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Vacation Rentals Are Here to Stay, and It's Time for Reasonable Regulations

The right framework for San Diego will balance the range of objectives while remaining foremost committed to safety and security.

The issue of monitoring and regulating San Diego’s short-term rental industry has vexed City Council hearings, town halls and other public forums for years. Before I was inaugurated, policy agreements failed to come together, and the status quo of the undefined, unregulated and unenforced industry continues to impact and frustrate everyone.

Since that time, I’ve followed experiences in other cities, listened to neighbors, owners and renters, and now want us to finally resolve our approach to serving visitors in residential units.

CommentaryShort-term rentals should not disrupt our communities or make it harder for residents to live here. Indeed, the biggest asset of the opportunity is bringing visitors to the neighborhoods we love, and helping the people who make those neighborhoods great continue to do so. A number of my constituents don’t want them at all, and a number of them use the revenue opportunity to make ends meet – so where is the right point of compromise that aims to solve the issues that we do agree on?

Vacation rentals have been around for decades, and with the evolving sharing economy, it’s clear these rentals are here to stay. Outright bans or severe limitations only further an underground economy that is already present, and those renting homes will creatively adapt and make it difficult for city regulations to be effective in achieving their purpose. Full free-market, property rights-oriented arguments don’t address community impacts or provide guarantees to concerned neighbors.

This week, along with my colleagues Mark Kersey, Scott Sherman and David Alvarez, I submitted a memo outlining a framework for an ordinance to regulate short-term vacation rentals. Our proposal seeks that compromise to:

• Allow property owners reasonable opportunities for limited short-term rental use

• Control impacts and provide peaceful co-existence for neighbors

• Allay investor interest in housing stock

• Provide self-sustaining revenue to enforce violations

• Support affordable housing funding for San Diegans in the future

These rentals have developed into a valuable part of San Diego’s local economy, bringing nearly $300 million to the region’s economy in direct and indirect spending on top of what hotel visitors brought, and supporting thousands of local jobs by connecting visitors to neighborhood small businesses. When we think of the high cost of living in our area, some San Diego families are able to make ends meet through the revenue afforded by these opportunities.

There have been instances, however, when a short-term rental has become a neighborhood nuisance, and there is the argument that investor-oriented actions are compromising slim housing stock at the expense of San Diegans.

To address the latter, whole-home short-term rentals should be restricted to limited-use permits, assigned to an actual person instead of a commercial operator, available only after the applicant has owned the property for at least one year and capped at three per homeowner, with permit fees escalating with each additional permit.

An impact fee on short-term rental activity similar to those used in New Orleans and Chicago should be collected and dedicated to creating and preserving affordable housing through the Housing Commission. At our proposal of $5 per night, this may add up to a revenue stream of over $5 million per year to complement affordable housing development financing pools.

In addition, rentals should have a three-night minimum stay within the coastal zone and historic districts to cater specifically to longer-term visitors, recognize and preserve the unique character of these neighborhoods and discourage negative impacts on the surrounding environment.

Community members have also expressed concerns that there are situations where too many people are packed into a location. To address this, tenancy limits for short-term rentals should be consistent with state and federal occupancy guidelines of no more than two adult occupants per bedroom, plus two in the home.

Fully staffed enforcement is the foundation of a successful vacation rental framework. That’s why a self-sustaining revenue structure that supports adequate permitting review, 24/7 code enforcement and rapid response to nuisance properties is built into the proposal. These enforcement measures will ensure the prevention of commercialization, limit “hotelization” in the community and impede large-scale corporate operations from negatively impacting our housing supply.

Escalating fines for both homeowners and renters, culminating with the revocation of rental permits for a third verified offense in a one-year period, will quickly quell bad actors from continuing operation and incentivize all owners and visitors to follow a strict good-neighbor code of conduct to address trash, parking and after-hours noise.

Our job as elected leaders is to create the right framework for San Diego to balance the range of objectives while remaining foremost committed to the safety and security of our constituents. With so many elements of policy to consider, compromise is going to be paramount or we will end up, again, unresolved.

Chris Ward is a San Diego City Council member representing District 3. Ward’s commentary has been edited for style and clarity. See anything in there we should fact check? Tell us what to check out here

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