Santa Barbara ramps up enforcement against illegal STRs

Santa Barbara is beefing up enforcement against illegal short-term rental (STR) properties, with the City Council voting to allocate $1.175 million toward a short-term rental enforcement pilot program. 

Under the program, the City Attorney’s Office and Finance Department will gather data on short-term rentals throughout the city, including those operating illegally. Then the city will turn to enforcement, starting with working with operators on voluntary compliance. The city can turn to civil administrative citations and fines, or criminal prosecution, for operators who don’t cooperate voluntarily. This could include past-due lodging taxes, estimated at up to $15,000 in coastal areas and $700,000 or more in inland areas.

The city estimates that between 1,000 and 1,500 short-term rental properties are operating illegally. In zones that allow short-term rental use, Santa Barbara property owners can apply for a land use conversion permit to legally operate. 

In Santa Barbara, STRs aren’t allowed in most inland areas of the city because they’re prohibited in residential areas. Currently, the city has issued permits for 16 short-term rentals in inland areas including downtown central business areas, Coast Village Road, Milpas, State Street, San Roque, and Cliff Drive.

However, short-term rentals in the coastal area are permitted, following a 2021 California appeals court ruling overturning a 2015 law banning most STRs from coastal areas of the city.

According to the California Coastal Commission, Santa Barbara’s previous ban violated the California Coastal Act, which requires affordable accommodations to be available to the public in the coastal zone. The Coastal Commission has become more involved in local regulation of vacation rentals in recent years, often supporting short-term rentals as essential to public access. 

Regulation of short-term vacation rentals in the coastal zone must be decided by both cities and the Coastal Commission, Judge Steven Perren said in his 2021 ruling. This map shows where short-term rental homes are approved and where operators can apply for permits. 

After the 2021 appeals court ruling, the city can only enforce penalties for coastal STR violations when it receives nuisance complaints about those vacation rental properties. However, officials can be more proactive against illegal vacation rentals located inland.

The city has issued three permits for STR properties in the coastal zone, while 112 vacation rentals in the coastal area pay transient occupancy tax (TOT) but aren’t technically permitted for that use.

Short-term rental operators are required to register with the city for business tax certificates, collect 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 the hosts are solely responsible for TOT compliance.

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.