A new ordinance could soon drastically limit the number of short-term vacation rentals in Santa Barbara. 

The Santa Barbara Planning Commission voted 4-2 on Thursday to send the rules to the Ordinance Committee with more information on waivers for parking rules, transient occupancy tax impact, how the program would be enforced, and more analysis on a cap of short-term rentals or lottery system for permits.

The proposed ordinance is meant to create a permit pathway and clear regulations for residential homes being used as short-term rentals and homeshares, which have the owner staying in the same house along with the guests. The rules are also meant to protect the housing supply for long-term rentals.

Under the proposed ordinance, short-term rentals and homeshares would be allowed only in certain zones of the city. Specifically, they would be prohibited in all inland residential zones and allowed only in non-residential zones or mixed-use residential zones, including the downtown corridor, the Milpas Street corridor and Upper State Street.

However, in the coastal zone, which includes the waterfront, the Funk Zone and the Coast Village Road area, homeshares would be allowed in all residential and non-residential zones. Short-term rentals aren’t allowed in single-family and two-family residential zones and are limited to the designated license area.

Commissioners John Baucke and Benjamin Peterson voted against moving the ordinance forward, wanting it to come back to the Planning Commission again. Commissioner Brian Barnwell was absent from Tuesday’s hearing.

Peterson said the ordinance has been in the works for a decade, and he was willing to wait for more information before moving forward.

“I understand that we’re here after almost a decade, trying to figure out how to implement the policy of prioritizing our housing stock for long-term residents,” Peterson said. “I’m concerned about this being so restrictive that we end up pushing folks underground and that we have the opposite effect of what we’re actually trying to achieve.”

City staff members were unable to answer the commission’s questions about how many short-term rentals are actually in the city right now. While roughly 25 are permitted, many more are believed to be operating underground because of the lack of a clear permit pathway, according to city staff. It was also unclear how the ordinance would impact TOT revenue, which is levied on hotels, motels and short-term rentals.

With homeshares allowed everywhere in the coastal zone, some commissioners favored a cap on short-term rentals and homeshares or a lottery system.

“At this point, where we are with inland I’m more comfortable with because of the significantly limited STRs. We don’t have them in single-family home areas, and I think those are really important steps that we’ve already made,” Commissioner Devon Wardlow said. “But when we’re talking about the coastal zone and coupling it with the homeshare program that would be allowed everywhere, that’s where I’m having more concern and think that we should really consider a cap.”

Short-term rentals would be allowed to have only two guests per sleeping room and up to six daytime guests.

Homeshares would be limited to four guests, plus the household of the owner or host, and up to six daytime guests. 

Under the proposed ordinance, parking must be included on site. A unit with up to four bedrooms must have two on-site parking spaces. For a unit with five or more bedrooms, three on site spaces must be included. 

A short-term rental can’t have been occupied by a long-term renter within the past 24 months, and property owners have to prove that no one was displaced to turn the unit into a short-term rental, according to the proposed ordinance.

Numerous property owners and short-term rental operators spoke out against the ordinance at the Thursday meeting, arguing it wasn’t just a regulation but essentially a ban on short-term rentals as many wouldn’t be able to comply with the proposed regulations.

Jennifer Kinsella, chief operations officer of Wanderlust Luxury Rentals, argued that short-term rentals allow visitors to support local businesses and support local cleaners, maintenance workers, plumbers and electricians.

“I support reasonable regulation that protects neighborhoods while allowing responsible short-term rentals to continue operating,” Kinsella said. “However, blanket restrictions that eliminate unhosted stays will have real economic consequences for the local workers, small businesses and the broader tourism economy.”

Some residents spoke in favor of the ordinance, sharing their negative experiences living near short-term rentals.

Craig Leeds said he lives in the Yankee Farm area near Braemar Drive and has to deal with noise, speeding, and littering from people staying in short-term rentals. 

“For us, it changed from a quiet, beautiful neighborhood to a miserable neighborhood to live in, and we’re considering moving out of Santa Barbara just because of it,” Leeds said. “I’ve lived here 50 years, and I really don’t want to have to move just because of short-term rentals ruining my life.”

Most of the commission was originally in favor of having the ordinance come back for more discussion by June. However, City Attorney John Doimas said it wouldn’t be possible to return with more information on TOT revenue impact by then. Additionally, he told the commission that the council wanted to review the ordinance in May. 

In the end, four of the commissioners voted to send the ordinance to the Ordinance Committee, as long as staff explores their concerns about enforcement, parking waivers, a cap or lottery system, and TOT impact.

If the Ordinance Committee agrees with the Planning Commission’s suggestions around a cap and lottery system, the ordinance will return to the commission before going to the City Council for consideration.