Santa Cruz Considers Limiting Vacation Rentals To Ease Housing Crunch

The city of Santa Cruz is considering a dramatic step to try to ease the housing crunch by limiting vacation rentals.

The neighborhood near Twin Lakes Beach in Santa Cruz is popular with vacationers. The beach is just across the street and a large portion of the homes are vacation rentals.

Just take a quick look at a map of Airbnb properties in the area, some rentals are going for around $395 a night for the entire home.

Homes like that are what the city of Santa Cruz calls an unhosted vacation rental; the entire house is vacant and available for rent. There are about 300 of them across the city.

Now, the city is now considering an ordinance to completely phase them out.

Scott Collins with the city of Santa Cruz said, “We’re the third least affordable community in the entire country as it relates to housing costs.”

Collins says by phasing out these full-time vacation rentals, the city hope it will ease the housing crisis by increasing the supply of rental homes for locals.

“So the 300 units is significant, that could be for a firefighter, police officer trying to stay in the neighborhood, or teacher or nurse really struggling to stay in the community,” Collins said. “It’s going to take more than one solution to solve this problem and we can’t guarantee we’re going to solve it at all. That’s the hard part. But this is a major component of it. There is no silver bullet for sure.”

Derek Timm works at Santa Cruz County Rental and Visitors Alliance and he’s not a fan of the proposed ordinance.

“Villifying 200 to 300 vacation property owners is not going to have an impact on this situation,” Timm said.

He argues the ordinance not only shuts out millions of dollars in tourism spending, but he says property owners will resist.

“So if the city decides to ban them from using them as vacation rentals, most of the owners — we’ve polled them — they will keep them vacant or about 2 percent of them said they would return those properties to the rental market,” Timm said.

If this proposed ordinance passes, it would crack down hard on violators by raising the fine from $500 to $2,000.

The city council will be taking public comments over the next few months prior to voting on the issue later this year.