San Diego STRO Good Actor Prioritization

San Diego Announces Short-Term Residential Occupancy Lottery – Tier 3 and Tier 4 Good Actor Prioritization

In October, the City Treasurer presented a Short-Term Residential Occupancy (STRO) lottery methodology for Tier 3 and Tier 4 licenses to the City Council. City Staff was asked to provide a plan for prioritization of good actors. On January 7, the Office of the City Treasurer released a memo outlining prioritization for good actors. Keep reading for an overview of the suggestion plan. The City also updated their website to reflect the updated application cost, which was voted on in October.

City Council has defined a Good Actor as a host who:

1. Pays Transient Occupancy Tax (TOT), whether directly to the City or through an Online Hosting Platform,
2. Has recent booking activity, and
3. Less than three (3) verifiable complaints.

Lottery Prioritization (Good Actor)
Prioritization will include hosts who completed TOT registration as of the date of the first reading of the Ordinance. As a result, for purposes of lottery prioritization, a good actor will be defined as applicants who:

1. Demonstrate compliance with the registration and tax remittance requirements as outlined in the SDMC Chapter 3, Article 5, Division 1 – Transient Occupancy Tax (TOT),
2. Have verifiable proof of booking activity of more than 90 days per calendar year, and
3. Have no verifiable violations for the dwelling unit in the prior two (2) calendar years. Note verifiable violations are those in which a penalty was issued by Development Services Department.

Lottery prioritization will be based on a weighted scale system (see image below). The point system is designed to give good actors a better chance of obtaining a license, although not guaranteed. Prioritization criteria are in addition to the minimum application requirements as outlined in the STRO ordinance section 510.0105. Additionally, hosts who have rented for two years or more and have rented their unit out for 90 nights prior to Oct. 2021 will be given priority.

Lottery Methodology
After passage of the published lottery application submission date, if the total number of Tier 3 or Tier 4 applications received are greater than the number of licenses available, completed applications will be weighted as outlined above. The lottery, including weighting, will be conducted by staff from the Performance and Analytics Department and will be done by random lottery as presented to City Council on October 11, 2021.

Updated Dates for Short-Term Residential Occupancy

Status of California Coastal Commission (CCC) Review
At the December 2021 CCC meeting, an extension of up to one (1) year to review the STRO ordinance was requested by CCC staff. The Commission approved the extension but communicated to City staff that the ordinance would be reviewed in Spring 2022. Upon review, the CCC may unconditionally certify or request changes to the Ordinance.

Licensing Requirement Effective Date
In the coming months, City staff will submit a request to City Council to amend the STRO license requirement date, extending the effective date up to 9 months, following unconditional certification by the CCC. The additional time will provide adequate notice to Hosts in the industry who are currently accepting advance bookings for their properties.

Application Submission and Lottery Dates
The license application period and lottery dates will be determined once the Ordinance is unconditionally certified by the CCC.

Next Steps

There are still many unanswered questions that need to be addressed. We are reaching out to the City to provide additional clarity and will provide an update as information becomes available. Stay tuned for details on an upcoming San Diego STRA event to provide information and updates on the latest ordinance developments.