ESCONDIDO — The city is fine-tuning a draft ordinance to regulate and tax short-term rentals.
Currently, there are 181 short-term rentals in Escondido. Since the municipal code is silent on transitory dwellings or rentals of 30 days or less, they are technically not allowed.
The draft ordinance, presented by staff from the city’s economic development department to the Planning Commission on March 26, would require short-term rental operators to possess a business license — a requirement for all businesses operating within Escondido — and a short-term rental permit.
The city would also conduct code enforcement inspections of the applicants’ homes when they apply for a short-term rental permit and during renewals.
If adopted, the city would begin collecting a transient occupancy tax, or TOT, traditionally obtained from visitors to hotels and motels (and short-term rentals in cities with regulations).
According to Director of Economic Development Jennifer Schoeneck, the city anticipates collecting approximately $300,000 per year in TOT from its existing short-term rentals. Schoeneck said the short-term permit would cost operators $250 plus an initial $231 property inspection fee.
The draft statute would update the municipal code with definitions and establish a system for reporting and responding to complaints regarding short-term rentals. Licensed operators would receive a $1,000 fine for the first violation, $3,000 for the second, and $5,000 for the third if offenses were committed within a year.
The proposal caps short-term rentals at 942 units, or 2%, of the city’s housing stock and seeks to prevent short-term rentals from clustering in certain neighborhoods by maintaining a 500-foot distance limit between them.
Short-term rentals would be only allowed in single-family detached homes, duplexes with two- and three-family dwelling units and townhomes.
In multifamily housing, buildings with two to 50 units could only have one short-term rental, buildings with 51 to 99 units could have two, and anything over 100 units could have up to five. Additionally, the ordinance would cap short-term rentals in multifamily housing at 25 citywide.
“If we reach that limit, a waiting list would be maintained,” Schoeneck told the Planning Commission.
Short-term rentals will not be allowed in accessory dwelling units, junior accessory dwelling units, income-restricted homes or units built under a Senate Bill 9 application, which allows property owners to build up to four units on a lot traditionally zoned for one.
A short-term rental host could only advertise up to two guests per bedroom, with an additional two guests overall.
Planning Commission members and the public expressed mixed views on the proposed ordinance and whether or not short-term rentals should be allowed in the first place.
Some residents fear short-term rentals will inundate neighborhoods with noise, parking and other issues — such as taking up housing stock in the midst of a state housing crisis — and would rather nix them completely. Others are more receptive to vacation rentals with strong code enforcement standards and limitations. One resident suggested a distance requirement between short-term rentals, schools and parks.
Others see short-term rentals as an opportunity to create supplemental income for families hosting short-term rentals and attract more visitors to Escondido, boosting the local economy.
The planning commissioners suggested modifying the ordinance, including adding space between schools and parks and differentiating between hosted and non-hosted short-term rentals.
The ordinance proposes that short-term rentals have signage posted with host contact information.
However, some commissioners, like Rick Paul, felt that requirement was too onerous. Paul also felt that requiring a business license, short-term rental permit and building inspection was also asking too much of short-term rental hosts, some of whom rely on the extra income to make ends meet.
“It might not pencil out for them anymore,” Paul told The Coast News.
Schoeneck said TOT tax could be collected retroactively for three years for short-term rentals operating in the city without a license or permit. But again, some commissioners felt that would be too burdensome.
While some commissioners also felt the 500-foot distance requirement between short-term rentals would be too much, others disagreed.
“I don’t know if 500 feet is enough to maintain historic streets,” said Commissioner Carrie Mecaro, who lives in historic Old Escondido.
Mecaro was also worried about the ordinance’s lack of parking requirements and how that would affect neighborhoods already lacking parking like hers.
Schoeneck said there is still time to modify the proposed ordinance, noting she plans to bring it back before the Economic Development Subcommittee to discuss adding the distance between short-term rentals and schools and parks.
The Planning Commission’s comments will be included in Schoeneck’s presentation of the proposed ordinance during the City Council’s final consideration at a later date.
