CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
8/26/2024
1 SUBJECT:
Short Term Rental Study Session
RECOMMENDED ACTION:
Receive updates on the Short-Term Rental Program and provide direction on potential revisions to the City’s Short-Term Rental regulations.
STAFF CONTACT:
Yulia Carter, Assistant City Manager
(650) 738-7301
[email protected]
Brianne Harkousha, AICP, Senior Planner
(650) 738-7341
[email protected]
BACKGROUND:
The City Council held a Study Session on June 24, 2024, to receive an extensive update on implementation of the City’s short-term rental (STR) program and to discuss potential provisions to be considered in an update to the STR Ordinance.
The City’s STR program is very complex and affects various municipal services. An effectively managed STR program can serve as a robust driver for the local economy, boosting tourism and hospitality, increasing local spending, enhancing property values, supporting local small businesses, and expanding the visitor-serving economy. Cities with an unregulated and improperly managed STR program have experienced a range of negative impacts which can create challenges disruptive to the local community and its character, including noise, garbage, traffic, parking, reducing the availability of long-term housing and the overall cohesion of neighborhoods.
At the last study session, staff provided an extensive update to the Council and the community and shared information about the implementation of the City’s STR program and enforcement efforts. Furthermore, staff provided general benchmark information regarding other agencies STR provisions. For further background, please refer to the staff report for the June 24, 20241 City Council Study Session.
During the previous study session, the City heard from the community, including STR operators and neighbors, who raised various concerns over current STR regulations and enforcement efforts. Changes were requested related to the following aspects of the implementation of the STR program to ensure:
• Inclusion of regulations in the new ordinance to effectively enforce noncompliant STRs.
• Addressing complaints about STR operators that were hosting parties, causing nuisance to the neighborhood, and especially those properties with repeat STR 1 City Council Study Session on June 24, 2024 - Staff Report & Attachments:
https://pacificacityca.iqm2.com/Citizens/FileOpen.aspx?Type=14&ID=1539&Inline=True Pacifica City Council 2
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violations.
• Understanding the impact of new ordinance provisions that may affect legal and compliant STRs.
Developing effective management standards and regulations for the STR program requires a careful balance between compliance and enforcement, the availability of long-term housing, and the economic benefits that successful STR operations bring to the local economy. While STRs can boost tourism and hospitality and support local businesses, it's essential that new regulations do not compromise the well-being and cohesion of neighborhoods. The end goal should be to integrate a well-managed STR program into the broader economic and social composition of Pacifica's community, ensuring that the benefits of tourism and local economic growth are balanced with the needs and quality of life of residents.
The City Council discussed the City’s regulations and limitations under the current Ordinance and identified potential provisions of interest to evaluate further and strengthen the City’s STR regulations. The City Council’s direction at the June 24, 2024 Study Session was for staff to evaluate and research the following provisions and areas to improve the City’s STR program.
Council’s direction can be divided into two categories: policy considerations and regulatory compliance matters.
Policy Considerations:
• Hosted vs. Unhosted Rentals: Differentiating and setting limits for unhosted STRs based on the number of rental days.
• Primary Residence Requirement: Requiring STRs to be primary residences with specific residency conditions.
• Occupancy Limits: Setting limits on the number of occupants per bedroom. • Parking Requirements: Defining where vehicles can be parked (garage vs. driveway).
• Multifamily Properties: Deciding on the allowance of STRs in multifamily residences.
• STR Density: Limiting the number of STRs per neighborhood, business district, or street/block.
• Zoning Differences: Exploring different regulations for STRs in Coastal vs. NonCoastal zones. • Minimum Rental Duration: Prohibiting hourly rentals and enforcing a 2–3-day minimum rental period.
Regulatory Compliance:
• Permit Limits: Restricting one STR permit per natural person. • Permit Processing Restrictions: Not allowing the processing of other city permits if the property is being converted to an STR without proper registration. • Enforcement Timeline: Shortening the enforcement process timeline. • Grandfathering Permits: Considering whether to grandfather in current STR permit holders.
• 24/7 Contact Requirement: Mandating the identification of a 24/7 contact person for each STR.
• Administrative Procedures and Compliance: Clarifying and Improving STR permit revocation procedures and enforcements.
Following the Council’s direction at the June 24 meeting, staff reviewed and evaluated these considerations to provide recommendations, further analysis of implementation impacts, or to request additional direction as necessary as summarized in the Discussion section of this Pacifica City Council 3
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report.
Staff also includes a list of defined terms in Attachment 1 to ensure that all parties reviewing this report fully understand common terminology. The terms listed in this attachment are for general understanding only and should not serve as a recommended language for incorporation into a future Ordinance.
DISCUSSION:
Before delving into the policy considerations, staff plans to first review the potential timeline for implementing potential new ordinance provisions. Staff have also analyzed the feasibility of a moratorium on new Short-Term Rental (STR) permits. This approach ensures that the timing and immediate impact of the proposed changes are fully understood before the Council engages in the detailed policy considerations tonight.
1. New Ordinance Timeline
After the Study Session on June 24, 2024, staff reviewed the concerns and issues expressed by the Council and members of the public. Per the council's direction, staff evaluated the list of items related to STR program implementation and potential ordinance provisions. This extensive review and update are incorporated within this staff report. If Council’s direction during the August 26, 2024, Study Session is to proceed with ordinance revisions, staff will still need to undertake significant work to bring the amendments forward for Council consideration, timeline and details as follows:
1. City staff would begin preparing draft ordinance amendments to the STR Ordinance in a redlined version. In addition, staff will also need to prepare any analysis required to justify any specific ordinance amendments.
2. City staff will coordinate and meet with the California Coastal Commission to discuss the feasibility of the recommended ordinance amendments. This step could present challenges if certain ordinance amendments need further analysis or are not perceived as feasible by California Coastal Commission staff and could result in an extended process.
