Vacation Rentals in Santa Cruz

View from a Vacation rental in Seacliff

View from a Vacation rental in Seacliff

Vacation rentals have been a hot topic in Santa Cruz as of late. Earlier this year the County adopted a cap on the number of homes that could be rented out as vacation rentals in specific locations. One of these locations was Seacliff in Aptos, and the issue became bitterly divisive amongst property owners in the area. Many people had bought their home under the impression that they could then rent it out to help cover the costs (though many did so illegally), while others grew tired of an empty neighborhood, especially in the midst of a region-wide housing crisis. Ultimately the issue was resolved, at least enough, through some basic compromises.

However, the impact that vacation rentals may be having on the housing stock is not something that has gone unnoticed. In light of their recently updated Accessory Dwelling Unit (ADU) ordinance, the City of Santa Cruz completed a snapshot inventory of known ADU units in early summer. Though informal in nature, the inventory showed that many of these units, perhaps hundreds, were being rented out to short term visitors. It should also be known that only 15 ADU units have been officially registered with the City, and only these 15 are currently paying the hotel tax (11%). This meant that a substantial number of ADU’s were being rented out as vacation rentals illegally, having a potentially serious impact on the availability of what would otherwise be permanent rental units.

City leaders, led by Mayor Lane, soon introduced legislation that would explicitly prohibit all ADUs within the City from being used as vacation rentals, a move that sparked an outcry from local homeowners. Many turned up at public meetings saying that this was a violation of private property rights, that people built these supplemental units with the understanding that they could rent them out as they so choose. Some Council Members responded that the units were never intended to be anything other than permanent units (under the supposed original intention of the ordinance), and that every little bit of housing stock counts, but ultimately the issue proved too divisive.

Instead the City has now begun the process of studying the full impact that all vacation rentals are having on the local housing market, and they aren’t just looking at ADUs. Over a 90 day period, City staff will be logging on to various websites such as Airbnb and VRBO, among others, and tracking the total number of unique units. After the 90 days the Council can choose to take up the issue again, this time with new information, or wait until next year.

However, it is now expected that the City Council will consider a temporary moratorium on all new vacation rentals, of all types, to be discussed at their September 29th meeting. The move to limit any new additional vacation rentals before the conclusion of the study marks a preemptive stake in the ground about what is important to Council. Despite the obvious economic dependency on tourism, some Council Members believe (and are willing to bet) that the impact on housing is simply too great to ignore. A moratorium, while temporary, would hold the issue at a standstill until more information is received.

Enact a Temporary Moratorium on Vacation RentalsThis would ban the development of any new vacation rentals within the City of Santa Cruz until the completion of a city wide study on how vacation rentals are impacting the housing stock is completed. The study is set to be completed by early December, but may take longer. This would also apply to any pre-existing vacation rentals that are being rented out illegally, who would not be allowed to register with the city during this moratorium, and instead could still be shut down via continued neighborhood complaint.



  1. Joan Fuhry says:

    I don’t think this is a yes or no issue. All ADUs and vacation rentals could registered. once a year hold a lottery for short-term rental permits, limited in number. This is one way to be fair to those who have units they want to rent out as vacation units yet still preserve some stock for month-to-month rentals or one year leases. I don’t think it’s fair to put any restrictions on individual rooms within private homes.

  2. lindarosewood says:

    Robert, do you know which office at the City is doing the “logging into Air BnB” research? Because I’m in contact with Murray Cox, the creator of Inside AirBnB and he’s going to make that Santa Cruz data public and searchable on Monday Nov 16. I think this information will be very useful to anyone wanting to research how many of these homeowners have turned their ADUs into non-TOT-paying vacation rentals.

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