Owners of vacation rentals could get hit with a hefty fine for violating the City’s “Short-Term Rental Ordinance,” after the City Council voted to amend its municipal code.
The Council has set fines for violations to the STR Ordinance at just $100 for a first-time offense; $200 for a second offense within a year; and up to $500 for a third and subsequent citations in the same year.
But a 2021 change in State Law, Senate Bill 60 (SB 60), changed everything.
SB 60 allows local jurisdictions to greatly increase fines for STRs “that pose a threat to health or safety,” reads a report from Community Development Director Airlin Singewald.
SB 60 hiked the fines up to $1,500 fir a first offense; $3,000 for a second offense within a year; and, $5,000 for additional violations within a year, according to the report.
The amended City Ordinance has a broad definition of public safety threats. “As specified in the proposed ordinance,” the report explained, “violations that pose a threat to public health or safety include but are not limited to the operation of a short-term rental without a valid short-term vacation rental permit, material false representation on any short-term vacation rental application or self-inspection form, or a material violation of any operational requirements.”
Singewald’s report continued, “There are limitations on how these fines can be imposed. For example, they cannot be imposed on first-time failures to obtain necessary STR permits. As required by the State Law, the proposed ordinance also references the hardship waiver process.”
That hardship process basically says that anyone getting an administrative citation has the right to request an administrative hearing. A written request must be sent to the police department.
The cited person must be notified of the sharing date no less than 309 days in advance, and if there’s a report on the violation written by the City staffer involved, the cited person must receive a copy of that report no less than 10 days before the hearing.
The City Manager picks the hearing officer, who cannot be a City employee, according to the Muni Code (Sec. 1.03.080).
Under the City’s STR program, the number of “full home” permits is capped at 175 for residential areas, and there’s no cap in commercial zones. There is also no cap on so-called home-share STRs, wherein the owner lives in the home and rents out a room or two to visitors.
STRs also cannot be in close proximity to each other, with a 175-foot buffer required between them.
STRs are also subject to the City’s Transient Occupancy Tax of 10% of the cost of a night’s stay, and STRs are also included in the Tourism Business Improvement District, a 3% of a night’s stay charge that funds the local tourism bureau, dba Visit Morro Bay.
The City hired a company, HdL to search the Internet for STRs being advertised in Morro Bay and used that report to compare to its list of permitted STRs to root out anyone illegally operating within the City.
As of Jan. 1, 2025, the City started requiring “all existing STR permit holders to renew their permits, as required by the STR Ordinance. This will involve completion of a renewal application and City inspection to verify compliance with applicable standards, including, but not limited to, parking and signage requirements.”
When the STR License Program first started, the permit limit was set at 250 but was later reduced to 175 by the City Council. There are more than that who hold permits and the City is not issuing any new permits for residential zoned STRs until the number drops below that 175 limit, through attrition.