3. Depending on the outcome with Coastal Commission staff discussions, City staff would proceed with one of the following:
a. Schedule an additional Study Session for City Council to review and consider recommended modifications by Coastal Commission staff; or b. If no substantial modifications are required by Coastal Commission staff, then City staff will schedule the proposed ordinance amendment for the next available Planning Commission meeting.
i. If the outcome of the Coastal Commission review is 3(b), then the next steps would be the Planning Commission consideration of the proposed ordinance amendments and recommendation of approval to the City Council. ii. If the Planning Commission recommends approval to City Council with or without modifications, City staff would schedule the proposed ordinance amendments for the first introduction to the ordinance at the next available City Council meeting. iii. If the City Council reviews and recommends approval of the proposed ordinance amendments and introduces the ordinance by title, then the second reading of the ordinance would occur at the next City Council meeting. iv. Thirty days from the date of the second reading, the ordinance amendments would apply to properties located outside the Coastal Zone. The ordinance would not be effective in areas located in the coastal zone until California Coastal Commission approval is received.
v. City staff will begin preparing and applying for an LCP Amendment for the STR Ordinance Amendment to be reviewed and approved by the California Coastal Pacifica City Council 4
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Commission. This step also contains uncertainty, but staff anticipates that the preliminary review of the ordinance and consistent coordination with the California Coastal Commission could reduce additional comments and/or requested modifications by the Coastal Commission.
Overall, the timeline for the implementation of the new STR ordinance is contingent on the Coastal Commission’s review and any modifications it might make to the Council-recommended amendments. The amended STR ordinance could go into effect as early as mid-late November 2024. Initially, the amendments will only apply to the areas outside the Coastal zone. Approval of a Local Coastal Program (LCP) Amendment by the Coastal Commission, which is required for the ordinance to apply within the Coastal zone, could take up to a year, at minimum, or likely longer. This delay may create a disparity and distinct set of STR regulations in coastal and noncoastal zones.
In any event, the new ordinance will not be in place in time for the STR permit renewal in October 2024. Renewal notices will be sent out early next week, and staff will coordinate with HdL to inform current STR permit holders that the Council may modify the ordinance in the coming year to change or expand the STR regulations in Pacifica.
2. Adopting a Moratorium
Several Councilmembers have asked whether the City should consider adopting a moratorium on new STR permits. Cities may impose moratoria (temporary prohibition on an activity) by adopting interim ordinances prohibiting any uses that may be in conflict with a contemplated general plan, specific plan, or zoning proposal. There is a detailed process for adopting a moratorium, which includes adopting specific and quantifiable findings demonstrating that there is a current and immediate threat to the public health, safety, or welfare and that the approval of any applicable entitlement for use which is required to comply with a zoning ordinance would result in a threat to the public health, safety or welfare. (See Government Code section 65858).
Moratoria are often used when there is an immediate threat to health and safety, and the city wants to take immediate action to preserve the status quo. For example, a city that supplies water and finds that its water supply is depleted may adopt a moratorium on new water service connections during a declared water shortage emergency if it finds that allowing new or additional water service connections would deplete the city’s existing water supply.
In this case, while there are a number of concerns that the community members have raised about STRs, there do not appear to be any facts that would indicate that the continued issuance of STR permits would constitute “a current and immediate threat to the public health, safety or welfare.” Additionally, stopping the issuance of STR permits would not do anything to address the community’s concerns relating to existing STRs. Moreover, given the Coastal Commission’s recent approval of the City’s Short-Term-Rental Ordinance and the rapidly approaching permit cap, it would be difficult to make the necessary findings because the permit cap accomplishes the same objective as a moratorium without the difficulties associated with making the requisite findings. As shown in HdL’s most recent report, there are only 11 permits available under the existing 150 permit cap. 8 applications are pending with HdL leaving only 3 available permits.
As a result of the City’s enforcement efforts, the remaining 3 permits will likely be issued in the next few weeks. Thereafter, applicants will be placed on a waiting list.
Finally, even if the requisite findings could be established, the moratorium would only be effective for 45 days. Thereafter, the Council would have to make another finding that a threat to health and safety still exists and there is nothing the City can do to mitigate the impacts. It is unclear how the City could make those findings if the City has reached the STR permit cap.
Finally, a moratorium prohibiting additional STR permits would require approval by the Coastal Pacifica City Council 5
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Commission. As the Council is aware, the Commission recently approved the Citywide cap on short-term rental permits. A limitation that is more restrictive than the City’s cap would require an amendment to the City’s local coastal program (LCP). The City will have likely reached its cap on STR permits well before the Commission’s action on any amendment.
3. Potential Provisions for the New Ordinance.
Staff has completed its analysis of the items related to STR program implementation and potential ordinance amendments directed by the Council at the June 24, 2024 study session and provides analysis of those items below grouped between the policy considerations and regulatory compliance items as outlined above and described below.
3.1 Policy Considerations to Improve the STR Program
• Hosted vs. Unhosted Rentals: Differentiating and setting limits for unhosted STRs based on the number of rental days.
Differentiation between hosted and unhosted rentals
Council directed staff to evaluate the terminology of a hosted vs. an unhosted short term rental and how defining these terms might allow the City to further regulate STR’s. Staff evaluated the provisions of eight different public agencies to determine whether defining hosted vs. unhosted short-term rentals was a common practice.
Staff found that several of the sample agencies had legislative distinctions between hosted and unhosted short-term rentals. Several agencies defined a hosted shortterm rental as a short-term residential rental in which the host is present while it is being rented. “Host” was defined as a host on premises at all times between the hours of 10:00 pm and 6:00 am. An unhosted stay was defined as a short-term residential rental that is not hosted.
“Host” was defined as any person who is the owner of record of residential real property or any person who is a lessee of residential real property who offers a dwelling unit, or portion thereof, for short-term rental either through a hosting platform or individually as an operator. An unhosted short-term rental was defined as a short-term rental in which the owner of record or the long-term lessee of the property does not reside on the property during the time a renter is occupying the residence. For the purpose of this report, these are the definitions used by staff in preparing the analysis and impact of implementation.
Limits for Unhosted STRs
The Council also directed staff to evaluate the possibility of limiting unhosted shortterm rental operations to a certain number of days per year. Staff evaluated eight agencies’ operating limitations, including contacting enforcement staff to measure the effectiveness of such provisions. One agency located in a coastal zone limited unhosted short-term rentals to a maximum of up to 60 days per calendar year.
Another agency located outside of the coastal zone limited unhosted short-term rentals to a maximum of 120 days per calendar year. These agencies’ staff indicated that administering, monitoring, and tracking the number of days an unhosted shortterm rental operated per calendar year had been challenging. While enforcement efforts have increased post-COVID, efficiently ensuring compliance with these provisions required a significant staff commitment of time and resources.
