What about a Short Term Rental?

Dax Nollenberger
- Dax Nollenberger

What about a Short Term Rental?

An excellent way to offset the rising housing cost is to rent out all or a portion of your new home for a specified period of time throughout the year. 

A question I get frequently as a real estate agent in Santa Cruz County is, can I Airbnb this property? Unfortunately for me, the answer isn’t a clear yes or a clear no. As with any government-regulated industry, there are extensive rules and regulations. 

The short answer, of course, is maybe. With an ever-increasing housing shortage, there has also been increasing pressure to restrict short-term rentals (STR for short). The first thing to know is who the governing bodies are for the specific location the home you are looking at is in. 

Before we dive into who regulates Santa Cruz County Vacation Rentals, we must first define what a Vacation Rental (or Short-Term Rental) is. A Vacation Rental is a residential home or portion of a residential home that is rented out for less than 30 days. Now, let’s talk about who regulates STRs in Santa Cruz County. 

Three different governing bodies determine short-term rental restrictions in different parts of Santa Cruz County. They are the City of Capitola, the City of Santa Cruz, and Santa Cruz County.

City of Capitola 

The City of Capitola is by far the easiest to understand. The city established a Vacation Rental Use area. If your home is in the area, you can rent short-term. If it is not in the area, you cannot. Applications, business licenses, permits, taxes, and fees are required. 

For more information about City of Capitola Vacation Rental rules and regulations, click HERE. 

City of Santa Cruz 

The City of Santa Cruz breaks Short-Term Rentals into two distinct categories, “Hosted” and “Non-Hosted”. Hosted can be defined as “an STR where the owner lives in the home for more than 6 months out of the year”. Non-Hosted is defined as “an STR where the owner doesn’t live in the home or where the owner occupies the home for less than six months out of the year”. Unfortunately, the City of Santa Cruz is not issuing any more new “Non-Hosted” Short-Term Rental permits (though that could change in the future). 

Key Notes: 

  • No additional “Non-Hosted” permits will be issued. 
  • Only 250 “Hosted” permits will be issued at any given time. 
  • Properties with an ADU are ineligible for STR in the City of Santa Cruz. 
  • Permits are non-transferrable. 
  • Must be the majority owner’s principal residence. 
  • Only one short-term rental is allowed per parcel #. 

Hosted Rental Permit Cap: 250 hosted permit rentals will be issued. 

  • No Waitlist: City has not hit its cap on hosted permit rentals yet.

For more information about City of Santa Cruz Vacation Rental rules and regulations, click HERE.

 

County of Santa Cruz

The County Short-Term Rental regulations are the most expansive both in geography and complexity. The first thing to note is how each area is identified by the county. There are four area designations in the County, listed below:

  • “Live Oak Designated Area” or LODA essentially runs south of Portola Dr and borders the Harbor to the west and 41st Avenue to the east. 

  • “Seacliff/Aptos/La Selva Designated Area” or SALSDA essentially runs south of Highway 1 and borders the City of Capitola to the west and covers the La Selva Beach Community to the east. 

  • “Davenport/Swanton Designated Area” or DASDA essentially covers the town of Davenport and extends north to the intersection of Highway 1 and Swanton Road and includes all parcels within one-quarter mile of Swanton Rd. 

  • Non-Designated is defined by all areas in the county excluding the designated areas above and both the City of Capitola and the City of Santa Cruz. 

To access the interactive GIS map, click the link, select “Data”, and search “Vacation Rentals” Link

Now that the areas are defined, let’s dive into the topic of property qualifications. The County has three distinctions when it comes to short-term rentals: Vacation Rental, Hosted Rental, and Bed and Breakfast.  

 A “Vacation Rental” is defined as a “single-family dwelling unit, duplex, or triplex (including condos and townhomes), but not including apartments or manufactured homes in a mobile home park”.  To access the Vacation Rental Ordinance (as of 4/22), click HERE. 

A “Hosted Rental” is defined as a “dwelling unit, where a long-term resident acting as host occupies one-bedroom in a dwelling unit while one or two legal bedrooms are rented for the purpose of overnight lodging for a period of less than 30 days”. To access the Hosting Rental Ordinance (as of 4/22), click HERE.

A “Bed and Breakfast” is defined as “a dwelling in which not more than five bedrooms are available for short-term rental not to exceed 30 days.” They are currently permitted in zones Residential Agricultural (RA), Rural Residential (RR), Single Family Residential (R-1), and Residential Multifamily (RM). For more, visit sccoplanning.com and download the Bed and Breakfast Inn Brochure HERE. 

While I always advise those looking at property for rental purposes to research the latest ordinances and contact the County of Santa Cruz Planning Department, I provided a cliffs notes version of some of the important restrictions as it relates to Vacation and Hosting Rental Permits. While there is significant overlap between Hosting and Vacation Rental ordinances, the key notes below are specific to Vacation Rentals unless otherwise noted with an H&V tag. 

Key Notes: 

  • Parcels with ADU’s are not eligible for vacation rental permits (H&V). 
  • Rental permit and transient occupancy tax registration is required (H&V).
  • Permit is non-transferrable. Sales included* (H&V).
  • If there is more than one dwelling on a property (like a duplex), the owner may live in a dwelling that is not used as a vacation rental. 
  • Generally, for the Designated Areas, no more than 19% of the total parcels on a specific block can be vacation rentals with a few area exceptions (H&V).
  • On-site parking requirements: one on-site space for 1-2 BR units, and a minimum of two on-site spaces for 3 or more BR units.
  • Only one vacation rental is permitted per parcel (H&V).
  • Affordable housing is not eligible (H&V).  
  • Waiting list request is void upon transfer of ownership (H&V). 
  • Vacation rental permits must be renewed every 5 years (H&V).
  • There is No Numerical Cap on Vacation Rentals in the Non-Designated Area.

To access the SCCO planning website, click HERE. 

So, how many permits are available in the County? None, right now. 

Designated Area Caps: 

  • LODA: 280 total vacation rental permits; 262 vacation rental permits and 18 hosted rental permits.
    • Waitlist: YES; 21 currently waiting. 
  • SALSDA: 286 total vacation rental permits; 241 vacation rental permits and 45 hosted rental permits. 
    • Waitlist: YES; 48 currently waiting. 
  • DASDA: 7 total vacation rental permits; 3 vacation rental permits and 4 hosted rental permits. 
    • Waitlist: YES; 0 currently waiting. 
  • Non-Designated: 250 total vacation rental permits. 
    • Waitlist: YES; 5 currently waiting.
  • Non-Designated: 183 total hosted vacation rental permits. 250 County-wide minus designated permits available by area (LODA: 18 SALSDA: 45 DASDA: 4).
    • Waitlist: YES; 5 currently waiting.

Short-term rental permits in Santa Cruz County are in short supply. The lack of long-term rental housing has forced increased regulation in the short-term rental sector. The city of Santa Cruz no longer issues permits to non-owner-occupied properties, the City of Capitola is limited to a small neighborhood of homes, and Santa Cruz County has a waitlist for every designated vacation rental area. While the lack of Short-Term Rental options may be discouraging, the right agent with the right expertise can help find the best path to still meet your real estate goals. 

Interested in talking through creative solutions that meet your real estate goals/needs? Give us a call. 

Thanks for reading. Reach out for all of your real estate needs. 831-227-5847.

Dax

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