San Diego delays start of short-term rental regulations

The San Diego City Council has delayed implementation of the city’s short-term rental law, which was supposed to start on July 1 of this year. Instead, the ordinance will go into effect up to nine months after it is certified by the California Coastal Commission. The commission, which has authority over vacation rental rules for coastal areas, is scheduled to review the legislation in March. If the measure is approved, its effective date would be no later than December, under the Council’s terms.

The law, which was passed in April of 2021, will cap the total number of whole-home vacation rentals to 1% of the city’s housing stock, meaning rentals would be limited to around 5,400. In Mission Beach, vacation rentals will be allowed to equal 30% of Mission Beach’s housing stock, meaning around 1,100 short-term rentals will be permitted. According to the city’s independent budget analyst, the law as it stands may result in 20% to 30% fewer whole-home vacation rentals within the city.

The rules allow only one short-term rental permit per individual, with permits awarded by lottery. The proposed lottery would operate on a point system that would give higher priority to operators who have had no code violations over the past two years.

The license limits and caps don’t apply to hosts who rent out their homes for fewer than 20 days each year or who offer hosted rentals where they’re on premises during guests’ stays.

The ordinance also strengthens enforcement efforts, including hiring new staff and officers. Short-term rental permit fees — ranging from $100 for hosts who rent out their properties for less than 20 days a year to $1,000 for operators who rent out whole homes for more than 20 days per year — will help fund enforcement.

Short-term rental hosts in San Diego are already required to collect transient occupancy tax (TOT) from guests and remit it to the City Treasurer, unless the tax is collected and remitted by a short-term rental platform on their behalf. Both Airbnb and Vrbo collect TOT on behalf of their San Diego hosts.

In Long Beach, California, the Coastal Commission has also impacted short-term rental rules. The commission wants regulations in Long Beach to reflect its stance that vacation rentals can help increase accessibility to coastal areas.

The city’s initial vacation rental ordinance was passed in the summer of 2020, with another law passed later that year allowing unhosted short-term rentals within Long Beach.

The rules require short-term rental hosts to hold a permit and include permit registration numbers in advertisements. Owners are only allowed to register one property as a short-term rental, although they can register two if one of them is the owner’s primary residence. The number of unhosted rental permits is limited to 800 in the city. The city also restricts the number of short-term rental units within multifamily buildings, according to the size of the building.

The regulations also enable Long Beach property owners to petition to ban short-term rentals in their census block. When a property owner requests a petition, the city will take a vote of the census block by mail. A ban can pass when a simple majority of voters in the census block approve it.

Long Beach rental hosts are also responsible for collecting the city’s transient occupancy tax from guests and remitting the tax to the city via monthly tax returns. If a short-term rental hosting platform such as Airbnb or Vrbo agrees to collect the tax on behalf of its hosts, the platform and host share responsibility to collect and pay the tax. Airbnb collects the city tax on behalf of its Long Beach hosts, while Vrbo does not.

The Coastal Commission suggested four changes to the city’s short-term rental rules in the coastal zone as conditions of its approval of the Long Beach law:

• Allow up to 350 unhosted short-term rentals in the coastal zone even, if the citywide cap of 800 is reached 
• Limit the ability of multifamily building owners to prohibit short-term rentals
• Require “a commitment to non-discriminatory services and ADA-accessibility information in the registration process”
• Monitor and report any impacts that vacation rental regulations have on public access, along with efforts to mitigate those impacts

The city has begun rewriting the law to reflect the commission’s amendments, and the City Council will review it in March for final approval.

MyLodgeTax can help California vacation rental hosts comply with all their TOT obligations. For more on lodging taxes in California, see our state Vacation Rental Tax Guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.

Cover photo by Canva