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New STR Regulations Adopted by MB City Council

It has been a while since we have updated you because we have been waiting to see what the final outcome would be for the new Short-Term Rental (STR) Ordinance after it was reviewed and voted on by the Morro Bay City Council. The first reading was held during the October 13th meeting, where several changes were made to the ordinance based on their acceptance of some of the Planning Commission’s suggested changes and also on their initial review of the ordinance at the September 22nd Council meetings. At the second reading of the ordinance, these changes were incorporated into the Ordinance and it was adopted by the Council with a 4 -1 favorable vote. Below are the significant changes made to the original ordinance that was submitted to the Planning Commission and City Council:

  1. The maximum number of licenses allowed for full-house (non-hosted) rentals in residential areas was reduced to 175. Note: The current maximum # of licenses allowed is 250 so it will be reduced by 75 through attrition but hosted STRs will not be counted. Unlimited number of hosted STRs will be allowed.

  2. The density regulations were changed from the original regulation that prevented “3 houses on either side, 3 in back and 3 across the street” from getting licenses. It was replaced with a density rule that blocks homes within a 175 ft. radius of an STR’s property lines. Note: this will have minimal impact for the next couple of years but will eventually result in significantly fewer STRs available in the beach-close areas. We believe this was an excessive reach on the part of the Council.

  3. All current STR license holders will be “grandfathered”, i.e. exempt from density and maximum license regulations, and classified as legal, non-conforming rentals. Note: In the past, the city grandfathered some Accessory Dwelling Units (ADUs) or Junior ADUs that held STR licenses and banned any future licenses for this type of housing. It was decided that existing ADUs holding licenses would be allowed to continue operation and would be counted toward the maximum allowed full house (non-hosted) STR licenses.

  4. STRs will not be allowed in multifamily dwellings (residential developments with 2 or more attached dwellings e.g., apartments, duplexes, condo buildings, etc.) that are in residential zones.

  5. A maximum of 1/8 of the total units in multifamily dwellings in commercial or mixed-use zones are allowed. If the development has 8 or less units, a maximum of 1 of these can hold a license.

Some of the significant new regulations for STRs in addition to those mentioned above are:

  1. Maximum occupancy for an STR is 2 people per bedroom plus 2 additional people (children under 3 are not counted). Maximum number of occupants allowed at any STR is 10 people over 3 years of age. Note: This will cause us to reduce the maximum occupancy on some homes managed by our company.

  2. All parking for STR guests and their visitors must be on-site.

  3. Primary renter of an STR must be a minimum of 21 years of age.

  4. Large permit fees will be levied against STR license holders to pay for city compliance personnel to enforce STR regulations. There will also be large penalties for ordinance violations and for illegal STR operators.

  5. STRs must post a sign on the property visible from the public right-of-way that identifies it as a vacation rental and shows the contact information for the local contact so neighbors can report problems or complaints.

  6. STR operators must include their STR license number on all advertising platforms like HomeAway/VRBO, Airbnb, TripAdvisor, etc.

Next Steps: The adopted ordinance will be sent to the California Coastal Commission for approval or modification and will only take effect after it receives final approval by the Commission. We think that all correspondence that was submitted to the Planning Commission and the City Council will be available to the Coastal Commission as they deliberate on the ordinance and make their decision. So again, we REALLY appreciate all of you who did submit letters and/or participated in the hearings. Stay tuned! We will continue to update you on the CCC proceedings, but please note, it could be quite a while before they will get it on their agenda so you may not hear from us for a while. Thank you for your interest and support throughout this process!

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