It’s still not a great time to be a short-term vacation-rental operator in Santa Barbara, but city officials will allow some time to put affairs in order before pulling the plug — that is, if you’ve been following the rules already.
After getting another earful from residents about the contentious issue this week, Santa Barbara City Council unanimously approved a plan to enforce its ban on short-term vacation rentals in residential zones.
Since 2008, the city has turned a blind eye to the practice of renting a unit for fewer than 30 consecutive days.
City officials collected transient-occupancy taxes and required business licenses knowing the practice was illegal, since it’s considered a business and should operate only in commercial zones. This year the city expected $1.2 million in TOT from the practice.
Officials allotted $180,000 of general fund money to help with the ongoing legal and planning staff costs of processing, which aims to get everyone in compliance with zoning laws and to recover fees from those flying under the radar.
Guilt forced Councilman Dale Francisco to suggest giving those who played by the rules more time to divest. In Tuesday’s report, staff discouraged any amnesty period.
Some of 350 rental operators on the books — especially companies renting out units or homes for clients — bemoaned uncertainty when they had gone to the city for approvals. The council voted to crack down on the growing practice in June.
“There’s truth to the argument that the city has appeared to sanction this by its own actions,” Francisco said. “I imagine this is going to be an enforcement nightmare.”
Other officials agreed, stipulating that enforcement funds be spent only on the first three priorities — existing and new complaints about vacation rentals, vacation rentals operating without a business license and not paying TOT, and rentals operating without required land-use approvals, a business license and not paying TOT where hotels (and rentals) were allowed.
Those already paying fees won’t be actively enforced until the beginning of 2017 unless a complaint is filed against them.
The council also approved the City Attorney’s Office subpoenaing at least 90 vacation-rental websites advertising short-term rentals in Santa Barbara, including Airbnb and VRBO, which show more than 1,000 individual units, community development director George Buell said.
The city will accept no new applications for short-term vacation rentals and will see TOT diminish over time, although rental operators must fork it over until contacted.
Buell said short-term vacation rentals will be part of Planning Commission hearings this fall and spring, with final zoning code changes before council for approval in fall 2016.
At that time, the council could decide whether to allow home sharing, which involves renting part of a dwelling that’s a primary residence with the host present during the stay.
“I think it goes again to the practical,” Mayor Helene Schneider said. “If we give amnesty and take away all options, I do think there’s going to be an underground market of some sort. It’s not ideal. It’s messy. There are gray areas.”
Francisco disagreed, calling home sharing a “slippery slope” that would be difficult to enforce. He was the only dissenting vote when the council directed staff to keep the issue in mind for possible approval next year.
Mayor Pro Tem Gregg Hart asked that the city send out blanket letters noticing all short-term vacation-rental operators of the change at the same time as subpoenas, and his colleagues agreed.
City Attorney Ariel Calonne estimated his office could complete about 300 cases per year, averaging 30 to 40 cases in six-week waves.
Familiar faces spoke during public comment, including renters who used the extra income from stays to pay their bills and send their kids through college.
Others came with concerns about noise and disturbances at the rentals, and one suggested the council use TOT dollars to pay for enforcement.
Eric Kelley, who owns the Book Den and rents a downtown bungalow on a short-term basis, said he and his wife would go out of the rental business without a fuss, but he cautioned the city to cut people a break.
“I think it’s important you be clear about the time frame,” Kelley said.
Santa Barbara Vacation Rentals owner Brooke Meek and other rental property managers strongly opposed the city subpoenaing documents and violating privacy policies.
The city report noted subpoenas would collect all addresses, owner names, the dates and duration of stays, rates collected, method of payment and the name of any person who rented the property.
Calonne’s staff clarified later, saying the city wasn’t interested in guests but in information about property owners, time period rented out and rates.
“I think this is a little excessive,” Meek said. “People did buy homes here with this in mind. Where is the responsibility from you guys? Why not give these people a period of time to wind down, to sell their homes?”
One vacation rental company owner said he’d be forced to layoff half of his 20-person staff, and another asked the council to think of the tourists who already have reservations.
“No one is talking about the housing crisis,” Hart said, referring to the 0.5 percent rental vacancy rate. “That issue is crushing people, and it is different today than it was just a few years ago. The truth of the matter is two-thirds of the people doing this aren’t getting business licenses.”
He preferred a six-month amnesty period but relented when council agreed to check in again on enforcement at six months and a year.
— 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.