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Brief History of Vacation Rental Regulations for Morro Bay


The city of Morro Bay approved Municipal Code 5.47 which required anyone operating a vacation rental to apply for a business license and permit and to pay Transient Occupancy Tax on all rentals.  This ordinance established rules requiring VR owners/managers to ensure that guests do not create unreasonable noise or disturbances and it established monetary penalties for violations of all STR regulations. It also mandated that a sign be posted, viewable from the outside, with contact information for the responsible party in case someone had an issue with the occupants of the home.  Unfortunately, there were no provisions made or procedures created by the city to enforce these regulations. 

2006 - 2016

Vacation Rentals became very popular with the traveling public and quickly grew to become the preferred lodging choice for families and groups of friends. Due to the increase in demand, the number of vacation rentals available grew exponentially around the world and in Morro Bay.  The community became concerned about the impact this was having on the residential neighborhoods and also about the growing number of VRs in the city so, based on public demand, in 2016 the city passed an Urgency Ordinance to limit VR licenses, capping the number at 250. 

2016 - Present

The city intended to modify the STR regulations soon after the moratorium was established but decided to address it as part of the overall General Plan update the city was working on.  STR regulations are established as part of the zoning laws which is a component of the General Plan.  Since this would extend the timeline for establishing new STR regulations, the city permanently established the cap of 250 by adding it to the Municipal Code.


The city has now hired Host Compliance to identify STRs operating without a license with the intention of shutting them down.  The city has also held community forums to get input, established an ad hoc committee made up of STR owners and managers and community members to develop proposed regulations and has surveyed the community for their input.  The city’s desired timeline for getting new regulations created and approved by the planning commission and city council is in the first half of 2020. The final approval for the new regulations will be made by the California Coastal Commission (unknown how long that will take). 

Read more on density and the arguments regarding Vacation Rentals in Morro Bay

Read about how the current situation unfolded and the history on STRs in Morro Bay

Learn about the common terms for Vacation Rentals and how they are defined

Browse our files data base for studies, publications, and more information on STRs

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