San Diego poised to repeal strict new Airbnb regulations

It was just three months ago that San Diego’s elected leaders finally agreed on new regulations aimed at reining in short-term rentals, ending a years-long stalemate on the contentious issue.

Or so it seemed.

Come Monday, the City Council will be back at square one when it will be faced with either having to rescind its Aug. 1 vote or ask the electorate to approve or reject the new regulations sometime in the next year or two.

Either way, San Diego will be thrust back into a political void that has sharply divided the city for years on how to balance the growing unease of residential neighborhoods over the proliferation of vacation rentals with the property rights arguments of homeowners who say they should be able to rent out their homes for short-term stays.

Stirring the debate anew is a referendum effort led by short-term rental platforms Airbnb and HomeAway that succeeded in garnering enough signatures to force a public vote.

Whichever route the council chooses — repeal or an election — a whole new array of options awaits that could easily leave San Diego in limbo for many months more, if not years. The next regular election will not occur until 2020 although the mayor and council could call for a special election next year.

Under the regulations formally enacted in early August, individuals would have been able to rent out their primary residences while they are not present for up to six months a year as long as they applied for a permit and paid an annual fee of $949. But owners of second homes would be barred from using their properties for vacation rentals — a prohibition that a number of cities, including New York, San Francisco and Santa Monica, are increasingly embracing across the country. The city of Los Angeles has been weighing similar regulations but has yet to take final action.

San Diego Councilman Scott Sherman, who in August formally joined the short-term rental platforms in backing the referendum, said he is leaning toward voting to withdraw the council’s action. The city’s new rules were to have gone into effect next July.

“I still think we have a chance for cooler heads to prevail and come up with a compromise, and there’s no sense in trying to get into a debate on when an election might be held,” said Sherman, who favors allowing the owners of second homes to rent them out for under 30 days at a time. “We can still enforce the noise and drunk and disorderly codes that already exist. It just takes the political will to put the people in place we need to enforce the codes.”

Councilwoman Lorie Zapf, who has been fighting to sharply curtail short-term rentals for the last several years, especially in the beach communities she represents, said last week she had not yet decided which referendum alternative she favors but insists she is not abandoning her fight.

Of the more than 11,000 short-term rentals San Diego was estimated to have as of the end of last year, more than one-fourth were concentrated in Mission Beach and Pacific Beach.

“I’m going to do whatever it takes to protect the neighborhoods from out-of-town investors and having a turnstile of strangers coming through the middle of their neighborhoods,” she said. “I’m still in the stages of finding out what the options are, but I’ve been talking with members of my community, and they’re extremely upset with this turn of events because it hurts them more than any other district in the city.”

Deciding how to proceed on Monday and beyond has become something of a chess game as council members weigh the various options — and risks — of a repeal or election.

Were the council to put the referendum to a vote, it would have to decide at a later date whether to do so in 2020 or in a more costly special election early next year, when there may be a push by Mayor Kevin Faulconer’s office for a spring vote on another ballot measure — an already qualified initiative to expand the city’s convention center and fund homeless programs and street repairs.

That could be a risky proposition, though, because the short-term rental platforms have the financial wherewithal to mount a well-funded campaign to repeal the city’s regulations. Just last June, Palm Springs voters easily approved a ballot measure overturning restrictions on short-term rentals.

In San Diego, a recent SurveyUSA poll conducted for the Union-Tribune and 10News found strong support for allowing the use of second homes for vacation stays.

In a statement released last week, Faulconer’s chief of staff, Aimee Faucett, said rescinding the regulations is probably the more prudent course to pursue.

“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.”

Should the council decide to rescind its action, which now appears to be the more likely outcome, the city legally has the option of adopting a new set of regulations within the next year. But those new rules would have to be “essentially” different from the ones that were repealed, according to City Attorney Mara Elliott’s office.

Her office said that should a new proposal emerge, it would provide legal review of whatever provisions are offered up to see if they meet the legal test of being different from the original legislation.

