The City of Morro Bay’s short-term rental ordinance was recently up for discussion.
There are currently 193 short-term rentals, or STRs, in Morro Bay. That number includes 173 full home rentals, 9 commercial, and 11 home share rentals. Morro Bay resident Mark Stephens owns one of them.
“Home-sharing is to allow the property owner to rent space in their home or ADU which we have,” said Mark Stephens, short-term rental owner.
Stephens says with Morro Bay being a big tourist town, it drives people to want to obtain a short-term rental permit. According to the city, there are currently 186 properties on the STR permit waitlist.
“Their source of revenue would be to rent those houses out so 186 sounds like a lot but in the scheme of things, I don’t think it’s out of the realm of possibility,” Stephens said.
According to a staff report prepared by Community Development Director Airlin Singewald, “The City’s budget relies heavily on TOT revenue.” Within the 2023-2024 fiscal year, transient occupancy taxes from STRs brought in $707,641.
Nearly a dozen people spoke at last Tuesday’s City Council meeting, some voicing concerns about STR owners who pay the minimum $500 TOT requirements to keep their permit but rarely rent out their property, taking permits from people who could use them year-round.
“There are numerous homes that are not being used, yet they have a license. They might rent them out once or twice. They’ve got money, they can afford to just write a check and be done,” said Michelle, a Morro Bay resident.
However, the city cannot revoke permits based on how often rentals are used. The city attorney advised it would have to be looked at on a case-by-case basis.
“It’s not just simply stating that they are going to revocate it, we have to go through a process that’s outlined in state law. They do have property rights,” said Robert Schultz, City Attorney.
With the help of a technology service company, the city ran a search of online STR hosting platforms in September and November of last year and did not find any STRs illegally operating, according to the staff report.
The city has since terminated its contract with the company and will need to decide soon on a new vendor to keep actively monitoring illegally operating short-term rentals in town.
“I do believe that they should enforce the policies on it,” Stephens said.
The city is currently conducting a permit audit for the year. No new STRs will be approved until the audit is complete.
