By Gary Wonacutt
Eight years ago, District 2 Councilmember Jennifer Campbell campaigned against whole-home short-term rentals (STRs) in residential neighborhoods. Three months into her term, after extensive communications with Airbnb and Expedia, she shifted to a compromise that leaned heavily toward the platforms’ recommendations. Campbell asserted her plan would substantially cut the consultant-estimated 16,000 STRs citywide, but that number has since proven greatly exaggerated.
Early regulatory efforts faced stiff resistance. The Kevin Faulconer “anything goes” proposal failed at City Council, and the Bry/Zapf “primary only” ordinance was rescinded after threats of lawsuits from STR organizations.
City Attorney Mara Elliott’s letter confirmed that short-term rentals violated existing zoning and were illegal. Rather than amend the zoning code or land-use plan— which would have triggered complex procedures, potential Coastal Commission review in coastal zones, and greater difficulty for future tweaks— the City exercised its general police power.
The resulting Short-Term Residential Occupancy (STRO) ordinance (Ordinances O-21305 and O-21464) applies citywide to all dwelling units, regardless of base zoning. It overlays a licensing, permitting, tax, and enforcement regime— including a tiered lottery system and caps— without reclassifying properties in the zoning code. This approach allowed quicker implementation and easier future amendments by simple Council vote.
In September 2022, the San Diego Short Term Rental Alliance (a pro-host nonprofit) sued the City in state court, later removed to federal court (Case No. 3:22-cv-01831), seeking to invalidate core provisions of the STRO ordinance.
In June 2023, U.S. District Judge M. James Lorenz granted the City’s motion to dismiss most claims. The court rejected Fair Housing Act racial-discrimination arguments (finding no standing and no discriminatory intent), as well as takings, equal-protection, substantive-due-process, and dormant-Commerce-Clause challenges. It ruled the ordinance a legitimate exercise of police power to preserve housing stock and neighborhood quality of life.
Owners retained core property rights (living in, selling, or long-term renting their units), and any economic impacts were reasonable. All federal claims were dismissed, with remaining state claims remanded. The decision provided strong precedent validating STR caps, distinctions between whole-home and host-occupied rentals, and housing-preservation goals.
The ruling has strengthened enforcement. Unpermitted or excess whole-home STRs are now clearly illegal and easier to cite, fine, or shut down. It deters future litigation and has been cited approvingly elsewhere:
• In Ruelle et al. v. Summit County, Colorado (2023), defendants relied on San Diego’s holdings to defeat equal-protection, due-process, and Commerce-Clause claims; the challenge was dismissed.
• Maui County, Hawaii, used the case in 2025 testimony supporting Bill 9 to phase out transient vacation rentals in apartment districts, citing its takings analysis and reasonable transition periods.
• Baltimore County, Maryland (2023) and Trophy Club, Texas (2024) referenced it when drafting numerical caps and addressing Commerce-Clause issues.
This legal clarity is especially timely for the June 2, 2026 primary in City Council District 2, which covers prime STR territory: Mission Beach, Point Loma, Ocean Beach, Clairemont, and parts of Midway.
Incumbent Jennifer Campbell is termed out; seven candidates are running, with the top two advancing to November. The current STRO ordinance caps whole-home (non-host-occupied) STRs citywide via lottery and tiers to protect long-term housing. Most candidates agree whole-home STRs worsen affordability, displace residents, strain neighborhoods, schools, and services. Five of the seven favor further limiting licenses; only Richard Bailey and Josh Coyne (described as status-quo) support maintaining the existing framework.
Candidate positions, drawn from May 2026 forums and campaign statements, include:
• Jacob Mitchell: Strongest pro-ban advocate. Pledges to introduce an outright ban on most STRs (modeled on New York City), allowing only minimal host-occupied rentals to return units to the long-term market.
• Paul Suppa: Supports shifting to an outright ban or heavy limits, calling STRs a “free-for-all” that spikes unaffordability by replacing stable residents with investor-owned turnover properties. Opposes vacancy taxes as unenforceable.
• Mandy Havlik: Would revamp the ordinance with stronger caps focused on whole-home rentals, requiring them to “contribute more” to offset impacts while preserving neighborhood character.
• Nicole Crosby: Prioritizes cracking down on whole-home STRs that displace families and shrink school enrollments; emphasizes robust enforcement and opposes cutting code-compliance staff.
• Richard Bailey: Pragmatic revenue approach. Acknowledges Coastal Commission barriers to a full ban; proposes directing STR license fees back to impacted communities rather than the general fund.
• Michael Rickey: Calls for revamping the ordinance and tightening the cap on properties.
• Josh Coyne: Advocates stepped-up enforcement of the existing rules, including 24/7 nuisance response (trash, parties), which observers view as maintaining the current status quo.
A separate 2026 proposal for a steep tax on whole-home STRs was killed in committee. Enforcement of the cap, code-compliance staffing, and budget issues remain flashpoints. Positions may evolve; voters should consult candidate websites and the May 2026 Paradise Point forum for the latest details.
In summary, San Diego’s police-power strategy produced a durable STRO ordinance that survived federal constitutional challenges, creating a blueprint now influencing other jurisdictions. The June 2026 District 2 race will likely determine whether the City further tightens whole-home STR limits or holds the line.