Implementation Impacts/Considerations:
Differentiation between hosted and unhosted rentals
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While the short-term rental ordinance could be amended to impose these additional requirements, monitoring and enforcement would require a significant operational commitment by the City’s small Code Enforcement Division and already understaffed Police Department. In addition, proposing a distinction between hosted and unhosted short-term rentals would be difficult to administer practically. Adding restrictive operational requirements on unhosted STRs would require staff to investigate, inspect, and verify compliance prior to registering such STR. It would also require the City to devote staff resources to the development of a new real-time STR investigation and inspection program. Additional reporting requirements, inspections, and investigations would also be required before resolving or enforcing an STR complaint. Such a program would likely require the hiring of additional enforcement personnel, increased STR permit fees, and increased fees for violations to ensure cost recovery.
Although the perception of limiting unhosted STR operations per year would seem like a tactic to reduce STR activity, adding such a provision would be difficult to implement effectively, as it would rely on self-reported data and only be enforceable if violations were reported or investigated. This approach would not likely address concerns about neighborhood disruptions but would severely affect the overall coastal hospitality industry in Pacifica. Additionally, verifying and monitoring the number of days an unhosted STR operates in a given year would require significant staff resources and would depend on accurate data reported by hosts and online platform verifications, making it challenging to enforce due to the complexity of tracking and the high likelihood of underreporting that may require more assistance from consultants to perform some of this work at a higher cost. A proposed limitation on unhosted STR operations would also not contribute to an overall improvement in life, health, and safety, as other provisions could directly impact this area. Thus, staff finds a provision to limit unhosted STRs impractical, unfeasible, and therefore, not recommended.
After evaluating the definitions of the terms staff recommends that defining a type of short-term rental, as “Hosted” vs “Unhosted” would be beneficial. Staff requests further direction from the Council on specific variations of such definitions, and whether placing additional restrictions on the number of unhosted STRs within the citywide cap of 150 STR units is still desired. Earlier this year, the City updated the STR permit application to include more data-driven questions, such as whether hosts are on-site during rentals. While precise data on the hosted versus unhosted composition of Pacifica's STRs will only be available after the next renewal in October, it is known that most STRs in Pacifica are unhosted.
If the City decides to ban or further restrict unhosted STRs, it would likely lead to a significant reduction in STR permits from compliant hosts, significantly impacting the economic benefits that the STR program provides to the local economy and local businesses. This may also result in a crucial drop in City revenues between $1.5-1.7 million per year (based on the unverified assumption that about 90% of Pacifica’s STRs are unhosted), which may lead to the inevitable reductions of already underfunded city services.
Additionally, such restrictions could also stimulate and encourage non-compliance, with some hosts potentially misrepresenting their hosting status on the permit application. As shared by staff in other jurisdictions with similar STR restrictions, enforcing this provision could prove challenging, as verifying whether a rental is hosted or unhosted might be difficult, if not impossible.
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The Council also wanted to explore the possibility of charging different STR permit fees for hosted and unhosted STRs. Charging different permit fees for hosted and unhosted STRs is not recommended due to enforcement challenges, administrative complexity, fairness concerns, and the potential for reduced compliance. As already mentioned, verifying whether a rental is truly hosted would be difficult, leading to possible false reporting and increased monitoring costs. A tiered fee structure could also create disparities among hosts, as some may feel penalized without justification.
This may discourage compliance, as some might choose to operate without permits or misreport to avoid higher fees. A uniform fee structure helps maintain fairness and simplifies enforcement, focusing on effective regulations rather than revenues or creating financial inequities.
• Primary Residence Requirement: Requiring STRs to be primary residences with specific residency conditions.
The council directed staff to evaluate provisions for a primary residency requirement with specific residency conditions. The council and members of the public expressed concerns about the STR being rented all year to strangers, impacting neighborhood character.
Staff researched options available to Council, including a primary residency requirement that would ensure that the STR property is used as a primary residence for some portion of a year. A variation of this requirement would be a temporary residency requirement, which would require a property owner to reside at the property for a certain period of time before applying for an STR permit. Implementing both of these options, such as allowing only hosted STRs and requiring that the property be used as a primary residence to obtain the STR permit, presents administrative and enforcement challenges similar to administering the hosted vs unhosted restrictions.
Identifying whether an STR property is used as a primary or temporary residence would require staff to review both the property owner’s documentation and the documentation of the lessee residing in the unit prior to issuing an STR Permit.
Documentation would likely include driver’s license, tax information or a copy of any lease and evidence proving that the host is actually living in the dwelling unit for the requisite period of time per calendar year. However, verifying the residential occupancy requirements could be difficult and presents the same challenges for staff to enforce a primary residency provision as described above. Practically, this provision would not be enforceable and would mainly be a self-reporting task in which compliance is only verified through documentation. For these reasons, staff is not recommending pursuing these requirements.
• Occupancy Limits: Setting limits on the number of occupants per bedroom.
Council directed staff to evaluate setting a limit on the number of occupants per bedroom. Council and members of the public raised concerns about STR operations exceeding maximum number of occupants for a typical residence and impacting neighborhood character with multiple people visiting a residence. Staff evaluated provisions amongst eight public agencies and found that the majority have an occupancy limit of no more than two people per bedroom. Setting limits on the number of occupants per bedroom is recommended to allow the City to ensure the proper ratio of guests to rooms available. Staff recommends adding a provision that sets a limit on the number of occupants per bedroom to a maximum of two Pacifica City Council 8
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occupants per bedroom. This would not apply to children under the age of twelve years old.
Implementation Impacts/Considerations: This type of regulation would be very challenging to implement from a regulatory perspective in determining what number should be applied as the limit because bedroom sizes can vary from property to property, and from an enforcement perspective because this would require determining who is actually utilizing the STR. The City could request certain information as part of the STR permit application as part of the registration (i.e., the application could require identification of the number of guests per bedroom), but that number could change over time if the owner decides to change the configuration of the bedrooms. In terms of enforcement, it would be difficult to identify which rooms the guests are actually staying in and whether the maximum capacity has been reached at a particular point in time.
