SLO County city is cracking down on vacation rentals with new rules, penalties
Atascadero is taking action against the growth of short-term rentals through a new ordinance that would set limits on how many units can be permitted and the type of buildings that can be used.
At its Tuesday evening meeting, the Atascadero Planning Commission voted unanimously to recommend an ordinance designed to address concerns about short-term rentals voiced by the City Council during its Oct. 22 strategic planning session.
In that planning session, members of the City Council expressed concerns about noise and parking complaints related to the rentals, along with a lack of any inspection or verification on whether the city’s existing rules are being followed.
Planning Commission chair Tori Keen said the ordinance was intended to keep Atascadero’s short-term rental market from getting out of control by requiring owners to live in their rentals as their primary residences.
“What the City Council is trying to do is say, ’We like it the way it is right now. We don’t want it to explode,’” Keen said. “We don’t want 132 units to turn into 200, 300, 400 units, so we’re trying to get in before it is a problem.”
New ordinance would have limited type, number of vacation rentals
Prior to Tuesday’s meeting, Atascadero already had several rules in place for its existing 132 licensed short-term rentals.
Under the existing regulations, these rentals can operate out of residential units with the approval of a home occupation business license, so long as the home was not an accessory dwelling unit and was not deed-restricted as an affordable unit.
Only one vacation rental is allowed per single-family or multi-family property and could only be rented to one party at a time under the existing regulations.
Mixed-use buildings were also limited to a maximum of 40% of their units operating as short-term rentals, as allowing more than that would trigger hotel building code standards.
Owners must pay a license fee of $184 to operate their vacation rental, which is renewed annually for $4, and register to pay transient occupancy tax based on its profits.
Under the new proposed ordinance, prospective vacation rental owners would have to get a permit from the community development director, have a business license issued and pay for an annual permit that sets standards for how to comply with code standards on owner occupancy and safety, according to the Planning Commission staff report.
Though the business license step of the process would have remained unchanged, the new annual permit requirement would require the city to review incoming applications for compliance with the new rules.
Additional proposed rules include requiring owners with units in single-family neighborhoods to live in their rental units — an occupancy that would be verified by the Homeowners Primary Residence Tax Exemption from the San Luis Obispo County Assessor’s Office.
Under that rule, when applying for the permit, owners would have to provide a contact available 24/7 to address concerns or complaints, along with proof of primary residency.
Owners must publicly post a notice outside their property in advance of getting permit approval from the city, and short-term rentals will be limited to one rental party consisting of a maximum of two vehicles, and must set quiet hours under the new ordinance.
The ordinance also would establish penalty fees for properties that don’t meet the new standards, and it proposed giving the city the authority to revoke permits for an owner’s failure to comply.
Fees for breaking the terms of the ordinance are anticipated to range between $800 and $1,000, with the City Council expected to adopt a fee at a future meeting, according to the staff report.
Short-term rental owners voice concerns on new rules
During public comment, short-term rental owner Sid Bowen said vacation rentals are not causing the same housing shortages in Atascadero as they are in Monterey, Santa Barbara and Lake Tahoe.
Bowen said as a more rural community, the effects of vacation rentals are less pronounced, and taking action against them now would only serve to raise costs associated with enforcing the ordinance.
“If you don’t have a problem, you don’t need to fix it,” Bowen said. “If you think you might have a problem in the future, then you can develop some standards for the future, but right now, we don’t have a problem.”
Templeton Vacation Rentals owner Sarah Maggelet said while there were components of the ordinance related to safety and neighborhood relations that were worth pursuing, other aspects of the ordinance would introduce unintended consequences for owners.
Maggelet said an ordinance more focused on the actions of bad hosts and tighter code enforcement would be more palatable to owners and guests alike.
“There are hosts that are not being responsible,” Maggelet said. “The important thing is not to paint the entire industry with a broad brush and do something like an owner-occupied regulation.”
“Your tourists don’t want to stay in Grandma’s extra bedroom, so they just won’t come — they’ll go to Paso,” Maggelet continued. “You guys are doing such an incredible job of promoting this town — don’t lose that momentum now by putting in that kind of a Draconian requirement, because the bottom line is, either people won’t rent or they’ll go under the table.”
The Atascadero City Council will review the ordinance for final approval at a future meeting.
This story was originally published August 20, 2025 at 5:01 PM.
