Passionate testimony moved the Santa Barbara City Council on Tuesday night, but officials ignored the majority of pleas and unanimously voted to uphold a ban on short-term vacation rentals in residential zones — an existing albeit heavily ignored city ordinance.
The direction to staff, which also gave a nod to amending code to allow home sharing, was the first move the council has made to correct a hypocritical practice it put in motion years ago.
That’s a fact more than 90 public speakers on either side of the controversial issue didn’t let officials forget.
Until now, the city has forced those renting out rooms or homes for fewer than 30 consecutive days to register for a business license and to pay transient-occupancy taxes while simultaneously calling the practice illegal in residential zones, since it’s considered a business.
Some 349 rentals are on the books — about a third of the amount estimated to exist — and many of their proprietors crowded into the overflowing council chambers wearing neon green ribbons in support of a staff option to both allow and better regulate short-term vacation rentals throughout the city.
But since more than 70 percent of them operate in neighborhoods where they shouldn’t, city officials worried about noise and other impacts for property owners.
Not to mention the fact that short-term rentals put added stress on Santa Barbara’s shrinking rental market, currently boasting a 99.5 percent occupancy rate.
“We have people today who need to live here but can’t live here,” Mayor Pro Tem Gregg Hart said.
He also noted the city’s stake and the “significant economic impact” that would serve as a consequence for its contradictory stance.
The city soon will have to balance its checkbook without the TOT that the popular practice brings into its coffers — approximately $1.19 million during the 2015 fiscal year.
Because of the city misstep to collect taxes in the first place, officials asked staff to determine an appropriate “amnesty period” to phase out short-term rentals.
One idea thrown out by City Councilwoman Cathy Murillo was two years.
Officials called the special meeting to hear public input, and they weathered a flurry of it over four hours.
Young families, retirees and middle-class couples pleaded with the council to continue allowing short-term rentals, many saying it’s the only way they can pay the mortgage or rent themselves.
Other homeowners saw Airbnb as a way to pay for indoor improvements or landscaping upkeep.
“I haven’t seen any neighborhood that’s looking bad because of vacation rentals,” one proud short-term rental owner said. “The reality is, Santa Barbara is a very expensive place to come to. But when they come here, they spend money.”
Another resident equated short-term rentals to a 2,000-room hotel that bypassed proper planning and environmental review processes.
Jeanette Webber, who manages five Santa Barbara hotels, including the Best Western Pepper Tree Inn, asked the council to take a hard look at the impacts.
“Of course they’re making a lot of money,” she said, noting rentals don’t have to pay for the same safety and other related inspections as hotels.
Staff made no recommendation but outlined what other cities do and listed four options in order of most restrictive to least, starting with banning all short-term rentals in any zone.
George Buell, the city’s community development director, said the council could also pass an ordinance or amend municipal code to permit the rentals and home sharing in current allowable zones, including commercial or hotel/motel/multi-unit zones, or to allow home sharing but not vacation rentals anywhere in the city.
He defined home sharing as renting part of a dwelling that’s a primary residence, with the host present during the stay.
Keeping rentals around would require full registration and collection of TOT, and eliminating them means staff would have to notify property owners currently operating them of a deadline by which they can’t fulfill any more reservations.
It would also mean more staff to enforce the rules — a cost quoted at $300,000 annually, according to City Councilman Dale Francisco.
Enforcement costs hurt worse considering the city would already lose nearly $1.3 million in projected and ongoing TOT revenues, which were forecast to grow to $1.27 million in fiscal year 2016.
To date, Santa Barbara short-term vacation rental enforcement has mostly involved police responding to noise or parking complaints.
Those complaints are rare, according to Samantha Ireland, who owns Vacation Rentals of Santa Barbara and screens potential guests. She represented 30 to 35 local homeowners who rent out their residences a few months of the year.
“It won’t necessarily eliminate activity; it’s just going to force it underground,” Ireland said of a ban. “We need to establish clear and easy regulations to follow.”
Representatives from the Santa Barbara Chamber of Commerce, Santa Barbara Downtown Organization and Visit Santa Barbara tourism organization all asked council for more time so their boards could come back with recommendations, but council saw no benefit in waiting.
Officials swore allegiance to residents over visitors, lauding zoning as a guiding force of city government.
“I’m not sure that (vacation rentals) fit Santa Barbara,” Councilman Frank Hotchkiss said. “We have distinct communities.”
Buell said staff plans to collect more public input over the next three to four months and to work with the planning commission to craft a zoning code amendment to allow home sharing in nearly all parts of the city.
The city will also work on an enforcement plan and timeframe for discontinuing the practice in residential zones, starting with the rentals who aren’t paying taxes and moving on to those registered with the city.
Hart cautioned that short-term vacation rentals within allowable zones — predominantly in downtown areas straddling State Street — would have to go through a more detailed compliance process.
Staff said so far, just one rental within that area (and the entire city) is fully registered and compliant.
— Noozhawk staff writer Gina Potthoff can be reached at gpotthoff@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.
