Improving the STR Ordinance

While the city’s Short-Term Rental ordinance is an improvement, there are loopholes (particularly in enforcement). Before Monday’s 6pm hearing, here are some ideas for improvement. In several cases, the proposed STR ordinance has not completely (or effectively) implemented the decisions reached by the Ad Hoc Committee of the Planning Commission that developed the ordinance.

Below are five specific weaknesses in the proposed ordinances: penalties, accurately reporting complaints, defining a “hosted” unit, requiring offstreet parking, and using AirBNB to enforce the ordinance. Fortunately, because Oceanside is one of the last coastal cities in Southern California to implement STR regulations, there are examples of approved ordinances from other cities that solve many of these issues.

If you have suggestions for changing the ordinance, email the Planning Commission at PlanningCommission@oceansideca.org and (or) Shannon Vitale at SVitale@oceansideca.org .

Consequences for Ignoring the Law

The Ad Hoc Committee that developed the ordinance proposed a “three strikes” policy — that three strikes in two years would be enough to suspend a STR permit. Later on, the standard was increased to three in one year/five in two years (per property). However, the “three strikes” are missing from the ordinance, replaced by the (undefined) judgment of the City Manager or the City Attorney:

A. Any person who violates the provisions of this Chapter shall be deemed guilty of a misdemeanor punishable by a fine not exceeding one thousand ($1000) dollars, imprisonment for a term not to exceed six months, or both, pursuant to Chapter 1, section 1.7(A) of this Code. The City Attorney may prosecute or authorize or direct the prosecution of this Chapter as an infraction pursuant to Chapter 1, section 1.7(b) punishable by the fines specified in Chapter 1, section 1.7(b)(2) of this Code.
B. In addition to any penalties imposed pursuant to Chapter 1.7 of this Code, any person who violates the provisions of this Chapter may be issued an administrative citation by an enforcement officer pursuant to Chapter 1, section 1.14 through 1.14.8 of this Code.
C. Any property maintained in violation of this Chapter is hereby declared to be a public nuisance that may be abated in accordance with Chapter 17 of this Code.
D. In addition to any other remedy for violations of this Chapter, the City Manager or the City Manager’s designee may revoke a short-term rental permit for a violation of this Chapter. The procedures set forth in Chapter 15, section 15.5 shall apply to any proposed revocation of a short-term rental permit.

In effect, this is a virtually unlimited level of administrative discretion that is antithetical to transparency and equal protection under the law:

• A less well-informed owner may be punished more severely than others.
• A well-connected, well-financed with sophisticated legal representation able to argue with the city can exploit these ambiguities to avoid having to follow laws that others must adhere to.

In other words, this could bring the worst of all possible worlds: a large business with good lawyers operating a chain of STRs could go completely unpunished, while an individual is banned from operation due to a lack of regulatory sophistication.

One way to solve this would be to have the Planning Department develop specific guidelines for revocation, and publish those for all to see. Another would be to publish standards in the ordinance, as in Bend (Oregon) ordinance:

A. In addition to the penalties described in BC 7.16.100, the following provisions apply to violations of this chapter:
1. Failure to renew an operating license as set forth in BC 7.16.060 is grounds for immediate revocation of the operating license.
2. Failure to meet the criteria required by BC 7.16.070(B)(1), (2) and (3) is grounds for immediate revocation of the operating license.
3. The discovery of material misstatements or providing of false information in the application or renewal process is grounds for immediate revocation of the operating license.
4. Expiration or revocation of the land use permit through Development Code proceedings is grounds for immediate revocation of the operating license.
5. Such other violations of this chapter of sufficient severity in the reasonable judgment of the City Manager, so as to provide reasonable grounds for immediate revocation of the operating license.
6. Other violations of this chapter, including but not limited to City initiated investigation/sustaining of complaints, shall be processed as follows:

a. For the first violation within a 12-month period, the sanction shall be a warning notice.
b. If the same offense continues to occur or a second similar offense occurs at any time during a 12-month period, the City may either send a second warning notice or suspend the operating license for 90 days, depending on the severity of the offense.
c. If a third similar offense occurs at any time during a 12-month period, the penalty shall be revocation.

B. Notice of Decision/Appeal/Stay. If the operating license is suspended or revoked as provided in this section, the City Manager shall send written notice of suspension and revocation to the owner stating the basis for the decision. The notice shall include information about the right to appeal the decision and the procedure for filing an appeal. The owner may appeal the City Manager’s decision to revoke the operating license under the procedures set forth in BC 7.16.110.

