DEL MAR — City leaders are slowly inching closer to developing a new ordinance for short-term rentals, setting direction this week for key issues, including a citywide cap and grandfathering in existing rentals.
The City Council discussion on Monday marked the fifth meeting in the last year regarding short-term rentals (STRs), defined as those rented for 30 days or less after the city re-started the process last January.
Following three hours of discussion and public comments, the council agreed on several elements for a new ordinance, including limiting STRs to a primary residence (where someone permanently resides for at least six months of the year), setting a citywide cap of 129 new STRs, setting a three-night minimum stay, and implementing a transient occupancy tax.
A council majority of Tracy Martinez, Terry Gaasterland and Dan Quirk also supported accommodating existing STR operators until the property owner changes, the permit is revoked due to noncompliance, or the permit is not renewed.
Initially, city staff proposed giving existing STRs five years to comply with the ordinance terms, including operating out of a primary residence. This did not sit well with several current owners, who said they had run their STR out of a second home for decades.
“Your policy only allows us to operate for another five years and then be outlawed. That is not grandfathering,” said short-term rental owner Debbie Church.
Resident Ron Fletcher, who operates a vacation rental out of a second residence with his mother, Barbara, said they rent it out during the year to afford to use the property for family reunions.
“With this ordinance, we’re disqualified,” Fletcher said. “The short-term rentals, we only do it so we get to use the house ourselves… I want to continue to share the house and use the house.”
Del Mar Principal Planner Amanda Lee claimed that existing STRs do not have inherent rights to continue operating in the city and noted that Del Mar is under extreme pressure from the state to preserve and create housing opportunities.
“It’s something the city has to proceed with cautiously. We have STRs that have been in place for various periods of time, but they don’t have rights to grandfathering,” Lee said. “We need programs to show how we are going to preserve existing housing stock.”
While Councilmember Dwight Worden and Mayor Dave Druker supported the five-year compliance window, their colleagues overruled them and said they would prefer to accommodate current rentals on a long-term basis and mandate that all new STRs be in primary residences.
“What we’re trying to do is bring some common-sense regulation to something that’s been occurring for a long time,” Quirk said. “I think the right, simple, straightforward thing to do would be, for existing STRs, we just accommodate them until the disposition or the sale of the property.”
The city also received pushback from residents for suggesting an STR cap of 129, equal to 5% of the city’s total housing units. The council agreed that this figure would apply to new rentals and not include existing ones that are grandfathered in.
Within those 129, the council also agreed on additional neighborhood-specific caps, allowing a maximum of 77 STRs in the North Beach area, 32 in the South Beach area, and 19 in the Hills area.
Residents said the cap does not account for Del Mar’s long history of hosting visitors who come for the local beaches and major attractions like the San Diego County Fair and horse racing. The following year, the city will also host the Breeder’s Cup and the returning KAABOO music festival, drawing even more visitors.
“Del Mar’s location is enjoyed year-round… We are the beach and more. We have so many things that draw visitors here to accommodate. Del Mar’s unique housing stock is used by many of these visitors,” said Gina Mattern, a short-term rental operator.
Several public speakers suggested that the city follow the lead of the City of San Diego, which limited the number of allowed STRs to 30% of all units, specifically in Mission Beach, due to its popularity with tourists.
The council also agreed that under the primary residence rule, owners who rent out a home as a long-term rental for at least six months out of the year should be allowed to use that property as an STR at other times of the year.
However, council members said they do not want to allow STRs to operate out of accessory dwelling units anywhere in the city.
The City Council also directed staff to do more research about potential regulations regarding LLCs and the transfer of property.
Lee said staff will use the framework and direction from the council to begin crafting a draft ordinance, which will require review by the Planning Commission and City Council before going to the California Coastal Commission.
The city’s last attempt at an STR ordinance was rejected by the state commission for being too restrictive and never went into effect.
The controversial 2017 ordinance allowed unlimited operations of short-term rentals in commercial zones while requiring those in nearly all residential zones to operate at least seven days at a time and no more than 28 days per year.
Since then, Del Mar’s STR market has operated largely underground and without regulation. A search of listings on Airbnb, Vrbo and other short-term rental sites last summer identified over 100 unique rentals within the city’s boundaries. However, the actual number is expected to be much higher.
The city also encourages residents to register their existing short-term rentals by March 1 to give the city an accurate idea of how many are currently operating. City leaders said the information will not be used for code enforcement purposes.
Thus far, 68 active STRs have been registered with the city, according to a staff report.