• Parking Requirements: Defining where vehicles can be parked (garage vs. driveway).
Council directed staff to define/limit number of vehicles and where they are allowed to park (i.e. garage, driveway). Council and members of the public expressed concerns about multiple vehicles parked on the street and lack of parking in the neighborhood due to the short-term rental operations.
Staff conducted research of the eight sample public agencies and found that these agencies included a few variations of parking standards for an STR operation, which included the following:
o STR to maintain minimum parking requirements consistent with the jurisdiction's parking standards per the zoning district or use type and must be available for the guests during the STR operations (typically two off-street parking spaces in a garage and two on-site (i.e., on the driveway).
o One vehicle per bedroom, either off-street or on-street parking space (requires off-street parking to be used before using onstreet parking spaces). o One per vacation rental, either on-site or within a designated parking lot.
Staff reviewed various parking standards for STR operations in benchmark agencies and found that the most common is to require that the property proposing an STR operation provide the minimum parking consistent with the zoning district or existing use on-site (i.e. Single-Family Residential Zoning or Single-Family Residential Dwelling) and the parking must be made available during the STR operations. For reference, PMC Section 9-4.2818 (Number of parking spaces required) of Pacifica’s Off-Street Parking and Loading Ordinance requires single-family and two-family residential uses to provide two garage spaces per unit and where adequate length to accommodate a parked car does not exist or on-street parking is unavailable a minimum of one guest parking space per unit should be provided. In addition, parking spaces are required to meet a minimum size to be considered a parking space consistent with PMC section 9-4.28047.
In order to address parking concerns for STR operations, staff would recommend a provision that would require STR operations to comply with the minimum number of required off-street parking spaces and be designed to be consistent with the City’s Off-Street Parking and Loading Ordinance. In addition, all off-street parking spaces must be available for the STR during operations. Staff would implement this Pacifica City Council 9
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provision by proposing objective criteria for an STR operator to comply with, such as requiring applicants registering an STR to provide a site plan and written statement indicating the location of the spaces and the size of the space to ensure it meets the minimum standards per the Off-Street Parking and Loading Ordinance. The operator would also need to agree to make all spaces available for renters of the STR of an unhosted short-term rental and make at least one space available for renters of the STR of a hosted short-term rental. This would also be verified during the inspection phase if a provision for inspections before issuing an STR Permit is adopted.
If a property registering for an STR does not have the minimum parking on-site consistent with the Pacifica Municipal Code, then they would not be eligible for an STR Permit because the property does not provide sufficient parking for the operations. To further implementation, staff would also recommend that the STR operators add the parking requirement to the guest manual to ensure the requirement is communicated to the guests of the STR. Although this provision cannot limit the public from using a public street, this would allow the City to verify that the STR operators are in compliance with the minimum parking standards for the property, and non-compliance could result in revocation of the permit and/or a site with inadequate parking available would not be eligible to register an STR at the proposed property.
In summary, staff would recommend to add a provision that requires STR operations to comply with the minimum number of off-street parking standards consistent with PMC Section 9-4.2818 and minimum design standards for each parking space PMC section 9-4.28047. In addition, the provision would require all parking spaces be made available for renters of the unhosted STR and at least one parking space made available for a hosted STR.
Implementation Impacts/Considerations: A provision that requires an STR operator to self-report the number and location of parking spaces would require staff to update application forms, review information during the registration phase, verify at the renewal phase, and also enforce if there was a reported complaint.
Administering this provision is possible; however, it would be an additional item that staff would verify during the application phases and enforcement. Thus, consideration of an increased fee for violations or increased STR permit fees would be necessary for cost recovery. Additionally, since this is primarily a self-reporting task and potentially verified during the inspection phase, it could be challenging to observe impactful results and/or may not fully address the Council or the public concerns regarding street parking.
• Multifamily Properties: Deciding on the allowance of STRs in multifamily residences.
Council directed staff to evaluate limiting STRs in a multifamily residence and prohibiting STR’s on vacant lots. Council and members of the public expressed concerns regarding multiple STRs being operated in one building and its impact on the neighborhood character or impact on available housing stock.
Staff’s analysis of the eight sample agencies found that several agencies had land use allowance provisions that allow one STR per property (legal lot of record) or parcel (APN). One agency prohibits STR’s in multifamily buildings with four or more units and one limits one STR per building with four or more units that share common walls.
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Pacifica currently has 15 properties that operate two or more STRs on lots with either two or up to five units per property. A figure of a list of properties may be referenced below (Figure 1). Proposing a provision that limits one STR permit per a legal lot of record and one STR permit per multifamily residential building with five (5) or more units when units share common walls would allow the current STR operators with multiple active STR permits within a triplex (3 or more units with share common walls) or on a single parcel (i.e. 2 STRs on one parcel) to continue to operate in compliance. This would also reduce the impact on overall TOT loss if existing, active, and compliant STRs are allowed to continue operating. Adding such a provision would address the concerns of multiple STRs operating in one building and the impacts on available housing stock in the buildings where affordable housing is commonly provided. A provision that limits the future number of STR Permits issued on a property or by multifamily residential building would allow staff to facilitate and track the concentration of STRs within the City.
Figure 1: List of STR Properties with Multiple Units
Based on this research and considering the concerns expressed by the Council and members of the public, it’s reasonable to propose a similar land use allowance to protect the neighborhood character, preserve housing stock, and reduce the potential nuisance of multiple STRs on one property.
Staff recommends a similar land use allowance provision for STR operations to ensure that there is only one STR permit per property (legal lot of record) or parcel (APN). In addition, staff would recommend another provision to limit one (1) STR permit per multifamily residential buildings with five (5) or more units, when units share common walls. If an STR is required to comply with the minimum land use allowances to operate, staff would implement this provision during the registration of the STR and verify that:
1) Only one STR operating per legal lot of record or parcel; and 2) Limit one (1) STR permit per multifamily residential buildings with five (5) or more units, when units share common walls.
3) When multifamily residential buildings consist of four (4) or less units, when sharing common walls then one STR permit per unit is required to operate an STR for each unit proposed in the building.
