Jonah Mechanic

Paradise worth fighting for

At the July 16 city council meeting, the usual sea of green (pro-vacation rental) and red (anti-vacation rental) t-shirts will be joined by blue representing Ocean Beach.

Matt Valenti from Save San Diego Neighborhoods calls the mayor's proposed ordinance "the Faulconer Eviction Machine."

The Ocean Beach town council has chartered a bus so Ocean Beach residents can be heard on Monday when the city council is scheduled to vote on the mayor's short-term vacation rental proposal.

The mayor has swapped out "short term vacation rentals" for "short term residential occupancy". One local said the mayor's "Orwellian twisting" of words doesn't change a thing.

View from a vacation rental in San Diego.

Vacation rentals are the only item on Monday's agenda. Though, with big votes having gone bust before (or not at all), it's anyone's guess how it will fly this time.

At the July 16 hearing, the usual sea of green (for) and red t-shirts (against) will be joined by blue (against) representing Ocean Beach. (Save San Diego Neighborhoods)

The mayor's proposed ordinance, if passed, will mandate that everyone renting out a home to vacationers be licensed. Property owners don't apply for this license, "hosts" do. A host can be a property owner with a deed or a renter with a signed lease. Any dwellings that get their license revoked have to wait a year to reapply (all licenses are renewed annually).

Each host can get up to two licenses as long as one of the addresses is their primary residence (granny flats are said to be off limits).

For home sharing, no license is required unless there are five or more bedrooms, then the host needs to register.

All these numbers mean nothing when it comes to Mission Beach as the number of licenses any one host can get issued is unlimited. Mission Beach is already the most heavily impacted area when it comes to vacation rentals.

It's clear from the city's December report that there are nearly five times the number of vacation rentals than the city has record of (approximately 3200 in May 2018). If this holds true, the $21 million tax revenue collected in 2017 could balloon to $100 million (if all off-the-grid rentals become legal).

Out of the 14,592 active listings in December, 75 percent are located in ten neighborhoods: Mission Beach (2305), Pacific Beach (1832), downtown San Diego (1588), La Jolla (1448), Uptown (1070), North Park (738), Ocean Beach (683), Point Loma (584), Clairemont (557), and Golden Hill (451).

The mayor's proposal puts aside funding for enforcement of quality of life nuisances caused by vacation rentals. The ordinance proposes to issue citations for noise up to $1,000 for both the vacationer and the host. If the police are called out, the vacationers could be responsible for the cost of that police response.

For the host, they will have to designate a local contact who can respond to any nuisances within one hour (phone or in-person).

Some say this is a loophole that doesn't guarantee the person is local. One person that manages vacation rentals said there is always someone local involved as the rental can only be maintained and cleaned locally.

There is a three-strikes provision when it comes to violations, though the city can go straight to pulling the license if deemed appropriate. Anyone that has a permit revoked can apply again in a year.

No transfers of licenses via hosts or locations will be permitted, but it's unclear if a host can then step in and apply at a new location (or vice versa).

Hosting platforms like Airbnb will be required to confirm a host has the required license and tax documentation. Though, it's unclear what penalties are for not doing so.

Nathan got a call from an Airbnb representative on Monday asking all hosts to pack the city council meeting on Monday. He thinks councilmember Barbara Bry's proposal is the only sane option. Bry's proposal allows unlimited home sharing in a primary residence on a short-term basis for up to 90 days a year.

An Airbnb representative told me they have had their hands full gearing up the city council meeting on Monday and that they do support the mayor's proposal.

I asked about what the city told me in March about third-party online hosts not remitting taxes to the city via specific property addresses. The representative responded, "Airbnb has been collecting and remitting taxes [more than $20 million] in San Diego since 2015."

Some have asked that Councilmember Scott Sherman (District 7) recuse himself from the vote because of his father's real estate holdings, some in a family trust.

Jeff Powell from Sherman's office said, "The councilmember is not involved in his father’s business. His father is not involved in short-term rentals. The only home the councilmember owns is the one he lives in. This false accusation is based solely on hypotheticals alone and provided no proof of any violations whatsoever. This is why the ethics commission [April] and the [fair political practices commission in December] both concluded that the complaint does not warrant an investigation and is not appropriate for consideration. These are absolute fabrications that have no basis in fact."

