Understanding short term rentals in San Diego (part IV): Proposed new rules

3

August 15, 2015 by Omar Passons

City of Austin's easy entry point to help citizens know the rules

City of Austin’s easy entry point to help citizens know the rules

I decided to post the draft Short Term Vacation Rental ordinance for the City of San Diego so that regular people who don’t hang on city hall’s every move can understand what’s going on. This is my area of law, so the contents of the law are important to me for that reason.  But the policy issues wrapped up in the proposal are also important to me as a member of the San Diego community. I have many neighborhood friends and colleagues around the city who want to know what is happening, what the rules are, and what the proposed changes actually mean. That’s what this post is about.

The basic rule that exists today for all single family residential zones and most multi-family zones right now (pending possible appeal): renting your entire primary home (or any rooms in it) for less than 30 days requires a $5,000 to $10,000 Neighborhood or Conditional Use Permit before you do it. This applies to home exchange, foreign exchange students, vacationers, military short stays, couch-surfing and any other way a person might stay in your home. It includes if you rent your place out while on a short vacation. And it applies whether you rent once or 100 times. If you don’t get the permit, you could also get a letter threatening you with up to $250,000 in fines. As a reminder, my client took her Airbnb listing down without being sure what “cease operating a bed and breakfast” meant more than three months before the enforcement hearing and the city went forward with the action anyway. Contrary to some reports and the ALJ’s ruling, the notice actually did NOT say stop using Airbnb or stop renting out rooms in your house for less than 30 days. Those things would have been clear.

With that as back drop, let’s get to the proposed new rules

Here’s a link to the entire proposed ordinance:

STVR Memo 081215

Specific sections

141.0301 observations

1410301 gen

This defines boarders, lodgers and “home sharing.” Let’s not quibble, “sharing” involves money. I don’t want to get bogged down on that. Something can be commerce without being a “business.” If you are empty nesters who occasionally rent your place when you go out of town, it’s not a business, but it is commerce.  Rules are needed. That’s really the point.

Anyway, two important points here:

  1. This explicitly includes home swap or any thing that is considered “of value” in addition to paying money. There is no minimum number of stays that triggers this, so if you do it once a year, this applies.
  2. The “shall reside” and “shall remain present” language eliminates the option of renting your own home if you take a trip to see relatives in Cincinnati. It doesn’t matter that your incentive to only have responsible people is very high because you will be returning to the home and presumably don’t want the place trashed our your neighbors mad at you.
  3. “Shall reside” is one of those phrases that normal people would have no idea what the city actually means.  According to development services, this actually just means that it is your primary residence. And “primary residence” turns on whether you reside in the home more or less than 6 months (Example: You take a sabbatical in Rome for 5 months, under this you CAN NOT rent out your home on a short term basis because you are not present, even though it is your “primary residence.”)

Policy Concerns:

  •  The requirement that the resident or host “shall remain present” is needlessly onerous.  If it is the place you reside even most of the time most people aren’t going to let visitors hang from the ceiling or annoy their neighbors with crazy behavior.
  • If the city intends for “shall reside” to mean that this is the home you live in at least 50% of the time, it should put that in writing. It’s not clear that the “primary residence” concept is the best (or even a particularly good) way to draw the line, but they have a tough job and need to start some place.

Subsection (c)

1410301c

This is one of the few relatively self explanatory provisions.  Although you have to go to another section of the code to find out what “accessory use” and “primary dwelling unit” mean, at least those terms are defined somewhere.

Policy concerns:

  • The subsection (c) limitation on gross floor area to 25% of the dwelling unit will have some significant limiting impact in parts of town with smaller dwelling units. A written, it benefits the wealthier, newer parts of San Diego over the less wealthy, older parts where the houses and lots are often smaller. (Example: This is 500 square feet of a 2000 square foot home, but only 200 square feet in an 800 square foot home)
  • The idea here is presumably to limit the intensity of visitors and protect neighbors from having too many paying visitors coming by next door. Whether this is the right way to address the issue is up for debate.
  • Alternative: Make a reasonable occupancy limit that is not limit based on number of bedrooms in a home. This isn’t ideal, either, but even 800 square foot homes can have three bedrooms

Subsection (f)

1410301f - parking

The standard residential parking requirement in San Diego is two off-street parking spaces unless your home existed before 1964 AND you haven’t made a change for which the upgrade to two spaces was required.  It isn’t immediately clear if this section means you need a third space for each two boarders or if they are allowed to use the spaces your property already has. This ought to be clarified.

Policy concerns:

  • This requirement will also serve to severely limit people’s ability to home share/have boarders, which may be the desired outcome for some policy makers, but it can’t really be called a balanced approach.
  • It appears that any home that has only 1 parking space because it existed that way before the parking regulations requiring two spots is basically locked out of this opportunity.
  • Further, again this regulation squeezes the little guy because the people most likely to have multiple parking spaces are bigger homes in more suburban areas.  With most residential requiring two off street parking spaces, it creates a de facto limitation of two boarders or lodgers.
  • The requirement of off street parking is a constant trap in San Diego. We are terrified of angering people over car parking and auto traffic congestion so it dominates our policy. We’d be better off giving people the alternative to include number of car restrictions in the mandatory rental agreement (contained in another section of the proposed ordinance). Off street parking requirements dramatically over-inflate the cost of building homes in the region, which is a big reason we have an affordability crisis. But we’d need to be more bold in leading on this issue if we want it to change.

