Final version adopted by Morro Bay City Council

We are excited to announce that the new proposed Short-Term Rental (STR) Ordinance for Morro Bay has finally made its way through all the municipal governmental reviews and a final version has been adopted by the City Council at the October 27th meeting. This process involved 2 review sessions by the Planning Commission and 3 different reviews/readings by the City Council.

As all of you know, the biggest issue we were fighting for was to ensure that all existing STR licensees would be “grandfathered”, i.e., not subject to the new density and maximum number of licenses (cap) regulations, AND WE GOT IT!  Therefore, all existing licensed homes will be able to stay on the market as long as they remain compliant operators and continue to renew their license. So, for you, this means that your favorite vacation home will still be available to you until the owner takes it off the market! 

In addition to the Council’s decision to abandon the lottery in favor of attrition to reduce the number of STRs in the city, below are the other significant changes made to the original proposed ordinance that was submitted to the Planning Commission and City Council:

1. 1.The maximum number of licenses allowed for full-house (non-hosted) rentals in residential areas was reduced to 175
        A. Current max allowed is 250.
        B. Hosted STRs will not be counted toward this            number and will not be limited.
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. 
3. 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.
2. All parking for STR guests and their visitors must be on-site (something our companies already enforce).
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 the city compliance personnel needed 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. Note: After this ordinance goes into effect, beware of renting homes in Morro Bay that do not have a business license number published.  They could very well be an illegal rental operation.

Next Steps:  The adopted ordinance will be sent to the California Coastal Commission for approval or modification. The new ordinance cannot go into effect until the Coastal Commission approves it which, given their packed agendas, could be quite a while. We believe 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.