Upon receipt of an appeal, the City Manager shall stay the suspension or revocation decision until the appeal has been finally determined by the City Council. [Ord. NS-2239, 2015]

Missing Complaints

The “three strikes” policy depends on an accurate count of violations. As came up repeatedly in testimony before the AHC — and the city eventually admitted — the city’s official statistics for complaints grossly under estimate the total number of complaints against STRs. The city staff’s August 21, 2018 presentation said there were only 64 complaints citywide against STRs, when there were more than that filed in South O in the two blocks of Pacific Street between Buccaneer and Cassidy Street beaches.

There are at least four possible reasons for under-reporting:

1. The phone-based Code Enforcement process may not capture every complaint against every STR.
2. The city admits that calls to Oceanside Police Department are not included in the Code Enforcement totals.
3. When a complaint is made (e.g. for noise, trash, etc.) either CE or OPD may not necessarily know that this is a Short-Term Rental.
4. As we have witnessed, neighbors next to chronic STR violators often give up on filing an official report when the city and owner do nothing to solve the problem.

The city needs an automated system for submitting and logging every complaint. Fortunately, it already has one: the “MyOceanside” app on iPhone and Android, which automatically suggests the location of the violation, and allows the complainant to attach pictures and contact info for follow-up.

All it needs to do is to get its vendor (Accela) to add a new menu item for “Short-Term Rentals”, have a menu indicating which clause of the ordinance is being violated, and a text box for any explanation. Since every (non-exempt) STR is required to post a sign with a complaint phone number, the sign should also tell neighbors how to file a complaint (by downloading the app or calling a phone number).

Keeping the Host in a “Hosted Unit”

A hosted unit is exempt from the annual permit. The ordinance says:

“Hosted unit” is a dwelling unit where the owner of the property occupies the dwelling unit as his or her principal residence and offers a portion of the dwelling unit for short-term rental while remaining on-site.

If my neighbor lives in a house, but then rents it out for a weekend and leaves town, this seems contrary to the spirit of the law — but it’s ambiguous whether it’s contrary to the letter of the ordinance as written today. Section 24.7 “Operational Requirements” needs to define what “remaining on-site” means. For example, a new clause of 24.7 could state:

For a hosted unit that does not have a short-term rental permit, the owner must be at the property between 10 p.m. and 7 a.m. any night that renters are staying at the property.

In San Clemente, its STR (“STAR”)‚ ordinance requires that

the owner or the owner’s trained and qualified property manager … must sleep within a habitable room in a unit on the property every night that a unit in the (property) is rented for short-term lodging purposes.

However, for Oceanside allowing for a property manager for a “hosted” unit seems contrary to the intention of exempting only small-time operators from the $250 annual permit fee.

Parking

Parking is one of the four major justifications cited in the ordinance:

WHEREAS, the city has received complaints related to the operation of short-term rentals in residential neighborhoods, including complaints concerning excessive occupants, noise, reduction of street parking and increased trash

However, under the ordinance STR visitors are not required to use the unit’s offstreet parking: the only requirement is that the “parking spaces shall be made available.” So if the visitors prefer to park on the street, the added demand will reduce the availability of neighborhood parking. Such parking overflow has been a chronic problem for the commercial STRs in the beach area.

In Big Bear, they prohibit all overnight onstreet parking by STR renters, but this is not a policy the AHC was ready to support. The city of San Diego (in their recently suspended ordinance) has specific limit for each property’s vehicle parking. At a minimum, the Oceanside ordinance should require all the off-street parking spaces permitted for the property be used before the renters park any vehicles on the city streets.

Cooperation from AirBNB

Most of the rental bookings come from online websites like AirBNB, VRBO etc. The AHC asked that the city of Oceanside enlist the online websites to help enforce the ordinance, but the city wasn’t sure how it could do so.

It turns out the city of San Francisco solved this problem, was sued by AirBNB and HomeAway, and won. What did San Francisco do? It made it a crime to collect fees for listing an unregistered rental unit. Here is what one news account said:

HomeAway joined the lawsuit, arguing alongside Airbnb that the law requiring them to police their websites to ensure that all rentals are registered with the city violates … [a] 1996 law that protects those who republish or provide an online platform for information or speech.

U.S. District Judge James Donato rejected that argument in November, saying the law does not prohibit Airbnb from publishing the listings – only collecting fees from unregistered rental bookings.

“As the text and plain meaning of the ordinance demonstrate, it in no way treats plaintiffs as the publishers or speakers of the rental listings provided by hosts. It does not regulate what can or cannot be said or posted in the listings. It creates no obligation on plaintiffs’ part to monitor, edit, withdraw or block the content supplied by hosts,” Donato wrote. “The ordinance holds plaintiffs liable only for their own conduct, namely for providing, and collecting a fee for, booking services in connection with an unregistered unit.” …

Under the amended ordinance, restrictions on postings was abandoned but it remains illegal for Airbnb to collect fees from the rental of any property not registered with the city. The ordinance imposes a $1,000 fine per day for every unregistered booking, and Airbnb and similar sites could also face misdemeanor charges under the law.

