Short Term Rental (STR) Program Update Study Session
July 16, 2024
Background
Last update to City Council: March 19, 2024
STR permits: 204 (Dec. 2023)
2023 TOT collection: $985,914 (hosted & unhosted)
Unpermitted STRs decline: 867 (2020) to 135 (2023)
Complaint calls decline
Follow-up information requested
Enforcement best practices
Connection between noise & unhosted STRs
Revenue potential & reporting
Permitted Short Term Rentals
Approx. 38% are located within the Coastal Zone
Approx. 58% are located within Coastal Zone and RMH-A (Old Town/Town Lot) areas
Current Requirements
Hosted (owner-occupied)
Citywide – unlimited (no cap)
Unhosted (owner un-occupied)
Zone 2 (Sunset Beach)
Due to annexation MOU
Limited time to obtain permit
One STR per property owner
Local contact person must be available 24/7 to respond within 1 hour to complaints and resolve Obtain STR Permit; renew annually
$1,000 fine each day for each violation
3 violations within 12-month period – results in revocation All marketing/listings must have City-issued STR permit number
Enforcement Best Practices
Staff researched how other cities operate STR programs and met with several STR vendors.
Third-Party Vendor:
Monitoring: Tracking over 60 rental listing websites for unpermitted STRs Compliance Letters: Sending notices to non-compliant STR operators 24/7 Hotline: Phone and web support for reporting complaints Online Portals: Permits, registration, and remittance
Tax Collection & Reporting: Ensuring accurate and timely TOT collection and reporting
Unpermitted STRs
Unpermitted STRs
135 unpermitted rentals (Nov. 2023)
Complaint Detail
STRs with Violations
Over 3-year program:
156 violations documented citywide between both unhosted and hosted STRs Concentration occurring in the downtown area and coastal zone
No Owner On-site Violations
36 STRs w/ No Owner On-Site (unhosted) Violations
14 in RMH-A (Oldtown/ Townlots) or Downtown Coastal Zone
Noise Violations
26 STRs w/ Noise Violations
12 in RMH-A (Oldtown/Townlots) or Downtown Coastal Zone
Comparison of Other Cities
Subtext goes here
Duplicate this slide as needed
Carlsbad
Carpinteria
Dana Point
Long Beach
Newport Beach
San Diego
Ventura
Cap
No
Yes
218 in VROD;
Unlimited homestays
Yes
115 in CZ + 60 outside CZ for nonprimary;
115 outside CZ
Yes
350 in CZ; 800 non-primary
Unlimited primary
Yes
1,550
Yes
4 tiers (STR types)
Unlimited T1 (PT)
Unlimited T2 (HS)
5,503 T3 (W, ex MB)
1,809 T4 (MB)
No
Existing # permitted STRs
445
180
165 (citywide)
800 incl primary
(650 non-primary)
1,550
8,651
T1 – 193
T2 – 2,691
T3 – 4,678
T4 – 1,089
200
Locational Restrictions
Yes
CZ & Residential
Yes
VROD – 4 subareas w/ caps
Yes
CZ & STR type
Yes
CZ & total #
Yes
Certain residential zones
No
No
TOT
10%
12%
10%
13%
10%
10.5%
10%
Population
113,018
12,689
32,403
444,095
81,794
1.38 mil
108,537
STRs in Coastal Zone (excl. Sunset Beach): 38
Active STRs (paid TOT in 2023): 25
Total TOT Collected: $157,285.04
Average Annual TOT per STR: $6,291.40
Encompass ~12,048 units
Coastal Zone TOT
Sunset Beach TOT
STRs in Sunset Beach: 48
Active STRs (paid TOT in 2023): 34
Total TOT Collected: $281,425.23
Average Annual TOT per STR: $8,277.21
Encompass ~650 units
Townlot & Oldtown Areas
Townlot
Oldtown
Hosted STRs in Townlot & Oldtown: 54
Active STRs (paid TOT in 2023): 37
Total TOT Collected: $209,208.22
Average Annual TOT per STR: $5,654.28
Encompass ~5,790 units
Actual & Potential Revenue
Townlot & Oldtown
Coastal Zone (Excluding Sunset Beach)
Sunset Beach
Average (Combined 3 Areas)
Citywide - Estimate
(with Avg Nightly Rate of $305 and 50% occupancy)
Average Annual TOT per STR Unit
$5,654.28
$6,291.40
$8,277.21
$6,740.96
$5,490
Total TOT Collected (2023)
$209,208.22
$157,285.04
$281,425.23
$215,972.83
n/a
Example Scenario:
Allow 200 STRs
$1,130,856
$1,258,280
$1,655,442
$1,348,192
$1,098,000
Range
Coastal Zone + SB + Old Town/ Townlot
66% of 2023 actual revenue
Potential Revenue
Range of potential revenue estimates in Coastal Zone & Oldtown/Townlot may be conservative (based on hosted STR) If program expanded to allow unhosted, conversion of existing hosted STRs would also potentially increase revenue Townlot & Oldtown
Coastal Zone (Excluding Sunset Beach)
Sunset Beach
Average (Combined 3 Areas)
Example Scenario:
Allow 200 STRs
$1,130,856
$1,258,280
$1,655,442
$1,348,192
Update Considerations
Enhanced Online Portal: Improving the registration and tax remittance process through a user-friendly online platform Active Reporting: Enforcing active reporting and implementing strict penalties for non-compliance Cap on STRs: Setting a cap on the number of unhosted STRs based on specific location criteria Waitlist Process & Auditing: Introducing a waitlist process for new permits and regular auditing to ensure compliance
Ordinance & Policies
Types of STRs: Hosted, unhosted, primary, vacation rentals Strict penalties: Implementing severe penalties for non-compliance Maximum Cap: Limits on the number of STR permits issued Incentivize and require permit holders to report activity and revenue accurately Location Restrictions: Designating specific areas where STRs are allowed Associated to high concentrations of STR listings and greatest revenue potential Enforcement Tools: Enhancing digital services, utilizing technology like noise monitoring devices and exterior surveillance
Questions?