Santa Cruz County Tightens the Reins on Vacation Rentals to Address Housing Crisis

Santa Cruz County is taking decisive action to combat its severe housing affordability crisis by implementing new, stricter regulations on short-term vacation rentals. The County Board of Supervisors has advanced a series of measures aimed at preserving the local housing stock for residents and mitigating the impact of unchecked vacation rental growth on the community.

The Heart of the Matter: Housing Affordability

Santa Cruz County faces one of the most challenging housing markets in the nation, where even a modest two-bedroom apartment demands a substantial hourly wage for affordability. Supervisors pinpoint the conversion of residential properties into short-term rentals as a significant factor exacerbating this shortage, arguing that tourism and investment are being prioritized over the needs of local residents. These new regulations are a direct response to community feedback and a recognition that the current landscape of short-term rentals is diminishing housing availability and affordability for those who live and work in Santa Cruz.

Key Provisions Shaping the New Regulations

The proposed regulations introduce several critical measures designed to control the expansion of vacation rentals in the unincorporated areas of Santa Cruz County. It’s important to note that incorporated cities within the county have their own distinct rules.

Caps and Limits for a Balanced Market

Non-Hosted Vacation Rental Permits: A cap of 270 permits will be placed on “non-hosted” rentals, where the owner does not reside on the property. This targets properties functioning primarily as commercial lodging.
Hosted Vacation Rentals: A limit of 250 permits is proposed for “hosted” rentals, where the owner lives on-site and rents out rooms. This acknowledges their role as income supplements for residents.
Permit Limits Per Owner: To prevent market concentration, the regulations limit vacation rental permits to one per person or entity, discouraging large-scale investors.
Tenant Protections: Property owners converting units to short-term rentals must provide evicted tenants with six months’ rent as compensation.
Phased Reductions: In specific zones, a phased reduction of “non-hosted” permits will occur if the established cap is not met, ensuring gradual impact.
Onsite Inspections: All new short-term rental properties will undergo onsite inspections to ensure compliance with safety regulations.
Exemptions for Tourist Areas: Certain streets in popular tourist areas like Aptos, Seacliff, and La Selva Beach will be exempt from the overall rental limit.
Increased Bedroom Limit: Hosted rentals can now rent out up to three bedrooms, an increase from the previous limit of two, offering more flexibility to homeowners.

Tackling Unpermitted Rentals and Platform Accountability

A significant focus of the new rules is addressing unpermitted vacation rentals and ensuring online booking platforms take responsibility.. Learn more about Santa Cruz Local

Enforcing Compliance

Mandatory Removal of Non-Permitted Listings: Platforms like Airbnb and Vrbo must remove any listings lacking a valid county permit.
Enhanced Enforcement: The county is strengthening its enforcement mechanisms, potentially including penalties for platforms that fail to comply with removal directives.
Addressing Unpermitted Operations: County staff estimate over 70 unpermitted vacation rentals are operating, and the new rules aim to bring them into compliance or remove them.

Community Concerns and Enforcement Strategies

The regulations also aim to address community concerns such as noise and neighborly conduct.

Community Feedback Channels

Vacation Rental Hotline: A dedicated hotline will be established for neighbors to report issues like noise complaints.
Required Signage: All short-term rental properties must display the hotline number prominently for guests and neighbors.
Funding Mechanism: The estimated $13,000 annual cost for the hotline will be covered by increased short-term rental application fees.
Preventing Over-Concentration: “Non-hosted” permit applications adjacent to existing “non-hosted” rentals may be rejected to avoid clustering in residential neighborhoods.

The Path Forward: Procedural Steps and Rationale

The measure was approved 4-0 by the Board of Supervisors, with final adoption scheduled for August 19. Following local approval, the regulations will require sign-off from the California Coastal Commission.. Learn more about County

Supervisor Insights

Supervisor Manu Koenig highlighted the frustration of first-time homebuyers being outbid by investors. Supervisor Justin Cummings described the trend as the “commercialization of residential property,” necessitating these regulations to preserve neighborhood character. Both supervisors view these rules as a starting point for further action.

Broader Implications and Future Outlook

Santa Cruz County’s approach to vacation rental management offers a potential model for other local governments grappling with the sharing economy’s impact on housing. While addressing housing needs, supervisors are also exploring ways to expand hotel capacity to support the tourism industry. These actions align with state mandates to increase housing supply, making Santa Cruz County’s efforts a significant development in the ongoing evolution of short-term rental policies nationwide.