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

After years of failed attempts to regulate the proliferation of Airbnb-style rentals, the 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 home-sharing platforms, as well as the local workers’ union. hotel workers. Led by council chairwoman Jennifer Campbell, whose district includes several beach communities in the city, the regulatory plan includes an overall cap on the number of whole-home rentals available for more than 20 days a year.

For all but Mission Beach, those rentals will be capped at 1% of the city’s more than 540,000 homes, or about 5,400. In Mission Beach, which has a long history of vacation rentals that predates the rise of the online home sharing, the allowance would be much more generous, limited to 30% of the total number of housing units in the community, or around 1,100.

Only one license will be allowed per individual, and the bylaw will not go into effect until July 1, 2022 to give the city time to transition to the new licensing system which will require the hiring of additional staff.

“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 this failure and now have a compromise which is the best way forward.”

Campbell, who is facing a recall campaign launched in part by critics who think short-term rentals shouldn’t be legalized, ticked off the ordinance’s benefits, including “a cap on whole-home rentals unchecked”, “strict regulation and enforcement”, and, she added, “bad actors will lose their license”.

Mayor Todd Gloria, noting the landmark moment, released a statement affirming his commitment to implementing and enforcing the new regulations, which still need the blessing of the California Coastal Commission as they relate to beach communities. from the city.

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

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

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

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

“We support Council Speaker 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 the concerns of 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 outstanding violations and are good performers so they can continue to operate. and earn an income to support their families.”

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

The council action comes 2.5 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 secondary residences for short stays. . The city’s efforts to control the meteoric rise of home sharing have been going on for at least five years, as supporters and critics clashed in hour-long hearings.

Hosts have argued that vacation rentals provide much-needed income to supplement their incomes, while naysayers have complained that short-term renters have invaded their once-peaceful neighborhoods and turned homes into unruly party houses.

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

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

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

The extent of the impact the ordinance will have on future short-term rental volume remains open to debate given the difficulty of calculating how many of the most frequently listed whole-home rentals were operating before the pandemic significantly curbed businesses. trips.

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

Not all home-sharing activities will be restricted 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. Similarly, 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 stronger enforcement aimed at weeding out problematic hosts who violate public nuisance regulations. Campbell’s office proposes to hire four code enforcement officers whose salaries would presumably be funded by as-yet-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 suggested a fee range from as low as $50 for someone renting their home less than 20 days a year to $1,000 for hosts renting their entire home more than 20 days a 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.