Short Term Rental Conversion Appeal on Tuesday

By Anna Marie Gott

This is an open letter to Santa Barbara’s Mayor and City Council who will hear the Appeal of a project denied by the Historic Landmarks Commission (HLC) on Tuesday, July 18th. The project consisted of the conversion of a residential home to permanent use as a hotel/Short Term Vacation Rental (STR) (i.e., overnight accommodations).

If you are concerned about this issue you should attend the City Council Meeting or send an email expressing your concerns. – The Mayor and Council Members do not hear enough from residents who have been negatively affected by STRs, while they hear from STR Operators often.

Mayor and City Council:

A quote from the 2015 Housing Element should be instrumental in the finding you make regarding the conversion of a residential home at 101 W Anapamu St. to permanent use as a hotel/STR:

“The use of residential units as short-term vacation rentals and/or only occupied as second homes poses a housing challenge to the City because these uses decrease available long-term housing opportunities for local residents as well as contribute to the increase in housing costs.”

This quote is pertinent to this and two other Appeals of hotel/STR conversions you will rule on. In each case, you should be aware that the owners never lived in the homes and that the homes were purchased solely for use as a STR or to be converted into a hotel/STR.  Two owners do not live in Santa Barbara, while one is a resident, and one owner has three homes dedicated to STR use in three California cities. – Each owner could be defined as a speculative investor, as they are subsidizing their ownership by converting a home to use as a STR or hotel/STR and removing a home from the ownership or rental market of residents.   

STRs and any hotel/STR conversions “decrease available long-term housing opportunities for local residents” and “contribute to the increase in housing costs.” – It is impossible to see how this project could be approved knowing the City’s severe housing shortage and that the conversion of this unit would open the door to more speculate investors doing the same. – It would be more unfathomable if this was approved knowing an unlimited number of conversions could occur annually when a single unit is converted.  

The loss of housing, the severe local and State housing shortage, the hotel vacancy rate and the number of illegal STRs, were critical factors in HLCs unanimous denial of the project.  Who made the decision was also a deciding factor. Staff only recently instructed the HLC and Architectural Board of Review (ARB) that the loss of housing could factor into the “sound community” plan finding and that THEY, NOT Staff, were responsible for making it. – Not one conversion was approved by either reviewing body once they considered the “sound community” plan finding.

Staff states that development trends indicate that the City will likely exceed construction objectives and the loss of a single housing unit is balanced by new construction. Here is what’s not considered: the reported 800 homes that have been lost to illegally operated STRs, the fact that speculative investors or Commercial Hosts, with second homes or multiple units, will benefit disproportionally when converting units to hotels/STRs, and finally renters are not considered – and they make up 60% of residents. Also not considered, is that the number of homes lost to illegally operated STRs is dwarfed by un-built ADUs and AUDs – which are expected to be radically more expensive than the current (older) housing stock. – But perhaps more importantly, Commercial Hosts, who could eviscerate rental housing markets in places like Santa Barbara, when they remove multiple units from the market at once, were not considered either.

Staff’s acknowledgement that a single unit conversion does not fall under the Condominium and Hotel Conversion Ordinance, and thus not subject to any annual limit of hotel/STR conversions, strengthens the case for denial and adds to the tally of things not considered. – The majority of hotel/STR Applications are single unit conversions, with 10 units operating or approved and 19 in the pipeline, while 3 Applications have a total of 17 units. – Another 8,900 units lie within the R-4 and commercial zone where hotels are permitted. – Given the cumulative effect each successive hotel/STR conversion has on the housing stock this Ordinance, and Staffs application of it, cannot be considered to be sound planning because by Staff’s rational every conversion would be approved.

Today, Santa Barbara has a residential vacancy rate under 1%, an average hotel vacancy rate of 24.38% and spiraling housing costs with double digit increases. This has resulted in decreases in disposable income and an exodus of moderate and middle income earners from the City as housing costs rise and become scarcer, due to illegal STRs. At the same time the City has made substantial concessions to create new housing units, but they will remain largely unrealized for years even as concern grows about the number of entitled AUD projects failing to secure building permits. – Given these circumstances it’s inconceivable that elected officials could believe that encouraging non-residents and residents to permanently convert housing units to hotel/STR use could ever be “consistent with the principles of sound communing planning.”

Reason and logic should prevail in this decision. The conversion of a single residential unit to a hotel/STR use should not be found to be “consistent with the principles of sound community planning” at this time. Residents need housing, not more hotels. – I urge you to uphold the HLC’s decision or to deny approval of this project. Further, I request that you ask Staff to come back with a discussion on a moratorium on hotel/STR conversions until the residential vacancy rate is 5% for a sustained period of time.

Meeting Details:

•       Tuesday July 18th at 2:30pm
•       735 Anacapa

Email City Council:

hschneider@santabarbaraca.gov, jdominguez@santabarbaraca.gov, ghart@santabarbaraca.gov, hwhite@santabarbaraca.gov, rrowse@santabarbaraca.gov, cmurillo@santabarbaraca.gov,
fhotchkiss@santabarbaraca.gov

Future hotel/STR Appeals:

•     August 1st, 812 Jennings Ave.
•     August 8th, 2017 Bath St.

More Information:

     homesnothotels@gmail.com