Board weighs cap on vacation rentals as SLO County falls behind on housing goals (2025)

A little over halfway through the current housing needs cycle, San Luis Obispo County has given the green light to build half of the homes it’s projected to need by 2028 — but who can afford to live in them?

That’s the question the Board of Supervisors tried to answer at its Tuesday meeting as it received a report on the county’s Regional Housing Needs Assessment progress.

In short, the answer is: very few people outside of top earners both within and outside of the county.

However, while problems such as a recent rapid rise in vacation rentals and a lack of home production to meet the needs of the county’s less wealthy are easy enough to identify, choosing the right policy for the job is not.

“We’re having empty second homes, we’re having a proliferation of vacation rentals, and at the same time, we’re fighting a housing supply problem,” District 2 Supervisor Bruce Gibson said. “It seems to me that the low-hanging fruit lies in looking at the housing stock we have and and preserving that.”

SLO County lags behind on several housing goals

In the current 2019-28 Regional Housing Needs Allocation Plan, San Luis Obispo County must add a total of 3,256 homes to its unincorporated communities.

The most recent wave of RHNA numbers prioritized affordable housing more than previous housing elements.

While 41.9% of the homes required in the current cycle must be priced for households at the above-moderate income level, the remaining 58.1% were allocated for very-low through moderate-income households, according to the county Department of Planning and Building’s report to the board.

But in San Luis Obispo County, where home prices were reported at a median price of $966,500 by the California Association of Realtors in March, building and selling homes at a premium is the expectation, not the exception — and that’s reflected in the county’s progress through its housing goals.

Between 2019 and 2024, San Luis Obispo County approved permits for a whopping 83% of the required 1,365 above-moderate-income homes it was required to build — nearly double what it had permitted for the moderate- and low-income brackets, according to the staff report data.

As part of its discussion of how to preserve housing stock, the board also heard a report on vacancy rates in the county.

The results, drawn from five-year estimates made in 2022 by the American Community Survey, showed a steep gap in vacancy rates when you compare San Luis Obispo County, at 13%, to Santa Barbara and Ventura counties, at 7% and 6% vacancy, respectively.

Within that 13% vacant housing stock, 61% is used for seasonal, recreational or occasional use in San Luis Obispo County, double Santa Barbara and Ventura counties’ figures.

An additional analysis of the number of establishments in unincorporated parts of San Luis Obispo County — along with transient occupancy tax data collected in the 2023-24 financial year — showed that while the number of vacation rentals in unincorporated San Luis Obispo County doubled from 1,024 to 2,037 between 2016 and 2024 and make up 88% of all establishments that pay TOT, they paid less than half of all TOT collected in 2024, because single hotel properties have so many more actual units.

Supervisors spar over best approach to create more housing quickly

Following the staff’s update on the county’s RHNA progress, the board discussed vacancy rates, the number of vacation rentals in operation and how it can make up the gap on housing production at lower income levels.

Gibson said he viewed the housing update as a sign that trying to meet the requirements of the RHNA simply by building more stock may not be enough to meaningfully improve affordability across the county.

“It sure seems like we’re working on encouraging, again, a supply-side approach that concentrates on housing, essentially, that we don’t need,” Gibson said.

Gibson said he wants to see the board look into a second-home tax, a countywide cap on vacation rentals and bringing back the discontinued Inclusionary Housing Ordinance’s in-lieu fees for developers, all in the service of converting second homes and vacation rentals back into homes for residents.

However, he received some pushback on second-home taxes and enforcing a vacation rental cap, with District 4 Supervisor Jimmy Paulding responding that he was “inclined not to pursue either” option.

County administrative officer Matt Pontes also said the second-home tax may not be possible to implement, as the city of San Francisco’s Empty Homes Tax was ruled unconstitutional by the San Francisco Superior Court in October 2024.

District 3 Supervisor Dawn Ortiz-Legg said she was supportive of looking into a vacation rental cap, noting that hotel businesses have been negatively impacted by the proliferation of vacation rentals.

While the board wasn’t in alignment on the potential policies Gibson pushed, it made a first step by instructing staff to look into fully recovering the cost of operating the county’s code enforcement program, which investigates zoning and rental issues.

As is, the cost of offsetting the 1.5 full-time equivalent employees who deal with vacation rentals would likely come out to an annual fee of around $250 to $300 per vacation rental, Pontes said.

Ultimately, the board voted 5-0 to discuss a ban on vacation rentals, setting a date in October.

This story was originally published May 2, 2025 at 9:00 AM.