San Diego approves regulations that could reduce the number of short-term vacation rentals by up to 30%

After years of unsuccessful attempts to regulate the proliferation of Airbnb-style rentals, San Diego City Council on Tuesday approved an annual cap that could reduce the volume of more active vacation rentals by up to 30%.

The new regulations, which still require a second council vote before becoming law, were born out of a compromise plan that won support from Airbnb and other major colocation platforms, as well as the local union of the hotel industry. Led by board chair Jennifer Campbell, whose district includes several of the city’s seaside communities, the regulatory plan places an overall cap on the number of entire home rentals available for more than 20 days per year.

For everyone except Mission Beach, these rentals will be capped at 1% of the city’s over 540,000 housing units, or about 5,400. At Mission Beach, which has a long history of pre-boom vacation rentals. online home-sharing platforms, the allowance would be much more generous, limited to 30% of the total housing units in the community, or around 1,100.

Only one permit will be authorized per individual, and the by-law will not come into effect until July 1, 2022 to give the city time to switch to the new permit system which will require the hiring of additional staff.

“San Diego’s past efforts to regulate short-term rentals have been unsuccessful,” said Campbell. “Our neighborhoods suffered from this failure, but we have learned from this failure and now have a compromise which is the best way forward.”

Campbell, who is facing a recall campaign started in part by critics who believe short-term rentals shouldn’t be legalized, ticked off the benefits of the ordinance, including “a cap on whole house rentals uncontrolled “,” strict regulation and enforcement “, and, she added,” bad actors will lose their licenses. “

Mayor Todd Gloria, noting this momentous moment, issued a statement affirming his commitment to implementing and enforcing the new regulations, which still need the California Coastal Commission blessing with regard to the seaside communities of the city.

“I applaud city council for taking the first step towards putting in place common sense regulation on short-term vacation rentals,” he said. “I want to thank Council President Campbell for her leadership and for seeking consensus on an issue that former San Diego officials were unwilling or unable to resolve.”

San Diego City Attorney Mara Elliott, who previously ruled that San Diego’s city code did not allow short-term vacation rentals, tweeted her praise of the council’s action.

“Thank you to the municipal council and the leadership of the chairman of the council @CMJenCampbell, San Diego is finally on the verge of having short-term rental regulations enforceable, ”his tweet said. “It’s been a long time coming and that’s what the neighborhoods deserve.

Just as the controversial vacation rental issue has divided the city in previous public hearings, it did so again on Tuesday, as more than 130 people addressed the council in a virtual session of nearly six time. While the compromise plan is notable for its support among many long-standing home-sharing operators, a number of them have called a lottery scheme that would be used to distribute licenses unfair. Existing and responsible operators who have paid their transitional occupancy taxes should be favored, they argued.

“We support Chairman Campbell’s Good Neighbor STR Order, not because it is a great victory for managers or local hosts, but because it is a fair compromise that takes into account the concerns of local people. two sides of this very vigorous debate, ”said Jonah Mechanic, owner of SeaBreeze. Vacation Rentals and leader of a coalition of vacation rental operators. “It’s also important for us to find a way to prioritize responsible short-term rental owners who have paid their taxes, have no ongoing violations and are good actors so they can keep operating. and earn an income to support themselves. families.”

To that end, the board agreed to return in October to consider some sort of lottery system that would prioritize hosts of “good players” who paid the required taxes and operated responsibly.

The council action comes two and a half years after Airbnb and Expedia, the parent company of HomeAway and VRBO, successfully staged a referendum campaign that killed much tighter council-approved restrictions that would have banned rental of second homes for short stays. . The city’s efforts to take control of the skyrocketing growth in housing sharing have continued for at least five years, as supporters and critics clashed in hour-long hearings.

Hosts argued that vacation rentals provide them with much-needed income to supplement their income, while opponents complained that short-term tenants have taken over their once peaceful neighborhoods and turned their homes into unruly party houses. .

Campbell’s proposal was supported by eight of nine council members, with Councilor Joe LaCava being the only dissenting vote. LaCava, who has said he “remains steadfast” in his position that short-term rentals should be banned, offered suggestions to strengthen the proposed ordinance. He failed to gain support for his suggested amendments, however, including a provision that would have limited licenses to a maximum of six years. He also sought approval for an affordable housing right which Campbell rejected as an amendment to his original motion.

Like a few other board members, he also pushed for stronger wording designed to ensure the accountability of home sharing platforms in cases where they continue to allow unregulated rentals on their sites.

Save San Diego Neighborhoods, which has long insisted short-term rentals be banned, did not make a presentation at Tuesday’s hearing but sent a letter to council this week from its attorney who argued that the The Campbell Ordinance was inconsistent with the General Plan and State Coastal Law.

The extent of the impact the ordinance will have on the future volume of short-term rentals remains subject to debate given the difficulty of calculating how many of the most frequently listed whole house rentals were in operation before the pandemic significantly reduced rental rates. trips.

A detailed report by the city’s independent budget analyst analyzed multiple data sources on home sharing from 2019 and concluded that the proposed cap could mean 1,650 to almost 2,800 fewer rental listings. whole houses that would be allowed to operate for more than 20 days. out of the year. This translates into a reduction of about 20-30% of those rentals that would be subject to the cap, believes fiscal policy analyst Baku Patel, who helped write the independent budget analyst’s report.

Not all colocation activities will be limited by the new regulations. The cap would not apply to hosts – whether owners or tenants – who rent a home for no more than 20 days per year. Likewise, there would be no limit for people who rent a room or two in their house while they reside there.

Key to the new ordinance is a stronger application aimed at eliminating problematic hosts who violate public nuisance regulations. Campbell’s office is proposing to hire four code enforcement officers whose salaries would presumably be funded by as yet unspecified license fees.

City officials expect to return to council later this year with a proposed fee package. An early version of Campbell’s proposal suggested a cost range of as low as $ 50 for someone renting their home less than 20 days a year to $ 1,000 for hosts renting their entire home for more than 20 days. per year.

The city treasurer’s office estimates an initial start-up cost of $ 1.7 million, plus ongoing costs of $ 2.4 million to administer the licensing effort.

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