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Encinitas council sets 2.5% cap on short-term rentals

ENCINITAS — The Encinitas City Council voted this week to cap the number of city-issued permits for non-hosted, short-term rental properties and require a minimum of 200 feet between permitted vacation rentals, among other proposed regulations.

The council voted 4-0 on Wednesday — Councilwoman Kellie Hinze recused herself from the vote because her family owns a vacation rental — to approve a 2.5% citywide cap of short-term rentals and a 4% limit for qualifying units located west of Interstate 5.

The council also reaffirmed its previous decision that new short-term rentals should be a minimum of 200 feet from existing short-term rentals (also called STRs or STVRs) to prevent an overconcentration in the community. Under the endorsed proposal, property owners must renew their rental permits every three years instead of annually.

The proposal will not become official city law until the California Coastal Commission approves the ordinance sometime in early 2023. 

If the state agency greenlights the ordinance, the number of permits for STRs that could be issued citywide would be 665, or 326 more than the existing amount, per city records. The total number for the coastal region would be 386, or 109 more such places than currently available.

“In the end, we as a City Council agreed that putting a limit on STR permits is in the best interest of the community overall,” said Councilman Tony Kranz. “It’s not something that we invented. Communities all over the country have these rules.” 

Mayor Catherine Blakespear expressed her support for the proposal, noting the city has a shortage of long-term rental properties, particularly affordable units.

“To me, the caps are really critical for helping the city with its housing issue,” Blakespear said. “This decision is a reflection of good governance. We struck the right balance when it comes to how many housing units become vacation rentals. I suggested and promoted a cap to ensure that the majority of Encinitas homes stay available for residents.”

Sea Bluffs, developed specifically to accommodate vacation-style units, is the only community exempt from the new proposed regulation.

“We identified (Sea Bluffs) as a unique situation, its own category,” Councilwoman Joy Lyndes said. “Sea Bluffs was developed as a condo-like situation where it was specifically designed to be a beach and tennis club type of area, so its defined land use is different from other land uses, and we want to look into what we can do to deal with unique situations like that.”

Some vacation rental owners spoke up at Wednesday’s meeting against the proposed changes, arguing the ordinances would infringe upon their personal property rights, curtail rental profits and hurt home equities.

“Restricting access to the coastal region to outside guests would be a very unfortunate outcome of these current proposed ordinances,” said resident Brian Witwer, a vacation rental owner, in a letter to the council. “In order to purchase a house in California, we did so with the knowledge that we could buffer the tremendous cost with income from a short-term rental. This income will also help us afford a later retirement to the Cardiff area once I transition out of my current employment.”

Jessica Perry, an operations manager at a vacation rental business, also voiced opposition to the regulations. 

“I strongly oppose the new short‐term rental regulations being proposed during the next council meeting, and I ask that you do not vote for these changes,” Perry said. “It is very clear to all of us that the city of Encinitas is making these changes to discourage homeowners from applying for an STR permit and to discourage current owners from continuing to rent out their homes. These proposed changes will only make it harder for travelers to find affordable lodging along the coastline, where they can have the entire family stay in one home at a fraction of the price of a hotel room.”

Resident Nanci Winkley said the city’s new regulations would hurt lower-income families. 

“The project unfairly impacts low and moderate-income individuals who want to vacation in Encinitas, and the project also reduces the number of housing choices in the city, thereby driving up the housing costs and reducing affordability,” Winkley said. 

While acknowledging STR owners’ concerns over the revised proposal, Kranz said the council has also heard from residents living near short-term rentals concerned by the impacts such residences may have on community character.

“Most of these objections come from people in the business of STRs, and they see this as encroaching on their business and livelihood, which I understand,” Kranz said. “There is a number of residents who live next door to STR properties who find that the impacts on their quality of life are significant.

Kranz further noted that he had personally heard from many residents who demanded even more stringent controls over vacation rentals than what the council ultimately adopted.

In endorsing the proposal, the City Council partly went against the recommendation of the city’s Planning Commission, which had recommended lowering the cap on STRs even further and advised the Sea Bluffs community not to be excluded from the new restrictions. However, city staff urged the council not to adopt the Planning Commission’s revisions to the proposal. 

Bruce Ehlers, former planning chairman and newly-elected District 4 council member, said city staff had acted inappropriately in countering the Planning Commission’s recommendation on the STR ordinance with their independent recommendation. 

“I was disappointed that staff inserted themselves into the discretionary power of the Planning Commission and of the council in countering the commission’s recommendation with their own recommendation, as though they have discretionary powers of their own,” Ehlers said. “Staff took it on themselves to go beyond the rules and take on more discretion than what is really theirs. Their job is to say what the rules are but not decide what the percentage (of STRs) should be.” 

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