Some granny flats in San Diego can rent short-term, others can't

Regulations proposed for vacation rentals makes scant mention of accessory dwelling units, even though their numbers have surged under new state and local laws meant to boost housing. So how will they figure in?

It was one of many questions raised at a planning commission hearing last week that led to the proposed ordinance being sent back to city staff for changes. It will be heard again by the commission on December 3.

"An [accessory dwelling unit] shall not be used for a rental," said Elyse Lowe, director of development services, adding that the code states that they can't be used less than 30 days as a rental. But 100 of the units are exempt from the rule.

According to a staff report, the answer begins with "what is a short-term rental?" The city lacks a clear definition. The new rules would define it as a dwelling unit, or portion of one, occupied for less than one month. If these rentals were regulated, the city could pull business permits to shut down bad actors.

The proposal, spearheaded by city councilmember Jen Campbell, is a compromise between Expedia, which owns HomeAway and VRBO home-sharing platforms, and Unite Here Local 30, the union of hotel workers.

Airbnb, the main platform operating in San Diego, was opposed, as it would cut the number of short-term rentals by about 60 percent. But most agree on the need to regulate the city's 16,000 short-term rentals. Many callers complained that investors and homeowners are turning neighborhoods into business districts.

The proposal would impose a license requirement and regulations on hosts and hosting platforms and repeal regulations for bed and breakfast and boarder lodging. A host could obtain one license at a time in one of four tiers, allowing the city to differentiate between part-time short-term rental use, home sharing, and whole home. Mission Beach, king of vacation rentals, garners its own tier for whole-house rentals.

Accessory dwelling units fall under home-sharing. But only 100 are eligible short-term rentals. That's because the city's granny flat rules, revised in 2017, excluded units built prior to that year. The older units were grandfathered in, free of the 30-day minimum stay rule.

Since that time, another 700-800 accessory dwellings have been permitted.

An analysis by inewsource found that despite the city's intent to create more housing, some of the new units became short-term rentals. The city has allowed at least seven granny flats to rent for less than 30 days. But since the analysis only looked at property owners who pay the transient occupancy tax, the number of illegal vacation rentals could be much higher.

It happened because the city has no way to police the 30-day minimum stay besides citizen complaints and code enforcement. And while a separate office would be created that would track, manage and enforce such rentals, catching violators still relies heavily on citizen complaints.

That's one flaw in the proposal, relying on neighbors to take the first step in enforcement, said commissioner Matthew Boomhower, who made the motion to send it back for changes.

"That's going to be a huge code enforcement issue," he said, referring to likely confusion about the grandfathered units.

"Code enforcement is constantly going to be dealing with complaints against those units because the general public isn't going to know, this [granny flat] is allowed to do this, this [one] isn't."

It fails to address how unlicensed short-term rentals will be policed. "We still have unlicensed cannabis businesses operating in the city, and we can't shut them down. We just keep playing whackamole."

Venus Molina, chief of staff to councilmember Campbell, and a main author of the proposal, said that as the city "becomes aware of the different licenses for [short-term rentals], and once they can actually match that with the licenses from the platforms, I think this will be an easy way to take down" the illegal ones.

The myriad details will be worked out over time, she said, which is why they set an implementation date of 2022.