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Short-Term Vacation Rentals Exacerbate Santa Barbara’s Tight Local Housing Market

With low-income tenants getting squeezed, housing commission likely to recommend that City Council adopt stricter enforcement policy

To illustrate the growing challenge of short-term vacation rental units, the Housing Authority of the City of Santa Barbara compiled a map of more than 300 of the units that are registered as such in the city.
To illustrate the growing challenge of short-term vacation rental units, the Housing Authority of the City of Santa Barbara compiled a map of more than 300 of the units that are registered as such in the city. (Housing Authority of the City of Santa Barbara illustration)

Finding affordable housing in Santa Barbara’s tight rental market is difficult, but the proliferation of short-term vacation rental websites is making the search all the more aggravating.

At a time when the city boasts a 99.5-percent rental-occupancy rate, Santa Barbara records show at least 330 short-term rentals were registered with Airbnb and the like, spread throughout the tourist-centric coastal city.

Worse yet is the impact on Santa Barbara’s poorest residents. Some former Section 8 landlords are opting against renting to low-income tenants with vouchers, instead turning precious affordable supply into short-term rentals.

According to the Housing Authority of the City of Santa Barbara, which met last week to discuss the growing problem, nearly 100 of its clients are currently looking for Section 8 housing.

The housing commission will soon forward a recommendation on the issue to the City Council, which will consider amending its short-term rental policy in June.

New rules are especially needed because most people renting rooms or homes to visitors for fewer than 30 consecutive days are doing so illegally, and Santa Barbara officials knowingly ignore it.

Short-term rental owners can’t operate in a residential zone, since it’s considered a business. Right now, officials force them to pay for a business license and transient-occupancy taxes.

Last year alone, the city collected $800,000 in bed taxes from short-term rentals, city manager Paul Casey said in a budget meeting last month.

“TOT is in no way sufficient mitigation from this process,” said Geoff Green, chairman of the housing commission. “Everybody’s got a share in this.”

The commission could suggest limiting or eliminating the growing phenomenon popping up in virtually every neighborhood and across all types of zones. A map displayed at last Wednesday’s meeting plotted the addresses of short-term rental units registered with the city.

The number of such rentals varies depending on which report you use.

Rob Fredericks, deputy executive director of the Housing Authority, said Santa Barbara found more than 300 units, but a second report lists more than 500 and a third estimates the number at more than 1,000.

There are an estimated 22,401 rental housing units in the city, he said, which means just 112 total units are available to lease.

Fredericks looked at the map and said with certainty that several former Section 8 landlords were among those operating illegal short-term rentals.

Rents have increased 7.1 percent since October 2014, he said, and occupancy rates have hovered above 99 percent since October 2013.

The average rent of a two-bedroom apartment now approaches $2,000 per month, Fredericks said.

Buying a home isn’t any easier. Santa Barbara is the least affordable county in California, with a mere 14 percent of residents who can afford a median home price of $930,000, according to data from the UCSB Economic Forecast.

Low vacancy causes many of the low-income families, seniors and people with disabilities the housing authority serves to fail at locating a unit to rent under its Section 8 housing choice voucher program, which provides incentives for landlords who participate.

Over the last year, the authority’s lease-up rate success for that program has dropped 60 percent, Fredericks said, while program costs continually rise.

City planners present at the meeting acknowledged enforcement discrepancies and asked for direction.

Green said he saw a “bright line” between using a primary residence as an income generator versus out-of-towners buying a home they don’t live in but rent out.

“To me, that’s a very different use,” he said. “It does impact the overall availability and is so clearly a violation of city zoning. You can get more (money) in two weekends than any month-long lease in this system.”

Issues that neighbors of short-term rentals face was a concern for some commissioners, including Catherine Woodford, who argued that neighbor relations should fall within the housing commission’s purview.

Commission vice chairman David Hughes disagreed, urging his colleagues to create a data-driven report that sticks to the facts.

“I think the data and evidence clearly show there’s an impact on housing availability and rental housing market,” he said.

Commissioners debated how long it would take the city to enact a new policy, with some guessing more than 18 months and others who said they were disgusted with that timeframe.

In the end, the commissioners directed staff to draft a report, which Green and Hughes could look over as a subcommittee before it goes to the City Council sometime next month.

Noozhawk staff writer Gina Potthoff can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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