San Diego City Council Votes To Institute Cap on Number of Vacation Rental Properties

The San Diego City Council passed a new ordinance earlier this week that will institute a cap on the number of vacation rental properties that the city will allow at any given time designed to crack down on properties that allow more rowdier events to occur and to help bring some of those houses back on the market to help alleviate the housing shortage in the city.

Under the new ordinance, authored by Councilwoman Jennifer Campbell, a lottery system will be put into place to decide which house owners will be given a two-year license to rent out their homes to vacationers for 20 more days a year, including those who have been going through online services such as Airbnb. House owners who have good standing and have not received noise complaints or other issues, will be given priority in the lottery. Those selected will have to pay fees to receive a permit. The cap is to be set at 1% of homes, or about 5,400 homes, with enforcement provisions set to help keep the ordinance enforced, including dedicated code enforcement officers.

Many in the city have been fighting for regulations like these since the mid 2010’s, when the proliferations of Airbnb and short-term rentals exploded in popularity across the city, especially in properties close to the beach. With noise complaints, specifically from those caused by bachelor and bachelorette parties at many properties, and the city’s low housing stock causing prices to skyrocket and worsening the homelessness crisis, the call for a cap on the number of vacation rentals became stronger.

The regulation effort led to the preliminary law being passed last year that broke up rentals into specific tiers, to make it easier to target the rental types causing the most problems and to help avoid removing rentals aimed at families. However, the final passage to actually limit the rentals was slower for a complete passage, only being approved by the California Coastal Commission (CCC) this March. This all led to the final adoption vote on Tuesday, with the City Council passing it unanimously 14-0.

“With today’s vote approving San Diego’s first-ever short-term rental rules, we’ve turned the corner on one of San Diego’s thorniest challenges,” Councilwoman Campbell said after the vote on Tuesday. “San Diegans have been asking for common sense and sanity on short-term vacation rentals for years – and now their voices are finally being heard. This new law will keep neighborhoods safe and livable by capping short-term rentals and finally create the robust enforcement arm needed to hold nuisance properties accountable.”

“This will allow thousands of homes to come back onto the housing market and bring stability and normalcy to our neighborhoods. It’s really a lot simpler than it seems. We have four different tiers, and tier three is for those who have a whole-home rental in the city of San Diego. They would have to join a lottery to get the license if there’s more than 5,400, which is the cap at this time. Those who live in Mission Beach and have a whole home, they’ll also have their own lottery. It’s 1,080 at this time. And so, if there are only 1,080 who apply, then they will all get a license if they are good actors.”

Short term rental changes in San Diego

Many in the short-term rental business were enthusiastic about the upcoming changes on Thursday, with many noting that they alone should not shoulder the blame for the affordable housing crisis in San Diego.

“The San Diego Short Term Rental Alliance (SDSTRA) is pleased to see sensible aspects towards regulations being put in place,” said the San Diego Short Term Rental Alliance in a statement. “We believe this permit and the fee collection and enforcement mechanisms behind it are good things that will foster harmony between short term rentals and the communities in which we co-exist. For years responsible hosts in San Diego have advocated for the city to clamp down on irresponsible actors who would tarnish our reputation and stain the time honored, long-standing tradition of short term rentals in San Diego.”

“However, we as the hosting community of San Diego, refuse to shoulder the blame for the city’s affordable housing crisis – a crisis that has been declared by the city council since 2002, long before the proliferation of web based platforms. This city’s housing crisis is solely a matter of burdensome costs, regulation, and opposition towards building more housing and increasing density. Prohibiting 5,000 or so short term units that the city estimates from operating will not make any significant impact on the affordability of housing in our great city.”

“It will however make it more difficult for families and friends to travel together to San Diego and we are very concerned on the impact this lottery will have on our members, our cherished guests, and the San Diego short term rental community at large and will be watching its implementation closely.”

However, for many, the law will simply not do enough to curb all the issues.

“There are no limits on permits for under 20 days per year for a rent out, meaning that these big parties can still happen,” explained Juan Ramos, a neighborhood watch organizer who has attempted to reign in rental problems on his street for the last decade. “This law is for complete house rentals. Guess where most of those are? The beach and other high wealth areas. This is a law aimed at protecting the interests of rich people and property management companies. This law makes it clear that they don’t give a damn about people not in those areas.”

“Seriously, a big part of the grief was over Airbnb. But guess what? Most Airbnb listings only rent out part of their home, like a garage or apartment unit or something. Guess what this ordinance does to limit those? Absolutely nothing.  This is not about the housing crisis. This is just a way to get rid of troublesome rental locations because they were being a bit too loud and their neighbors didn’t like people having a good time. And those people will now be renting more in our neighborhoods giving us the problems they didn’t want. I’d call all those people for the ordinance evil, but I think they already know it.”

New licenses are expected to be issued by the end of the year, with the regulations coming into law early next year.