New bid to regulate short-term rentals raises questions in Pacific Beach about input and enforcement

Pacific Beach community leaders are concerned about an agreement regarding regulation of short-term rentals like this one.
Pacific Beach community leaders are concerned about a recent agreement regarding regulation of short-term rentals like this one.
(Elisabeth Frausto)

A recent compromise between two industry organizations regarding short-term vacation rentals is causing concern among many local groups and residents.

The memorandum of understanding, signed June 24 and released July 1, is an agreement between Expedia, which owns VRBO and HomeAway, two online platforms for renting STVRs, and Unite Here Local 30, a union that represents hospitality workers.

It is designed to provide a regulation framework for San Diego’s burgeoning number of short-term rentals, which the city auditor estimates at 16,000.

The agreement was facilitated by City Council member Jennifer Campbell, whose District 2 includes Pacific Beach, Mission Beach, Ocean Beach and Point Loma.

Agreement between VRBO/Homeaway and San Diego’s hospitality union, brokered by City Councilwoman Jennifer Campbell, sets a possible framework for short-term rental regulation

The MOU calls for STVRs to be grouped into four tiers, with the first tier designated as residences rented out for no more than 30 days per year.

The second tier is a rental where the owner remains on the property, such as with a single room or a “granny flat.”

The third tier addresses whole-home rentals that can be rented for more than 30 days per year — the most prolific type in the city. The MOU adds a cap to that type at 0.7 percent of the total housing units, or 3,750 whole-home STVRs.

Tier 4 gives Mission Beach its own tier, allowing up to 30 percent of the housing inventory to be used as whole-home STVRs, or 1,086, at current numbers.

The agreement is “important to our communities,” said Campbell’s chief of staff, Venus Molina. “About 80 percent of STVRs are in Districts 1 and 2. Because they’re not regulated and there’s not enforcement, there’s nothing that can be done and our residents have been talking to us to get something done.”

The City Council would have to agree to take up the proposal. Expedia and Unite Here said they hope the council will pass legislation that could go into effect in 2021.

But critics of the proposal are concerned about what they say is a lack of input and enforcement. Karl Rand, chairman of the Pacific Beach Planning Group, said he learned of the compromise as it was made public July 1. “We were caught by surprise,” he said.

Brian White, president of the Pacific Beach Town Council, said he also was surprised. “As stakeholders, we felt ignored,” he said.

Fireworks erupted during the Pacific Beach Town Council’s July meeting with a testy exchange between the board and San Diego City Council member Jennifer Campbell’s Pacific Beach representative over a proposal for permitting and regulating short-term vacation rentals in the city.

White said he’s concerned that “Campbell was consulting a multibillion-dollar vacation rental corporation and a labor union and leaving residents and local community groups out of the conversation.”

“We kept reaching out,” White said, “and we were granted a meeting on June 25. The MOU is actually signed on June 24. I feel the meeting they had with us on June 25 was a token meeting so they could check the box on community input.

“Our purposes were to ascertain information about the ordinance in the works. They told us nothing was in writing; they didn’t share any details with us. They pretended this was very early on. Six days later, there was a press conference about the MOU, signed the day before our meeting.”

Molina confirmed the MOU was released before gathering community input and said Campbell’s office had been “meeting with [Expedia and Unite Here] for over a year.”

“This has been a work in progress,” Molina said. “The MOU is signed by the two entities — we are supporting that and bringing those terms to council. We’re still getting input.”

White and the rest of the Town Council released a statement July 3 that said the group “strongly opposes this approach by council member Campbell to legalize short-term rentals in our neighborhoods. STVRs are visitor accommodations and these commercial uses are illegal under the city’s zoning code and have no place in our residential zones.”

In 2017, City Attorney Mara Elliott concluded that San Diego’s municipal code doesn’t permit vacation rentals in any zone.

But Molina said simply outlawing STVRs is “impossible” and that the cap outlined in the compromise is a step forward. “We’ve reduced the STVRs by 70 percent; that’s 70 percent of housing going back into the market,” she said.

Some critics of vacation rentals say they create financial incentives for renting out properties for short-term stays instead of long-term residential use, thus reducing the housing supply and driving up prices.

Molina said the next steps are for the city attorney to “draft the ordinance, what the enforcement is going to look like. That’s where the input comes in.”

The enforcement aspect, especially as it relates to Pacific Beach, worries Rand, who said he’s focused on whole-home STVRs. “I believe the main concern in Pacific Beach is going to be how many of those will be in Pacific Beach,” he said. “Are we going to bear the brunt of that allowance?”

The website estimates there are more than 1,200 active STVRs in Pacific Beach, with 86 percent of them whole-home rentals.

“The question I want answered is, how they will distribute these licenses?” Rand said.

Rand said he sent an email to Molina asking whether specific caps on Pacific Beach STVR numbers would be set. “I got a noncommittal response: ‘We’re working on it,’” he said.

Molina said “the ordinance and a lot of the enforcement pieces is something we are still working on with the city attorney. We’re still working to get input from community members, from different groups like the hoteliers, the town councils, planning groups and any other folks who want to give their opinion on this. This is a really good opportunity because we’re crafting that language for the ordinance right now as we speak.”

Molina said the work also includes determining a system to whittle the city’s whole-home STVRs to the cap of 3,750.

However enforcement is written into the ordinance, Rand said, “you can’t have a really effective enforcement system without having an effective permit system.” He suggested raising the annual city STVR permit fee from $1,500.

“That would work in both directions,” he said, having the “dual effect of reducing the number of people interested in getting them, and [making] sure you have adequate funds to do enforcement.”

Molina said Campbell hopes to take the matter to the Planning Commission in August and the City Council in September.

The timeline concerns White. “We’re three months away from a mayoral election,” he said. “This issue stands to be a major campaign issue. To rush through an ordinance now makes the timing really suspect.”

For now, Rand said he’ll wait to see what comes of the ordinance. “We’re continuing to see how we’re going to proceed,” he said. “Things are still up in the air. We’re still waiting to jump.”