DEL MAR — The Del Mar City Council unanimously approved a new set of regulations for short-term rentals on Monday after multiple meetings and fervid discussions with residents over the past two years.
The new STR ordinance sets a cap of 129 total STRs in the city, equal to 5% of Del Mar’s total housing stock. It also sets a limit of one STR per owner, a minimum 3-night stay, and requires the units to be used as a primary residence, meaning someone lives there for at least six months of the year.
A key section of the ordinance allows existing short-term rentals to be grandfathered in and exempt from several rules in the ordinance, so long as they register their rental with the city by Dec. 31 and apply for a permit within 60 days of the ordinance going into effect.
As of Monday, 120 existing STRs had registered with the city, leaving only a handful of permits available to new rentals. Del Mar’s cap of 129 STRs includes neighborhood-specific caps, with a maximum of 77 STRs in the North Beach area, 32 in the South Beach area, and 19 in the Hills area.
“When you look at 120 registered right now, and a cap of 129, you can see we don’t have much capacity for new,” said Principal Planner Amanda Lee.
All existing STRs that want to register will be grandfathered in, even if the number exceeds 129, but no new rentals will be allowed to apply for a permit until the number drops below the cap.
The City Council also agreed not to automatically adjust the cap as new housing units are built in the future, leaving it up to future councils to change the cap if they wish.
According to the city, long-term rentals will be exempt from the ordinance. This includes rentals of more than 30 days or those rented for a month, including rental periods from the beginning to the end of a calendar month, as well as rental periods that start on a day within the calendar month and end on the same day of the subsequent calendar month.
Del Mar residents will also be asked to approve a measure making STRs subject to a 13% transient occupancy tax in the November election. If passed, TOT will be collected from all STRs, similarly to hotels, bringing in an estimated $775,000 in annual revenue for the city.
After the ordinance’s second reading at the City Council’s Sept. 23 meeting, it will still need to be approved by the California Coastal Commission before it can go into effect. This process could take one year to 18 months.
“Coastal Commission staff recognize that this is something that is a priority to get done, so they indicated that their goal is to get this done within a year,” Lee said.
The ordinance will become effective the same day that the Coastal Commission grants certification. At that point, owners of existing STRs must apply for a permit from the city within 60 days in order to be grandfathered in.
The City Council’s last attempt at an STR ordinance was in 2017, with the adoption of an ordinance allowing unlimited operation in the city’s commercial zones but requiring STRs in nearly all residential zones to operate a minimum of seven days at a time and no more than 28 days per year.
This ordinance never went into effect after failing to obtain unconditional approval from the Coastal Commission, which argued that the regulations were too restrictive.
Some residents argued that while this new ordinance is an improvement, some of the regulations are still too restrictive and will lead to attrition among short-term rentals in the city.
Primary residence rules
The primary residence rule was among the most controversial, with speakers saying Monday that it is not realistic for most STR owners to live in their units full or part-time.
Existing STRs will be exempt from this regulation until there is a change in ownership or the loss of a permit. However, residents said this rule will essentially constitute a ban in the long term.
“Go find six people who want to be a permanent resident here, who want to short-term rent their residence. I challenge every one of you to go and find even six people, because they don’t exist,” resident Brenda Sampierre said. “Every one of these STRs are a second home. That’s why they’re STRs.”
City officials said this requirement is needed in order to show state housing officials that they are preserving housing stock, especially with new policies coming down the pipeline.
According to Lee, the state Department of Housing and Community Development is considering new regulations for the Regional Housing Needs Allocation process that would require cities to create one housing unit for every new STR.
She said that including the primary residence requirement within the STR ordinance could protect the city if these state regulations become effective.
“There is some risk because, remember, these are not legal, existing STRs. They will show as new STR permits. We can argue the heck out of this, but it’s stronger for the city to have this primary residence requirement in our ordinance now,” Lee said. “The primary residence requirement really gets at our commitment in the Housing Element to make sure we’re not losing units for housing stock.”
Councilmember Terry Gaasterland made a motion to remove the primary residency requirement, arguing that it was unnecessary, but did not receive any support from fellow members.
With a current vacancy rate of around 24% in the city, residents said these regulations will not increase the overall housing stock.
“All you’re gonna wind up with is a bunch of empty second homes for people who can afford to keep their home without renting it,” said Sampierre.
Assistant City Attorney Wendy House noted that owners do not need to live in their units for six consecutive months out of the year, just six months total.
Inspections
Another hot topic of discussion on Monday was inspections, with the City Council ultimately choosing to forgo city-led inspections and instead allow owners to self-certify that their STR meets health and safety standards.
Proposed language in an earlier version of the ordinance stated that the city would have the right to enter and inspect STRs prior to the issuance or renewal of a permit, and for any other needed reason.
STR owners expressed concerns about the city having the ability to enter their rental without cause, and about neighbors weaponizing the reporting process over minor inconveniences.
Staff clarified that inspections would only take place if there was evidence of a health or safety issue, and the city would not arbitrarily enter an STR just for the sake of a random inspection.
“We have no intention or capacity to be doing inspections without just cause,” said City Manager Ashley Jones.
Councilmember Dwight Worden and Mayor Dave Druker argued that STRs should be inspected like any other business in the city. Other members said they should be treated differently, noting that the city does not inspect hotel rooms.
“To me, there’s an intrinsic difference in entering a place that is a person’s home, whether a second home or primary home,” said Councilmember Terry Gaasterland.
New ordinance language removes the city’s right to enter an STR for an inspection and requires STR owners to complete and sign a self-certification inspection form under penalty of perjury, ensuring that their rental is in compliance with all safety codes.
Condos and apartments
The ordinance also limits STRs in condo complexes and apartments in different city zones.
STRs are prohibited in apartments in the residential zone, and are allowed in apartment buildings in the commercial zone with a 10% cap. In condo complexes, only 10% of all units can be used as STRs in both the commercial and residential zones.
Condo owners asked the city to allow complex HOAs to decide their own caps. Gina Mattern said she is one of 11 out of 16 total condo owners at Costa Del Rey who rents out her condo as an STR and said the city’s 10% cap would only allow two STRs in the complex.
“We are the most affordable short-term rentals for a family of four. So you wipe us out, and your $630-a-night average is going to go skyrocketing. Any average family will not be able to come and visit, so I think it’s a detriment … it’s an unintended consequence,” Mattern said.
The City Council agreed to circle back to this topic.
