The Solvang City Council voted unanimously Monday night to approve the first reading of a proposed overhaul of the city’s short-term rental policies.
The updated ordinance, recommended by the Planning Commission in January, would tighten permitting rules, add inspection standards and expand the city’s enforcement tools, according to city staff.
Community Development Director Rafael Castillo said the city’s existing rules were last codified in 2016.
“Since that time, technology and platforms have outpaced our existing regulations,” he said, adding that the updates are meant to address “limited safety and inspection requirements” and “housing availability concerns.”
Under the new ordinance, short-term rental permits would be capped at 40 citywide and new permits would be issued only within Solvang’s Village Mixed-Use zone, which includes much of the downtown commercial corridor along Mission Drive. Existing short-term rentals in R-3 residential zones could continue operating until the property is sold, but the permit would be nontransferable.
Castillo said the cap was based on prior City Council direction to double the city’s current permit total. He said Solvang has about 25 active short-term rental units, though staff expects about five to be reclassified as hotels or another lodging category.
Once the cap is reached, the city would manage an online waiting list and offer openings during annual renewals to applicants in order.
The updated rules also would prohibit short-term rentals in accessory dwelling units, Senate Bill 9 units created through by-right lot splits, and homes with affordable housing covenants.
Other provisions include life-safety inspections, occupancy limits tied to bedroom count, and operating standards related to parking and trash. Operators also would be required to designate a local contact able to respond to complaints within 60 minutes.
Mayor David Brown asked about enforcement and referenced the council’s recent municipal code enforcement changes. Castillo said staff would seek voluntary compliance first and had no plans to start enforcement at misdemeanors.
During public comment, resident Susan Townsend urged the council to consider allowing homestays more broadly across the city. Homestays are short-term rentals where the host lives on the property.
“Owner-occupied home stays are a completely different issue than a large absentee owned vacation rental,” she said. “When the owner lives on the property there is built-in oversight and far fewer if any issues.”
Townsend said capping permits at 40 and limiting rentals to one zone would push visitor spending to neighboring communities. She also challenged the idea that prohibiting short-term rentals in ADUs would meaningfully increase workforce housing, arguing that many ADUs and studio units are not well suited for long-term renters.
Castillo said the council previously rejected broader homestays because of enforcement concerns. He said the council could revisit the ordinance after a year as a check-in and consider changes.
“We could either at that point expand the geographic area or the cap number,” Castillo said.
City Attorney Chelsea O’Sullivan said the ordinance is expected to return to the council for a second reading and final approval at a future meeting and would likely be placed on the consent calendar.
The Solvang City Council’s next meeting is scheduled for 6:30 p.m. March 9 at Solvang City Hall, 1644 Oak St.