthen an existing law that bans rentals of fewer than 30 days.

The issue hits close to home for council member Greg Tanaka, who lives in College Terrace, a neighborhood with close proximity to Stanford University that makes it a popular destination for Airbnb guests. He said Monday that he's aware of two Airbnb properties on his block. One of them, which is near his house, operates quietly and has never caused any problems. Another one, farther down the block, frequently drives his neighbors crazy, he said.

But Tanaka argued that the problem isn't Airbnb but the fact that some people just don't respect their neighbors. He mentioned another apartment building near him with long-term rentals who are always throwing large parties.

"The crux of this issue really is: Are they being a good neighbor or not? Are they being intrusive to others or not? I think that's what we need to deal with," said Tanaka, who joined Cormack in dissent.

The council majority, however, concluded that short-term rentals bring their own particular problems. When residents are frequently turning over and the property manager lives off-site, it's hard to know whom to complain to when the guest is causing a disturbance. Janice Stone, who owns a condo in Midtown, recalled her experiences in sharing a wall with a residence that is constantly rented out on a short-term basis. The frequent turnover, she said, is detrimental to her building's sense of community.

"It's very disconcerting having strangers living next door, sequentially in quick succession," she told the council.

Vice Mayor Lydia Kou, a real estate agent, said she has heard from other residents who have complained about a big charter bus coming in and offloading a large number of people into a neighboring house. Short-term rentals, she argued, have a higher chance of bringing disruptive impacts to a residential block.

"The noise levels are high, there's numerous cars parked on the street, there's loud music — it goes on into the night," Kou said, "And even though police are called, oftentimes it's really hard to disperse them and the owner or the company manager are nowhere nearby."

Kou was one of three council members who signed on to a memo advocating for the new restrictions. Council member Tom DuBois, who led the effort, argued that short-term rentals aren't just an occasional nuisance. They are also, he argued, a drain on the city's rental stock because they turn what could otherwise be long-term apartments into de facto hotel rooms.

DuBois cited a recent city report showing that out of the city's rental stock of 8,057 dwellings, only 93 are estimated to be vacant, a rate of 1.17%. The number of Airbnb listings dwarf that amount, he said.

He also suggested that the status quo puts the city in a bit of an ethical bind. Though Palo Alto has banned rentals of fewer than 30 days, the city has struggled to enforce this rule. At the same time, the city has an agreement with Airbnb that requires the company to pay a transient-occupancy tax (also known as a hotel tax). The city may not crack down on violations, but it certainly profits from them.

"We have this conflict of our values, if you will. We prohibit short-term rentals, we're struggling to create housing, yet we don't enforce our ban on short-term rentals and are collecting TOT tax," DuBois said.

Mayor Pat Burt and council member Eric Filseth both agreed with the memo's authors, giving them the majority of votes they needed to advance the recommendation. The council voted to send the item to the council's Policy and Services Committee, which will consider next year ways to strengthen enforcement of the city's existing limits and new restrictions and registration requirements on short-term rentals that are not owner-occupied.

Like DuBois, Burt cited an "inherent conflict" in how the city has been treating short-term rentals.

"We turn a blind eye and accept their TOT, and I think that it's inherently wrong to take that approach and we should simply clean it out, figure out what we allow and be above board with that," Burt said.

According to the memo, there were about 500 short-term rentals in Palo Alto last year, of which 375 consisted of entire units.

"This represents 375 units which should be housing stock available for long-term rental," the memo states.

While the city has not been collecting any data on local short-term rentals, Council member Greer Stone cited various national studies that supported his view that a proliferation of short-term rentals drives up rents. One such study, which was conducted by Kyle Barron, Edward Kung and Davide Proserpio and published by the Harvard Business Review in 2019, analyzed Airbnb listings and rent rates and concluded that a 1% increase in Airbnb listings is causally associated with a 0.02% increase in rental rates and a 0.03% increase in house prices.

"There's a true housing crisis in Palo Alto and across the region and across the state," Stone said. "This memo helps address some of that."

Some disputed the notion that the short-term rentals would necessarily convert to long-term residences once the city's new restrictions kick in. David and Felice Stonestrom, who are retired and live in College Terrace, wrote in a letter to the council that their home would simply sit vacant if they weren't allowed to rent it out when they travel. Far from constraining the housing market, their home provides people who have short-term housing needs on the Stanford campus or nearby an affordable place to stay, they wrote.

"We pay a neighbor to serve as property manager while we are gone, so there is always a local contact should problems arise. Our neighbors appreciate having our house occupied rather than sitting empty while we are gone," the Stonestroms wrote. "Some of the more draconian proposals would take our property off the market, with no benefit to anyone."