The city has long wanted to do something about the increasing number of illegal short-term housing rentals operating in Santa Barbara, and the City Council Finance Committee could begin the crackdown today when it considers authorizing a 12-month pilot program aimed at enforcement.
Staff is recommending the committee adopt a resolution to appropriate funds for the development of a short-term rental enforcement pilot program directed by the City Attorney’s Office and the Finance Department.
The Finance Committee will meet in the David Gebhard public meeting room, 630 Garden St., starting at noon.
The overall objective of the year-long pilot program is to gather accurate data on the number, location and seasonality of short-term vacation rentals operating in the city, staff said.
Once accurate data is obtained, the effort shifts to that of gaining compliance with the city’s zoning laws through investigation and, if necessary, prosecution of people operating illegal rentals in the inland areas of the city and in the Coastal Zone in response to nuisance-based complaints, staff said.
“The true magnitude and accompanying costs of that enforcement effort cannot be determined until accurate information is ascertained,” staff said.
While short term rentals are not permitted in most areas of Santa Barbara, they have nonetheless become a new form of visitor lodging in the city within the past decade.
STRs constitute the rental of any dwelling unit to any person for exclusive transient use of less than 30 days.
“While an informal market may have existed in years past, hosts can now make a spare room or an entire apartment or house available to potential visitors through websites such as Airbnb, VRBO and others,” staff said. “Guests can select from a variety of housing options and have the experience of staying in a home in a neighborhood not traditionally geared to tourism.”
The problem, staff said, is that in many areas of the city, “unregulated short-term rentals are inherently incompatible with the surrounding land uses and neighborhood due to the intensity of use and potential nuisance impacts related to noise, parking, littering, traffic congestion, public safety, ‘party houses,’ loss of community and the displacement of long-term residents.”
Operating a residential unit as a short-term rental is typically far more lucrative than renting the unit on a long-term basis, which can take away already scarce housing for long-term rentals in Santa Barbara, and may encourage tenant evictions if a landlord concludes that they can earn more from short-term rentals than from a long-term tenant, staff said.
Plus they violate the city’s zoning code due to their being illegal.
Because of the start of a significant increase of STRs in Santa Barbara in 2015, the council directed staff to begin proactive enforcement of existing zoning regulations on unlawful vacation rentals.
Gathering the necessary evidence to support proactive enforcement was time-consuming and costly because of the number of unlawful vacation rentals then existing in the city, staff said.
The City Council allocated $170,000 from the General Fund to cover the costs of increased enforcement by the City Attorney’s Office and Community Development Department in Fiscal Year 2016 to hire contracted staff to assist in the enforcement of illegal STRs.
“Unfortunately, what was learned from that enforcement experience is the amount and resources allocated at that time was nowhere near enough to curb the explosion of the STR market,” staff said.
In subsequent years, the focus and resources dedicated to enforcement shifted to defend the city’s ability to prohibit STRs in multiple legal battles. One case in particular, Kracke v. City of Santa Barbara, changed how STRs are enforced in the Coastal Zone. The Second District Court of Appeal determined that enforcement actions against Coastal Zone STRs are limited to situations where complaints are received due to tenant behavior or other nuisance-like conditions.
“Therefore, the city is unable to proactively initiate STR enforcement actions against unlawful rentals in the Coastal Zone as compared to inland where the city is free to enforce whether or not a complaint is received,” staff said.
In September, a presentation by the Community Development Department to the City Council noted that there continue to be a high number of STRs operating in the city (though that exact number is not known).
“At that meeting, noting concerns regarding neighborhood compatibility and the loss of urgently needed housing to a commercial enterprise, City Council expressed the need for increased enforcement on STRs.”
The City Attorney’s Office has designed an aggressive one-year pilot program of STR investigations in order to determine the true number of operating STRs in the city and to discourage illegal operations.
The new pilot program will have one primary goal: achieving permanent compliance with the Zoning Ordinance in the inland areas of Santa Barbara and compliance in the Coastal Zone in adherence to the parameters put in place by the court in the Kracke decision.
“To be clear, the recovery of unpaid Business License and Transient Occupancy Tax (TOT) cannot be the primary goal of the program,” staff said. “The results of any investigation can form the basis of a criminal filing by the City Attorney’s Office. Therefore, any action taken will be focused on deterring the activity, and revenue generation cannot be considered as an objective in the prosecution portion of this program.”
A significant first step of the program, and expense, would be directed to contracting with a private vendor to provide monitoring services of existing operating STRs to assist in identifying and locating STRs. The cost estimate for this service ranges between $100,000 to $450,000, depending on the level of service the city selects.
Once accurate data is created and maintained to initiate the enforcement program, qualified investigators will be needed to gather hard evidence, staff said. This is the costliest portion of the program.
“However, a quality code enforcement program is only as good as the documents show,” staff said. “When inquiries are conducted, investigators must develop and maintain accurate records that can stand up in court. Staff is recommending that the city contract with private investigator services, as well as hourly employees.
“While this is more costly than hiring an investigator as a full or part-time employee, the basis for this recommendation for the pilot program is the initial ability to cast a wider net on enforcement by utilizing multiple investigators simultaneously and to identify the true numbers of STRs more accurately before retaining city employees for this work.”
The total cost of estimated funding needed for the pilot program ranges from $947,000 to $1,402,000 for the full enforcement program.
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