San Diego Vacation Rental Lottery: How to Qualify

The City of San Diego has finally released more information regarding the San Diego vacation rental lottery system. This details how owners and managers of vacation rentals may be rewarded via their Good Actor Plan, and how the plan impacts the upcoming short-term vacation rental license application process.

12/1 Update: Tier 3 License Application Reopened!

According to the City of San Diego’s short-term residential occupancy website:

The Application period for Tier 3 & Tier 4 applications has closed. Please note that although both the Tier 3 and Tier 4 application period has closed, a lottery will only be conducted for Tier 4 applications. More information regarding Tier 3 applications will be forthcoming in the next week, including the reopening of the Tier 3 application process.

When will I receive my Tier 3 license?

Tier 3 Hosts will receive an email on or before December 16th with a link to pay the Tier 3 license fee. Once the license fee is paid, Hosts will receive the Tier 3 STRO license via email.

How will the San Diego Vacation Rental Lottery Process Work?

The City of San Diego will publish the lottery application submission dates on the Office of the Treasurer’s webpage. Once the lottery application process has concluded, if the total number of tier 3 and 4 applications is greater than the number of licenses available, the completed application will be weighted by the “good actor” priority system.

When Will the Lottery Application Process Begin?

According the to the City of San Diego’s implementation timeline, the application process will begin on October 3, 2022. The application period will close on November 30, 2022, with the lottery draw being conducted on December 16, 2022.

If selected, those in tier 3 and 4 will be required to pay their license fees by January 6, 2023. The implementation of the law will take place on May 1, 2023.

Who Can Apply for a Vacation Rental License?

Applications are only eligible from “a natural person who has the legal right to occupy the dwelling unit and to allow short-term residential occupancy. Only one completed and accurate application per dwelling unit will be considered for a license, regardless of the Tier.”

How does the San Diego Vacation Rental Lottery Define a “Good Actor”?

City Council defined a good actor as a Host that has:

1. Paid Transient Occupancy Tax (TOT), whether directly to the City or through an Online Hosting Platform,

2. Recent booking activity, and

3. Less than three (3) verifiable complaints.

How Does the San Diego Vacation Rental Lottery Prioritization (Good Actor) Work?

According to the City of San Diego’s memo, released on January 7, 2022:

“In order to fulfill the City Treasurer City Charter section 45 responsibilities, prioritization will include Hosts who completed TOT registration as of the date of the first reading of the Ordinance. As a result, for purposes of lottery prioritization, a good actor will be defined as applicants who:

1. Demonstrate compliance with the registration and tax remittance requirements as outlined in the SDMC Chapter 3, Article 5, Division 1 – Transient Occupancy Tax (TOT),

2. Have verifiable proof of booking activity of more than 90 days per calendar year, and

3. Have no verifiable violations for the dwelling unit in the prior two (2) calendar years.  Note verifiable violations are those in which a penalty was issued by Development Services Department.

Lottery prioritization will be based on a weighted scale with points assigned as defined in the table below. To satisfy the direction provided by City Council, staff has assigned higher priority points to the three criteria memorialized during the previous City Council meetings.

Although priority points will not guarantee a license, it will improve the probability that good actors will receive a license and still provide an opportunity for a license to newcomers in the industry. A priority point will be granted to applicants meeting each criteria”

A calendar year is typically defined as twelve (12) consecutive months commencing on January
1 through December 31. However, given that full certification from the California Coastal
Commission is not anticipated until this coming fall of 2022, using only prior calendar years ignores the most recent, relevant activity. To ensure that all activity immediately preceding the
application period is considered and the intent of the original memo is fulfilled, the table below
replaces “calendar year” with “previous year.” Previous year, as used for purposes of priority
point eligibility, is defined as the previous twelve (12) month period.

San Diego Vacation Rental Lottery Criteria and Priority Weight Points

Criteria	Priority Weight Points
Hosts in compliance with Transient occupancy Tax (TOT) registration requirement as of STRO Ordinance First Reading (February 23, 2021)	1
Hosts with proof of booking activity of more than 90 days per calendar year and operating during the previous consecutive (maximum of 3 points) a. One (1) to two (2) calendar years; or b. More than two (2) calendar years but less than five (5) calendar years; or c. Five (5) calendar years or more.	1 2 3
Hosts with verifiable proof of payment of Transient Occupancy Tax (TOT) per the previous consecutive year for (maximum of 3 points): a. One (1) to two (2) calendar years; or 2. More than two (2) calendar years but less than five (5) calendar years; or 3. Five (5) calendar years or more.	1 2 3
Hosts operating during the previous two (2) calendar years and have no verifiable code violations during the previous two (2) calendar years.	3
Maximum Weight Possible	10

As an example, if the license application period opens in September 2022, the previous year
will be September 1, 2021 through August 31, 2022.

“Prioritization criteria are in addition to the minimum application requirements as outlined in the STRO ordinance section 510.0105. For an application to be considered complete and submitted, Hosts must certify under penalty of perjury that all information contained in the application, including prioritization criteria, is accurate. A Host’s failure to provide adequate documentation may result in the removal of prioritization points or revocation of a license. Licenses issued to Hosts that are determined by the City to contain false or inaccurate data may be revoked.”

Why Create a Good Actor Plan?

