The California Coastal Commission approved San Diego's cap on short-term rentals Wednesday after commissioners added a key provision requiring the city to revisit the new regulations in seven years to assess their effects.
"For a city that gets 35 million tourists, I really feel like you guys got it right, trying to balance all the interests and understanding that it's going to be an iterative process, it's going to be a work in progress," said Coastal Commission chair Donne Brownsey just before the commission OK'd the changes in a 12-0 vote.
Prior to the meeting, the commission's staff recommended the review because the overhaul of short-term rental rules posed a "risk of substantial adverse impacts on coastal access" so it would be prudent to re-evaluate the changes after seven years.
Alex Llerandi of the commission staff said the agency would usually consider a five-year timeline but given the complicated nature of the issue and the sheer number of vacation rentals in the San Diego area, a longer period seemed appropriate.
"San Diego is the largest jurisdiction in the coastal zone, it has thousands of units and this is a large inaugural attempt to regulate it," Llerandi said. "So we knew it would take all parties — the commission, the city, operators, visitors — to learn and digest the law, adapt the market to it, let it ripple out both through the STR (short-term rental) and the hotel industry."
The San Diego City Council approved the ordinance last year and the new rules could go into effect as early as this fall. The Coastal Commission's action on Wednesday will now go before the City Council for approval.
Under the new framework, whole-home rentals will be capped at 1 percent of the city's more than 540,000 housing units, which amounts to about 5,400.
However, a more generous carve-out was made for Mission Beach, one of the most popular neighborhoods for vacation rentals. In Mission Beach, the cap will be set at 30 percent, or about 1,100 dwelling units.
Altogether, about 6,500 licenses will be available in the city, which would represent a reduction of 48 percent compared to the current estimate of 12,300 vacation rentals, according to the Coastal Commission.
The new regulations allow for only one license for individuals renting their entire residence for more than 20 days per year. But an unlimited number of licenses will be allowed for vacation rentals of less than 20 days a year or for home-sharing in which a host rents out a room or two.
Two-year licenses will be allocated through a lottery system, with priority given to rental operators with longer tenures who have no record of code violations at their units in the past two years.
The new ordinance is part of a long-running debate over short-term rentals in San Diego, trying to balance the interests of property owners who earn income by renting their dwellings and local residents who complain an excessive amount of short-term rentals undermines the community feel of their neighborhoods and depletes the number of year-round housing units.
Coastal commissioners spent nearly an hour hearing from 24 residents who called in during the public comment period.
Pedro Tavares of the San Diego Short Term Rental Alliance supported the commission's proposal with the seven-year modification, calling it a "true compromise." Although he had questions about the lottery, "this ordinance will provide a path forward for short-term rentals to operate in San Diego in harmony with neighbors."
Marta Knapp, who grew up in Mission Beach and rents property there, said "many of the families that stay with me could never afford to live at the beach. Short-term rentals allow more people shoreline access for a price within their budget. They allow for cheaper accommodations for large families."
But Gretchen Newsom, a single mother with a son, said she had recently been told the cottage she rents in Ocean Beach is about to be sold and she has 60 days to find a new home. "But the sad fact is that the housing stock in Ocean Beach has been decimated by short-term vacation rentals," she said. "I have watched over the years as properties on our block get snapped up by investors and get transitioned to short-term vacation rentals."
According to a recent city of San Diego survey, about 39 percent of short-term rentals citywide were located in the coastal zone. Of those, 94 percent came from whole-home rentals that accommodated an average of 5.8 renters. The average nightly rate came to $306.
