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City Council approves new short-term rental rules

Photo credit:
Wikimedia Commons

Years of debate may have come to an end over short-term rentals in San Diego. The City Council, using Mayor Faulconer's input voted to establish new regulations for short-term residential occupancy (STRO) programs such as Airbnb. These new rules include upholding strong code enforcement and preserving the quality of life in San Diego’s neighborhoods.

“I introduced my compromise proposal to help the City Council find enough common ground so they could pass comprehensive short-term rental laws, and with the additional amendments made today we’ve finally achieved that goal,” Mayor Faulconer said in a statement. “As I’ve said repeatedly, the most important thing is that we have an established set of rules that protects neighborhood quality of life through increased oversight and enforcement.”

Mayor Faulconer continued, “True compromise means everyone gives a little in order to reach a common objective, and we can all agree that it is time for San Diego to move forward on this issue. I appreciate all of the input we have received from the public and stakeholders, and I want to thank the City Council for working collaboratively with my office to get this across the finish line.”

The ordinance still requires a second reading before the City Council, after that Mayor Faulconer will have 10 days to either sign it or veto it. If he signs it will go into effect a month later, but the full license requirements in the ordinance won’t go into effect until July 1, 2019.

It should also be noted that the Coastal Commission has to approve the ordinance.

The new rules will create the City's first license-based system to manage the rentals, charge cost-recoverable fees to administer licenses and enforce code violations, hire staff to address complaints and charge a nightly fee that would go into a fund to help affordable housing projects.

For ten years the City Council has been deadlocked on which way to go with STROs, but last month Mayor Faulconer proposed a compromise that allows a host a maximum of two licenses; one for their primary residence and one additional license for a secondary residence. 

It also included no limitations on the number of licenses available to hosts within Mission Beach given the long history of vacation rentals and unique character of the community.

Mayor Faulconer listened to public feedback and issued a memo on Monday saying that operators of short-term rentals in Mission Beach that have acted in good faith by previously registering and paying taxes should continue doing business as long as they adhere to the new registration rules and good neighbor policy. He added that Mission Beach operators should now be limited to the same license restrictions as the rest of the city. 

The City Council agreed and amended Mayor Faulconer’s proposal keeping with the two license rule even in Mission Beach.

The City Council left the rules related to registration, the good neighbor policy, enforcement and the affordable housing fee largely unchanged.

BALANCED PROGRAM WITH CLEAR RULES

All hosts are required to:

  • Register with or be licensed annually by the City
  • Secure a Transient Occupancy Tax (TOT) certificate
  • Pay TOT and the Affordable Housing Impact fees monthly
  • Obtain a Neighborhood Use Permit for dwellings with four or more bedrooms
  • Advertise a STRO license number on all advertisements
  • Comply with “Good Neighbor” policy, including posting local contact information on property
  • Collect and maintain detailed records on each STRO transaction for a period of three years

All platforms are required to:

  • Provide notice of the STRO and TOT requirements to each host prior to their listing
  • Collect TOT and Affordable Housing Impact fees at the same time rent is collected
  • Ensure only licensed or registered hosts are using the booking service on the hosting platform
  • Collect and maintain detailed records on each STRO transaction for a period of three years

ENFORCEMENT, COMPLIANCE AND NEW ONLINE TOOL FOR COMPLAINTS

Mayor Faulconer is also on board with enforcement of the new regulations ensuring that hosts, guests are in compliance and neighbor complaints are addressed. A new team of police and code enforcement agents will be put in place working nights and on the weekends. 

Licensing and registration will interface with a City database and complaints will be vetted through a hotline and mobile application.

Enforcement is based on an inter-departmental strategy that includes the Code Enforcement Division, the City Treasurer’s Office, the City Attorney’s Office and the San Diego Police Department (SDPD).

The City issued the following list of changes that will be made. The enforcement program will:

  • Maintain a database of all licensed or registered STRO locations within the City Treasurer’s Office that will provide information to the SDPD.
  • Issue notices of violations, administrative citations, fines and revocation of licenses.
  • Create a STRO Code Enforcement, SDPD and City Attorney team for proactive enforcement in the areas with most frequent violations. The team will work evenings and weekends to target disturbances.
  • Monitor websites to ensure hosts are paying TOT; violators will be reported to the City Attorney.
  • Receive complaint calls 24-hours per day, seven days per week; an online portal will be created to report violations.
    • First notice of violation is considered a “warning”
    • Second notice of violation may result in citation
    • Third notice of violation within 12-month period may result in revocation of STRO permit

SUPPORTING AFFORDABLE HOUSING

The proposal also includes a new Affordable Housing Impact Fee of $2.73 (home share) to $3.96 (whole home) per rental night, paid for by hosts. Implementation of the fee is expected to generate funding for the Affordable Housing Fund, which is administered by the San Diego Housing Commission and is used to pay for affordable housing-related projects.