The San Diego Planning Commission voted unanimously Dec. 3 to forward a proposed short-term vacation rental ordinance to the City Council for review and recommended adoption with some revisions, including loosening the limit on whole-house rental licenses to 1 percent of the city’s available housing stock.
The effect of the proposed restrictions would be to reduce the number of whole-home short-term rentals, which the city believes totaled close to 13,000 as of last summer, by 50 percent.
If approved by the council, the ordinance would go into effect Jan. 1, 2022.
The ordinance — which stems from an agreement that District 2 Councilwoman Jennifer Campbell brokered between Expedia, which owns two online platforms for renting STVRs, and Unite Here Local 30, a union that represents hospitality workers — proposes to define short-term rental occupancy as a stay of less than a month and would include regulations that could then be enforced.
The regulations would require a license to operate a short-term rental unit, put limits on the number of licenses a host may obtain, create caps on the total number of whole-house short-term rental units and create a process to track and manage such rentals and enforce regulations.
The regulations also would establish a mechanism to cite hosts or suspend or revoke the licenses of those who don’t follow the rules.
For years, the debate over vacation rentals has pitted the rights of property owners to rent their homes against residents who have seen their neighborhoods disrupted by tourists, leading to complaints about noise, trash and parking problems.
Other critics of vacation rentals say online listing platforms create financial incentives for renting out properties for short-term stays instead of long-term residential use, thus reducing the housing supply and driving up prices.
At a previous hearing Oct. 8, some planning commissioners expressed concerns with parts of the ordinance, with Commissioner Matthew Boomhower saying there was “a lot to be worked out.” The commission sent the proposal back to Campbell’s office for refinement.
Among the issues raised were how the number of short-term rentals should be restricted, the nature of the system through which licenses would be allocated, the enforcement mechanism, the impact on city departments (such as code enforcement and the city treasurer’s office as it handles an increase in transient occupancy tax collections), and how accessory dwelling units would factor in.
Rather than present changes to the ordinance at the Dec. 3 meeting, Campbell’s chief of staff, Venus Molina, presented answers to questions commissioners had asked during the October hearing.
“What was agreed upon [at the last hearing was] we need regulations and something on the books we can enforce and control the short-term vacation rentals in San Diego,” Molina said.
The ordinance groups short-term vacation rentals into a four-tier licensing system:
• Tier 1: Home-share or whole-home short-term residential occupancy for an aggregate total of 20 days or less per calendar year
• Tier 2: Home-share short-term residential occupancy for more than 20 days per calendar year
• Tier 3: Whole-home short-term residential occupancy for more than 20 days per calendar year
• Tier 4: Special tier for Mission Beach, which allows for whole-home short-term rental in a manner consistent with recommendations from the Mission Beach Town Council
Under the original plan, the number of homes that could be fully rented out for short-term stays while the owner or resident is not present would be capped at about 5,130 citywide, including a carve-out for close to 1,100 such rentals in Mission Beach.
Under the proposal the commission recommended for approval, the number would be capped at about 6,500 citywide.
In the original plan, the number of allowed licenses in the city, exclusive of Mission Beach, would be limited to 0.75 percent of the city’s housing units. In the recommended proposal, the cap would be 1 percent.
For Mission Beach, long a magnet for vacation rentals, the proportionate allowance would be much larger, representing 30 percent of the community’s total dwelling units.
For Tiers 3 and 4, Molina said, licenses would be granted in a lottery system to a “person … with a legal right to both occupy and allow STRO in the unit.” That is intended to slow the proliferation of corporations and LLCs purchasing and renting out multiple houses. The licenses would not be transferrable to other people or properties.
Licensing fees would help pay for additional enforcement through an office of short-term rental occupancy and a 24-hour complaint portal. The code enforcement division recommended hiring additional officers to tend to the complaints.
A “good neighbor” policy would require hosts to inform guests that if police are called to address disturbances, the guests may be responsible for paying the city for the police response.
During commissioners’ comments, Boomhower said he felt staff addressed “almost all the concerns” but added that the proposed 0.75 percent cap for Tier 3 is “arbitrary.”
“I would be willing to support a cap at 1 percent for Tier 3,” he said after hearing speakers during public comments ask for the limit to be raised. “I get we have a housing crisis and we need to address this, but people have a right to use their property however is legal. A cap makes sense, but I want to make it as broad as possible.”
Commissioner Kelly Moden questioned whether licenses could be distributed equally by City Council district or neighborhood.
Boomhower said the lottery system legally is the fairest method but that “some communities are more desirable for short-term rentals” and he didn’t want to see “the coastal communities and districts” be inundated with licenses.
Moden questioned how violations that could lead to a license being revoked would be validated and not have the city rely on “angry neighbors that are mad they have an Airbnb next door.”
Leslie Sennet, deputy director of code enforcement, said complaints would be part of an investigation and that a staff member would evaluate whether a citation should be issued.
Moden also questioned whether San Diego “has the police force” to handle the work. “I see a lot of pitchforks in the public comments, and maybe there will be a calming-down period, but I see this as a lot of work for the first few years,” Moden said.
As with the first hearing, public speakers expressed viewpoints across the spectrum. Those who rent out their houses touted the value of short-term rentals as a way to supplement their income and help the local economy through tourism dollars. Some said the proposed limits on whole-house rentals are “unreasonable” and would “incur a lawsuit.”
Jonah Mechanic, owner of SeaBreeze Vacation Rentals in La Jolla, said the proposal is “fair, balanced and common sense” but “far from perfect.” It protects short-term rentals and “balances the needs of the community by punishing those that are irresponsible and rewarding those that are responsible,” Mechanic said.
Bird Rock resident Steve Dowdy spoke about a Nov. 28 shooting outside a short-term rental on his street (a gun was discharged during an argument, but no one was injured).
“When are you going to listen to the residents of San Diego that have to live next to these?” Dowdy said.
The commission unanimously passed a motion to send the ordinance to the council with the following recommended revisions, subject to review by the city attorney and to be revisited in one year:
• Raise the limit on whole-house rental licenses to 1 percent of available housing stock
• Suggest to the council that the whole-house limit be distributed by district “or some other boundary” equally and let council members decide if they want to pursue that
• Identify a requirement that the license holder be able to validate his or her permanent address so it matches the property to be rented
• Include restrictions similar to commercial zones for noise mitigation and other quality-of-life issues
“I think this is a compromise ordinance. Nobody’s happy, so we did a good a job,” commission Chairman William Hofman said. “We need regulations; we need to put those in place so we can have better enforcement.”
San Diego Union-Tribune staff writer Lori Weisberg contributed to this report. ◆