Encinitas cracks down on vacation rentals

Several hundred Encinitas homeowners have been targeted by a city crackdown on unregistered vacation rentals that are advertised on websites like Airbnb.

In the last three months, the city has sent letters to 305 homeowners stating that an ordinance passed in 2006 requires a permit and tax payment on short-term rentals, which are private homes rented for 30 consecutive days or less. Roughly 165 letters are still to be mailed.

Encinitas officials said a high number of unregistered vacation rentals prompted the enforcement push. According to a city analysis last year, only about one-fourth of the 688 short-term rentals in Encinitas that are listed on various home-sharing websites had city permits.

Lance Hetherington, a property owner who received a letter, said he didn’t realize he’s required under city law to pay a 10 percent tax on rental revenue and obtain a permit that costs $140 annually.

“I wasn’t up to speed on permitting, but I am now,” Hetherington said.

The two-bedroom house he’s rented to travelers for roughly the past year is on the same lot as his small home. Hetherington, who was unemployed for three years, said he listed it through HomeAway.com to help pay the bills. When it isn’t booked, it’s a place friends and family can stay, he said.

The city’s letter gives homeowners 14 days to apply for a permit and start paying taxes — or cease renting and advertising their short-term vacation rental.

Hetherington plans on pursuing the former option, even though he’s not exactly thrilled by the 10 percent tax, part of which is earmarked for beach replenishment projects.

“I’m OK with paying taxes to the city. I see why it’s necessary. I just think they’re a little high,” he said, adding that he’ll either have to raise rates or absorb the loss.

The city passed its short-term rental ordinance more than a decade ago — well before the boom in online rental websites — due to complaints over rowdy out-of-towners. The ordinance was enforced on a complaint basis until last year when the city hired a temporary employee to track unregistered rentals.

Mayor Catherine Blakespear said enforcing the ordinance is important for the sake of neighborhoods. A key component of the law, she said, is a requirement that landlords display a sign outside their home with a name and telephone number in case of any problems.

“Systems work best when neighbors are able to communicate with each other directly, follow the rules in place, and not involve city code enforcement,” Blakespear said.

Coastal cities like Encinitas — described on websites such as Airbnb and VRBO.com as a charming seaside community, close to golden beaches and good surf — have seen vacation rentals explode in popularity over the past several years.

Del Mar and several other cities are still wrestling with how to regulate rentals, some of which have been operating for decades. Some residents argue the rentals result in a revolving door of strangers with little regard for neighborhoods. Others say they’re an important source of income for owners and also boost the local economy.

Blakespear said while she periodically hears concerns about short-term vacation rentals in Encinitas, the city hasn’t discussed strengthening its rules.

“It doesn’t seem like we’ve reached a fever pitch around this issue, and I do think that it’s because we’ve had an ordinance in place for some time,” she said.

Since beginning proactive enforcement on Oct. 24, Encinitas hasn’t issued any fines, which start at $250 and reach $1,000 upon fourth and subsequent violations.

“Once we go through this initial effort, I think there wouldn’t be as much leniency, because people should be on notice now,” said City Finance Director Tim Nash.

The unlicensed rentals were identified after a temporary city employee — armed with the online listings — determined the general area of each rental and then matched the online photos to images on Google Street View. Those pictures are included with the letters.

Helen Jones said she was surprised to receive a letter because her property hasn’t been offered as a short-term rental since the summer of 2015. Still, she said, she complied with the tax and permit requirements.

She also sent a response to the city clarifying that, though her listing was still online, it was done only as a matter of convenience, in case she decides to one day rent it out again.

“Just to make sure I’m OK with the city, I’ll take the listing down,” she said.

Nash said most of the homeowners he’s spoken with so far said they simply weren’t aware of the city’s ordinance. Others — like Jones — have sent responses saying their units are no longer being rented, and a few were landlords who didn’t realize their long-term tenants were renting to vacationers.

The city’s initial attempt to enforce the registration rules hit a snag months ago when the first batch of 40 letters went out — and half went to property owners not hosting vacation rentals. Nash attributed the error to bad data from a consultant that the city ultimately scrapped in favor of the temporary employee.

“When we sent out those letters that weren’t accurate, yes there were some folks that were upset. But since then, I would have to say most people understand why we’re doing this,” Nash said.

He said the city budgeted $15,000 for the temporary employee, and paid the consultant $4,188 — some of which it might recoup.

Whitlock is a freelance writer for The San Diego Union-Tribune.