ENCINITAS — New regulations for the city’s short-term rental market went into effect this month and an industry expert said rental operators should get used to the changes.
Similar to most cities, short-term rentals in Encinitas have become more popular with people looking for new avenues to supplement their income, and online platforms such as Airbnb and Vrbo have made it easier for homeowners to list their spaces for rent. The city of Encinitas currently has 426 permitted short-term rentals.
In response to the significant increase in short-term rentals, or vacation rentals, the Encinitas City Council adopted a new set of regulations in November, including new permitting fees and a minimum night stay for properties that are not occupied by the rental’s owner.
“The nuances really come in terms of how jurisdictions are defining short-term limits or they are putting limits on them,” said Pam Knudsen, an executive at Avalara, a tax compliance software-as-a-service company that works with short-term rental operators.
Knudsen told The Coast News cities take many different paths to their short-term rental regulations based on how they define them and which ones they allow. In Encinitas, the city only allows short-term rentals to operate in single-family homes and duplexes in residential zones (vacation rentals are currently not allowed in condominiums or apartments).
The City Council also considered implementing other guidelines surrounding the use of cameras and self-check-in for guests and could return to those regulations in the future.
One of the biggest changes in the new year for short-term rental operators is a significant increase in the annual permit fee. The $150 fee for operators had remained unchanged since 2006. Under the new regulations, rental operators must pay $425. According to the city, the price hike will recover just 80% of its costs.
Knudsen said the fee seems standard to her based on the data she has been able to see.
“I’ve seen some that are higher and I’ve seen some that are lower, it’s pretty much in the middle,” Knudsen said. “I know we’ve got some communities that have a $1000 fee, some that are still around that $150 fee so there’s a pretty broad spectrum.”
While Encinitas said it is losing money, Knudsen said there are other jurisdictions with higher fees who use the proceeds to fund other priorities.
“There is at least one community that has a higher rate and they said they are taking that rate and specifically targeting those funds to input to build affordable housing for some of the residents,” Knudsen said.
The city’s costs include enforcement and paying city staff to review and approve each permit application.
“And that is really for every resident to look at and say, ‘Am I OK with how the city is spending my money?’” Knudsen said.
For jurisdictions nationwide including Encinitas, short-term rental market enforcement and compliance will be critical to responding to the growing industry. The city enacted new ordinances due to what it described as a great number of complaints from residents “including, but not limited to, excessive noise, disorderly conduct, overcrowding, parking and traffic issues, trash/debris and other similar quality of life issues,” according to the ordinance language.
Making sure every short-term rental in the city is permitted and following new regulations will be a challenge. Since the city said it is only recovering 80% of its costs, Knudsen suggested there may be other ways to help ensure vacation rental operators remain in compliance.
“So we’ve seen the jurisdictions really try to crack down on compliance and they’re actually leaning on some of the booking companies like Airbnb and Vrbo to help with that,” Knudsen said. “The jurisdictions are actually looking to partner with some of the players in the industry to help them out with compliance.”