Powell showed me decision letters from both investigations that found the accusations speculative and without evidence.

Jonah Mechanic, is the president of Share San Diego and his company manages about 180 vacation rentals locally. He supports the mayor's proposal.

Mechanic said the mayor's plan has common-sense regulations that will raise an additional $6 million for enforcement and $3 million for affordable housing. "You can have the best regulations in the world. At the end of the day, if there is no funding for enforcement, it doesn't mean anything."

I asked for his take on Mission Beach not having the same permit limitations. Mechanic manages about a dozen rentals in Mission Beach.

"The situation in Mission Beach is very unique. This area has a lot of multi-family homes with the majority of them not owner-occupied." He said vacationers have been staying in vacation rentals in Mission Beach for over 50 years.

Mechanic said the hotel industry's recent campaign against vacation renters is over-the-top. "Families looking for a safe and quiet environment to enjoy San Diego make up the majority of those renting homes here. For the hotel industry to somehow associate that with child molesters and Megan's law is despicable."

He said the other side hides behind the affordable housing argument. "On the one hand, they say it impacts affordable housing and then on the other it reduces property values. Which one is it?"

"The truth is they just don't want them. The mayor could come up with the perfect ordinance, and they still wouldn't want it."

When it comes to the argument about long-term leases, Mechanic said most of the vacation rentals are second homes for part-time San Diego residents that rent them out to offset expenses when not in use.

Mechanic said vacation rentals are needed because there aren't enough hotel rooms to meet the high demand.

The city's December report said the hotel market in San Diego is only second to Las Vegas with average occupancy rates near 80 percent and climbing.

It was reported in February that San Diego is the most profitable city for Airbnb hosts (non-shared houses).

I asked Mechanic to comment on reports that he's offering commissions to realtors for new vacation rentals.

Mechanic said he is offering his services to realtors in case they have a buyer or seller that has questions about how vacation rentals work. Realtors get a finder's fee for referrals. "I'm so confused as to how this could be twisted into a negative somehow."

Eden Yaege, president of the Clairemont town council, said the mayor's proposal is a sham. "Any town council who has made a formal statement has come out in opposition to the proposal."

"I know lawyers working on the paperwork now so that one person can have multiple people as fronts for their commercial network of vacation rentals."

Matt Valenti from Save San Diego Neighborhoods calls the mayor's proposed ordinance "the Faulconer Eviction Machine." He said the way the mayor defines a vacation rental host will legalize the conversion of an unlimited number of housing units into short-term rentals.

"A property owner can make a host out of his wife, his children, his friends, or a random straw man who gets a piece of the action. Those hosts could live anywhere in the world. They never have to step foot in San Diego. All they have to do is sign a lease giving them the right to occupy the space, and then apply for the permit."

An invitation to a July 19 Airbnb meet-up posits: "If you own rental properties and want to maximize their value, then there is nothing better than creating an ATM from Airbnb."

A similar April event stated: "So far, San Diego isn’t super strict when it comes to Airbnb hosts."

As far as the $3 million per year the mayor's proposal puts toward affordable housing, Valenti said, "It won’t come close to mitigating the damage his plan will do to our affordable housing stock."

Valenti asked the mayor's office to clarify if the maximum number of short-term rentals any single investor can own is dependent on the number of individuals willing to host those rentals for them.

Elyse Lowe from the mayor's office told Valenti (via email) that the mayor's approach "is to provide equal protection that doesn't discriminate between renters and owners."

Could this nondiscrimination leave the door open for Mr. A, who owns one hundred beach houses in San Diego, to anoint 100 different people legally to serve as proxy-hosts for each of his properties through Airbnb?

Or does the mayor's proposal force Mr. A to rent out 98 of his beach houses long-term? Is Mr. A barred from signing leases with hosts that don't live in his property or in San Diego?

"It’s a loophole big enough to drive a truck through, a truck not unlike the moving trucks that will be heading out of San Diego, along with the working families who will find themselves evicted in favor of tourists."

I asked Mechanic how he sees "hosts" as defined in the mayor's proposal. He said he was unsure as well and is hoping for clarity at Monday's hearing.

Anyone not able to attend the July 16 meeting can leave comments online and will be part of the public record.