Split Santa Rosa commission punts making more drastic vacation rental rule changes to City Council

A proposed citywide ban on nonhosted vacation rentals failed to get buy-in from the Santa Rosa Planning Commission on Thursday as commissioners largely passed decisions on more stringent regulations to the City Council.

The commission, in a closely watched six-hour meeting, voted 4-2 to recommend the City Council update the existing short-term rental ordinance to limit operators to owning one hosted and one nonhosted rental where the owner doesn’t live on site, among a slew of other changes.

The city has issued 226 vacation rental permits, 75% of which are for nonhosted rentals, as of Thursday, according to city figures.

Santa Rosa was relatively late to enact policies for vacation rentals less than two years ago despite the business flourishing across the North Bay over the past decade. The city has largely taken a more hands-off approach to governing where and how they can be operated.

Sonoma County and other cities in the region, meanwhile, have carved out bans on rentals in neighborhoods with a high concentration of rentals or capped how many nights per year a home can be rented.

A majority of commissioners on Thursday hesitated to support competing amendments proposed by Vice Chair Julian Peterson to ban nonhosted rentals from operating citywide and by Commissioner Terry Sanders to increase the number of rentals operators are allowed to own.

Peterson and Sanders voted against the recommendation while Commissioner Jeffrey Holton was absent.

The discussion coming from each end of the dais was illustrative of the broader divide in the community over vacation rentals.

Over two hours of public comments ahead of the vote, neighbors of rentals described how the stream of visitors coming and going every weekend had disrupted the fabric of their neighborhood, with many calling for a blanket ban on nonhosted rentals.

Rental owners and operators, on the other hand, said stricter regulations put a strain on their business and didn’t address bad actors.

In the end, the 4-2 vote came over objections from both residents seeking stronger regulations and operators wanting the status quo.

Thursday’s marathon meeting sets up a pivotal discussion in July when the council is expected to consider the updates.

Council member Victoria Fleming, whose northeast District 4 has one of the highest concentrations of rentals in the city, has supported stricter regulations and previously said she believes nonhosted rentals are an inappropriate land use in residential neighborhoods.

But there hasn’t been clear consensus during prior council discussions for a ban.

No sweeping overhaul of rules

The proposed limit on nonhosted rentals would mean operators who have more than one such property would lose their right to operate the remainder of those properties once the current permit expires. The city estimates there are about two dozen affected operators.

Senior Planner Shari Meads said limiting the number of rentals one person can own would potentially reduce overconcentration in certain neighborhoods and allow more people to participate in the business.

Commissioners also supported limiting what type of housing can be converted into rentals and adding policies related to outdoor lighting, trash and recycling, water conservation and fire safety.

Fines for code violations were also increased, pending approval by the City Council.

But the recommendations don’t represent the sweeping changes some residents had expected and it didn’t ease restrictions on nonhosted rentals as operators had hoped.

Santa Rosa officials in October 2021 approved a framework for short-term rentals to operate in the city that sought to reduce fire safety risks, preserve housing stock and protect residential characteristics of neighborhoods. The rules govern capacity and noise limits, parking requirements, ban rentals from being used for events and sets fire safety requirements.

The rules were updated last August to limit the number of rentals where the property owner doesn’t live at the home to 198 to give staff time to process a backlog of applications and work on more permanent rules. Operators hoped that cap would be lifted or increased after the rules were amended.

Following a monthslong public outreach process, staff identified more drastic changes, such as prohibiting nonhosted rentals in residential zones and addressing the cap on nonhosted rentals.

But they ultimately didn’t incorporate those changes into the proposal.

Meads said officials hadn’t received clear direction from the council to rewrite the rules and there were concerns more stringent regulations would cause existing rentals operating in good faith to become noncompliant.

Commissioners divided on new rules

The preliminary hearing is the first time the Planning Commission, which is appointed by the council, has taken up the hot button topic.

Peterson, who was appointed to the commission by Council member Chris Rogers, said allowing nonhosted rentals to continue operating in the city was a mistake.

He likened them to a commercial enterprise, which would otherwise not be allowed in residential areas, and said they are loosely regulated. It’s largely up to operators to certify they meet city standards and it has mostly been up to residents to police rentals, he said.

“I don’t see a lot of value in nonhosted rentals at this point,” he said.