As a result, the online listings for STRs in San Francisco dropped in half.

Reducing STR Impacts

On Monday, the Planning Commission will consider the city’s first-ever ordinance regulating Short-Term Rentals. The full agenda packet is here. It summarizes the process the city has followed to get here.

Oceanside is the last coastal city north of Coronado to address short-term rentals. Carlsbad bans them outside  the coastal zone and two condo complexesin La Costa; they are heavily restricted in Encinitas and Solana Beach (see pp. 51-53 of the staff report). So if a commercial operation wants to run a STR business, they come to Oceanside.

While the new laws are an improvement, they would be among the weakest of any city in the state. With improvements, the ordinance can potentially reduce the impacts of STRs on Oceanside neighborhoods, but are unlikely to slow STR growth and its reduction of affordable housing.

The Impact on Affordable Housing

Conversion of a owner-occupied or long-term rental into a STR reduces the housing stock. (Renting part of a home or renting an empty vacation home does not have this impact, unless a home is bought for this purpose). UCLA research has shown that a rise in STR listing brings with it higher housing and rental prices.

The state Legislature is passing one bad bill after another, taking away local control from cities in hopes of convincing the public they are “solving” the housing crisis.  The more housing gets converted from residential to STR, the more likely the state is to override local control here to force new housing units over neighborhood objections. See, for example, Gov. Newsom’s February lawsuit seeking to overturn the right of Huntington Beach to enforce its zoning laws, or SB50 which would allow 85’ towers in Seaside, Fire Mountain and South O, and passed the state senate Housing Committee earlier this month.

When the City of San Francisco decided to limit STR to 90 days (hosted by the residents), AirBNB sued (and lost). The city attorney said

While we’re happy to see a homegrown San Francisco company like Airbnb succeed, it can’t be at the expense of residents being evicted or units being removed from the housing market so people can make more money putting apartments on Airbnb.

After the law went into effect, the San Francisco Chronicle reported “Stricter rules stop homes from becoming hotels.”

The city’s proposed ordinance says nothing about the impact of STRs on affordable housing, which is the main reason allowed under state (and Coastal Commission) law. In contrast, the city of Santa Cruz says in its (Coastal Commission-approved) ordinance

The regulations contained herein will help ensure that short-term rental activities do not become a nuisance or threaten the public health, safety, or welfare of neighboring properties while helping to maintain long-term rental housing stock in the city.

The STR Impact on Oceanside

More than 70% of the STRs are west of I-5. Put another way, 4.9% of the housing stock west of I-5 is already converted to short-term rentals. Fire Mountain is the third most popular STR location.

Among these residences being converted are those along Pacific Street, where existing 3-4 bedroom homes are replaced by 8-10 bedroom mini-hotels. These commercial lodgings are not required to meet hotel (or boarding house) parking standards, which means their guests are parking on the street. Particularly around Buccaneer and Cassidy St. beach, onstreet parking has become scarce in the summer due to these large-scale commercial operations (most by a single operator).

Weakening the AHC Proposal

Monday’s proposed ordinance specifically removes (or weakens) three of the recommendations of the “ad hoc committee” that worked from August 2018 to January 2019 to develop the proposed regulations:

9. Inspection process: One-hour inspection warning for code enforcement violations.

After consultation with the City Attorney’s Office, staff does not support this approach due to concerns with constitutional protections. Alternatively, staff recommends having language in the GNP that requires an owner or authorized agent to respond to a complaint within one hour.

11. Three strikes policy (three citations within 12 months or five citations within 24 months may result in STR revocation of 36 months. Some violations may result in immediate revocation.)

After consultation with the City Attorney’s Office, staff recommends enforcement language stating that any STR that has been the subject of three verified complaints in a twelve-month period will be automatically referred to the City Attorney for enforcement of appropriate remedies.

13. Distinguish corporate ownership from home ownership and further regulate or cap the corporate ownerships.

At this time staff does not recommend this approach as it will be difficult to monitor and regulate.

Public Involvement

The number of STRs will continue grow (and housing affordability to decline) unless the city reduces the incentives for investors to buy residential properties for conversion to STRs.

Monday’s PC meeting begins at 6pm at the City Council Chambers (300 N. Coast Highway). The STR ordinance is item #6 (the 3rd public hearing).

This is scheduled to be considered by the City Council Wednesday May 29 at at a special 2pm (daytime) meeting. Mark your calendars.