SLO County beach town is cracking down on illegal vacation rentals. Here’s how

Morro Bay started cracking down on illegal short-term rentals this year to help increase compliance with the city’s permitting process and protect the character of residential neighborhoods. So how is it going so far?

“As I walk the neighborhoods in North Morro Bay ... I see so much more compliance,” Mayor Carla Wixom said. “There’s vacation homes I didn’t even know existed because now their signs are up, which is allowing an opportunity for checks and balances for neighbors.”

In January, the Morro Bay City Council directed staff to track down rentals operating without the proper permits, then voted to pause the issuance of new short-term rental permits.

On Tuesday night, Morro Bay community development director Airlin Singewald presented the City Council with an update on the process.

To start, there are three types of short-term rentals: a property in a commercial zone; a residential home share, which is a rental within the host’s primary residence; and a full-home rental, which is when the owner rents out an entire house for fewer than 30 days without living on the property, Singewald said.

The city limits short-term, full-home rentals to 175 properties in the city. As of Tuesday, there were 121 such rentals operating legally in Morro Bay, and 186 properties were on the waitlist.

Since January, the city has shut down five illegal rentals, while 86 voluntarily closed or failed to renew their permits, he said.

The city was aware of 160 short-term rentals operating legally in Morro Bay as of Tuesday, including all three types of properties. The city does not have a limit on the number of commercial short-term rentals or residential home-shares.

Some Morro Bay residents called for the city to set even stricter rules for short-term rentals.

“It is destroying the neighborhood feel,” Michelle Leicester-Cadaret said. “It’s a constant turnover of strangers in our neighborhood with our children.”

Beach-N-Bay Getaways co-owner Maggie Juren, however, said she thought the current permitting and enforcement process was working successfully.

Complying with the permitting process “has gone pretty smoothly” for her company, she said.

Meanwhile, properties unwilling or unable to comply will naturally stop operating due to the city’s recently increased enforcement of the rules.

“Please let these regulations achieve their purpose, which is to create a fair balance of providing very desirable tourist-serving accommodations, but with adequate enforcement to ensure our residential neighbors are respected,” Juren said.

Bringing vacation rentals into compliance

From January to October, the city renewed 86 short-term rental renewal permits, and as of Tuesday, the city was reviewing 45 other permit renewal applications. The owners of 27 rentals had not yet submitted applications to renew their permits, Singewald said.

The city denied two renewal applications, but those property owners were undergoing the appeal process and continued to operate.

Meanwhile, city staff were monitoring and working to close 10 to 15 unpermitted short-term rentals, Singewald said. During the past month, the Morro Bay Code Enforcement Division sent more than 12 cease-and-desist orders to unpermitted short-term rentals and issued citations of up to $500 per day to property owners who refused to comply.

In 2021, the city placed a cap on full-home rentals to limit negative neighborhood impacts, like noise and street parking.

“The cap does not apply to home shares because they have lesser neighborhood impacts, due to the requirement for the owner to live on site to manage their guests,” Singewald said in an email to The Tribune. “Home shares also tend to have fewer overnight guests, which translates to lesser neighborhood impacts compared to a full home rental.”

In January, the City Council will discuss whether to reopen the application process for new short-term rentals in residential areas.

Even if the city allows for new permits, many of the properties on the waitlist would not qualify, Singewald said.

Waitlisted properties must comply with a buffer requirement, which says that new short-term rentals must be at least 175 feet away from other short-term rentals.

“The purpose is to limit the concentration of short-term rentals and related activities in residential neighborhoods,” Singewald said in an email to The Tribune.

At the meeting, Singewald said at least half of the waitlisted properties would be disqualified because they are within 175 feet of an existing short-term rental.

“Existing short-term rentals (and waitlisted properties) tend to be concentrated in certain neighborhoods. As a result, only a small number of properties would likely qualify for a new permit,” the staff report said.

When the City Council set a cap for short-term rentals in 2021, existing rentals were grandfathered in and allowed to continue to operate.

Morro Bay resident Barry Branin called on the City Council to do something to limit those grandfathered properties. He suggested limiting their operating life to three to five years.

On a stretch of Beachcomber Drive, Branin said he was aware of at least six short-term rentals operating near each other.

“The damage to our neighborhood is tremendous,” he said.

If the City Council decided to proceed with such a policy, City Attorney Brian Stack said it would need to ensure they are not violating the rights of property owners — which tends to include the right to rent out their property.

This story was originally published October 15, 2025 at 1:52 PM.