Arroyo Grande to debate home stays

Some Arroyo Grande residents who advertise a room rental or two in their homes for vacationers say such “home stays” bring more tourism revenue to the city, encourage owners to maintain their properties and make living on the Central Coast more affordable.

Opponents of home stays, however, say they are not a good fit for their neighborhood, and are asking city officials to prohibit them.

The debate is set to heat up Tuesday when the Arroyo Grande City Council considers new regulations for vacation rentals and home stays, or short-term room rentals in owner-occupied homes.

With the proliferation of temporary housing and vacation rental websites such as Airbnb and VRBO.com, a number of cities — including San Luis Obispo — are trying to determine how best to track, regulate and collect tax revenue from them.

Last November, the San Luis Obispo City Council agreed to create an ordinance to allow home stays. Officials estimated doing so would bring an additional $45,000 to the city through transient occupancy tax, or bed tax.

It’s unknown how much revenue similar room rentals might generate for Arroyo Grande.

The city doesn’t have rules in place regulating vacation rentals — homes that are rented for 30 days or fewer but are not owner occupied — or home stays, and city planners don’t know how many exist within the city.

But planners estimate the city might collect about $350 to $1,500 per rental unit each year in bed tax, not including the fees would-be renters would pay to obtain a permit.

The proposed ordinance would require property owners of vacation rentals to obtain a minor use permit and a business license, and to pay the same transient occupancy tax to the city that hotels pay.

The same terms would apply to home stays, which are defined as owner-occupied units where a maximum of two rooms are available to rent.

Over the past few years, city staff has received inquiries about whether the city regulates vacation rentals — some from people seeking information about renting their home, some from those making a complaint about an operation nearby.

The city hasn’t tracked the complaints, but Assistant Planner Matthew Downing said it receives several complaints a year about noise, traffic and other issues.

In a letter to the city, three homeowners who maintain short-term rentals wrote that they provide a unique experience for a variety of travelers and generate money that stays within the community.

“As on-site homeowners, we are sensitive to noise, litter, overcrowding, parking difficulties and other anti-social behavior and are on hand to ensure that these things do not occur,” states the letter signed by Gay Groomes, Joe Klamon and Robin Rinzler.

It continues: “Due to extremely high guest satisfaction ratings, STR (short-term rental) tourists are far more loyal, visit more frequently, stay longer, spend more and recommend Arroyo Grande more often to friends, neighbors and business associates.”

Nearly 40 people in one neighborhood, however, signed a petition asking the council to deny home stays in the city. (At least one of the short-term rentals operates in the same area.)

The petition states that residents support vacation rentals of non-owner-occupied residences but believe home stays are not a good fit for the neighborhood.

Resident Michael Howard, who submitted the petition, said not many people are likely to be able to afford to own a second home in Arroyo Grande to turn into a vacation rental.

But allowing home stays is “basically giving a green light to every single resident in the city to essentially turn their house into a hotel,” he said. “And I have a problem with that.”

He thinks the city should wait and see how other cities handle the issue, or allow home stays in mixed-use areas but not residential neighborhoods. Arroyo Grande isn’t New York, or even San Luis Obispo, Howard said — it’s a bedroom community and should remain so.

The Arroyo Grande Planning Commission has recommended the council approve the new rules for vacation rentals and home stays. Proposed regulations came twice before the commission; in addition, the city held two community meetings to get more feedback.