Living in a Rental Paradise?

news1_housingThe debate over a county vacation rental ordinance continues
It’s 3 a.m., you’ve got a big meeting in the morning and the tourists staying in the vacation rental next door are rocking out to “Pour Some Sugar on Me.” You could call the Sheriff’s Office, but since the homeowner lives out of state, it’s unlikely that your simple reprimand will be the end to your sleepless nights.

Scenarios like these are becoming more and more common in Santa Cruz County, where there are a known 570 vacation rentals. With the advent of the Internet, it’s not hard to see why it’s a goldmine industry.

But along with the tourists and supplemental income have come neighborhood complaints of increased traffic, excessive garbage, late night partying and limited street parking. In response to the grievances of locals, Santa Cruz County First District Supervisor John Leopold proposed a Vacation Rental Ordinance to the Board on June 15, 2010.

Provisions of the ordinance include an administrative use permit and transient occupant tax registration, limit tenancy to one per week, restrict occupancy to four people per bedroom and require on site parking. A contact for the vacation rental must be within 15 miles of the home and the property cannot be used for weddings or corporate events.

In a town where tourism is the No. 1 industry, it’s not surprising that Leopold’s ordinance has vacation rental owners and local businesses enraged, pitchfork in hand.

At a public hearing on Oct. 6 in Live Oak, where 12 to 13 percent of the houses are vacation rentals, 150 fervent community members voiced their opinions—some in favor, others opposed—about the ordinance before the Housing Advisory Commission, which concluded the meeting with a 7-2 rejection.

In response to its dismissal, the Planning Department created a revised ordinance, which was accepted in a 9-1 vote at the Nov. 3 Housing Advisory Commission meeting. The new version includes a registration system by means of a ministerial permit, the requirement of in-county management, a condition that the Sheriff’s Office be reimbursed for responding to complaints, a dispute resolution process and necessary signage for each rental that includes management contact information.

However, minutes after the HAC approved the simplified ordinance, the Planning Department surprised everyone at the meeting with the announcement that they had created a third ordinance without the public’s knowledge. The third proposal has a provision for public input regarding vacation rental permits—after someone applies for a permit, the Planning Commission sends out a letter to all houses within 300 feet. Only if the homeowners approve of the permit will it be issued.

For Anthony Abene, spokesman for Good Neighbors of Santa Cruz (GNSC), a nonpartisan group of more than 200 county citizens, the third ordinance is an unwelcome sneak attack. “We thought the Planning Commission came up with a reasonable compromise,” says Abene, referring to the second revision. “I’m concerned that we’re going to be ignored after all this work we’ve put into attending meetings and such. We’re hoping they won’t throw away all the public input.”

While GNSC is in support of peaceful, quiet neighborhoods, they believe that Leopold’s proposed regulations will drive away tourists and, in doing so, severely harm the local economy. For GNSC, a realistic ordinance would apply to everyone, require people to register their vacation rentals, make signage with contact information for the owner mandatory, require an in-county contact instead of in-county management and allow for a two-hour response time for complaints (rather than require the contact to be within 15 miles of the home). They also oppose the public hearing process, saying it gives too much power to neighbors and competing vacation rentals.

At the other end of the spectrum sits Friends of Live Oak Neighborhoods, a coalition of Live Oak residents who feel that a strict ordinance is a no-brainer. Referring to vacation rentals as “unmanaged mini-motels” in a Nov. 7 letter to the Santa Cruz Sentinel, Marcella Hall wrote on behalf of the coalition in support of Leopold’s crackdown.

“Would you want to live next to a home with that kind of turnover of vacationers in ‘party mode?’” she asked readers, calling the ordinance “a very small step in trying to keep many of our neighborhoods from becoming commercial strips.”

That very image of businesses infiltrating residential communities is what prompted Leopold to propose an ordinance in the first place. The idea of regulation, explored eight years ago by his predecessor First District Supervisor Janet K. Beautz, but never resolved, has become increasingly imperative, according to Leopold, with the recent proliferation of vacation rental homes.

“When you have 600 units of commercial activity in neighborhoods, it’s an appropriate place for land use regulation,” says Leopold, who cites Capitola as a city that has had successful regulation of vacation rentals for a decade. “I’m not willing to forsake neighborhoods for tourism—we need a healthy balance.”

Yet GNSC maintains that a vacation rental increase of 1 to 2 percent each year is hardly an invasion. After all, Abene adds, vacation rentals have been abundant in Santa Cruz for more than 100 years.

Since many vacation rental owners screen residents prior to their stay and have their own house rules, should everyone have to pay for the sins of a few bad apples?

For the Santa Cruz County Conference and Visitors Council (CVC), the answer is far from black and white. To the council, a sensible ordinance would include a permitting process, whereby vacation rental owners would have to pay transient tax, an in-county contact to address problems and a dispute resolution process.

What concerns CVC’s CEO Maggie Ivey most, however, is the prospect of a seven-night minimum, as is the policy in Monterey and Carmel—when “most tourists don’t have the time or money to stay more than three days”—and the ordinance’s impact on the real estate market. “The tourism industry understands neighborhood integrity,” says Ivey. “But there is a small number of chronic offenders, whose actions will affect a lot of people.”

Of those impacted, Kevin Moon, Farmers Insurance executive and former Santa Cruz City Council candidate, is convinced that the vacation rental owners are the victims and that the legislative process for the ordinance is a farce designed to trick citizens into believing that their opinions matter in county decision-making.

“The ordinance is a total infringement on people’s property rights,” says Moon. “This is an old-time political move wherein the politicians propose an aggressive-type of ordinance that makes citizens upset, then they’ll back it up and back it up until they get what they want—they make the people think they won, when really the politicians won.”

Exactly how public opinion will factor into the ordinance’s outcome is yet to be seen. At the Nov. 10 Planning Commission hearing, 47 of 61 speakers argued in favor of either no ordinance or the revised version recommended by the Housing Advisory Commission. Still, a fourth proposal was discussed by the Planning Commission which would have a separate set of rules for Live Oak than for the rest of the county, require existing vacation rentals to be grandfathered countywide, either have no limits on turnover or a two-day minimum, maximum occupancy would be two per bedroom plus two additional, signage, a permit fee and parking limited to two cars on-site and two on the street.

As confirmed by Leopold’s recent email newsletter, the debate is far from over. Since a lawyer hired by three out-of-town vacation rental owners has presented a legal challenge, the environmental review process for the ordinance will have to be extended. The Planning Commission is scheduled to take a final vote on Feb. 23, 2011, after which the draft of the ordinance will go before the Board of Supervisors and will need approval from the Coastal Commission.

With four proposals on the table, hours of testimony and the unavoidable conundrum of not being able to please everyone, to say the good-intentioned Leopold has opened a can of worms may be the understatement of the year.

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