Santa Cruz is a picturesque city with its clean beaches, stimulating arts and culture, and abundance of outdoor activities. As one of the most visited places in Central California, Santa Cruz offers numerous activities for members of the whole family. Due to the city’s growth in popularity over the years, investors and homeowners are looking to leverage their primary, secondary, and investment homes by renting them out to tourists. However, this increased popularity has led to more city regulations. Anyone considering turning their home into a vacation rental needs to keep the following information in mind.
What is considered a vacation rental in the City of Santa Cruz?
The City of Santa Cruz regulates vacation rentals, or short-term rentals, according to Municipal Code 24.12 Part 18.
This ordinance “provides a set of standards governing the renting or leasing of residential property on a short-term basis. The [ordinance intends] to allow short-term rental of residential properties within the City while protecting the City’s long-term housing stock. The ordinance also ensures that short-term rentals (STR) do not become a nuisance to the community, or threaten the public’s health, safety or welfare. The ordinance requires the issuance of a residential short-term rental permit before a homeowner may operate an STR.”
According to Code 24.12, a short-term rental property refers to either part of a home or the entire home being rented out for fewer than 30 days at a time.
Short-term rentals can either be hosted or non-hosted.
A hosted short-term rental “is defined as an STR where the owner lives in the home for more than six months per year, although the owner does not need to be present during the … guests’ stay. For duplex and multi-family properties, the ordinance also allows an owner to utilize one unit on-site for STR purposes as long as the owner resides at another unit on the property for more than six months per year.”
By contrast, a non-hosted short-term rental “is defined as an STR where the owner does not live in the home or lives in the home for fewer than six months per year.”
Can I apply for a short-term rental in the City of Santa Cruz?
As of November 2021, the City of Santa Cruz is accepting applications for STRs. Owners of short-term rental properties can apply for a permit directly from the director of the Department of Planning and Community Development. However, some limits may apply, as the city does NOT currently issue the following applications:
- Non-hosted/non-occupied STR permits
- STRs in accessory dwelling units (ADU)
- STRs for properties that have an ADU (existing, legally-operating ADU STRs are permitted)
Permits are issued only to the owner and primary resident of the rental unit, and only two STR permits are allowed (with exceptions).
Furthermore, “eligible short-term rental [properties] must not be subject to any outstanding building, electrical, plumbing, fire, health, housing, police, or planning code violations or enforcement actions, including any notices of violation, notices to cure, orders of abatement, cease and desist orders, or correction notices.”
How can I obtain a short-term rental permit in the City of Santa Cruz?
In the City of Santa Cruz, 250 owner-occupied STR permits are available on a first-come, first-served basis. Only one STR is permitted per parcel. Applicants must submit an STR permit and Transient Occupancy Tax (TOT) Certificate.
Interested individuals can go to the city’s online system, which allows them to apply for an STR permit and TOT certification. In addition, they can file and pay the STR permit fee, their current monthly TOT, and past due TOT balances; close their rental property account; and more. It is important to note that applicants are required to pay a one-time, non-refundable permit fee, found in the Planning Fee Schedule. All fees are adjusted on an annual basis.
Individuals need to submit the following materials as a part of their application. *All items must be drawn to scale.
- Plot plan
- Floor plan
- Photograph of the outside of the building with the address visible
- Two forms of principal residency proof
Additionally, applicants need to enroll in the City’s Rental Inspection Service (RIS). The current RIS fee can be found in the Planning Fee Schedule and must be paid annually. More information about the RIS program can be found on the Residential Rental Services page.
The Department of Planning and Community Development reviews several factors, as outlined in the code. Here’s a brief summary of what applicants can expect officials to review:
- Timeliness and completeness of an application
- Payment of the processing fee
- Evidence of compliance with TOT provisions
- Submission of plans relating to the short-term rental property
- Past rental violations committed by the applicant
- False, misleading, or fraudulent statements made by the applicant
- Whether the issuance of a permit to the applicant is in the interest of public health, safety, and welfare
If a person has an existing STR, a new TOT Certificate number is provided during this process. If an applicant had a short-term permit revoked in the past, they are unable to apply for a new permit until two years from the date of the prior revocation.
For people who are unable to submit their application online, the City of Santa Cruz allows them to use a printable PDF version. It is available online or at the Planning Department Public Counter at City Hall and can be submitted by mail or in-person during regular business hours. It is important to note that every rental is required to have a permit!
What can I expect once I’m approved?
Once a permit is approved, here’s what a property owner must do to maintain good standing:
- Fully comply with the Santa Cruz Municipal Code
- Report annual TOT payment activity to the city
- Comply with the city’s residential rental inspection program
- Complete any corrections found during any inspections within a reasonable time period, as determined by the director of Planning and Community Development
Furthermore, applicants must comply with all operation standards outlined in Santa Cruz Municipal Code 24.12 Part 18. Here’s a brief snapshot of what is included:
- A maximum of two persons per bedroom, plus two additional guests, is allowed, regardless of the age of the occupant.
- Only one rental agreement may be in effect in a short-term rental at any time.
- Parking at the STR is limited to one vehicle per one-bedroom unit, two vehicles per two- or three-bedroom unit, and one additional vehicle per additional bedroom for units in excess of three bedrooms.
- Quiet hours are between 10:00 p.m. and 8:00 a.m.
- No special events are allowed (e.g., weddings, parties, etc.).
- A local contact person must be designated to be available twenty-four hours per day, seven days per week. This person must live within twenty miles of the rental for the purpose of being able to physically respond within thirty minutes to the property.
- STR rules should be posted inside the location and readily visible to all guests.
- Renters must be informed of trash and recycling days and where to place receptacles.
- STRs must have a sign identifying the structure that includes the local contact person’s information.
Violation of any associated codes can result in the permit being revoked.
Can I market my vacation rental online?
Those who are ready to list their home on the vacation rental market are welcome to leverage a hosting platform, including AirBNB or VRBO. However, per the city, all postings must include the city-issued short-term rental permit number and transient occupancy registration certificate number.
Is my short-term rental permit transferable?
The short-term rental permit is non-transferable, except when a transfer qualifies as an exemption from property tax reassessment pursuant to the California Revenue and Taxation Code Section 60 et seq., as determined by the Santa Cruz County assessor.
Community Development via phone at (831) 420-5247.