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Implementation Impacts/Considerations: A provision specific to land use allowance would require staff to review property records and verify compliance during the registration phase of the STR. This would increase staff time to review applications to register an STR and ensure compliance. A new provision specific to land use allowance would also apply to existing STRs and eventually, existing STR operators would be required to comply with the standard. However, improvements to the Administrative Regulations of the Municipal Code may be considered to protect the existing compliant STR operations, which will be further discussed in the following sections of this report.
• STR Density: Limiting the number of STRs per neighborhood, business district, or street/block.
Council directed staff to evaluate limits on the number of STRs per neighborhood, district, street, or block. Council and the public expressed interest in a provision that would limit the concentration of STRs to either locations where higher density exists or limiting number per neighborhoods to ensure an oversaturation of STRs does not occur.
After reviewing the provisions for the eight sample agencies, staff found that a majority of the agencies did not have a limit on STRs based on neighborhood, district, street, or block. One agency had a neighborhood cap which provided that no more than 20% of the units could be permitted for STRs. One agency’s ordinance provided that no more than 15% of parcels could have an STR per block. Other provisions related to concentration limitations were buffers, where one agency required 55-feet between STRs and no more than 15% of parcels per block with STR operations, and one agency with an overlay district that allowed STRs in a particular area that was analyzed and justified to have the highest density and foot traffic in the City to promote STR operations.
The agency that had a neighborhood cap of providing that no more than 20% of the units could operate as STRs, is also a high-demand tourist destination and currently has close to 3,000 STR properties in the jurisdiction. This agency has very different characteristics than Pacifica and this should be considered when determining an STR limitation based on neighborhood. Similarly, the agency that has a buffer and cap per block and the other with an overlay district are located adjacent to jurisdictions with high demand tourist destination along the coast.
A provision that limits the number of STRs per neighborhood could reduce the proposed STR operations where the City experiences some of the highest visitors and has the most tourist attractions. For example, most visitors visit Pacifica for the beautiful beaches and outdoor recreational amenities along the coast, and limiting STR operations within a neighborhood such as the Sharp Park neighborhood, where there are many outdoor recreational amenities and visitor-serving activities, could have a financial impact on existing business operations in the area. Based on data provided by HdL, the City currently has 67 STR Permits located in the Coastal Zone and the majority are within the Sharp Park neighborhood. A provision that limits STRs within this neighborhood may have an impact on existing STR operations and a financial impact on the City.
Given the potential impacts above, if a majority of the Council was interested in pursuing this option further, staff recommends further evaluating this provision with a financial impact analysis and consideration of how it would impact the active, legal Pacifica City Council 12 August 26, 2024
STR operations and visitor-driven areas.
• Zoning Differences: Exploring different regulations for STRs in Coastal vs. NonCoastal zones.
Council directed staff to evaluate different regulations for STRs located in Coastal vs.
Non-Coastal zones. Council expressed interest in a provision that included different regulations for STRs located in coastal vs non-coastal zones. Staff referred to the provisions of the eight-sample agency’s and found that only one prepared a new ordinance provision that prohibits new unhosted STRs outside of the coastal zone.
However, staff also notes that the new ordinance amendment has not yet been certified by the Coastal Commission. Additionally, one agency has a cap for STRs located within and outside of the coastal zone. Staff did not find specific regulations for coastal vs non-coastal STRs amongst the eight sample agencies.
Distinguishing STR operations by coastal vs. non-coastal zone and proposing different regulations for each may be problematic to enforce. It would require extensive coordination/collaboration with the California Coastal Commission to ensure the feasibility of the regulations in the coastal zone. It would also create disparity and inequality within the STR program. Given the potential challenges, staff would not recommend pursuing these requirements.
• Minimum Rental Duration: Prohibiting hourly rentals and enforcing a 2–3-day minimum rental period.
The Council directed staff to evaluate a provision for minimum night stays and/or prohibiting rentals by the hour/day. Concerns were raised regarding STRs operating for rentals by the hour or day to be used for an event or party. Allowing a residence to be rented for a short duration could increase the likelihood that the residence is used for large, one-time events. Staff reviewed the eight sample jurisdictions’ provisions and found that multiple jurisdictions prohibit events in STRs and/or require a minimum of two (2) consecutive night stays for STRs. Staff recommends a provision that requires a minimum two-night consecutive stay and prohibits events (parties) in units with an active STR Permit.
Implementation Impacts/Considerations: Implementing new provisions would increase staff time spent reviewing STR applications and enforcement to ensure compliance with the ordinance. This would result in the potential need to increase STR permit fees and/or violation fees to recover cost. In addition, administering this provision would be primarily a self-reported task, and staff would not be aware of an STR that does not meet the minimum stays until a report is filed. The only way staff would confirm that the minimum night stay was not adhered to is if the online rental posting indicates a less than two-night stay. Thus, implementing this standard could present challenges if the online rental company does not agree to ensure these stays offer the minimum requirement and if the operators neglect to disclose their operations are inconsistent with the provision.
3.2 Regulatory Compliance
• Permit Limits: Restricting one STR permit per natural person.
The Council directed staff to research whether the City could restrict short-term rental permits to “natural persons” to prevent large corporations from owning multiple Pacifica City Council 13 August 26, 2024
short-term rental properties. California law defines a corporation as a “person.” The term “person” includes both corporations and natural persons. (Civ. Code, § 14(a); Civ. Proc. Code, § 17(b)(6); Corp. Code, § 18; Pen. Code, § 7). California law grants corporations all of the powers of a natural person in the carrying out of its business activities, subject to restrictions in its articles of incorporation or to statutory limitations. (See California Corp. Code, § 207). Any restriction on corporations holding short term rental permits would likely be subject to challenge as conflicting with a matter of state concern. Further, as "persons" corporate entities are protected by federal civil-rights laws. (See, Genesis Environmental Services v. San Joaquin Valley Unified Air Pollution Control Dist., (2003) 113 Cal. App. 4th 597, including the rights to equal protection and due process.
Staff does not recommend restricting STR permits to only natural persons.
Restrictions on the number of short-term rental permits held by a single entity could accomplish the same purpose without the exposure to litigation. Like San Francisco and Half Moon Bay, the City could condition a short-term rental permit on “occupancy” of the unit by” at least one of the unit’s primary residents for a certain time period. (See Rosenblatt v. City of Santa Monica, (2019) 940 F.3d 439, 451).
