Santa Barbara extends short-term rental enforcement program

A pilot program in Santa Barbara designed to cut down on illegal short-term rentals (STRs) has been extended for another year. So far, the city has investigated more than 150 STRs, filed 25 cases in court, and collected $596,000 in back taxes, fees, penalties, and interest.

The city authorized the program in May 2023 and began operations in August 2023. For the pilot program, the City Attorney’s Office hired three special investigators and a financial analyst. The team gathers evidence, communicates with operators, and visits properties. Team members start by encouraging owners to cooperate voluntarily. If that doesn’t work, they can move on to civil or criminal charges. The city can punish STR law violations with a maximum penalty of $1,000 or six months in jail.

The program was initially given a budget of $1.175 million, but it’s spent less than $100,000 so far. Enforcement is expected to start costing more as the program continues, according to Mayor Randy Rowse. 

“I know the low-hanging fruit comes first. I am sure the expense vs. revenue side is going to change dramatically in the next year, so I am glad we have a cushion because they are going to get harder and more expensive to do,” Rowse said. It’s estimated that more than 1,100 STRs are still operating illegally in Santa Barbara.

Santa Barbara STRs are allowed in commercial areas zoned for hotels, as shown in this map. They’re banned in residential areas of the city, so they’re illegal in most inland neighborhoods. 

However, STRs are allowed in coastal areas due to a 2021 California appeals court ruling. 

That decision overturned a 2015 law prohibiting most STRs from coastal areas of the city. The 2015 law was challenged by a vacation rental property manager, supported by the California Coastal Commission. The commission has become more active in short-term rental debates in recent years, often coming down on the side of allowing STRs to preserve coastal access.

Following the 2021 appeals court ruling, the city is only allowed to enforce penalties for coastal STR violations when it receives a nuisance complaint about a property or if there is an accessory dwelling unit (ADU) at the property. However, officials can be more proactive against illegal vacation rentals located inland. 

Short-term rental operators are required to register with the city for business tax certificates, collect transient occupancy tax (TOT) from guests, and pay the tax to the city monthly. While Airbnb and Vrbo collect local lodging taxes on behalf of their hosts at the time of booking in some California cities, neither marketplace collects taxes for hosts in Santa Barbara, so hosts are solely responsible for TOT compliance.

Avalara MyLodgeTax can help automate and simplify tax compliance for hosts. For more on lodging taxes in California, see our state vacation rental tax guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.