Subsection (h) – POTENTIALLY BIGGEST ISSUE

1410301h bandb

Translating this section into English, it essentially says that if you rent to more than one person who don’t know each other (i.e. “multiple short term rental agreements”) in the same dwelling unit that you are subject to the commercial bed and breakfast law.

IMPORTANT: This means that you will NOT be able to just list your home on Airbnb or your couches on couchsurfing.com and have a guy from Sweden and one from Brooklyn stay at the same time without first getting the $5,000 – $10,000 permit

Presumably this is written this way because of some theoretical concern that a person will have tons of strangers coming by and clogging up the neighborhood.  But isn’t that already dealt with by simply limiting the number of total occupants/cars?

Policy concerns:

  • This simply makes no practical sense. Here’s an example: You could have a group of six frat guys – sorry frat guys – all come with different cars and be fine as long as they made one rental agreement, but two people who are both using public transit but don’t happen to know each other and that would trigger the bed and breakfast permit.
  • This option limits the very flexibility that these services create.  If the goal is to limit impacts on neighbors, then just do that.

Observations about Section 141.0315 – the short term vacation rental ordinance

1410315 gen define

First and foremost, why make a law that is so hard to understand? Worse, to a lay person it *looks* like it is actually clear until you peel back the onion.  For example, it isn’t clear to me what “exclusive transient use” means.  Does that mean if the owner lives in the house part of the year she can not meet this definition? Is this essentially saying you have to declare your property a full-time short term vacation rental and then never do anything else with it to maintain applicability?

As a general matter, many of the requirements in 0315 are good ones, in my opinion.  It could stand to have more teeth, actually. Yes, you read that right. Harsher penalties for the actual bad actors would be great.  But as is typical with local government, the language is much more cumbersome than it needs to be because they are trying to fit this new information into an existing regulatory framework instead of making the land use code more nimble so that it can better handle future changes. Isn’t the current situation at least suggestive that we’ll have some issue we can’t think of right now in 5 years and so we’d be better off creating more flexibility? This also does nothing to simplify the language, which means people need lawyers to make sense of it all – which I’d prefer we had less need for lawyers for stuff that should be easy.

Subsection (a) observations

1410315a1 dwell size

I’m not a building code expert, so can’t tell you off hand if the reference to the building code above is truly accurate.  That said, I wouldn’t be surprised to learn that this is a citation to something applicable to full time residential homes rather than this unique situation in which people are, by design, staying for shorter periods.  Why does that matter?  Because it’s at least plausible that the state building codes are designed to protect people in their homes with basic health and safety standards, so it may be objectionable for three people to share 200 square feet long-term but okay for a weekend.

One of the good things about legal training is not only that you are forced to be skeptical. We are also forced to “grow up” in the law realizing that we don’t know everything and can, in fact be wrong.  This may not be your experience with the lawyers you know, but I assure you any good lawyer you come in contact with won’t have trouble acknowledging the possibility of being wrong. This is one such instance for me. I may not fully understand what the city has in mind above, or what relationship the building code has here. But isn’t that incumbent upon them to spell it out in a way that makes sense?

Final thoughts

I thought very seriously about simply including a section that re-writes the whole new ordinance in a way that anyone off the street could pick up and read/understand. Or at least giving that a try.   But I need to get outside and help finish building parts of my new house, so there’s no time.  I wanted to put a few of my thoughts and help translate the code so people who don’t do this for a living could kind of understand and then contact the members of the Smart Growth and Land use Committee of the City of San Diego. These are the people you need to be in touch with.

This code update is a chance for the City to take a sharp turn and write something easy to understand.  It doesn’t have to follow the same pattern as the rest of the convoluted and hard-to-understand code because most of the issues stand alone pretty well.  But it requires the people writing the code to accept that whatever the code was intended to be initially, it is not clear to the people it is supposed to serve. The city could use this chance to really make this part of the code clear and not worry that it doesn’t read like the rest, and then the next time it could repair some other part to make it simpler. Ultimately, my land use practice might shrink, but it would make regular people’s lives – and businesses who create and expand jobs – much more simple and straight forward.

Only time will tell.

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3 thoughts on “Understanding short term rentals in San Diego (part IV): Proposed new rules

  1. shelley says:

    Omar, does all this mean that if you do not live in the home you’re using as a short term rental (a single family home with no addl units on the property), it’s legal and you’re not required to get the Conditional Use Permit? Is there any amount of time in the year where you can live in the home? Like where it won’t be considered your primary residence?

    • Omar Passons says:

      With my standard disclaimer that this isn’t legal advice, I’ll try to answer. The proposed rule appears to make it the case that IF you stay in the home you rent at any time during the year it cannot be considered a short term vacation rental. But it may mean as long as your use is also only for less than 30 days at a time (i.e. ‘transient’) that you can meet the definition. In single family residential zones the city currently interprets its laws that the situation you described is legal without any permit. Under the new rules, these would be allowed as a “limited use” – which wouldn’t require a permit but does have a few restrictions. Let me know if that helps.

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