San Diego council OKs regulations that could cut number of short-term vacation rentals by up to 30%
New ordinance would cap whole-home rentals available for more than 20 days in a year at 1% of the city’s housing stock, except in Mission Beach.
Following years of failed attempts to regulate the proliferation of short-term vacation rentals, the San Diego City Council on Feb. 23 endorsed a yearly cap that could cut the volume of the more active rentals by as much as 30 percent.
Councilman Joe LaCava cast the only dissenting vote among the nine council members, failing to win support for four suggested amendments.
The new regulations, which still need the blessing of the California Coastal Commission, grew out of a compromise plan that won the support of Airbnb and other large home-sharing platforms, as well as organized labor.
The regulatory plan, shepherded by council President Jennifer Campbell, whose District 2 includes Ocean Beach and Point Loma, calls for an overall cap on the number of whole-home rentals available for more than 20 days in a year.
Such rentals will be capped at 1 percent of the city’s more than 540,000 housing units, or about 5,400. However, in Mission Beach, which has a long history of vacation rentals that predates the rise of online home-sharing platforms, the allocation would be much more generous, limited to 30 percent of the community’s total dwelling units, or about 1,100.
Only one license will be allowed per individual, and the regulations will not take effect until July 1, 2022, to give the city time to transition to the new licensing system that will require hiring additional personnel.
“San Diego’s past efforts to regulate short-term rentals have ended in failure,” Campbell said. “Our neighborhoods have suffered from this failure, but we have learned from that failure and now have a compromise that is the best way forward.”
Campbell ticked off the ordinance’s benefits, among them “a cap on uncontrolled whole-home rentals,” “strong regulation and enforcement” and “bad actors will lose their licenses.”
Just as the contentious issue of vacation rentals has divided the city in past public hearings, it did so again this time as more than 130 people addressed the council during a six-hour virtual session.
While the compromise plan is notable for its support among many longtime home-sharing operators, some of them characterized as unfair a lottery system that would be used for distributing licenses. Existing, responsible operators who have paid their transient occupancy taxes should be favored, they argued.
“We support council President Campbell’s good-neighbor STR ordinance, not because it’s a big win for local managers or hosts but because it’s a fair compromise that takes into consideration concerns of both sides of this very vigorous debate,” said Jonah Mechanic, owner of SeaBreeze Vacation Rentals and leader of a coalition of vacation rental operators. “Also important to us is we figure out a way to prioritize responsible short-term rental owners who have paid their taxes, don’t have outstanding violations and are being good actors so they can continue to operate and earn income to provide for their families.”
Toward that end, the council agreed to return in October to consider some kind of lottery system that would prioritize “good actor” hosts who have been paying required taxes and have operated responsibly.
The council action comes more than two years after Airbnb and Expedia, the parent company of HomeAway and VRBO, mounted a referendum drive that killed much tougher restrictions approved by the council that would have barred the rental of second homes for short-term stays. The city’s effort to gain control over the mushrooming growth in home-sharing has been going on at least five years as proponents and critics squared off in multiple hours-long hearings.
Hosts have argued that vacation rentals provide them much-needed revenue to supplement their incomes, while opponents have complained that short-term renters have overrun their once-peaceful neighborhoods and turned homes into unruly party houses.
LaCava, whose District 1 includes La Jolla, said in a statement after the vote that “my short-term rental stance has been clear; the city should enforce our current municipal code, which does not define STVRs, therefore, prohibits them.”
But given that the ordinance had the support it needed to pass, he unsuccessfully proposed amendments that he said would strengthen it:
• A fixed cap calculated at 1 percent of the current housing stock for Tier 3 licenses, which include whole-home short-term residential occupancy for more than 20 days in the calendar year. “This ordinance will give up 1 percent of our housing stock in perpetuity,” LaCava said. “We work tirelessly to increase our housing stock and we must not give away future housing units, affordable or market rate, for visitor accommodations.”
• Limit license terms to six years. “As written, this ordinance awards lifelong ‘golden tickets,’ and that doesn’t comport with a vision of equity,” LaCava said. “A reasonable term ensures that every property owner can have the opportunity to participate in the financial gains that short-term rentals offer.”
• Expressly provide platform enforcement. “Technology is constantly changing, and the city is unlikely to keep abreast of how and who abuses those changes,” LaCava said. “The ordinance must expressly provide the city the right to enforce against platforms that advertise or offer unregulated units.”
• Include an affordable-housing preservation fee for Tier 3 licenses.
Just how far-reaching an impact the ordinance will have on the volume of short-term rentals remains open to debate given the difficulty in calculating how many of the more frequently listed whole-home rentals were operating before the COVID-19 pandemic dramatically curbed travel.
A detailed report by the city’s Independent Budget Analyst analyzed multiple sources of home-sharing data as of 2019 and concluded that the proposed cap could mean anywhere from 1,650 to nearly 2,800 fewer whole-home rental listings that would be allowed to operate more than 20 days out of the year. That translates to about a 20 percent to 30 percent reduction in such rentals that would be subject to the cap, according to fiscal policy analyst Baku Patel, who helped draft the Independent Budget Analyst’s report.
Not all home-sharing activity will be limited by the new regulations. The cap would not apply to a host — whether an owner or a tenant — who rents out a home for no more than 20 days out of the year. Similarly, there would be no limits for those who rent out a room or two in their home while they are living there.
Key to the new ordinance is stepped-up enforcement aimed at weeding out problematic hosts who violate public nuisance regulations. Campbell’s office proposes hiring four code enforcement officers whose salaries presumably would be funded through still-undetermined licensing fees.
City officials expect to return to the council later this year with a set of proposed fees. An early version of Campbell’s proposal had suggested a fee range of as little as $50 for someone renting out his or her home for less than 20 days a year to $1,000 for hosts renting out their entire homes for more than 20 days a year.
— Point Loma-OB Monthly staff contributed to this report. ◆