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California Coastal Commission OKs San Diego cap on short-term rentals — with a key provision

San Diego's short-term rental ordinance could go into effect as early as this fall.
(Mark Winfrey / EyeMark)

The city must revisit the new regulations in seven years to assess their effects.

The California Coastal Commission approved San Diego’s cap on short-term rentals March 9 after commissioners added a key provision requiring the city to revisit the new regulations in seven years to assess their effects.

“For a city that gets 35 million tourists, I really feel like you guys got it right, trying to balance all the interests and understanding that it’s going to be ... a work in progress,” Coastal Commission Chairwoman Donne Brownsey said just before the panel OKd the changes in a 12-0 vote.

Before the meeting, the commission’s staff recommended the review because the overhaul of short-term rental rules posed a “risk of substantial adverse impacts on coastal access” and thus it would be prudent to re-evaluate the changes after seven years.

The full state commission will consider the new regulations in March, setting the stage for fully implementing them as early as this fall.

Alex Llerandi of the commission staff said the agency usually would consider a five-year timeline but that given the complicated nature of the issue and the sheer number of vacation rentals in the San Diego area, a longer period seemed appropriate.

“San Diego is the largest jurisdiction in the coastal zone; it has thousands of units and this is a large inaugural attempt to regulate it,” Llerandi said. “So we knew it would take all parties — the commission, the city, operators, visitors — to learn and digest the law, adapt the market to it, let it ripple out both through the STR (short-term rental) and hotel industry.”

The City Council approved the ordinance last year, and the new rules could go into effect as early as this fall. The Coastal Commission’s action will now go before the council for approval.

Under the new framework, whole-home rentals will be capped at 1 percent of the city’s more than 540,000 housing units, or about 5,400.

However, a more generous carve-out was made for Mission Beach, one of the most popular neighborhoods for vacation rentals. There, the cap will be set at 30 percent, or about 1,100 units.

Altogether, about 6,500 licenses will be available in the city, which would represent a reduction of 47 percent compared with the current estimate of 12,300 vacation rentals, according to the Coastal Commission.

The new regulations allow for only one license for individuals renting their entire residence for more than 20 days per year. An unlimited number of licenses will be allowed for vacation rentals of less than 20 days a year or for home-sharing in which a host rents out a room or two.

Two-year licenses will be allocated through a lottery system, with priority given to rental operators with longer tenures who have no record of code violations at their units in the past two years.

The ordinance is part of a long-running debate over short-term rentals in San Diego, trying to balance the interests of property owners who earn income by renting their dwellings and local residents who complain that an excessive amount of short-term rentals undermines the community feel of their neighborhoods and depletes the number of year-round housing units.

Coastal commissioners spent nearly an hour hearing from 24 residents who called in during the public comment period.

Pedro Tavares of the San Diego Short Term Rental Alliance supported the commission’s proposal of the seven-year review, calling it a “true compromise.” Though he had questions about the license lottery, “this ordinance will provide a path forward for short-term rentals to operate in San Diego in harmony with neighbors.”

Marta Knapp, who grew up in Mission Beach and rents property there, said “many of the families that stay with me could never afford to live at the beach. Short-term rentals allow more people shoreline access for a price within their budget. They allow for cheaper accommodations for large families.”

But Gretchen Newsom, a single mother with a son, said she was recently told that the cottage she rents in Ocean Beach is about to be sold and she has 60 days to find a new home. “But the sad fact is that the housing stock in Ocean Beach has been decimated by short-term vacation rentals,” she said. “I have watched over the years as properties on our block get snapped up by investors and get transitioned to short-term vacation rentals.”

According to a recent city survey, about 39 percent of short-term rentals in San Diego were in the coastal zone. Of those, 94 percent were whole-home rentals that accommodated an average of 5.8 renters. The average nightly rate was $306. ◆