The City of San Diego memo states:

“Prioritizing good actors who have long standing economic activity in the STRO industry advances the purpose of the Ordinance by: 

• Allowing the City to continue to maximize TOT to protect the cleanliness and public safety of our neighborhoods, while continuing to support the small businesses that rely on tourism resulting from STRO, 

• Preserving low cost accommodations at the coast consistent with the requirements of the Coastal Act, and 

• Supporting the City’s desire for safe and livable neighborhoods by reducing the strain on San Diego Police Department and Code Enforcement related to STRO operation.

What is the San Diego Vacation Rental Lottery Methodology?

Via to the City of San Diego memo:

“After passage of the published lottery application submission date, if the total number of Tier 3 or Tier 4 applications received are greater than the number of licenses available, completed applications will be weighted as outlined above. The lottery, including weighting, will be conducted by staff from the Performance and Analytics Department and will be done by random lottery as presented to City Council on October 11, 2021.”

Why was the Proposed Star Date of July 1, 2022 Pushed Back?

According to the City of San Diego’s Short-Term Residential Occupancy website:

“In the coming months, City staff will submit a request to City Council to amend the STRO license requirement date, extending the effective date up to 9 months, following unconditional certification by the CCC.  The additional time will provide adequate notice to Hosts in the industry who are currently accepting advance bookings for their properties.”

UPDATE – May 17, 2022

The San Diego City Council has officially approved the CCC’s recommended amendments to the ordinance. The CCC will vote again in the coming weeks to pass the amended ordinance submitted from the San Diego City Council. The San Diego City Council will then have up to nine months to enact the ordinance, once unconditionally approved by the California Coastal Commission.

What is the Status of the California Coastal Commission’s Review?

On March 9, 2022, the California Coastal Commission approved a modified version of the City of San Diego’s short-term rental ordinance. “Once the California Coastal Commission unconditionally certifies the STRO ordinance as a local coastal program amendment, an ordinance implementation date will be set, including the requirement to obtain a STRO license.”

UPDATE – August 10, 2022

The California Coastal Commission has unconditionally approved the City of San Diego’s STRO regulations. The City will have up to nine months to enact the ordinance.

What are the Applications and Licensing Fees?

Tier 1 – $25 application fee; $100 license fee

Tier 2 – $25 application fee; $225 license fee

Tier 3 – $70 application fee; $1,000 license fee

Tier 4 – $70 application fee; $1,000 license fee

What are the Differences Between Tiers?

Licenses will be issued based on tier regulations.

Tier One License: Short-Term Residential Occupancy for 20 Days or Less Per Calendar Year.

• This license is required for home sharing or whole home, short-term vacation rentals throughout San Diego for an aggregate of 20 days or less per calendar year.
• A license may only be issued for host’s primary residence.
• A license may only be issued for a dwelling unit per calendar year.
• Expires two years from the date of issuance, but may be renewed based on Municipal Code section 510.0106(d).

Tier Two License: Home Share for More than 20 Days Per Calendar Year.

• This license is required for home sharing short-term vacation rentals throughout San Diego for an aggregate of more than 20 days per calendar year.
• A license may only be issued for host’s primary residence.
• The host must occupy the primary residence for no less than 275 days of the calendar year in which the property is rented as a home share, short-term vacation rental.
• Expires two years from the date of issuance, but may be renewed based on Municipal Code section 510.0106(d).

Tier Three License: Whole Home Short-Term Vacation Rentals Outside of Mission Beach

• This license is required for home sharing short-term San Diego vacation rentals, outside of Mission Beach, for an aggregate of more than 20 days per calendar year.
• Requires guests stay for at least two consecutive nights.
• Expires two years from the date of issuance, but may be renewed based on Municipal Code section 510.0106(d).
• The total number of licenses issued shall not exceed 1% of the total housing units in the City of San Diego, excluding Mission Beach. The number of available licenses will be updated every two years. However, the number of licenses available shall not be reduced below the previous two-year total.

Tier Four License: Whole Home Short-Term Mission Beach vacation rentals

• This license is required for home sharing short-term Mission Beach vacation rentals, for an aggregate of more than 20 days per calendar year.
• Requires guests stay for at least two consecutive nights.
• Expires two years from the date of issuance, but may be renewed based on Municipal Code section 510.0106(d).
• The total number of licenses issued shall not exceed 30% of the total housing units in the City of San Diego, excluding Mission Beach. The number of available licenses will be updated every two years. However, the number of licenses available shall not be reduced below the previous two-year total.

Where Can I Read More About the San Diego Vacation Rental Regulations and the City’s Plans?

You can learn more by reading our previous blog post on the San Diego Vacation Rental Regulations, including what constitutes the TOT tax, how to apply for a certificate and more.

How Can Titan Beach Rentals Help?

First, we have a long history of paying the TOT on time for all the San Diego vacation rentals we manage, and have managed previously. As such, we can guarantee a timely and accurate payment of San Diego’s Transient Occupancy Tax, thus putting your property in good standing prior to applying for a Mission Beach vacation rental license, or one elsewhere throughout San Diego.

If you have rented your property in the past, or have/had a vacation rental manager, we can work with them to verify records and documentation which will be required for submission in order to qualify as a “good actor”, thus increasingly the likelihood of earing a license.

Secondly, we can provide some insight into how you may be able to apply, and be granted, multiple licenses if you own more than on San Diego vacation rental. 

Lastly, we care about our local communities and police our vacation rentals in accordance with the Good Neighbor Policy, with the local community quiet hours, plus we require a signed vacation rental agreement for every reservation made.