New Ordinance on Short-Term Rentals Passed

The Sacramento City Council has approved a comprehensive ordinance regulating short-term rentals, such as those listed on platforms like Airbnb and VRBO. The new regulations, which passed with a 7-2 vote, aim to balance the economic benefits of short-term rentals with the need to preserve neighborhood character and housing availability.

Under the new ordinance, which will take effect on July 1, 2025, property owners who wish to operate short-term rentals must register with the city and obtain a permit. The ordinance establishes two categories of short-term rentals:

• Hosted rentals: Properties where the owner lives on-site and rents out a portion of their home. These will be allowed in all residential zones.
• Non-hosted rentals: Properties where the owner does not live on-site. These will be subject to stricter regulations, including a cap on the number of days they can be rented annually.

Key provisions of the ordinance include:

• Annual permit fees of $125 for hosted rentals and $250 for non-hosted rentals
• A 90-day annual cap on non-hosted rentals
• Occupancy limits of two people per bedroom plus two additional guests
• Requirements for smoke detectors, carbon monoxide detectors, and fire extinguishers
• Prohibition of events, parties, and commercial activities
• A "three strikes" policy for violations that can result in permit revocation

The ordinance also establishes a 12% transient occupancy tax on short-term rentals, matching the rate currently applied to hotels. Revenue from this tax will be directed to the city's affordable housing trust fund.

Community Response

The new regulations have drawn mixed reactions from community members. Many neighborhood associations have expressed support for the ordinance, citing concerns about "party houses" and the conversion of long-term housing to short-term rentals.

"This ordinance strikes a reasonable balance," said James Thompson, president of the Midtown Neighborhood Association. "It allows responsible homeowners to earn supplemental income while preventing the commercialization of our residential neighborhoods."

However, some short-term rental operators have criticized the regulations as overly restrictive. The Sacramento Short-Term Rental Alliance, a group representing property owners, expressed particular concern about the 90-day cap on non-hosted rentals.

"Many of our members rely on rental income to afford their mortgages," said Alliance spokesperson Sarah Chen. "The 90-day cap will make it difficult for some owners to remain financially viable."

Implementation Timeline

The city will begin accepting permit applications on May 15, 2025. All short-term rental operators must obtain permits by the July 1 effective date or face penalties. The Community Development Department will lead implementation efforts and has announced plans to hire three new staff members to manage the permit program and enforce compliance.

City staff will report back to the Council after one year to evaluate the ordinance's effectiveness and recommend any necessary adjustments.