Board weighs cap on vacation rentals as SLO County falls behind on housing goals
A little over halfway through the current housing needs cycle, San Luis Obispo County has given the green light to build half of the homes it’s projected to need by 2028 — but who can afford to live in them?
That’s the question the Board of Supervisors tried to answer at its Tuesday meeting as it received a report on the county’s Regional Housing Needs Assessment progress.
In short, the answer is: very few people outside of top earners both within and outside of the county.
However, while problems such as a recent rapid rise in vacation rentals and a lack of home production to meet the needs of the county’s less wealthy are easy enough to identify, choosing the right policy for the job is not.
“We’re having empty second homes, we’re having a proliferation of vacation rentals, and at the same time, we’re fighting a housing supply problem,” District 2 Supervisor Bruce Gibson said. “It seems to me that the low-hanging fruit lies in looking at the housing stock we have and and preserving that.”
SLO County lags behind on several housing goals
Just as notably, the county only had permitted 1% of the required 801 homes for very low-income households over that time.
In San Luis Obispo County, very low-income is defined as 30-50% of the area median income of $93,398, low-income households make 50-80% of the AMI, moderate-income households make 81-120% of AMI and above-moderate-income households make more than 121% of the AMI, according to the U.S. Census’ 2019-23 data.
According to the staff report, around 69% of San Luis Obispo County’s population falls into the moderate- or above-moderate-income level, while 14% of the county’s households are low-income and another 17% are very low-income.
Supervisors spar over best approach to create more housing quickly
Following the staff’s update on the county’s RHNA progress, the board discussed vacancy rates, the number of vacation rentals in operation and how it can make up the gap on housing production at lower income levels.
Gibson said he viewed the housing update as a sign that trying to meet the requirements of the RHNA simply by building more stock may not be enough to meaningfully improve affordability across the county.
“It sure seems like we’re working on encouraging, again, a supply-side approach that concentrates on housing, essentially, that we don’t need,” Gibson said.
Gibson said he wants to see the board look into a second-home tax, a countywide cap on vacation rentals and bringing back the discontinued Inclusionary Housing Ordinance’s in-lieu fees for developers, all in the service of converting second homes and vacation rentals back into homes for residents.
County administrative officer Matt Pontes said the second-home tax may not be possible to implement, as the city of San Francisco’s Empty Homes Tax was ruled unconstitutional by the San Francisco Superior Court in October 2024.
Gibson, Paulding and District 3 Supervisor Dawn Ortiz-Legg indicated they were interested in exploring a tax on vacant homes, with the aim of raising $8-10 million per year to fund affordable units, along with the idea of restricting the number of vacation rentals.
Ortiz-Legg said she was supportive of looking into a vacation rental cap, noting that hotel businesses have been negatively impacted by the proliferation of vacation rentals.
While the board wasn’t in alignment on all the potential policies Gibson pushed, it made a first step by instructing staff to look into fully recovering the cost of operating the county’s code enforcement program, which investigates zoning and rental issues.
As is, the cost of offsetting the 1.5 full-time equivalent employees who deal with vacation rentals would likely come out to an annual fee of around $250 to $300 per vacation rental, Pontes said.
Ultimately, the board voted 5-0 to discuss a ban on vacation rentals, setting a date in October.
This story was originally published May 2, 2025 at 9:00 AM.
