Real Estate News is a new feature at Titles & Deeds. We will periodically address new developments in the real estate world that matter to real estate investors.
Update: Read here to find out what has happened more recently involving San Diego Vacation Rental regulation.
For the past few years, vacation rental properties have been a controversial topic in San Diego. Real estate investors often find vacation rentals to be a lucrative source of income in many San Diego neighborhoods, and companies like Airbnb and HomeAway offer an efficient way to match property owners with renters. Neighbors of vacation rentals, on the other hand, often complain that allowing short-term rentals of residential properties harms neighborhoods in various ways, such as by increasing noise and traffic. After a rather confusing series of events, the San Diego City Council has scheduled a hearing on a proposed set of regulations affecting short-term vacation rental properties as a form of San Diego real estate.
Most cities have zoning and land use regulations that limit the uses of various types of property. For example, an owner of land that is zoned as “residential” may not, broadly speaking, operate a business on that property. They might be able to operate a “work from home” sort of business, but a business that is open to the public, like a retail store, would most likely violate zoning regulations and result in legal action against the property owner. Hotels and other businesses that provide overnight lodging are often subject to separate city regulations. Residential properties that are made available to the public as vacation rentals have the potential to run afoul of multiple city regulations or ordinances.
Numerous cities around the country have considered whether residential properties made available for rental through companies like Airbnb are, or should be, subject to regulations governing hotels and motels. In San Diego, the question has partly come down to zoning regulations. The City Attorney issued a memorandum in March 2017, stating that the city’s zoning ordinance prohibits short-term vacation rentals altogether. The memorandum describes the city ordinance as a “permissive zoning ordinance” that prohibits any use that is not specifically listed. The ordinance, according to the City Attorney, makes no mention of short-term vacation rentals and therefore does not allow them. This was only an opinion by a city official, rather than the judgment of a court of law, so it is not the final word on the question. Other city officials also disputed the City Attorney’s conclusions.
The City Council was scheduled to hold a hearing on proposed regulations affecting vacation rentals in October, but another memo from the City Attorney’s office resulted in the cancellation of the hearing. This memo concluded that the regulations, as written, presented multiple potential problems under the Equal Protection Clause of the California Constitution. For example, the proposed regulations would only allow short-term rentals of “primary residences,” which would treat owners of other types of residential property differently without a “rational basis.” Council members responded by drafting new regulations. A new hearing is scheduled for December 12.
The new proposed ordinance, described in the news as a “compromise” ordinance, was made available to the public in late November. It would require a minimum three-night stay for short-term rentals, and it would establish standards and procedures for permits. It also includes provisions regarding property owners’ responsibility for managing matters like “noise, disorderly conduct, overcrowding, and accumulation of waste.”
More Blog Posts:
Vacation Rentals and San Diego Real Estate Investors: A Match Made…Cautiously, Titles and Deeds, August 26, 2017
What California Real Estate Investors Should Know About Commercial Leases, Titles and Deeds, August 10, 2017
What California Real Estate Investors Should Know About Residential Leases, Titles and Deeds, July 26, 2017