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Pull quote

‘Pacific Beach has lost over 4% of its housing to whole-home vacation rentals.’

– Iain Richardson, Pacific Beach planner

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By DAVE SCHWAB

In June 2023, Pacific Beach planner Iain Richardson briefed the Pacific Beach Town Council on the number and location of short-term rentals in the community, arguing such rentals are depleting the housing stock and exacerbating the ongoing housing crisis.

Nine months later, Richardson gave a similar presentation to PBTC updating the group on the status of the community’s STRs. His conclusion this time around: Unless loopholes in the present STR ordinance are addressed, rentals will continue to increase further shrinking the available housing supply.

“The number of STR licenses continues to grow in the Tier 3 whole-home category and it’s getting worse,” Richardson contended noting that, in the last six months of 2023, 700 more STR licenses were issued citywide.

Worse yet, insists Richardson, is that corporate entities are increasing their share of short-term rentals in PB. “Instead of having one person owning one license as the ordinance intended, we find 30% to 40% of all the licenses are owned not by people but by corporate entities,” said Richardson, who estimated a third of beach STR rentals are now corporate owned, another third are owned by trusts, and individuals now own only about one-third of the total.

Richardson argued this loophole involving “ghost” owners who are not individuals has led to STR hosts who “have nothing at all to do with the property.”

“Though the ordinance implemented a city-wide cap on Short Term Residential Occupancy (STRO) licenses, just a few areas have seen the majority of activity,” concluded Richardson during his Feb. 21 slideshow presentation. “Pacific Beach has lost over 4% of its housing to whole-home vacation rentals, and Ocean Beach a massive 6%. This housing would be enough for over 3,000 long-term residents in these two areas alone.”

Richardson recommended one solution. “A 2% cap on licenses by planning area could see more than 1,000 housing units returned to long-term use in the affected areas,” he said.

There is a second loophole in the STR ordinance that Richardson contends has allowed STRs to gobble up more of the limited available beachfront housing supply. That involves allowing some apartment buildings to be converted into “apartment hotels” using STRO licenses.

“Long-term residents have been evicted,” Richardson said as a result. He recommended this solution. “By closing loopholes in the ordinance and limiting licenses to a maximum of 25% of a property’s units, over 500 more affordable units could be returned to long-term housing across the City.”

Pedro Tavares, a board member with the San Diego Short Term Rental Alliance, has disputed the conclusion that there are an unreasonable number of STRs in PB, or that they are significantly contributing toward the housing shortage.

“The City is vastly failing to produce enough housing to keep up with current and forecasted demand,” Tavares said. “Add to that the amazing amenities offered in this City, particularly in the beach communities, and it’s no wonder the cost of housing is only going to rise and will continue to do so. Reducing the number of short-term rentals will not bring them all to the long-term housing market and will not make a dent in rental or sale prices of units.”

Richardson pointed out the City is supposed to revise the STR ordinance in May this year on the ordinance’s first anniversary. “We are proposing the City make changes to the ordinance to address the shortcomings that have emerged,” he said.

STR ordinance changes Richardson recommends include:

– Limiting converting apartments into apartment hotels;

– Addressing the “ghost” ownership issue by requiring people with an ownership interest in the parcels to hold the STR licenses;

– Penalizing those who’ve had their licenses revoked by not issuing a new license on that parcel for 12 months;

– Requiring STR platforms like Airbnbs to be held accountable for observing the STR ordinance and following it, which has not been done.