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The Vacation Rental Dilemma, Briefly Solved, Is Back Again

The City Council voted Monday to rescind strict rules passed in July that limited vacation rentals to a homeowner’s primary residence. Here’s what we know about what led up to that decision and what may be next.

Vacation rental opponents hold up signs during a City Council meeting. / Photo by Adriana Heldiz

Regulations that would have sharply curtailed vacation rentals citywide are now off the books – which means city leaders must once again tackle an issue that has evaded solutions for years.

The City Council voted Monday to rescind strict rules passed in July that limited vacation rentals to a homeowner’s primary residence. Opponents of the rules qualified a referendum to overturn them. Faced with a decision to let the referendum move forward and let the issue go unresolved for as long as two years until it went before voters, or to axe its own rules after several failed tries to create regulations, the Council chose the latter.

“We don’t want to be in limbo for two years,” said City Council Pro Tem Barbara Bry, who earlier this year led the effort to enact the controversial rules.

The rescission is the latest setback in a years-long debate that’s paralyzed city leaders.

Now they’ll have a new challenge: City Attorney Mara Elliott’s office says any new rules introduced within the next year must be “essentially different” than the rules enacted in July, meaning the City Council can’t just make a few tweaks and move forward.

Mayor Kevin Faulconer’s team now expects to push forward regulations in 2019, and says it’s already started working on them.

“Today’s action may take us back to the drawing board, but the good news is that we are not back at square one,” Faulconer spokeswoman Christina Di Leva Chadwick said in a statement. “We have already begun working with stakeholders to develop a new compromise based on the fact that the referendum took the previous ordinance off the table.”

But Faulconer, Bry and others haven’t said definitively whether that means new rules will be less restrictive than the rules approved in July.

What is clear: Most city leaders concluded they needed to nix the rules they approved just months ago to move forward.

Here’s what we know about what led up to that decision and what may be next.

The referendum appeared likely to prevail at the polls.

Recent polling funded by the Union-Tribune and 10News revealed about two-thirds of prospective voters thought the city should allow homeowners to rent out a second home they don’t live in year-round.

Vacation-rental backers and companies including Airbnb and HomeAway also had significant resources to invest in amplifying their campaign arguments.

That didn’t bode well for the City Council’s rules, which barred those rentals.

Other factors jeopardized the City Council rules, too.

Before they proceeded with their signature gathering effort, vacation rental advocates hinted at legal challenges to the new plan.

The state Coastal Commission has also said it’s not cool with onerous restrictions. The agency’s San Diego district manager previously noted it was particularly interested in maintaining existing rentals in Mission Beach, given “the decades-long population” of vacation rentals there. The City Council-approved plan would have forced homeowners renting second homes in Mission Beach to shutter their rentals.

No rules on the books means no meaningful enforcement – and almost everyone wants enforcement.

Faulconer has said he won’t crack down on vacation rentals until regulations are approved.

He decided that despite a 2017 memo from Elliott declaring short-term vacation rentals illegal under current city code.

Vacation rental opponents have cheered Elliott’s interpretation, but it amounts to only a moral victory for them if Faulconer is unwilling to enforce a crackdown on rental operators.

The July City Council vote gave Faulconer the go-ahead to ramp up enforcement. He planned to assemble a group of city attorneys, code and police officers to enforce the rules and proposed hiring 16 new employees to staff that enforcement team and monitor hotel-tax collections.

But the referendum put those plans on hold.

“At the end of the day, people want resolution on this issue, and rescinding the ordinance in order to bring people back to the table to craft new rules is the faster way to get enforceable regulations on the books,” Aimee Faucett, the mayor’s chief of staff, told the Union-Tribune last week.

It also means that Faulconer is likely to stick to his plan to avoid cracking down on vacation rental operators until new rules are in place.

Despite years of paralysis, Faulconer’s team and a City Council majority said they think a deal is possible.

City Councilmen Scott Sherman, Chris Ward and Chris Cate said Monday they believe the city can strike a deal.

“I think there is room to find a true compromise down the road,” Sherman said.

Faulconer’s team agrees.

“We still believe there is a path to a compromise as long as interested parties are willing to work toward a solution,” Chadwick said.

Key stakeholders also signaled their willingness to work with the mayor and City Council at Monday’s meeting.

Brigette Browning, president of the local chapter of Unite Here labor union, which represents workers in San Diego’s hotel and hospitality industries, was a key voice pushing Democrats to get behind more restrictive rules a few months ago. On Monday, Browning told the City Council she backed rescinding those same rules – and looked forward to working with city leaders on new rules.

Not everyone is certain a deal is forthcoming.

Councilwoman Lorie Zapf, who is fighting to hold onto her coastal seat, was the sole vote against rescinding the vacation rental rules. She decried the decision and the years of City Council regulatory failures.

“(There’s) no guarantee a compromise will be reached anytime soon,” Zapf said.

Continued vacation rental wars are politically perilous.

Opposition and support of the city’s new rules didn’t fall along party lines – and prolonging the issue could hurt Bry’s potential run for mayor.

If the City Council had opted to send the matter to voters, it would likely have ended up on the November 2020 ballot. Thus, the measure could have shaped Bry’s mayoral bid since she led the push for restrictive rules. Had the rules remained on the books, they may have alienated both Democratic and Republican voters who back permissive rental rules.

And if Bry and other Democrats had pushed for an earlier vote through a special election, they would have had to grapple with a city law passed in 2016 that was backed by left-leaning interests that requires general-election votes on city ballot measures.

Bry told VOSD the prospect of waiting two years for action, not political concerns, drove her to vote to rescind the rules. She said she plans to begin meeting with community groups about potential vacation-rental rules after next month’s election and will use their feedback to inform her next steps.

“I would like to lead,” Bry said.

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