San Diego lottery for short-term rental licenses should prioritize ‘good actors’, council insists

As the city of San Diego prepares to implement its first-ever short-term vacation rental regulations in July, officials on Monday unveiled a lottery system that longtime hosts and council members say municipal, has not prioritized responsible operators, as promised earlier this year.

The council has asked Mayor Todd Gloria’s office to go back to the drawing board and come back in a month with a new proposal that will reward those who are “good actors”, a request that was made in February when elected leaders first new regulations approved governing the city-wide operation of the increasingly popular home-sharing industry.

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The new city ordinance specifically limits the number of whole-home rentals that operate more than 20 days per year to 1% of San Diego’s more than 540,000 homes, or about 5,400. A separate, more generous allowance was made for Mission Beach, a longtime mecca for Airbnb-style rentals. More active whole-home rentals will be limited to 30% of the total number of housing units in the community, or approximately 1,100.

Council Chair Jennifer Campbell, whose office has led the new regulatory effort for the past year, told city staff on Monday she wants to see a lottery that gives preference to operators who don’t have no pending code enforcement action in the last three years, have paid their Transient Occupancy Tax on time, and hosted at least 90 nights of reservations in the last year.

“I look forward to the positive impacts this will have in our city,” she said.

The council did not say whether it would revisit the revised proposal at a formal council session.

Monday’s hearing was billed as an informational hearing and therefore did not require a vote, but that hasn’t stopped Airbnb, as well as many vacation rental hosts, from raising complaints about the proposal, which they fear would bring their long-running operations to an abrupt end.

“We urge the city to include a prior booking history of at least 90 days within a 12-month period for lottery eligibility,” said John Choi, senior public policy officer at Airbnb.. “… Without prioritizing good actor hosts, we think San Diego ranks squarely as an outlier. Other cities that have legalized vacation rentals and limited permits, such as San Diego, have generally grandfathered hosts who previously operated.

While the city’s treasurer’s office said home-sharing platforms generally don’t share the rental activity of their individual hosts, Campbell said she’s been assured by the companies that they’re willing to provide the city with the necessary verification.

Several council members appeared irritated that their instructions, which were to set up a lottery system that would give priority to hosts who paid the required taxes and acted responsibly, had been ignored.

“There’s a lot to do to get this system right and so it feels a bit like deja vu not to have a system like we asked for,” said adviser Raul Campillo. “…If our constituents hear us and the media prints the words we say, then we come back and don’t have such a policy-aligned system…it destroys credibility and makes the public believe that we don’t we’re not serious about doing that.

Equally disturbed was councilor Stephen Whitburn, who said he had gone back and listened to council’s February motion to reaffirm his remembrance.

“I want the licensing process to prioritize responsible existing operators who have demonstrated compliance with the rules,” he said. “That’s what my constituents want and I’m sure that’s what most San Diegans want. When I learned that the proposed lottery system before us today did not give preference to good actors, I was surprised.

Eligibility under the process outlined Monday by the city treasurer’s office said only that to qualify for a license, hosts cannot have pending city enforcement action for “violations of any provision of the San Diego Municipal Code (SDMC), unless approval for a license is required to resolve the enforcement action. They should also apply for a TOT license, if they have not already done so. .

New vacation rental regulations, due to come into force on July 1 next year, only allow one two-year license per host.

Whatever lottery scheme the council ultimately adopts will only apply to whole house rentals for more than 20 days a year. An unlimited number of licenses will be allowed for vacation rentals of less than 20 days per year or colocation operations where a host rents a room or two.

To ensure that residents of all communities have the opportunity to obtain a license, the citywide lottery – with the exception of Mission Beach – would tie allotments in each community planning area to the percentage requests received. So, for example, if 30% of the applications came from La Jolla, that same percentage of the available licenses for the city, outside of Mission Beach, would go to La Jolla applicants. The selection would be random for each community.

In order to fund the administration and enforcement of vacation rental regulations, license and application fees will be charged. The council on Monday approved a fee schedule ranging from $100 for a two-year license for hosts who rent out their properties less than 20 days a year to $1,000 for those who rent out entire homes for more than 20 days out of the country. year. Application fees range from $25 to $70.

The revenue will cover the hiring of approximately 15 new positions, including nine in the area of ​​code enforcement.

An added wrinkle to the expected start next summer of new short-term rental regulations is the question of when the California Coastal Commission, which has jurisdiction over beach communities, will sign on. City officials said they would not enforce any of the new citywide rules until the commission weighed in.

If the coast agency was able to formally certify the regulations by April, the effective date could remain July 1, but any delays by the commission would jeopardize that start date, said Elyse Lowe, director of the city ​​development services department.

A number of hosts have complained that getting the new program started before the busy summer season ends will be difficult, given that many are already accepting bookings for the summer months. Councilwoman Vivian Moreno, who pressed council to consider a later start date, such as Oct. 1, cast the only negative vote on the new fee schedule.

“Rolling out a new regulatory system during one of the busiest weeks of the busiest seasons for vacation rentals, I think, is problematic,” she said, “especially since the tourism industry has been hit so hard by COVID-19.”

In a report to council, city staff said the lottery application process would begin no later than March 31, with the results of the draw known no later than May 31. These dates could change however, depending on what happens with the Coastal Commission.

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