Overview of Santa Cruz City Vacation Rental Proposed Ordinance
Ordinance is being reviewed by City Council on September 26, 2017
On September 26th, the City of Santa Cruz will consider a major code revision that would severely restrict private property rights of all properties in Santa Cruz. The City has had a long history of allowing home owners to rent their properties on a short-term basis, but the City’s planning commission voted in July to eliminate ALL non-owner-occupied vacation rentals in the City, and further restrict all owner-occupied properties as detailed below. Under the proposed ordinance, vacation rentals that are 2nd homes or investment properties will have to CLOSE in the next 3 to 10 years. The City Manager’s office is now claiming that these 200 properties should be housing for City employees, and banning their use as vacation rentals will make the other 23,635 housing units in the City more affordable.
The City is already $2 million over budget for the current fiscal year, and the proposed regulation would add to their deficit, costing the City nearly $1 million in direct TOT tax losses plus require the hiring of additional staff to support the complex proposed regulation. Additionally, the restrictions will depress the market for vacation home buyers within the City and have a negative impact on housing values, especially within the Coastal Zone where vacation home buyers have traditionally been able to offset their housing costs by renting on a short-term basis.
The proposed ordinance ignores the Subcommittee and City staff recommendations, Contact the City Council before they formalize the Ordinance. Stay informed: register for the Santa Cruz County Rental and Visitors Alliance email list here.
Here is a Summary of the ordinance, that the City Council will first consider September 26th:
1. City will allow initially a TOTAL of 400 owner occupied and non-owner-occupied vacation rentals. Currently unregistered non-owner-occupied vacation rentals may NOT register.
2. One vacation rental per owner.
3. 2nd homes/Non-Owner occupied vacation rentals to be eliminated as follows:
a. Must close in 3 years if you own more than one vacation rental.
b. Must close in 5 years or upon sale if you do not meet City’s new parking requirements, one per building/APN; or other City imposed standards including signage, TOT, and annual inspections
c. All other non-owner occupied units must close in 10 years or upon sale and have permit reviewed at year 5 (City staff stated “owners should plan on making other family or life decisions with their Property”).
4. Permits are not transferable, and may not be taken to a new property by owner of permit (simply a temporary permit to operate).
5. A large license fee will be added, and all Vacation Rentals must apply for renewal every 5 years
6. Fines from $1000-$3000 per violation.
7. The city will not regulate the short-term rental of a bedroom in an owner-occupied home, nor will a permit be required, but must pay TOT.