Coastal Commission endorses new short-term rental ordinance

Mission Beach was carved out with a 30% cap by commissioners

On March 9, the California Coastal Commission unanimously endorsed San Diego’s new short-term rentals ordinance.

Commissioners capped rental numbers by population while providing a lottery for operators, as well as requiring a review of the measure’s impacts after seven years.

The new regulatory system caps whole-home rentals at 1 percent of the city’s 540,000-plus housing units. Mission Beach, which historically has had the City’s highest percentage of short-term rentals, was carved out and given a 30% cap by commissioners.

Coastal Commission staffer Alex Llerandi said the amendment passed by the commission “is designed to balance the need to protect and preserve high-priority visitor-serving accommodations, with community character and housing needs by permitting STRs to be located throughout the City. But it caps the total number of rentals allowed. Staff is recommending reassessing the program after seven years.”

“The majority of STRs, approximately 39%, are along the coast,” Llerandi pointed out noting, “That’s almost 5,000 units. The vast majority of STRs are whole-home rentals, as opposed to home share, where the property owner is present.”

Llerandi noted the typical STR operator rents out their property for the majority of the year, both as a business and as a visitor amenity. “STRs are a major part of San Diego’s tourist economy and experience, particularly during the summer months,” he concluded.

Reacting to the Coastal Commission’s carve-out amendment for Mission Beach, Gary Wonacott, a past president of Mission Beach Town Council, claims the 30% cap for rentals is still too high.

“The single most important metric that decides whether a community can be overrun by short-term rentals is density, the number of STRs per square mile,” said Wonacott. “At 30% percent, Mission Beach is at 1,852 STRs per square mile. But, it will be much worse for some residents on some of the courts, because the number of STRs will not be uniformly distributed on each court. A 60-80% total of STRs on a court/place will lead to resident flight.”

Contended Wonacott: “Thirty percent is too much, and will ultimately result in the demise of the community because the community organizations will over time break down and succumb to the STR community. Right now, and since 2018, the STR industry has controlled the narrative coming out of Mission Beach.”

Jonah Mechanic, owner of SeaBreeze Vacation Rentals in La Jolla and president of Share San Diego, Airbnb’s San Diego arm, was encouraged by the direction local government is headed with short-term rental regulations.

“The recent decision by the California Coastal Commission to approve the proposed STR regulations passed by the San Diego City Council is a major step forward towards implementing a balanced ordinance that protects good actor hosts who have been following the rules, and establishes a regulatory framework that will protect our communities,” Mechanic said.

“This ordinance represents a compromise position, and while the host community is very concerned about the major reduction in whole-home rental permits, we are looking forward to finally having a framework the City can use to effectively monitor and regulate short-term rentals throughout our City.”

The City Council voted 8-1 in February 2021 in favor of a new short-term rental ordinance authored by District 2 Councilmember Jennifer Campbell’s office. It was signed into law by Mayor Todd Gloria in April 2021.

The new ordinance claims to reduce the volume of whole-home short-term rentals while creating a legal inventory for them. It also will provide new rules governing its operation, including 24/7 accountability by hosts.

Estimates are that 6,500 short-term rental licenses will be available in the City of San Diego with the new regulations, a reduction of 48% from the current estimate of 12,300 vacation rentals now available.

New short-term rental rules allow one license per operator to rent their entire residence for more than 20 days annually. An unlimited number of licenses however will be granted for short-term rentals of less than 20 days per year, or for home-sharing where a host rents out one or two rooms.

A lottery system will be instituted for the granting of two-year licenses for short-term rental hosts. Priority will be given to rental operators with longer tenures, and to those hosts having no record of code violations on their rental properties for the past two years.

The short-term rental ordinance as amended by the Coastal Commission will return to the City Council for final approval sometime later this year.

The City’s short-term rental ordinance passed in 2021 includes:
• Capping whole home STRs at 1% of the City’s housing stock per the San Diego Planning Commission (based on SANDAG’s annual Demographic and Socioeconomic Housing estimates), which would equate to 5,400 today.
• No limit on home-sharing STRs.
• Allowing part-time STR operators to obtain a license at lower annual fees to accommodate high visitor events such as Comic-Con, Pride, or December Nights.
• Allowing STR owners a maximum of one license, per person.
• Creating a detailed “Good Neighbor Policy” along with strict enforcement guidelines, a fine structure for violations, and a license revocation standard.