Vacation Rentals in San Diego

By Frank Gormlie

Besides the Chargers stadium, there is no other hotter issue these days in San Diego than that of the issue of vacation rentals.  And this is particularly true in the beach and coastal communities of San Diego, like OB, Pacific Beach, Mission Bay.

It is an issue that hits close to home and is a personal one for many San Diegans. A good friend of mine just got married up in the Bay Area. He and his wedding party of 5 found a nice, roomy house in Berkeley with such a nice backyard that they held their ceremony there. They had found the place on Airbnb after another real bed and breakfast had cancelled on them at the last moment.

Another buddy of mine – a former OBcean –  flew out here last spring from the East Coast and rented a 2 and 1/2  bedroom house on Muir Street via a site like Airbnb. There is no way he, his wife, 2 kids, mother-in-law and aunt could have afforded a hotel for that many of them.

I have some good friends who have a 2-bedroom house in OB a block from the beach. They’re both retired and when they leave town, they occasionally rent out their house to vacationers through an online website. The money received helps them maintain the house and with other living expenses.

My young daughter and her hubby recently drove out to Joshua Tree with friends for a break and found a inexpensive house to stay in, close to the Park with Airbnb. They couldn’t afford a hotel with their limited income.

Yet at the beaches, the complaints have been coming in. Local residents are pounding their verbal fists at community meetings, city council committee hearings, in letters to the editor. They cite the noise, the traffic, the trash, the late-night parties, the rowdiness, the disruption of their peaceful neighborhood, the “pop-up” hotels that have turned their residential communities into revolving doors of strangers.

Housing advocates cite the loss of affordable housing, as hundreds of rental units are taken off the market when landlords eye the more pricy charges they can demand to short-term vacationers for those units. This squeezes the rental market and forces up prices.  People who want more controls on home-shares say landlords are taking hundreds of rentals off the market, exacerbating the an already tight housing stock and sky-high prices. They say landlords are motivated to rent units to tourists rather than long-term tenants.

There is even a loss of real community when vacation rentals and short-term rentals begin to take over entire blocks of once vibrant neighborhoods.

On the other side, proponents of vacation rentals claim that they bring much-needed money to pensioners, grand-mothers, and others who lease out rooms or entire houses to supplement their limited incomes. The rules are too strict, they say, and violate property rights and the right to their livelihoods. They cite that the problem short-term tenants are a minority and most are well-behaved.

And plus, sites like Airbnb allow people to take affordable vacations in a trending “sharing-economy”.

The issue’s complexities are reflected in that it turns out that vacation businesses are major players in who places ads on Airbnb – that it’s not all grand-ma’s.

One study was done recently on Airbnb in LA recently, using publicly available data on Airbnb rentals from one day last October. The study –

found that a third of Airbnb revenue in the city comes from leasing companies and big vacation rental agencies: businesses with lots of listings, often for apartments that are only used for vacation rentals. npr

And in fact many houses that are leased out for short-terms are homes and will never be part of the rental market – thus, they’re NOT removing potential rental units.

It is such a heated and contentious issue that when a San Diego City Council committee held a hearing on the issue in April, so many people turned out, a second one had to be scheduled later on May 29th.  San Diego has found itself as just one of the latest battleground over the issue of “house-sharing”.

It’s especially an issue in many of the cities and towns that hug the California coastline – as the success of such online room/house rental agencies as Airbnb – a multi-billion dollar business – forces government to play catch-up to new technology and lifestyles.

The issue is in the news just about every other day. Just Tuesday, June 9th, the San Francisco Supervisors voted to table a proposal for an ordinance to limit short-term vacation rentals to 60 days a year.  An Airbnb spokesman stated that the vote postponement made it clear, “…the supervisors listened to the thousands of home-sharers across San Francisco who galvanized around this issue.”

San Diego City Council Inaction

Ever since Councilwoman Lorie Zapf and her staff were met with an avalanche of complaints about short-term rentals at a Pacific Beach community meeting, the issue has been on the San Diego City Council’s radar. In April, the Pacific Beach planning group voted to prohibit vacation rentals in single-family residential areas that are for less than 30 days.

Zapf, of course, represents much of the coastal areas of the city which are in District 2, and some of the most impacted neighborhoods – and it’s probably her office that has received the most noise about the issue. Both pro and con.

So, what is city government doing about the issue?

In a March 30 memo Councilwoman Zapf called on the mayor and council to update the municipal code to something akin to what the cities of Encinitas and Solana Beach have for restrictions on their vacation rentals.  Zapf chairs the City Council’s Smart Growth and Land Use Committee and it was her committee that had to stretch into two sessions, including 6 hours of public testimony.

Some of the passionate public speakers proposed restrictions on vacation rentals such as minimum stays of 30 days, restrictions on occupancy, calls for a permit process, improved city monitoring and enforcement of compliance, and higher fines for noise and nuisance issues. Some spoke for an outright ban in certain communities.

Zapf is an advocate of a minimum rental period of 21 days in residential neighborhoods, otherwise the property owner needs to obtain a permit.  During the hearing, she stated:

“I’m a mom, I’m raising my kids in what is a single-family residential neighborhood. I can tell you I would not want in my neighborhood a pop-up hotel. I have two young daughters and worry about their safety.”

Other members of the council committee made their views somewhat known.  Republican Scott Sherman had his own concerns on restrictions on housing. He said:

“I want to make sure we’re not overly restricting people’s property rights.”

 Councilman David Alvarez was contrite and apologized for the council not having taken on the issue earlier. He said:

 “On both sides of this issue we really have failed.”

