Taking On the Short-Term Rental Problem in Santa Barbara

Last year, the City of Santa Barbara decided to seriously crack down on short-term vacation rentals, setting aside $1.175 million toward a one-year short-term rental enforcement program aimed at finding illegal operators in the city and collecting back taxes, fees, interest, and penalties. Since launching in August 2023, the enforcement program has handled 151 cases, and collected more than a half a million dollars, and now the city is asking for an extension on the temporary program to continue to chip away at the estimated 1,147 unlawful vacation rentals still operating in the city.

On Tuesday, April 16, the Santa Barbara City Council will hear the first update on the pilot program, and according to the report prepared by Assistant City Attorney Denny Wei and City Attorney’s Office Investigator William Alva, the city has followed up on 106 citizen complaints and found 46 more properties through proactive enforcement.

In total, there are 57 cases still in progress, while 45 were brought into compliance voluntarily, 18 were determined to be unfounded, and six were found to be outside city limits. Twenty-five cases are currently going through the court system. So far, the city has collected $269,272 from properties in the coastal zone and $233,607 for properties in the inland area.

According to the staff report, the program has been a success in its first year, spending only $99,083 out of the $1.175 million budget by “being mindful of spending taxpayer money” and taking “all possible steps to use the allocated funds judiciously.”

But the pilot program is set to expire at the end of July, and with more than a thousand illegal vacation rentals still operating in Santa Barbara, the City Attorney’s Office is asking for an extension to keep the program going forward. No additional funds are being requested.

The report also details how the cases were handled. The City Attorney’s Office employed three special investigators who worked to follow up on complaints, gather evidence, interview witnesses, and visit the properties, with the intention of getting operators to voluntarily come into compliance and pay any applicable back taxes, fees, and penalties. Property owners that did not come into compliance were then referred to the city prosecutor to begin the court process. Later, the city brought in a financial analyst to assist with the program.

While the program has brought in more than $500,000 in penalties and fees, city staff said that current enforcement of unpermitted short-term rentals in the coastal zone is limited to tax violations unless there were more serious issues regarding “tenant behavior or other nuisance-like complaints.”

In order to allow the city to go after the estimated 1,147 illegal short-term rentals that are still out there, Councilmembers Mike Jordan and Eric Friedman also requested to agendize a second item on the same day to allow the council to discuss potential changes to the city’s short-term rental regulations.

“Short-term vacation rentals have grown in popularity and numbers across the city,” the two councilmembers wrote in a memo sent out earlier this week. “Both regulated (zoned and registered) and unregulated (not zoned and/or not registered) continue to re-purpose the city’s housing stock away from permanent housing as they are converted to short term visitor uses only.”

Not only do short-term rentals ”intrude into existing single family residential” areas, but they can cause “significant tensions,” the memo continues, “as residents have observed neighborhood housing turned into transient visitor lodging,” along with reports of weekly turnover, lack of local oversight or management, increased parking and noise, and other impacts.

The main goal of the discussion will be to assess what types of changes could be made to the current regulations to ensure that the city continues “to protect and develop all types of housing stock and take steps to remedy the loss of such,” according to Jordan and Friedman’s statement.

This could include addressing zoning codes, which currently allow for single family residential, hotels, and short-term rentals to exist in the same areas.

“In order to clarify short-term vacation rental regulations and address conflicts with residential uses, while protecting erosion to city housing stock,” the memo states, “we believe that revisions to existing ordinances is warranted and appropriate.”

City Council will receive the update on the pilot program and discuss potential changes to short-term rental regulations at City Hall on Tuesday.