Short-Term Vacation Rentals

The City of Morro Bay adopted a Short Term Rental Ordinance in 2020 that allows property owners to operate STRs in the city-limits, provided they comply with permit requirements and standards to minimize neighborhood impacts. The STR Ordinance requires property owners to obtain an STR permit, business license, and Transient Occupancy Tax (TOT) account prior to operating an STR. These permits are subject to annual renewal and inspections every four years. The ordinance also establishes a maximum number (“cap”) of 175 full-home rentals allowed in residentially zoned areas. Such rentals are also subject to a “buffer” that requires new STRs to be separated by at least 175 feet  (measured from property lines). This limitation does not apply to a home-share STR in residential zones, or STR in commercial and mixed-use zones.

To determine compliance with the STR Ordinance, the City has hired a company called HdL to run a software program that identifies all STRs that are actively advertising and renting on online platforms (AirBnB, VRBO, etc.). The City will be comparing the results of this search to our permit records and take enforcement action to achieve compliance. Illegally operating STRs will be required to immediately cease operation, are liable for the last three years of unpaid TOT, and may face fines of up to $500 per day of non-compliance. At the same time, the City will identify active STRs that are partially compliant, meaning they are operating with expired business licenses or TOT accounts. The City may authorize a partially compliant STR to continue operation once they renew their permits and pay applicable back taxes. The City will send the first round of enforcement letters on November 4, 2024.

In a parallel effort, beginning January 1, 2025, the City will require all existing STR permit holders to renew their permits, as required by the STR Ordinance. This will involve completion of a renewal application and City inspection to verify compliance with applicable standards, including, but not limited to, parking and signage requirements. 

The City recognizes and appreciates our STR operators who take great care to comply with the City’s STR regulations. We look forward to working with all STR operators to ensure uniform compliance and create a level playing field, while maintaining a high qualify of life for full-time residents.

Full-Home Residential STR Permit Cap

NO NEW PERMITS FOR FULL-HOME SHORT-TERM VACATION RENTALS IN A RESIDENTIAL ZONE WILL BE ISSUED UNTIL THE NUMBER OF ACTIVE PERMITS DROP BELOW 175.

This limitation does not apply to home-share STRs in residential zones, or any STRs in commercial or mixed-use zones. There are currently 175 permitted full-home residentially zoned STRs in Morro Bay. Non-renewal of existing permits will allow for future acceptance of new permit applications, which will be accommodated on a first-come, first-served basis. Applicants who are not eligible for a permit due to density limitations will be placed on a chronologically-maintained wait list. 

Get on the Waitlist

If you are interested in maintaining a vacation-rental in the City of Morro Bay, please contact city staff. If you are already on the waitlist, the city will reach out with next steps.

STR Permit Application Process

Prospective STR applicants are encouraged to come speak with city staff prior to submitting a formal application. The purpose of this dialogue is to help the applicant verify zoning, parking requirements, maximum occupancy, insurance, house rules, etc. Staff are available to assist in-person at the City of Morro Bay Public Services Building or via the information listed at the bottom of this page.

Review all supplemental information below and contact staff with any questions. 

• STR Application Worksheet
• STR Application
• STR Inspection Report 
• Good Neighbor Brochure

Submit a completed application to: str@morrobayca.gov

Once a formal application goes through the intake process and the appropriate fees have been paid, a staff planner will review the application and an inspection will be scheduled.

Review Timeline

The city will review the application for completeness; and if found to be incomplete, request additional information from the applicant within 30 days of receipt of the application. An application that is found to be incomplete upon a second submission shall be deemed abandoned. 

The city will deny, conditionally approve, or approve an application within 45 calendar days of receipt of a completed application. Conditions imposed shall be aimed at ensuring that the short-term vacation rental does not create a disturbance in the neighborhood and is not operated in a manner that will undermine the character of its neighborhood. 

STR Annual Permit Renewal Process

Permit renewals shall be submitted 60 days prior to the permit expiration on a form provided by the City and signed by the property owner. Renewal forms must detail any changes in the short-term vacation rental (bedrooms, ownership, number of guests, parking, etc.), and shall otherwise certify that other than what is listed as a change, the information in the original application remains the same.

Permit renewals that are not timely submitted may experience a delay in reissuance, which may temporarily suspend a permit until the renewal is issued. During this time, an STR may not be rented.

Questions

Please contact staff at str@morrobayca.gov, or visit staff at 955 Shasta Ave, during our open counter hours, Monday - Thursday, 8:00 AM through 5:00 PM.