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)

The City of Santa Barbara will take a first look at how to rewrite a wrong in its municipal code — charging short-term vacation rental owners taxes and fees while calling them illegal — at a public meeting scheduled for Tuesday.  

Santa Barbara City Council members will take a crack at the contentious issue during a special evening session to try striking a balance between the growing popularity of short-term vacation rental websites like Airbnb and the city’s shrinking rental housing market.

Santa Barbara boasts a 99.5 percent rental-occupancy rate, and 349 short-term rentals are registered with the city, which means they pay for a business license and transient-occupancy taxes.

Since most people renting rooms or homes to visitors for fewer than 30 consecutive days live in residential zones, the practice is illegal because it’s considered a business.

Officials have ignored that fact for years, pocketing $800,000 in bed taxes last year alone, according to a past estimate by City Administrator Paul Casey.

The City Council hopes to hear public input on the issue next week so officials can better direct city staff members, who aren’t making any recommendations.

“We’re approaching it objectively,” said George Buell, the city’s community development director. “We’re looking for information that can be provided through public testimony before we get too far out in front of the issue. There are strong opinions on both sides of the issue. On one side you have people who have been running vacation rentals, and they use it as a means to supplement their income.”

On the other side are struggling low-income housing seekers who face fewer and increasingly more expensive options.

Speaking on their behalf, the Housing Authority of the City of Santa Barbara sent the council a letter that almost goes as far as recommending a ban on all short-term vacation rentals inside residential zones.

“The Housing Authority Commission has concluded that the proliferation of short-term vacation rentals exacerbates the existing tight rental housing market in Santa Barbara,” the housing commission wrote. “That is because we are witnessing the wholesale removal of entire units (apartments, condos and single family homes) for the purpose of using them as short-term vacation rentals. The owners of these dwellings … are doing the math and realizing that nightly and weekly rentals can deliver much more revenue that a month-to-month rental.

“While some might argue that such is their right in a free market economy, short-term vacation rentals violate current, well-established zoning restrictions and result in the loss of critical housing inventory — inventory that was built to house the local workforce and residents who are in need of housing.”

At a meeting last month, the housing commission reported that some former Section 8 landlords were opting against renting to low-income tenants with housing vouchers in favor of the more lucrative practice.

At any given time, just 112 rental units are available in Santa Barbara out of the total 22,401-unit supply, the Housing Authority reported.

Buell wouldn’t talk about specific enforcement options the city would consider, since planning staff was still working on that ahead of the agenda’s public release Thursday.

Any direction would likely include amending the city’s zoning ordinance or municipal code, he said.

Cities across the country are taking up similar short-term vacation rental discussions, especially those in popular tourist destinations.

In Santa Monica, officials banned short-term rental stays unless the owner is present during the stay, referred to as a “home sharing.”

Goleta earlier this year passed an ordinance to regulate the properties, requiring owners to apply for business licenses, submit “nuisance response plans” and to pay a fee of about $75 for a permit to operate, among other rules.

To date, Santa Barbara short-term vacation rental enforcement has mostly involved police responding to noise or parking complaints.

The special council meeting is scheduled to begin at 6 p.m. Tuesday in the Council Chambers on the second floor of City Hall at 735 Anacapa St.

Those looking for a sneak peek before then can visit the city’s new short-term vacation rental website by clicking here

Noozhawk staff writer Gina Potthoff can be reached at Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.