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

A short-term rental ordinance shepherded by City Council President Jennifer Campbell won approval from the council Feb. 23.
A short-term rental ordinance shepherded by San Diego City Council President Jennifer Campbell won approval from the council Feb. 23.

District 1’s Joe LaCava casts the lone dissenting vote, and other La Jolla representatives also have concerns.


Following years of failed attempts to regulate the proliferation of short-term vacation rentals, the San Diego City Council on Feb. 23 endorsed a yearly cap that could cut the volume of the more active rentals by as much as 30 percent.

Councilman Joe LaCava, whose District 1 includes La Jolla, cast the only dissenting vote among the nine council members, failing to win support for four suggested amendments.

The new regulations, which still need the blessing of the California Coastal Commission, grew out of a compromise plan that won the support of Airbnb and other large home-sharing platforms, as well as organized labor.

The regulatory plan, shepherded by council President Jennifer Campbell, whose District 2 includes several of the city’s beach communities, calls for an overall cap on the number of whole-home rentals available for more than 20 days in a year.

Such rentals will be capped at 1 percent of the city’s more than 540,000 housing units, or about 5,400. However, in Mission Beach, which has a long history of vacation rentals that predates the rise of online home-sharing platforms, the allocation would be much more generous, limited to 30 percent of the community’s total dwelling units, or about 1,100.

Only one license will be allowed per individual, and the regulations will not take effect until July 1, 2022, to give the city time to transition to the new licensing system that will require hiring additional personnel.

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

Campbell ticked off the ordinance’s benefits, among them “a cap on uncontrolled whole-home rentals,” “strong regulation and enforcement” and “bad actors will lose their licenses.”

Just as the contentious issue of vacation rentals has divided the city in past public hearings, it did so again this time as more than 130 people addressed the council during a six-hour virtual session.

While the compromise plan is notable for its support among many longtime home-sharing operators, some of them characterized as unfair a lottery system that would be used for distributing licenses. Existing, responsible operators who have paid their transient occupancy taxes should be favored, they argued.

“We support council President 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 concerns of both sides of this very vigorous debate,” said Jonah Mechanic, owner of La Jolla-based SeaBreeze Vacation Rentals and leader of a coalition of vacation rental operators. “Also important to us is we figure out a way to prioritize responsible short-term rental owners who have paid their taxes, don’t have outstanding violations and are being good actors so they can continue to operate and earn income to provide for their families.”

Toward that end, the council agreed to return in October to consider some kind of lottery system that would prioritize “good actor” hosts who have been paying required taxes and have operated responsibly.

The council action comes more than two years after Airbnb and Expedia, the parent company of HomeAway and VRBO, mounted a referendum drive that killed much tougher restrictions approved by the council that would have barred the rental of second homes for short-term stays. The city’s effort to gain control over the mushrooming growth in home-sharing has been going on at least five years as proponents and critics squared off in multiple hours-long hearings.

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

District 1 Councilman Joe LaCava cast the lone dissenting vote on the short-term rental ordinance.

LaCava said in a statement after the vote that “my short-term rental stance has been clear; the city should enforce our current municipal code, which does not define STVRs, therefore, prohibits them.”

But given that the ordinance had the support it needed to pass, he unsuccessfully proposed amendments that he said would strengthen it:

A fixed cap calculated at 1 percent of the current housing stock for Tier 3 licenses, which include whole-home short-term residential occupancy for more than 20 days in the calendar year. “This ordinance will give up 1 percent of our housing stock in perpetuity,” LaCava said. “We work tirelessly to increase our housing stock and we must not give away future housing units, affordable or market rate, for visitor accommodations.”

• Limit license terms to six years. “As written, this ordinance awards lifelong ‘golden tickets,’ and that doesn’t comport with a vision of equity,” LaCava said. “A reasonable term ensures that every property owner can have the opportunity to participate in the financial gains that short-term rentals offer.”

• Expressly provide platform enforcement. “Technology is constantly changing, and the city is unlikely to keep abreast of how and who abuses those changes,” LaCava said. “The ordinance must expressly provide the city the right to enforce against platforms that advertise or offer unregulated units.”

• Include an affordable-housing preservation fee for Tier 3 licenses.

La Jolla Shores Association President Janie Emerson said she was proud of LaCava “for standing up for the interests of his council district.”

“The city attorney has stated that if our current laws were properly enforced, there would be no issues. Enforcement has always been the issue, not the ordinance,” Emerson said. “Without proper and constant enforcement, nothing will change.”

La Jolla Town Council trustee James Rudolph said: “There should be a limit to the total number of licenses within any council district. Obviously, many of the vacation rentals are grouped along the coast, so residents in these areas are understandably concerned that, without a cap, too many licenses will be issued, thus resulting in an unbalanced concentration in particular areas.”

The La Jolla Cluster Association — which includes the five La Jolla campuses in the San Diego Unified School District — often laments that the increase in short-term rentals has decreased the housing stock for families who will send their children to local schools.

“Even before the pandemic, declining enrollment in our public schools has been a concerning reality for years,” said Cluster Association co-chair Neha Bahadur. “Fewer students means decreased funding, fewer teachers and staff, and potential cuts to programming. In our coastal community, STVRs have played a role in this declining school enrollment, as there is less housing inventory and certain neighborhoods may seem less appealing to new families looking to move into the area.

“I am grateful that the City Council is working to address this important issue and I appreciate Councilman LaCava’s efforts to include amendments that would have increased accountability, equity and enforcement. I hope the council will reconsider these amendments when this issue comes up for a second vote in October.”

Just how far-reaching an impact the ordinance will have on the volume of short-term rentals remains open to debate given the difficulty in calculating how many of the more frequently listed whole-home rentals were operating before the COVID-19 pandemic dramatically curbed travel.

A detailed report by the city’s Independent Budget Analyst analyzed multiple sources of home-sharing data as of 2019 and concluded that the proposed cap could mean anywhere from 1,650 to nearly 2,800 fewer whole-home rental listings that would be allowed to operate more than 20 days out of the year. That translates to about a 20 percent to 30 percent reduction in such rentals that would be subject to the cap, according to fiscal policy analyst Baku Patel, who helped draft the Independent Budget Analyst’s report.

Not all home-sharing activity will be limited by the new regulations. The cap would not apply to a host — whether an owner or a tenant — who rents out a home for no more than 20 days out of the year. Similarly, there would be no limits for those who rent out a room or two in their home while they are living there.

Key to the new ordinance is stepped-up enforcement aimed at weeding out problematic hosts who violate public nuisance regulations. Campbell’s office proposes hiring four code enforcement officers whose salaries presumably would be funded through still-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 had suggested a fee range of as little as $50 for someone renting out his or her home for less than 20 days a year to $1,000 for hosts renting out their entire homes for more than 20 days a year. ◆