By Louis Rodolico
This summer, the San Diego City Council sided with the well-funded hotel lobby to limit vacation rentals. The hotel lobby had strategically timed the vote to reduce vacation coalition income until after the window for the 2018 ballot closed.
The council’s vote dropped the value of vacation rental properties overnight. The new law goes into effect in July 2019. The vacation rental coalition had no choice but to act quickly and get enough signatures in 30 days to stop the City Council. If the Registrar of Voters validates enough signatures, the council’s vote will be stayed until the pro-vacation rental coalition can get its issue on the 2020 ballot.
The hotel lobby also floated a Transient Occupancy Tax petition for the 2018 ballot. It would have generated billions in TOT revenue for the city, the homeless and a Convention Center expansion starting in 2019. The registrar found that petition lacked sufficient valid signatures.
Given the caliber of hotel lobbyists, I believe the hotel lobby put out an incomplete petition intentionally. The TOT petition now goes on the 2020 ballot, delaying any new tax until 2021. Very clever.
The hotel lobby, with the cudgel of hotel TOT taxes, has won the day. The pro-vacation rental coalition cites the “shared economy” and has broad popular support. You can listen to all the testimony from both sides.
There is no reason why we shouldn’t be able to find a compromise. One option would be to allow vacation rentals when college is out of session. Link that to monthly rentals when classes are in session and tie everything to a robust tax code. That would decrease legal challenges, keep a lot of vacation rental property owners’ heads above water, push business to hotels during the off season and help eliminate the city’s housing shortage.
The council’s vote on coastal-zone vacation rentals will likely be slapped down by the California Coastal Commission. Since the city yanked permission to operate rental properties that had been taxed as rentals for decades, the courts will likely force the city to buy back rental rights.
After all, vacation rental owners paid a premium for properties that could be used as vacation rentals; they operated in good faith and did not break any laws but have become victims of new laws intended to bankrupt them.
When we travel, we stay at locations with vacation rentals. We had a week seaside staycation in Mission Beach this summer. To me, San Diego’s beach communities are reminiscent of many of the East Coast shore communities. It is working class, high energy, with people taking full advantage of the boardwalk with bikes, scooters and skateboards of all sizes and types.
Some find the somewhat carnival atmosphere of tattoos and dress distasteful, but for most it is a place to experience and for others a place to be seen. I appreciate the vibe of San Diego’s beach communities. To legislate them out of existence would be a major cultural loss.
With a shrinking middle class, there are now more homeless and wealthy. And the council vote certainly helps the wealthy. Many San Diego vacation rental properties are heavily mortgaged and will not pencil out as yearly rentals. The only buyers left standing would be the wealthy looking for seaside building sites.
The council’s recent devaluation of shore rental properties will save the wealthy millions. There are strips of rarely occupied seaside mansions up and down the coast. They create virtual phantom neighborhoods — enormous houses that could rent for $30,000 a month but remain mostly vacant. What ever became of “San Diego housing for San Diegans?”
Council votes are no sure thing these days. After all, council voted in 2006 to build the Regents Road Bridge but well-funded lobbyists helped Westfield UTC reverse that by 2016. Ignoring public will, needed ambulance routes and public safety, the Australian-owned mall succeeded in shutting down the Regents Road corridor so all traffic comes up Genesee Avenue to the mall’s door. The pro-bridge coalition lost because they did not have millions like the mall.
It looks like the vacation rental coalition will depend on the 2020 ballot, hoping that “the people will save us.” Maybe, maybe not. In 2012, voters chose to rein in the city pension system, but that vote was overturned by the California courts.
Locally and nationally, lobbyists dominate our election funding process, consistently putting politicians in a box. With the upcoming election, we will be told to be good citizens and vote. However, it is becoming painfully obvious that today’s politics boils down to which lobbying group can raise the most money, not the common good or the will of the electorate.
Besides limiting vacation rentals here, lobbyists have driven legislatures to avoid universal health care, voter rights, gun control, and humane opioid controls. In a social media age, when all citizens can respond immediately, are legislatures becoming archaic?
There are enormous sums surrounding vacation rentals. The hotel lobby and the vacation rental lobby will have to duke it out.
Louis Rodolico has been a resident of University City since 2001.
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