What those new and different regulations might look like remains to be seen, and it’s not a discussion likely to take place Monday because that issue is not before the council. Whatever new legislation that is ultimately adopted, it would have to pass muster with the California Coastal Commission for those areas of the city in the coastal zone.

Some have suggested that perhaps the council could retain the primary residence-only regulations but resurrect the idea of exempting Mission Beach, long a magnet for vacation rentals, from limits on short-term stays.

Another idea being floated is to create different ceilings for short-term rentals in various inland and coastal areas of the city, taking into consideration some communities’ longstanding tradition as vacation rental destinations.

Taking a more hard-line position is Save San Diego Neighborhoods, a community coalition that has long advocated for banning all vacation rentals in residential neighborhoods. It plans to urge the council on Monday to do just that.

The group said the council should rescind its action and enforce the legal opinion rendered last year by Elliott that San Diego's municipal code doesn't permit vacation rentals in any zone.

“It’s clear it’s the only solution at this point,” said Matt Valenti, with Save San Diego Neighborhoods and a member of the Clairemont Planning Group. “How much longer are we going to dilly dally and go back to the city attorney for the umpteenth time, it’s so silly. It’s just time to do the right thing once and for all.”

The hotel industry, which has consistently pushed for tight regulation of short-term rentals, is taking a somewhat similar position, although it is willing to consider alternative regulations that could be cobbled together in the next year.

“The city attorney has opined that short term-rentals are illegal so enforce the ordinance, but we would like to see them replace their ordinances with something different,” said Lynn Mohrfeld, CEO of the California Hotel & Lodging Association. I’m absolutely certain that if it goes to the ballot the short term rental platforms will put in substantial money. My position is it’s time to do something and it doesn’t seem like good policy to kick the can down the road again.”

The lingering uncertainty about the rules of the road for short-term rentals has been unnerving for out-of-town homeowners like Garo Megerian who rent out their second homes for vacation stays.

A Springfield, Penn. physician, Megerian became so smitten with La Jolla on a visit here that he and his wife Annette purchased a four-bedroom ocean-view home last year with the idea of later retiring in San Diego.

The only way, though, to make the purchase financially feasible while still allowing him and his wife and other family members to occasionally use the home, was to rent it out much of the year for short-term stays, he said.

Megerian says he’s puzzled as to why a popular tourist destination like San Diego wants to shut down second home owners like himself.

“I just don’t get the whole issue,” he said. “At least here on the East coast, in vacation areas like the Jersey shore, the Outer Banks, everyone rents out their house. If there’s an outright ban in San Diego, there’s no way I could afford to keep a vacation home because the income we get helps pay the mortgage and utilities, and I’m not retiring for another four to five years. I’d have to sell.”

La Jolla Town Council President Ann Kerr-Bache, who also heads a short-term vacation rental working group representing some 20 community groups, believes there may be some room for detente among all the sparring stakeholders. Her group, in a meeting last week, decided it will ask the council Monday to repeal its ordinance and get to work quickly on a new set of regulations.

“We can’t afford to wait much longer to get some enforcement and monitoring going,” she said. “There are things we might be willing to compromise on. One positive to come out of all this chaos from Airbnb is that we get to take a more detailed look. I do want to engage in discussions with Airbnb and see what works for them and what doesn’t.”

Representatives of Airbnb, which has waged similar battles in many other cities, declined to be interviewed for this article but offered a statement that sought to strike a conciliatory tone.

“Whether the law passed is rescinded or put to the voters for a final say, it’s clear from the tens of thousands of signatures validated earlier this month that San Diegans want a different, more balanced approach to short-term rentals that protects property rights, encourages tourism, weeds out bad actors and creates an enforceable regulatory structure,” the company said. “We remain committed to working with the city and all stakeholders to find the right balance in San Diego.”

lori.weisberg@sduniontribune.com

(619) 293-2251

Twitter: @loriweisberg

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