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San Diego Adopts Short-Term Rental Rules to Protect Neighborhoods, Establish Robust Enforcement

City Council Amends and Adopts Mayor Faulconer’s Compromise Proposal to Establish First-Ever City Regulations for Short-Term Rentals

Monday, July 16, 2018 - NEWS RELEASE

San Diego – After a decade of civic debate and public hearings, the City Council voted Monday to establish new regulations for short-term residential occupancy (STRO) using a compromise proposal by Mayor Kevin L. Faulconer as the basis to set clear rules of the road for the home-sharing industry that includes robust code enforcement to preserve 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. “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 rules adopted today create the City’s first license-based system to manage short-term rentals; charge cost-recoverable fees to administer licenses and enforce code violations; establish a “Good Neighbor” policy to preserve neighborhood quality of life; hire additional staff to respond to complaints about nuisance properties; and implement a per-night fee that would generate funding for affordable housing projects.

With the City Council deadlocked after years of debate, Mayor Faulconer last month introduced a compromise plan that allows for a maximum of two licenses to be issued to a host – 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.

After listening to public feedback to his proposal, Mayor Faulconer issued a memo earlier today calling on the City Council to amend the plan by allowing existing operators of short-term rentals in Mission Beach that have acted in good faith by previously registering and paying taxes to continue doing business as long as they adhere to the new registration rules and good neighbor policy. The Mayor also said new operators in Mission Beach should be restricted to the same license limits as the rest of the city.

In its final vote, the City Council amended Mayor Faulconer’s proposal to only allow a host to be issued an STRO license for the host’s primary residence and one additional license for a dwelling unit on the same parcel as the host’s primary residence. The Council also removed the exception for Mission Beach so the same rules exist across the city.

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 an 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 committed to active enforcement to ensure hosts, guests and online platforms for short-term rentals are in compliance with the new regulations. That includes a new team of police and code enforcement officers to work evenings and weekends to address code complaints; the creation of a license and registration system that interfaces with City databases; and a new complaint hotline or mobile application for residents to report violations.

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 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 an 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.

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