He said nonhosted rentals were inconsistent with residential zoning and city general plan and recommended that they be banned.

Commissioners, in opposing Peterson’s proposed blanket ban on those rentals, said they didn’t believe it was their purview to recommend such a far-reaching measure and that there hadn’t been any direction from council to do so.

Their task was to create a policy that helps manage, not eliminate, rentals, they said.

“Until we hear from the council that they want to do away with nonhosted short term rentals, it would be hard for me to make that (recommendation),” Chair Karen Weeks said.

Peterson argued it was within the commission’s rights to do so and they had done so before as they’ve considered long-term planning blueprints.

Sanders, meanwhile, proposed raising the number of nonhosted rentals one person could own to three.

He said limiting it to one property would financially impact those who already have multiple rentals.

“To say that you now can’t do this activity tomorrow that you were able to do yesterday, I’m not comfortable with that,” he said. “Let’s not hamstring people who have been counting on this for their retirements, their income.”

Sanders, who came up short in his bid to oust Fleming from her council seat in November, was subsequently appointed to the commission by Vice Mayor Dianna MacDonald.

He pushed back on concerns that short-term rentals impact the city’s housing stock, noting that those rentals represent less than 1% of the city’s 70,000 homes. He said he didn’t see a difference between owning several long-term rentals and more than one vacation rental.

Staff, residents and operators have recognized new enforcement steps have made an improvement and the city is moving in the right direction, said Sanders.

The comments appeared to be an about-face for Sanders, who during his campaign for the District 4 seat said he would not support any use that disturbed neighborhoods.

“I oppose anything that interrupts the quiet enjoyment of one’s home. That is my north star,” he wrote in response to a Press Democrat questionnaire that asked candidates about vacation rental governance and enforcement.

Peterson said he was skeptical of the concern voiced over the potential financial fallout of stricter regulations on rental operators.

“We’re talking about people with at least one house and often more than one house in one of the most expensive property markets in the country,” he said, adding that operators could rent their home for longer than 30 days or sell the property.

Residents, operators unsatisfied with changes

Residents opposed to short-term rentals said the proposed regulations still fail to address the impact they’ve had on the city.

All but four rentals are in areas zoned for residential use.

Fountaingrove resident Erich Rail said four years after moving into his home he’s surrounded by three rental properties.

The homes have the capacity for up to 30 renters each night plus 15 daytime guests and there have been issues with parties, loud music, people parking in his driveway and a steady stream of traffic throughout the week.

Speaking after the meeting, Rail said while property managers have done a fairly good job of addressing his concerns, it’s a disturbance.

But more than that, it has disrupted the sense of community he expected to find when he and his wife decided to rebuild their home after it was destroyed in the 2017 Tubbs Fire, he said.

“We talked about leaving and one of the hardest decisions in our lives was to commit and rebuild and we were looking forward to something better than we got,” he said. “You don’t know your neighbor because you don’t have a neighbor, you’re living next to a commercial enterprise.”

“We feel isolated, in a constant state of anxiousness. You just never know how the next guest is going to be,” he said.

He acknowledged the issue isn’t unique to Santa Rosa, and while he knows there are good operators, he called for governance changes that could be beneficial to both residents and property owners. He proposed phasing out nonhosted rentals over several years and using the tax generated from the rentals to help make whole affected property owners.

Rental operators pushed back against much of the criticism and said most rentals were responsibly managed, provided key income for operators and helped support Sonoma County’s tourism economy.

Vacation rentals registered with the city reported generating nearly $1.1 million in lodging taxes and more than $1.4 million in business improvement areas assessments in 2022, according to the city.

Gary Lentz, who operates two nonhosted rentals in east Santa Rosa, said losing income from one if the limit were imposed would impact his ability to retire.

He said he began renting his home in 2015 as a way to save his house from foreclosure after being in and out of jobs for about five years in the recession. The move has helped provide for his family and create a cushion so that he can retire in a few years.

“I don’t have a pension. I didn’t have a 401K for most of my working life. This is how I was planning on putting the rest of my kids through college and retiring,” he said. “It would be a hardship.”

The city should grandfather in existing operators and impose the limit on new operators, he said.

He said he would consider taking legal action should a cap be imposed and is in talks with other operators about next steps.

“We think we have vested rights,” he said.

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