In the end, the 4-member committee punted. They unanimously voted to request that the city use more resources and step-up the enforcement of noise and nuisance regulations – which may begin this summer – and they asked city staff to report back on alternatives after doing more research and community outreach.

Alex Bell, Zapf’s PR staffperson, updated me this morning during a phone call to her office. City staff will take their proposals to the Committee of Planning Committees, to the Technical Advisory committee – which is a long-standing committee of residents who give advice on landuse issues – , and back to Zapf’s committee in September or October. Then it goes to the Planning Commission.

Zapf is most concerned, Bell said, with protecting single-family residential zones. She wants to place a requirement that if the houseowner is not on site, they cannot rent for less than 21 days without obtaining a permit. The councilwoman is also concerned about enforcement issues around these limitations. What may happen is that staff comes forward with a proposal that has stricter limits on short-term rentals depending on the landuse zone. Single-family zones would have more than mixed-use zones, for instance.

Her constituents in District 2, Bell said, tend to support more restrictions on these types of rentals.

But what is clear, the City is not moving on this hot issue quickly, and it will simmer at least until next Fall. In fact, an Arizona travel magazine blog has reassured its readers in that San Diego is not about to enact anything restrictive in the near future. It advised:

[San Diego] is in the early stages of addressing the issue. No changes are imminent. Visitors are unlikely to see any immediate impact except perhaps stronger enforcement of noise and other nuisance violations.

The significance of the impact of vacation-rentals on Arizona vacationers in San Diego was highlighted:

An estimated 6 percent of overnight visitors from Arizona stay in vacation rentals instead of hotels or with family or friends, according to 2013 research from the San Diego Tourism Authority. One in five overnight vacationers to San Diego come from Arizona, more than any state besides California.  azcentral.com

So, as city staff do their research and plan community outreach on the issue, what are other cities doing? One of the options for San Diego staff is to craft something similar to other cities in the County. Based on media reports (San Diego U-T), we find:

Solana Beach: One of the first cities in San Diego County to set limits on short-term rentals, in 2003, it adopted an ordinance that prohibits rentals of less than 7 days in residential zones, requires owners to get a permit for a one-time fee of $110 with a small yearly renewal fee, and requires the exterior posting of contact information in public view, and a response within 24 hours to any complaints. Its success is seen in that over the past 5 years there has not been a single complaint.

 Encinitas: Like Solana Beach, Encinitas adopted its ordinance early on, and passed it in 2005. It  requires a permit with an annual fee of $150, it limits the number of occupants in rentals to 2 people per bedroom, plus one additional person per home, and it requires property owners to post their contact information on the outside of building and to respond within 24 hours if problems are reported.

Oceanside: Owners are required to have a business license and to pay Oceanside’s 10 percent hotel room tax and a 1.5 percent fee to the tourism marketing district. Any stay over 30 days is not considered a vacation rental and does not pay the room tax or marketing district fee.

 Carlsbad:  The City Council adopted regulations in April similar to those of Encinitas and Solana Beach, which just took effect on June 4. However, Carlsbad decided to allow them only in its coastal zone, an area entirely west of El Camino Real and excluding much of the downtown “village” area.

What about other major California cities?

San Francisco:  supervisors tabled further attempts to regulate home-shares just this week despite calls from some members to vote on a plan to limit short-term vacation rentals to 60 days a year. The vote by the Board of Supervisors to move the discussion to next month was approved 7-4. Current city law, in effect since February, calls for a 90-day cap on entire-home rentals via companies such as Airbnb. Hosted rentals are not capped.  San Diego U-T

 Santa Monica: Last May, the city council unanimously voted to ban vacation-home rentals of fewer than 30 days, although it will allow Airbnb-style stays in a portion of an occupied house or condo, but owners must get a permit and collect lodging taxes.  The new regulations go into effect June 15. Santa Monica officials estimated about 1,700 housing units in the city were regularly rented out as vacation rentals.

 Sacramento: The City Council wants to be flexible and has a proposed ordinance that would allow property owners to rent out units for a maximum of 30 days in a calendar year without being considered a bed and breakfast. Owners who rented their units out for more than 30 days in a year would have to obtain a city permit, which would include an evaluation for traffic impacts and noise. Sacramento Bee

Berkeley: The City Council in this trendy university city with a huge lack of affordable housing, is considering guidelines for legalizing and regulating short-term rentals – defined here as rentals lasting fewer than 14 days, and vacation rentals – short-term rentals during which the host is not present.  The Daily Californian

However San Diego goes, it’s clear that this issue will not be going away, even if more regulation is on its way. But hopefully, the following scenario will never occur:

Imagine someday, you wake up and take a leisurely stroll through the community and you find the entire village is filled with vacationers, – every house, every condo, every apartment, every little shack and cottage have been rented out for the weekend or week.

The sidewalks, cafes and bars are filled completely with strangers. You walk around and don’t see anyone you know. Small clusters stand on corners, looking at maps or their ipods, trying to figure where to go.

There’s long lines, not just at Hodad’s but at just about every restaurant. Even some of the bars have lines to get in.  So, the businesses are raking it, though, for these vacationers are spending more money this weekend than the residents spend in a year.

Yet you look around and you no longer recognize the place. Time for a vacation.

As one woman resident of the beaches complained at the May 29th San Diego council committee hearing:

“Everyone wants to stay in a vacation-rental. But no one wants to live next to one.”

 News sources for this article: San Diego U-T ,  azcentral.com

npr , Sacramento Bee

Reuters  NBC7