San Diego Reopens Vacation Home Rental Applications

News Summary

San Diego is reopening applications for Tier 4 Short-Term Residential Occupancy (STRO) licenses in Mission Beach, the first chance in 2.5 years. The application process will begin on July 1, allowing whole-home rentals that operate over 20 days a year. Initially restricted in November 2022, a lottery system will determine processing order after the closure on August 15, 2025. Current license holders can apply but must cancel existing licenses if approved for a Tier 4 license. The city also plans to increase the Transient Occupancy Tax to help fund community services.

San Diego is reopening applications for vacation home rental licenses in Mission Beach, marking the first opportunity in 2.5 years. The application process for Tier 4 Short-Term Residential Occupancy (STRO) licenses will commence on Tuesday, July 1, at 10 a.m. These licenses are specifically designed for whole-home rentals that operate more than 20 days per year within the Mission Beach Community Planning Area.

The city had initially restricted Tier 4 applications in November 2022 after reaching capacity almost immediately. In the interim, San Diego has been managing a waitlist for applicants eager to secure these licenses. The reopening of the application process represents a significant shift in the city’s approach to vacation home rentals, as previous measures were established to control the proliferation of such properties.

The STRO Ordinance, which mandates obtaining a short-term rental license, was adopted by the San Diego City Council and subsequently approved by the California Coastal Commission in 2021. This ordinance aims to balance options for vacation rentals with the need for long-term housing availability, and it also includes restrictions on the number of licenses issued. Currently, the number of short-term vacation rental licenses is capped at 1% of the city’s overall housing supply.

Applicants for the Tier 4 licenses will have a 45-day window to submit their applications, which will close on August 15, 2025. Following the closure of applications, city staff will implement a random lottery system to determine the order of processing and the positions on the waitlist.

Existing holders of Tier 1-3 licenses will have the option to apply for a Tier 4 license but will be required to cancel their current licenses if their new application is approved. To qualify for the application, hosts must maintain an active Transient Occupancy Tax certificate and ensure that all Rental Unit Business Taxes are in good standing.

District 2 Councilmember Jennifer Campbell commented on the regulations, noting their effectiveness in returning rental units to the market for residents while still providing vacation options along the coast. This approach aims to preserve the character of neighborhoods and meet the needs of both short-term visitors and long-term residents.

Additionally, the Transient Occupancy Tax (TOT) is scheduled for an increase starting May 1, which is anticipated to generate significant revenue for the city. The expected earnings are about $82 million in 2025 and could exceed $1.04 billion over the next decade. The adjusted TOT rates will rise from the current 10.5% to tiered rates of 11.75%, 12.75%, and 13.75% based on proximity to the San Diego Convention Center.

This increase in the TOT is expected to provide funding for essential services such as street repairs, shelters for the unhoused, and enhancements to the San Diego Convention Center. The program aims to address pressing needs within the community while managing the balance between tourism and local housing demands.

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Additional Resources

• Times of San Diego: City of San Diego to Reopen Vacation Home Rental Applications
• San Diego Union-Tribune: Arizona Couple Says Goodbye to San Diego
• Fox 5 San Diego: Applications for Mission Beach Whole Home Short-Term Rental Licenses
• Encyclopedia Britannica: Short-Term Rentals
• KSBY: Election Results
• Google Search: San Diego Transient Occupancy Tax