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San Diego referendum plan puts new Airbnb law on hold

  • Oct 16, 2018 | Jennifer Sokolowsky

San Diego skyline

A referendum on San Diego’s newly approved short-term rental law has been qualified by the city as having enough signatures to force a vote. This means the new law will be on hold until either the public votes on it or the City Council takes action to rescind the law or put a new one in its place.

More than 62,000 signatures were gathered for the referendum, which would overturn the new ordinance and is backed by online short-term rental platforms Airbnb and HomeAway, as well as by short-term rental owners’ groups. The measure could go on the ballot in 2020 or earlier next year if a special election were called.

If the city repeals the new law and halts the referendum vote, it would be prohibited from approving a similar law for one year — unless it came up with a law that’s “essentially different” from the one that was rescinded. Any short-term rental law the city creates would still need to be reviewed by the California Coastal Commission, which sent a letter to San Diego City Council members before they passed the new law to remind them of how important rentals are in ensuring affordable access to the coast.

A statement from Airbnb, HomeAway, and Share San Diego, which headed the referendum effort, said that “When voters have a say, short-term rentals win. Over 62,000 San Diegans — nearly twice the amount needed — signed the petition to stop the de facto ban on short-term rentals because they agree there is a better solution than the onerous law that was passed … We believe there’s a better way and look forward to a resolution whether it be by the city or the voters.”

Meanwhile Save San Diego Neighborhoods, which advocates restrictions on short-term rentals, called on city officials to immediately start enforcing older existing San Diego ordinances that prohibit short-term rentals in residential zones.

“Airbnb and short-term rental operators, owners and investors have been breaking the law — exploiting San Diegans and San Diego’s housing stock long enough. This must stop,” Save San Diego Neighborhoods said in a statement.

The new law in question, which would go into effect in July 2019, restricts short-term rentals in all parts of the city to owners’ primary residences, and only for six months of each year while hosts are not present. The law would also require three-night minimum stays for popular coastal areas and downtown.

Under the ordinance, all short-term rental operators would be required to apply for a short-term rental license and pay a yearly fee of $949. Hosts who have a second unit on their property, such as a duplex, could apply for a second short-term rental license. Those who wanted to offer homes with four or more bedrooms for short-term rentals would have to apply for a different type of permit with a more extensive process. Hosts would be required to include their license number on all ads.

The new short-term rental licensing fees paid by hosts would go toward funding enforcement efforts, including a new team of police officers to deal with short-term rental issues, the creation of a license and registration system, and a new complaint hotline or app.

Short-term rental hosts would also be required to pay a fee of $3.96 for whole-home rentals or $2.73 for room rentals that would go toward affordable housing in San Diego.

The law would also require short-term rental hosts to get a San Diego transient occupancy tax (TOT) certificate, collect tax from guests, and remit it to the city. If hosts use an online platform such as Airbnb, HomeAway, or VRBO, the platform would be required to collect the taxes and affordable housing fees on their behalf.

Currently, Airbnb is the only platform that collects the TOT for hosts. Hosts who use other short-term rental platforms such as HomeAway or VRBO are responsible for taking care of lodging tax themselves. MyLodgeTax can help San Diego short-term rental hosts fulfill their lodging tax obligations, including registration, collection, and payment.

According to data analytics firm Host Compliance, San Diego now has 11,000 short-term vacation rentals, most of which are whole homes. The city estimated that approximately 80 percent of San Diego short-term vacation rentals would be affected by the new law.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.