There is a recent case invalidating a residency restriction which required the primary resident of the home-shared dwelling to be the dwelling's owner. (S. Lake Tahoe Prop. Owners Grp. v. City of S. Lake Tahoe (2023) 92 Cal. App. 5th 735, 762).
Therefore, the primary residency requirement would need to be linked to occupancy not ownership to ensure that the restriction is applied equally to both local and out of state owners.
Implementation Costs/Consideration:
This type of restriction would significantly limit the number of STR permits since many people do not hold property as individuals. It could also expose the City to a legal challenge if the City distinguishes between natural persons and corporations. • Permit Processing Restrictions: Not allowing the processing of other city permits if the property is being converted to an STR without proper registration.
Council directed staff to evaluate whether the City could hold processing of a building permit if an application is received to register an STR for the same property. Council and members of the public raised concerns about STR operators receiving STR Permits for properties that have not obtained Building Permits for existing construction and have Building Permit proposals in process while an STR Permit is proposed on the same site.
Holding the processing of a building permit application if an application is received to register an STR for the same property is not a common provision in the STR Ordinances reviewed of the eight sample agencies, and may be difficult to justify a nexus to do so. In addition, it would be speculative for staff to assume that a property applying for a Building Permit would later apply for an STR Permit. Staff currently prepares a thorough review of active planning applications, active building permits, and/or code violations at the time of STR Permit submittal and prior to issuance of an STR Permit. However, the Ordinance does not have a provision allowing staff to inspect the property prior to issuing the STR Permit to ensure the validity of the active permits or potential violations that are not on record with the City.
Therefore, staff would recommend a provision to require an on-site inspection prior to issuing an STR Permit to investigate any life, health, or safety issues and other items necessary to operate an STR. A majority of the sample jurisdictions require inspections prior to issuing STR permits. However, staff is seeking Council direction Pacifica City Council 14 August 26, 2024
to determine the level of inspection as it varies from requiring inspections from the Building Division, Code Enforcement, Fire Department, Environmental Health Department, and some are self-certified. The frequency of inspections also differs among the eight sample agencies. Most require a one-time inspection for new applications. One agency requires an inspection with new applications every three years. Another requirement is the inspection of new applications on an annual basis.
In addition, some jurisdictions require a self-certified inspection for either unhosted or hosted STRs.
At a minimum, staff would recommend inspections performed by staff in the Code Enforcement Division and Building Divisions prior to issuance of an STR Permit for an Unhosted STR. These inspections would include a detailed list of items to ensure public health, life, and safety and any additional items to be reviewed for an STR operation. To further address concerns expressed by the Council and the public, staff would recommend a mandatory inspection at the time of new application and annually thereafter. For hosted STRs, staff would recommend a self-certified inspection submitted prior to the issuance of an STR permit and concurrently with the submittal of an STR application. The self-certified inspection would be based on items listed in the City’s checklist for inspection of building safety, fire-life safety, and other applicable STR operations standards.
Staff would recommend a provision to require a City staff inspection to receive approval from the City’s Building and Code Enforcement Divisions prior to issuance of an STR Permit for Unhosted STRs. This inspection would include, at minimum, checklist items verifying emergency ingress/egress routes, installation of carbon monoxide detectors, location of fire extinguishers, existing code violations, existing building permits on record, and other items as necessary for STR operations or to be consistent with public health, life, and safety measures. Staff also recommends that inspections occur prior to issuance of the first STR Permit, every renewal (annual basis), and as needed if an STR operation is in violation of the code. Furthermore, a new provision for hosted STRs requires a self-certified inspection approved prior to the issuance of an STR permit and submitted concurrently with an STR application.
Criteria for the inspection would be based on items listed in the City’s checklist for inspecting buildings for safety, fire-life-safety, and other applicable STR operations standards.
Implementation Impacts/Considerations: Depending on the type proposed, additional staff resources would be dedicated to inspections. Thus, we would need to analyze the cost and time commitment required to conduct inspections. This would ultimately increase either the overall permit fee or the applicant's cost when applying for an STR Permit.
Pacifica’s Community Development Department consultant services for the Building Division, CSG Consultants, estimates approximately $125 per hour for a typical new home final inspection, which includes ensuring the building’s structural integrity is safe, all electrical, mechanical, and plumbing systems are working, and a fire extinguisher is installed on each level.
However, staff would consider a more thorough inspection for an STR operation, such as confirming applicable permits were received for the construction of structures, properly installed carbon monoxide detectors, verifying emergency ingress/egress routes smoke alarms, and verifying consistency with operations listed in the STR permit application (i.e. number of bedrooms listed, parking spaces provided, etc.). The fee may be estimated to be higher than the approximate amount Pacifica City Council 15 August 26, 2024
provided by the City’s Building Division consultants as the inspection would involve more than a final inspection of a new home. Since this level of inspection would require additional staff resources, an increase in the annual permit fee would be necessary for cost recovery purposes.
• Grandfathering Permits: Considering whether to grandfather in current STR permit holders.
The Council directed staff to evaluate whether a grandfather clause could apply to current permit holders who are in compliance with the current code standards.
Council and public members raised concerns about legal STR operators operating in compliance with current standards but may be impacted by a newly adopted provision. For example, if a new provision proposed an allowance of one STR Permit per building, then an existing STR operator with STR operations in three units of a triplex building would not be eligible for three STR Permits and could not renew two of the three permits. This could reset the City’s total STR count towards the cap of 150 STR units and impact existing TOT revenue and the operator’s business if the existing STR operators have been following code standards and received little to no founded complaints.
Staff reviewed provisions from the eight sample agencies and found that one agency provides a provision that allows an STR operation located in a multi-family dwelling or condominium unit to continue if the short-term rental was legally operating as of January 1, 2024. After reviewing potential options, staff found that adding a section identifying administrative regulations in two areas, (1) application processing (renewal) and (2) revocation and suspension, would strengthen the City’s ability to preserve existing, legal, and compliant STR operations. In addition, staff will evaluate a similar grandfather clause provision referenced in the benchmark agencies’ ordinances above to specify the requirements that a compliant STR operator could be exempt from. However, staff seeks the Council’s preliminary direction on specific provisions they may be interested in that would not apply to the legal, compliant STR operations.
