San Diego’s new short-term rental plan gets off to a strange start with far fewer people request the required licenses provided that.
The plan is for hosts, using websites like Airbnb, to apply for a license. San Diego, unsure of the exact number of whole-home short-term rentals, capped licenses at 5,416 citywide (except for Mission Beach, which has a separate cap) and planned to do a lottery to distribute licenses.
The city got just over half and are trying to persuade again more people to apply.
It needs revenue from license fees required to administer and enforce its new regulations, such as responding to complaints, getting rid of harmful properties, and identifying unlicensed rentals.
Q: Is San Diego on track with its first short-term rental plan?
Haney Hong, San Diego County Taxpayers Association.
NOPE: The restrictions are arbitrary, and while it was perfectly true that short-term rentals limit housing inventory, the real culprit for the housing shortage is the difficulty of building new inventory and upgrading old. We spend so much time in restrictions – restricting licensing, restricting building permits, restricting height limits (luckily some of that is going away) – maybe some permissiveness would be the right way to go.
Kelly Cunningham, San Diego Institute for Economic Research
YES: The plan developed after years of contentious debate appears to be a good compromise between the competing interests that may be produced, including the exemptions allowed for Mission Beach. Despite overstated perceptions of the strength of the industry, not meeting the number of allowed permits or needing a lottery does not mean the plan needs to be changed. Some short-term rental owners may not have understood the process or the time frame or may not care and intend to continue renting.
Lynn Reaser, Economist
NOPE: The city’s approach has been flawed as it will fall far short of the revenue it estimated to be collected. At best, $6.5 million could be raised over two years. This mirrors the filled cap of 1,100 in Mission Beach plus the 5,416 in the rest of the city at $1,000 per two-year permit. However, the actual amount is expected to be just $4.2 million, based on just 3,110 permits taken out outside of Mission Beach.
Phil Blair, Manpower
YES: And it looks like a win-win. In Mission Beach, the lottery system is efficient and now we can test whether our quantity is appropriate or not. The city should not encourage additional applicants, but make them available upon request to the rest of the city.
Gary London, London Moeder Advisors
NOPE: It is the poster child for useless public policy. We are seeing the birth of a new bureaucracy, born out of misinformation, set up to engage in redundant oversight while charging short-term rental owners $1,000 to support it. The overstatement of the number of short-term rentals shows how little this problem has to do with the housing shortage, when the city already has many rules in place to address noise, safety and parking issues.
Alan Gin, University of San Diego
YES: The short-term rental situation was spiraling out of control. Their numbers were exploding, taking a lot of long-term rentals off the market and also hurting the quality of life in some neighborhoods. So there was a need for regulation. It is unfortunate that the lack of applications is affecting program funding, but it also means that there are more long-term rentals available, which helps the housing market.
Bob Rauch, RA Rauch & Associates
YES: San Diego is on the right track. We need to limit the number of housing units that could disrupt neighborhoods and/or deflate housing supply in various markets. Short-term rentals play a valuable role in providing revenue for legitimate uses, but the city must regulate the industry to ensure those looking for housing are housed and owners who have not signed up for parties noisy next to have a voice. It’s also legitimate revenue for the city to run the process.
Kirti Gupta, Qualcomm
Do not participate this week.
James Hamilton, UC San Diego
NOPE: Rather than trying to micromanage with arbitrary quotas, the city should clearly define the uses of temporary rentals that cause problems, such as guest numbers, noise, or drugs. A breach of the rules should result in a one-year ban on the landlord’s right to short-term rental. Using properties that would otherwise be vacant to generate revenue for San Diego residents and provide visitors with a place to enjoy our city is potentially a win-win situation for everyone.
Austin Neudecker, Weave Growth
Do not participate this week.
Chris Van Gorder, Scripps Health
YES: The city tries to reconcile the needs of landlords wishing to rent their properties with the rights of neighbors who may be disturbed by transient occupants and disruptive/disrespectful tenants. But at the moment, it seems the application process is a little lighthearted – perhaps because some are just taking the “catch me if you can” approach. Enforcement of non-compliant, unlicensed homeowners could be a challenge for the city.
Norm Miller, University of San Diego
NOPE: San Diego should not use arbitrary quotas to determine the appropriate number of short-term licensees. We should look to the market and neighborhood residents to determine whether or not to allow short-term rentals. A neighborhood, such as Pacific Beach, Mission Beach, or Ocean Beach, or an HOA can on its own, with sufficient support, enact rules that limit (or do not limit) the use of properties for short-term rentals, and this is the level at which such decisions must be made.
Jamie Moraga, Franklin Revere
NOPE: It appears the city either underestimated the number of applicants or relied on inaccurate data. With increased economic uncertainty, some owners may be selling their properties or considering long-term rentals instead of paying that extra tax for short-term vacation rentals. This revenue shortfall will impact the projected revenue that was to be generated from fees to support the regulations and their enforcement.
David Ely, San Diego State University
YES: City officials can reasonably say that their plan is a reasonable compromise. But it’s unclear why license applications fell short of expectations. If the number of properties for short-term rentals is actually lower than estimated, this result should be welcomed by landlords and managers concerned with the popularity of short-term rentals. If owners abandon the market due to the new regulations or have concluded that the regulations are unenforceable, adjustments may be necessary.
Ray Major, SANDAG
NOPE: Regardless of the intent of the new law, San Diego received only half of the desired applications, indicating a problem with the plan. It’s no surprise that people trying to make a few extra bucks renting out their homes and rooms aren’t clamoring to pay the city $1,000 for a two-year license that would pay to regulate the industry they’re in are found.
Caroline Freund, UC San Diego School of Global Policy and Strategy
YES: Regulating short-term rentals makes sense, but the plan needs fine-tuning. Mission Beach aside, an open application process would make more sense than a lottery. Licensing 30% of Mission Beach properties is excessive – local residents are ticked off. Regulations must be enforced. The policy is vague about what happens if you violate it. Instead, fees and penalties should be listed. A lack of application will make the effort useless.
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