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Citywide cap on short-term rental licenses not likely until later this year as San Diego council grants delay

San Diego has been wrestling for years with how to regulate vacation rentals. The council approved a new ordinance last year.
San Diego has been wrestling for years with how to regulate vacation rentals. The City Council approved a new ordinance last year.
(Mark Winfrey / EyeMark)

The new implementation date will be postponed for up to nine months after the California Coastal Commission certifies the new legislation, possibly as early as March.

The start of the city of San Diego’s long-stalled short-term rental regulations may be delayed until the end of this year, pending the outcome of a required review by the California Coastal Commission.

The new regulations, which were approved by the City Council last year, were supposed to go into effect July 1, but the council agreed Feb. 1 to delay the implementation for up to nine months after the Coastal Commission certifies the new legislation.

The commission, which is required to weigh in on the new rules for rentals in San Diego’s coastal zone, is scheduled to consider the matter in March. If the commission were to OK the regulations at that meeting, the effective date would not be later than December.

At stake is an approved citywide cap on what will be much-coveted licenses allowing hosts to rent out their homes and apartments for short-term stays advertised on popular home-sharing platforms such as Airbnb and VRBO.

“I want to assure the citizens that this delay will actually ensure the success of the short-term vacation rental ordinance,” said Councilwoman Jennifer Campbell, whose office a couple of years ago revived efforts to formally regulate short-term stays in people’s homes. “I know people have been waiting for many years to see these regulations become law, and I understand the impatience. So I want you to know I remain as committed as always to see this through.

“This amendment will give staff an opportunity to ramp up services and will allow operators a more realistic window of opportunity to become compliant with the regulations.”

The council vote was 8-1, with Councilman Joe LaCava dissenting. LaCava, whose District 1 includes La Jolla, had opposed the ordinance when it went before the council last spring, arguing that short-term rentals should not be legalized. He unsuccessfully proposed amendments that he said would strengthen it.

In addition to awaiting Coastal Commission action, city staff said it was concerned about starting a new program so close to the approaching summer season, when vacationers typically will have booked their rentals months ahead.

City staff says more time is needed to implement a citywide cap on Airbnb-style rentals as San Diego awaits a decision on whether the new regulations pass muster with the California Coastal Commission.

Without the delay, vacation rental hosts would not know in advance whether they had licenses, which are going to be issued via a lottery system, the city treasurer’s office said.

San Diego’s new ordinance will cap whole-home rentals citywide at 1 percent of the city’s more than 540,000 housing units, or about 5,400. An exception was made for Mission Beach, which has a long history of vacation rentals. There, the allocation is more generous, with licenses limited to 30 percent of the community’s total dwelling units, or about 1,100.

Only one license will be allowed for those who rent out their entire residence for more than 20 days out of the year. An unlimited number of licenses will be allowed for vacation rentals of less than 20 days a year or for home-sharing operations in which a host rents out a room or two.

While short-term rental hosts welcomed the postponement of licensing in light of the approaching summer, critics remained skeptical that the city’s new regulations will make a difference in preserving the residential character of single-family neighborhoods.

“This vacation rental ordinance has been doomed to failure from the start,” said Matt Valenti, a renter and member of Save San Diego Neighborhoods, which argues that vacation rentals should be barred in residentially zoned areas. “Our city already can’t enforce the most basic quality-of-life issues like noise complaints. It will never be able to properly enforce this overly complicated scheme, leading to the loss of more and more affordable rental housing throughout San Diego.”

The group Save San Diego Neighborhoods argues that vacation rentals should be barred in residential neighborhoods.
(File)

In advance of the ordinance’s still-unspecified effective date, city staff will hold a lottery to determine who will get a two-year license to legally operate vacation rentals. Under the proposed lottery system, the highest priority will be given to longer-tenured rental operators who have no code violations associated with their units in the past two years. Points will be allocated on a weighted scale that would not necessarily guarantee a license for such individuals, but the system will improve the likelihood that “good actors” will secure a license, according to the city treasurer’s office.

To fund administration and enforcement of the regulations, license and application fees will be levied ranging from $100 for a two-year license for hosts who rent out their properties for less than 20 days a year to $1,000 for those who are renting out entire homes for more than 20 days out of the year.

Total administration and enforcement costs over a two-year period are estimated to be $8.1 million, which includes more than $1.2 million in one-time costs for licensing software, a phone system, the purchase of three new city vehicles for enforcement and hiring new staff. In all, the city is proposing to add 15 positions, including nine in code enforcement. ◆