Furthermore, there is no “grandfathering in” with the current annual renewal process and any grandfathering would only last for one year. Thus, if Council wants to consider grandfathering in then specific provisions would need to be identified.
Implementation Impacts/Considerations: Implementation of the administrative regulations would increase staff time reviewing applications and further consultation with management and the City’s Attorney’s Office to ensure staff administers the regulations accordingly. Please refer to the section below for further details on potential Administrative Regulations and Protocols.
• 24/7 Contact Requirement: Mandating the identification of a 24/7 contact person for each STR.
The Council directed staff to evaluate a provision that requires a 24/7 contact that would respond in a specific amount of time to resolve STR complaints. Council and members of the public raised concerns regarding the lack of accountability from STR operators when receiving complaints and the lack of resolution to complaints in a timely manner from the STR operator and City staff. Staff reviewed the eight sample jurisdictions' provisions and found that all jurisdictions require STR operators to provide a contact person who is available 24/7 to respond to STR complaints. The Pacifica City Council 16 August 26, 2024
required response times range from 15 to 60 minutes by phone and/or 30 minutes to 1-hour response in person.
Staff recommends a provision that requires STR operators to list a contact person who is required to be available 24/7 and respond to complaints by phone within 30 minutes, and if in-person resolution is necessary, one hour in person.
Implementation Impacts/Considerations: Implementing a new provision would increase staff time spent on reviewing STR applications and enforcement to ensure compliance with the ordinance. This would result in the potential need to increase STR permit fees and/or violation fees to recover cost. In addition, administering this provision would be primarily a self-reported task until a complaint is received and resolution from the applicant is required.
Administrative Procedures and Compliance: Clarifying and Improving STR permit revocation procedures and enforcements.
Staff reported procedures related to code and law enforcement response in detail during the last study session, also describing the complexities related to legal, code, and law enforcement related to STRs. Since the last meeting, staff have streamlined enforcement protocols to ensure a more rapid response to unpermitted or non-compliant operations and identified a consistent path forward to rectify, suspend, or revoke permits for STR operators who have fallen out of compliance with our ordinance's mandates.
• Streamlining Enforcement of Tax Obligations and Unpermitted STR Operation
As staff reported at the June 24, 2024 study session, the City has a variety of tools for enforcing compliance with the STR program. The City has partnered with HdL to provide permit compliance and tax collection services. HdL’s advanced data algorithms are capable of locating and tracking unpermitted short-term rental activity in real-time. Throughout the continuing collaboration, staff and HdL have further streamlined the process for locating, notifying, and commencing formal enforcement proceedings against unpermitted properties.
The Council expressed the desire to shorten HdL’s process, which can take up to four months to bring an unpermitted STR to compliance before turning non-compliant properties back to the City for additional legal proceedings. City staff met with HdL to discuss how this timeline could be reduced. When an unpermitted STR is identified, HdL will send the owner or operator a courtesy notice advising them what they must do to bring their property into compliance. Most owners and operators respond to this letter and comply. If, however, no response is received by the fourteen-day deadline set in the courtesy notice, HdL will send the owner/operator a formal warning letter advising them that if that matter is not resolved or no response is received within another fourteen days, they could be subject to the assessment and additional legal enforcement by the City. If no response is received by the end of the fourteen-day period, the City will issue a Notice of Violation and Assessment. At that time, the file is turned over to the City’s STR Administrator and the City’s Code Enforcement Division for formal administrative enforcement.
The formal enforcement protocols for enforcement of the STR permit requirements in Article 49 of the Pacifica Municipal Code include the use of all remedies authorized by the City’s Municipal Code. This includes mailing the STR owner and operator a certified Notice of Violation (NOV) that enforcement proceedings have commenced and advised the owner and operator that their property is in violation of the law and that the owner and operator must pay the assessed tax and fee liability and cease and desist operations until an STR permit is obtained. During this Pacifica City Council 17 August 26, 2024
process, the owner and operator are provided with notice and an opportunity to be heard if they should desire to appeal the NOV. Property owners who fail to contact the City, file an appeal, or otherwise correct their nuisance activities will then be issued citations under the Municipal Code for each day the property remains out of compliance. Citations can be as much as $500 a day.
If the registration and remittance requirements of the City’s taxes have also not been complied with, the owner is advised that taxes, fines, penalties, and interest will be assessed against the property if no response is received within ten days. In the absence of a response or an appeal, at the expiration of the ten-day period, the City’s Tax Administrator can proceed with filing a tax lien against the property with the County recorder placing a cloud on the property’s title.
The City’s robust enforcement protocols have been successful. Since our last report, nineteen STR Accounts have been resolved either through a cessation of illegal activity or by registration, remittance, and the granting of a valid STR permit. Three accounts are in active communication with the Code Enforcement Division and the City Attorney’s Office. While resolution of the outstanding liabilities on these three accounts is progressing, they remain unpermitted at this time and further enforcement efforts may be necessary. During this same period, an additional twelve notices of violation have been prepared and will shortly be sent out to non-compliant properties that did not respond to HdL’s outreach. These NOVs will go out in the next couple of weeks once their outstanding tax/fee liability is assessed. • Administrative Policies and Procedures to Implement the STR Ordinance Section 9-4.4907 of the Pacifica Municipal Code allows for revocation or suspension of a ShortTerm Rental Permit, if the STR Administrator makes a determination that the permittee has violated any of the STR Ordinance provisions or is operating the STR in a manner that is detrimental to the public health, welfare or safety or constitutes a nuisance. Section 9-4907(e) of the STR Ordinance allows the Short-Term-Rental Administrator to promulgate any policies or procedures necessary to implement and enforce the City’s Short-Term Rental Ordinance.
Administrative policies and procedures are being crafted and will be issued within the next 4-6 weeks to streamline and clarify the process for suspension or revocation of an active STR permit. Among these policies, in consultation with the legal department, the Administrator is formulating a “three-strikes” provision for permit holders. Under these anticipated criteria, any owner or operator subject to three “completed enforcement proceedings” in any twelve-month period arising out of activity deemed detrimental to public health, welfare or safety or which constitutes a nuisance will be subject to permit suspension or revocation. For purposes of this administrative policy, “completed enforcement proceedings” will mean either an administrative citation or notice of violation which has not been overturned by a timely administrative appeal.
