As we enter the summer of 2021, many COVID-19 restrictions are easing up, vaccines are widely available, and Americans are breathing a sigh of relief. It’s nearly vacation season, and Santa Cruz County is becoming a hot spot for prospective travelers. This year, the season brings especially good tidings for homeowners: according to the county guidelines, travel restrictions and the moratorium on new vacation rentals have been lifted! As a result, property owners in Santa Cruz County can look forward to a more prosperous summer than they endured in 2020 – specifically one in which the COVID-19 pandemic does not hinder profits.
Moratorium on Issuance of New Vacation Rental Permits Lifted
On January 26, 2021, the Board of Supervisors for Santa Cruz County approved amendments to the Vacation Rental Ordinance established in June 2020. TheVacation Rental Ordinance placed a moratorium on new vacation rentals countywide and established several other rules meant to limit the travel industry. However, as vaccines rolled out this year and COVID-19 cases began to drop, the county lifted the moratorium and resumed processing applications for new vacation rentals.
What is a Vacation Rental?
A vacation rental, also known as “short-term rental” or a property intended for “transient rental use,” is defined as an entire home or a portion of a residential home that guests can rent for a maximum of 30 days. In Santa Cruz County, vacation rentals can include single-family houses, multi-family dwelling units (such as duplexes and triplexes), condominiums, or townhouses. That sounds like a broad category, but note that a vacation rental is different from a hosted rental or a bed and breakfast, whose definitions we break down below.
A hosted rental “is a short-term rental (less than 30 days) of one or two bedrooms in a home, where the property owner will stay on-site during the rental. A Hosted Rental is different from a ‘Vacation Rental,’ which is a short-term rental of an entire house.” As of March 26, 2019, the county had reached its limit of 250 Hosted Rental Permits, and no additional permits are available at the time of writing.
On the other hand, a bed and breakfast is “a dwelling in which not more than five bedrooms are available for short-term rental not to exceed 30 days.” Bed and breakfast inns are currently permitted in the following residential districts: Residential Agricultural (RA), Rural Residential (RR), Single Family Residential (R-1), and Residential Multifamily (RM); however, they are not permitted in the Beach Residential (RB) zone district. A property has to meet specific standards and requirements before it can be considered a bed and breakfast, which differs from a vacation rental.
What else does not qualify as a vacation rental?
Unfortunately, the limitations to what exactly qualifies as a vacation rental will pose a barrier to some. According to Santa Cruz County Code, “Habitable accessory structures, nonhabitable accessory structures, accessory dwelling units (“ADUs”) constructed under the provisions of SCCC 13.10.681, 13.20.107, or 13.20.108, and legally restricted affordable housing units shall not be used as vacation rentals.” In other words, many auxiliary structures and affordable housing units are off-limits as vacation rentals.
Benefits of a Vacation Rental
Passive income and additional revenue streams build a fast track to financial freedom, and owning a vacation rental is a powerful way to make that vision a reality. The travel industry is set to take off in a rapid post-COVID recovery, and those who own vacation rentals are well-positioned to profit handsomely from that explosion. At a time with historically low interest rates, it’s easier than it has been in decades to turn a serious profit on your investment in a short-term rental property, especially in as idyllic a location as Santa Cruz County.
How to Obtain a Vacation Rental Permit?
If you already have a vacation rental permit, you are all set to start benefiting from the lifted moratorium! Get ready for a busy summer season as eager tourists with stockpiled vacation days and months of lockdown behind them start to take advantage of disappearing travel restrictions and flock to sunny California as their escape. But don’t forget to check your permit to see if you need a renewal; don’t wait until the last minute and miss out on this unique summer opportunity!
For those seeking new permits, there are a few steps that must be taken.
Currently, all vacation rentals require county review, but homes with fewer than four bedrooms do not require a public hearing. Instead, the Planning Director or a designee through the Level IV administrative use permit process will have the final say on granting those permits. If your property has a little more space, there’s an additional step: New applications for vacation rentals consisting of four or more bedrooms will be considered at a public hearing.
There Are Always Exceptions!
The opportunity for new permits is exciting, but there’s only so much space to go around, and some regions are all booked up. Live Oak Designated Area (LODA), the Seacliff/Aptos/La Selva Beach Designated Area (SALSDA), and the Davenport/Swanton Designated Area (DASDA) are currently at capacity. That means there is currently a waitlist for new permits in these areas. Loda is capped at 262 vacation rental permits; SALSDA is capped at 241 vacation rental units; and DASDA is capped at 3 vacation rental units.
If you are undeterred and willing to exercise some patience, you can join the waitlist. The county specifies that “Permits will be issued on a first-applied, first-issued system, with evaluation of permit availability occurring on a bi-annual basis (June 1 and December 1). Unfortunately, waiting isn’t free; There is a $145.00 annual wait list fee that applicants must pay to maintain a spot on the list. To submit a wait list request, please fill out the Wait List Request Form.”
One more exception: These guidelines do not apply to Pajaro Dunes, where an existing development permit governs vacation rentals.
Applying for a Vacation Rental/Renewal Permit in Santa Cruz County
All permit application submittals are being accepted and processed remotely this year via the department’s online “ePlan” portal. To apply for a Vacation Rental Permit or Renewal, please visit the ePlan Review Page.