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What's Next After City Tears Up Vacation Rental Deal and Announces New Energy Agency

San Diego must start over with vacation rentals and from scratch to launch a new energy agency to take over the job of buying electricity for residents.

Councilwoman Barbara Bry / Photo by Adriana Heldiz

This post originally appeared in the Oct. 27 Politics Report. Get the Politics Report delivered to your inbox.

We haven’t seen a week in local politics like this in a while. Sometimes there are big weeks in campaigns. Sometimes there are big weeks in public policy.

Last week was both.

First: Monday, the San Diego City Council rescinded regulations that would have set the stage for a crackdown on vacation rentals across the city. We thought for sure they’d let them go to the referendum.

It seemed like the easiest political path: The fiercest opponents of vacation rentals — Councilwoman Barbara Bry and Councilwoman Lorie Zapf — could stick with their success and try to defend it in a referendum. Now, Bry has agreed to go back to the drawing board. They’re barred from passing something substantially similar for one year so they’ll have to pass something more amenable to Airbnb and the other companies.

Bry seems to think the mayor could, right now, eliminate all vacation rentals based on the 2017 memo from city attorney Mara Elliott that declared vacation rentals an illegal use of land. She argued that because short-term rentals are not included in the list of uses for homes in San Diego, they were illegal.

But the mayor declined to enforce that interpretation and the city continues to collect taxes on the short-term rentals.

The city, in other words, is a total mess on vacation rentals.

Zapf wanted to fight it out at the ballot. Bry seems confident the Council can come to a compromise soon. After all, the 105th time’s the charm, right?

“We could pass something in the January/February time frame. We honestly can’t do something before then,” Bry told Voice of San Diego’s Lisa Halverstadt this week.

Second: Faulconer made a huge decision this week to get the city into the energy business. He’s decided San Diego should form an agency to replace SDG&E as the purchaser of power for many  residents. He wants other cities to join him in a joint-powers authority.

San Diego Mayor Kevin Faulconer / Photo by Vito Di Stefano

Ry Rivard did an excellent job explaining how this all happened and then providing some answers to FAQs about how this all will work.

Your intrepid Politics Report staff talked to the mayor and looked him deep in the eyes and asked if he really, truly, definitely, undoubtedly, sincerely, absolutely, wanted to do this or whether he, you know, sees the writing on the wall and just decided to get in front of it.

He said he was genuinely into it. He read his staff’s business plan and said it was good and he felt like it would help decentralize the whole system and make it more competitive.

“Who doesn’t like competition?” he said.

It’s not very conservative for a government to take on such a new and complicated proposition. The politics of Community Choice Aggregation — as this path is known — aren’t always so cleanly left vs. right. Unions have sometimes been skeptical of the deals, for example.

Kevin Dayton, a policy consultant and conservative who has studied the agreements, tweeted the most optimistic take from the right.

“Community choice and municipal public power agencies can have better rates than investor-owned utilities – IF governed prudently. But unions, environmental activists and social justice groups want to control them. Business and taxpayer groups must monitor closely – forever!” he wrote.

Update: On Monday Oct. 29, the Labor Council, the coalition of labor unions, threw some cold water on the bipartisan celebration of the city getting into the energy business.

In a Facebook post, the group urged the city to take things slowly.

“While we applaud the efforts, we do encourage extreme caution as workers are being asked to support a startup with no history of buying and selling electricity on a mass scale,” the group wrote in a statement.

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