Under the anticipated provisions of the policies, owners, or operators with three completed enforcement proceedings within any twelve-month period will be ineligible for renewal of their STR permit for a period of one year.
Since the last study session, staff have modified the response procedures to “found” STR violations to be followed by an NOV and implemented an internal tracking system for various cross-departmental STR violations in code enforcement, law enforcement, and tax/permit categories.
Staff also reviewed the law enforcement data for STR properties with three or more “found” violations over the last six months, and has initiated an STR permit-revocation process for one STR, with several other properties receiving NOVs that will be counted towards the “threestrikes” provision.
Summary of STR Permits
Pacifica City Council 18 August 26, 2024
Staff received an updated summary of Pacifica’s STR Permits including information regarding the current cap, compliant STRs, in process, non-compliant, and others. The summary is included as Attachment 2 to this report. As shown in HdL’s most recent report, there are only 11 permits available under the existing 150 permit cap. 8 applications are pending with HdL leaving only 3 available permits. As a result of the City’s enforcement efforts, the remaining 3 permits will likely to be issued in the next few weeks. Thereafter, short term rental applicants will be placed on a waiting list.
Collaboration with Airbnb
The City entered into a Voluntary Collection Agreement with Airbnb in October 2018. The agreement outlined Airbnb's responsibilities and processes for collecting and remitting transient occupancy taxes (TOT) on behalf of its hosts for taxable booking transactions made through its platform. The agreement also included provisions for notification to hosts and guests, choice of law, and other standard contractual terms.
Airbnb assisted the City in enhancing education on STR regulations for Pacifica hosts. These collaborative efforts have led to the recent design and launch of a responsible host page on the Airbnb platform to educate Pacifica STR operators who utilize Airbnb services, representing the vast majority of all Pacifica STRs, about the necessary requirements: Pacifica, CA - Airbnb Help Center. In addition, staff received the attached letter (Attachment 3) from Airbnb.
However, staff previously reported that Airbnb generally believes that all local regulatory policies and laws related to STRs are the sole responsibility of the local jurisdiction. Therefore, in the past, Airbnb was hesitant to suspend unpermitted, non-compliant STRs from its platform unless they were engaged in criminal conduct or imposed open threats to health and safety. Since the last study session, City and Airbnb staff have met a few times to find a mutually acceptable solution to further motivate Airbnb hosts to comply with all City STR regulations. Staff is currently working on a comprehensive list of various “non-compliant” properties with their Airbnb listings to share with Airbnb for further compliance actions. Other measures, like listing STR permits on Pacifica posts and enhancing neighborhood hotline reporting, were also discussed.
Airbnb also requested that the City include the letter addressed to the Council providing an opinion on the future of the STR program in Pacifica, which is included in Attachment 4 to this staff report. Staff met with a group of Pacifica hosts (upon their request) who advertise on Airbnb and also expressed a strong desire to take bad players out of the privilege of being allowed to operate STR in Pacifica.
City staff has also contacted VRBO, the second largest STR platform, to request a meeting to discuss collaborating on compliance efforts.
Continuing this collaboration is crucial for managing the STR program effectively, ensuring that hosts are educated on their responsibilities, and addressing residents' concerns through transparent communication and public engagement.
CONCLUSION:
In summary, the effective management of Pacifica's Short-Term Rental (STR) program requires a balanced approach that considers both the economic benefits of this major segment of the local economy and the preservation of neighborhood character and long-term housing availability. Developing regulations that strike this balance is key for the sustainable well-being and cohesion of the community.
Some policy provisions could be implemented relatively easily, while others may require substantial efforts and resources. The evaluation of potential provisions such as differentiating between hosted and unhosted STRs may present some enforcement and administrative Pacifica City Council 19 August 26, 2024
challenges. Therefore, any regulatory changes should prioritize practicality and enforceability, focusing on measures that can be efficiently implemented, upheld, and monitored.
Ongoing collaboration with HdL and STR platforms like Airbnb remains a critical component in enhancing compliance and educating hosts about local regulations. These partnerships can facilitate better enforcement mechanisms, streamlined tax collection, and improved communication between stakeholders. Also, engaging with both hosts and residents through transparent dialogue and public outreach will further support the development of a wellmanaged STR program that aligns with the community's economic and social objectives.
Staff seeks the Council’s’ direction for refined STR regulations by considering stakeholder feedback, monitoring the progress made to date with the current policies, and adapting to the diverse community needs related to this complex topic. By fostering a cooperative environment and implementing thoughtful, enforceable regulations, Pacifica can ensure that its STR program continues to provide economic benefits while maintaining the quality of life for all residents.
PUBLIC COMMENT:
Prior to publication of this staff report, Staff received six public comments after 12 pm for the July 8, 2024 and August 12, 2024 Council Meetings. These comments are included as Attachment 5 for reference.
ALTERNATIVE ACTION:
None identified, as the purpose of the study session is to receive direction about further analysis and work on potential ordinance revisions.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
The Short-term rental program study session is consistent with the following item in the Counciladopted Strategic Plan and Priority Work Plan for FY2023-24:
• Goal 3: Prioritize protection and development of affordable housing. o Strategy B: Update the Short-Term Rental Ordinance.
Additionally, the study session supports the following Council goals:
• “Organizational and Fiscal Stability” The STR program contributes approximately $2 million in taxes and fees to the City’s revenue base annually. • “An Engaged Community” Consideration of the STR program in a public forum expands public participation in a manner consistent with this City Council Goal. • “A Healthy and Compassionate Community” Evaluating the relationship of STRs to the City’s housing stock is consistent with this City Council Goal.
FISCAL IMPACT:
There is no fiscal impact associated with this study session. However, any specific policy direction to staff may significantly impact the City’s budget, level of services, and overall longterm financial sustainability.
ORIGINATED BY:
Planning Department
ATTACHMENT LIST:
Attachment 1_Common Terms (PDF)
Pacifica City Council 20 August 26, 2024
Attachment 2_STR Summary Report HdL 8-20-24 (PDF)
Attachment 3_Airbnb Letter (PDF)
Attachment 4_PRT Letter to Pacifica (PDF)
Attachment 5_Public Comments_Redacted (PDF)