City Attorney Mara Elliott says a memo that led city officials to cancel a long-awaited vote on vacation rental regulations was meant to aid rather than halt City Council action.

The legal opinion issued last Wednesday surprised City Council members and seemed to imperil a City Council-initiated regulatory proposal some had hoped would end more than two years of policy paralysis.

The memo, written by Deputy City Attorney Shannon Thomas, suggested two recommendations separately floated by City Councilmen Chris Ward, Mark Kersey, Scott Sherman and David Alvarez and Councilwoman Barbara Bry ran afoul of the Constitution’s Equal Protection Clause, among other concerns. Panic set in, spurring Sherman to request that the vote be canceled.

That wasn’t the outcome Elliott expected.

“I was extremely disappointed because we worked very hard to position it so that something could happen that day,” Elliott said.

The goal, Elliott said, was to give City Council members legal advice on an array of policy suggestions so they’d understand all their options and the legal concerns tied to them when it came time to vote.

The memo left some City Council members with another impression: that what they were proposing wasn’t ready for a Monday vote. Some questioned if Elliott was trying to sink their proposal.

Not true, Elliott said.

The memo is the second one Elliott issued this year that has rocked the debate over short-term vacation rentals. The first, issued in March, declared vacation rentals illegal under city code. Elliott described it as an attempt to encourage City Council action.

Elliott said she had hoped last week’s memo would open the door to action too.

City staffers had already presented three regulatory options to a City Council committee. Elliott thought the City Council could tweak one of those to reflect their wishes – and add language to address the legal concerns. After all, the City Council members who issued their own memos hadn’t written rules they could vote on. City staff had.

Elliott said she thought her office’s memo gave the City Council information needed to update those proposals to reflect their wishes while also allowing them to avoid the legal pitfalls it laid out.

Measures that aimed to treat certain rental operators differently were at the heart of the two City Council-driven proposals, a dynamic Elliott’s office zeroed in on in its memo.

Bry’s proposal would allow homeowners to rent out their primary residences up to 90 days a year. People would be prohibited from owning a home in a residential neighborhood and renting it out to visitors all year.

It was not clear how much support it had.

The four councilmen whose proposal seemed to have the greatest chance of success was less restrictive but pushed for a three-night minimum stay in coastal zones and historic districts and a requirement that a property owner own a home for at least a year before renting it out. It also capped the number of permits to three per owner.

City staff, working for Mayor Kevin Faulconer, had offered a few different proposals. All would allow for whole-home rentals with annual permits with varying requirements based on the number of rooms and guests. One had a 90-day cap on visitor stays each year.

Elliott believes the City Council could have simply added language to the staff proposals and explained the reasoning behind their regulatory proposals to address the equal protection hurdles. The memo, however, didn’t specify how the issues could be addressed. It did say attorneys could discuss those issues upon request.

The memo seemed to confuse Council members.

It initially surprised Bry but a spokeswoman said the councilwoman is now confident her proposal can still move forward.

Alvarez and Sherman, two of the four councilmen behind the compromise, had more lingering concerns after reading the review.

“Without any guidance on how to make these proposals work from the legal perspective, I don’t see how we could move forward on Monday with any pieces of this,” Alvarez told The San Diego Union-Tribune last week.

Councilman Chris Cate, who’s pushed for permissive rental regulations, viewed the memo similarly.

“From my mindset, I think we were all ready to deal with this until we got a memo late in the game,” said Cate, who has had his own clashes with Elliott recently.

The day after the memo was released, Sherman fired off a request that the vote be postponed. Sherman specifically referenced the city attorney’s memo as the impetus for his request.

His goal? Saving the compromise he’d hashed out with three fellow councilmen.

Sherman said he saw the attorney’s memo as an attempt to stall. He said the lack of an ordinance to vote on that specifically outlined his group’s compromise also complicated matters.

He’s now hoping to have a drafted ordinance and legal clarity by the time the item returns to the City Council. A mayor’s office spokeswoman said Thursday the mayor has agreed to work with the City Council to incorporate its suggestions into the options they’ve already pulled together.

“It was very difficult for me but I think the four-person memo has the best chance of actually getting something across the finish line, and if that wasn’t ready to go, and the city attorney threw out her memo at the last second to kind of try and slow things down, it was prudent to wait, even (despite) how much I hate it,” Sherman said.

Elliott said she suspects there’s more to the story. She and her chief of staff also rejected Sherman’s contention that the memo was a last-minute attempt to foil the City Council vote.

“I think that Council just simply was not ready to deal with it and probably some of the Council members were wondering whether they had the support they needed in order to get their proposals passed,” Elliott said.

When it comes to votes, it appears the foursome did have at least one more lined up. Cate told VOSD he had expected to support their measure at the Monday meeting. His vote would have provided the majority needed for approval.

Now Cate worries the compromise measure could fall apart.

“I hope this doesn’t remove the will from my colleagues who put their names on the line,” Cate said. “That’s my biggest fear.”

City Councilman Chris Ward, a driving force behind the compromise proposal, is more confident.

“I still think we have a strong framework to address the issue and believe Council’s still committed to finally establishing regulations,” Ward said in a Thursday statement.

Lisa Halverstadt

Lisa is a senior investigative reporter who digs into some of San Diego's biggest challenges including homelessness, city real estate debacles, the region's...

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