Santa Rosa approves new limits on vacation rentals but existing operators largely protected

Santa Rosa will limit the number of short-term rentals an operator can own but existing operators with more than one property will be allowed to remain in business under prior rules.

The carve-out should appease the roughly two dozen operators who own more than one rental and would be affected by the rule change. Some had threatened legal action if the council imposed regulations that would force them to stop operating.

But the city will continue a freeze on new applications for nonhosted rentals where the owner doesn’t live at the property that has been in place since last August.

That ensures the share of nonhosted rentals across the city doesn’t grow — at least for now.

The council approved the changes in a 6-1 vote at the end of a marathon meeting that adjourned just before midnight.

Several bids by Council member Victoria Fleming to sway her colleagues to support stricter regulations failed. Her proposals included a substitute motion that called for a blanket ban on nonhosted rentals in residential neighborhoods.

Fleming, whose northeast District 4 has one of the highest concentrations of rentals in the city, voted against the updated rules.

There are 230 short-term rentals that have received a permit to operate in the city, about 75% of which are nonhosted rentals.

The contentious issue has divided the community and pitted two vocal constituencies against each other ― neighbors of rentals, many in the city’s wealthy hillside enclaves, who have opposed the increasing number of rentals in their neighborhoods over concerns about noise and traffic and rental operators who have a piece of the prized Sonoma County real estate market and fear more government regulation will hamper their business.

The dilemma is largely of the city’s own making.

Santa Rosa was relatively late to enact policies for vacation rentals less than two years ago despite the business booming across the North Bay over the past decade. The city, bruised by a 2017 ballot box loss in its local attempt to institute residential rent control, followed a more hands-off approach to governing where and how they can operate.

In that vacuum, rentals were allowed to flourish throughout the city and officials have now found themselves trying to retroactively address their impact in the community, a process that has left many unhappy.

The updated ordinance is expected to come back to the council for a second vote on July 11 and will go into effect 30 days later.

The revisions are likely not the final word on short-term rental operations in Santa Rosa.

The ordinance calls for staff to return with potential language for a ballot measure next year that would ask voters to weigh in on allowing rentals in the city, a play by Fleming to keep discussions open.

Fleming, speaking Wednesday, said while the rules don’t represent the more sweeping changes her constituents have been calling for, they provide some new protections for residents.

“While I’m disappointed that the council did not implement a full solution last night, there are some reasons to be hopeful,” she said.

Debate shows council divide

During public comment ahead of the vote, neighbors described how the stream of visitors coming and going every weekend had disrupted the fabric of their neighborhood and become a nuisance.

Many called for a blanket ban on nonhosted rentals and noted other cities in the county and Napa had taken stricter action years ago.

Rental owners and operators, on the other hand, said stiffer regulations would be a blow to their business and hinder their long-term financial planning.

Many said the current ordinance was working as intended and that noise and other concerns had been minimized in the past few months with better enforcement by the city.

Most council members didn’t support a staff recommendation to limit operators, including those now in business, to one hosted and one nonhosted permit.

The change would’ve meant that operators who have more than one nonhosted property would lose their right to operate the remaining properties once the current permit expires.

Staff said the limit would potentially reduce overconcentration in certain neighborhoods and allow more people to participate in the business.

The proposal had already generated legal threats from operators with more than one property who said they had invested thousands of dollars into their rentals under existing rules and that the action infringed on their rights.

It’s not clear if such a challenge would have held up in court.

City Attorney Sue Gallagher told the council on Tuesday that the courts had found in other cases that regulations or prohibitions of short-term rentals didn’t constitute what’s known as a government taking and that property owners could still sell their property or rent it long term. The courts have also found the public benefit of protecting residential neighborhoods is greater than the burden on an individual property owner, Gallagher said.

The council extended a moratorium on new applications for nonhosted rentals in place since the council capped the number of those types of rentals citywide at 198. And they set policies that would essentially phase out rentals across the city as homes are sold, permit holders die or permits are revoked, a move Fleming and Vice Mayor Dianna MacDonald supported.

The city has approved permits for 171 nonhosted rentals and 15 are under review.

Most council members, however, steered clear of greater restrictions on where rentals could operate or further limiting the number of rentals allowed citywide.

Sonoma County and other cities in the region have imposed vacation-rental bans in neighborhoods with a high concentration of rentals or capped how many nights per year a home can be rented.

Fleming said the impact of rentals on neighborhoods disproportionately impacts her district, including Fountaingrove, Hidden Valley and the McDonald Avenue areas.

She said she had championed initiatives in their districts and called on them to support her in return.

“I need your help because my residents are suffering tremendously,” she said. “I ask you to really consider if this was plaguing your neighborhood, your residents, the way that it was mine and I said to you ‘It’s not me, it’s not my neighborhood,’ how would that make you feel about your ability to work with your council to address residents’ needs?”

Fleming pressed her colleagues to consider banning nonhosted rentals in residential districts and allow them in commercial areas and in the downtown.

She offered to support for grandfathering in existing operators if they supported other limitations.

She likened nonhosted rentals to hotels, which would otherwise not be allowed in residential areas, and said they didn’t don’t conform with city zoning laws or the general plan.

The other council members weren't swayed.

Council member Eddie Alvarez said while he didn’t intend to discount the concerns of residents in District 4, he said he didn’t think it was appropriate for government to restrict what people can do with their properties.

Council member Chris Rogers favored asking voters to decide where rentals should operate but opposed council members taking such action and said he didn’t want to move rentals from one area of the city to another “where perhaps we think people will complain less.”

The discussion provided a rare public glimpse at the decision-making process on the dais as council members tried to reach a consensus. It also was the first major debate for the newly composed council, which seated two new members and a mayor in December.

Fleming said though she is disappointed voters will hopefully have a chance to have their voices heard at the ballot box.

"That will give us the best chance for people to determine what they want and how they want their communities to look and, regardless of the outcome, the people will have a say and that’s pretty powerful,“ she said.

You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On Twitter @paulinapineda22.