A weary Pacific Grove City Council puts final touches on short-term rental ordinance.

The Pacific Grove City Council was stretched to its limits trying to parse its short-term rental ordinance amidst angry cries from both residents and short-term rental owners.

“This has been a long and tortuous path,” Councilmember Bill Peake said on Feb. 21, after yet another long hearing of public comment—this time from those upset with the inclusion of a lottery for short-term rental licenses .

“I empathize and understand your frustration,” Peake said. “There’s no solution here that’s going to make everybody happy—or even a vast majority of people happy.”

The council started down the long path to revamp its short-term rental ordinance last May, but it’s been a contentious issue for several years.

Pacific Grove was the first city in the county to allow a certain number of short-term rentals to operate. It’s two closest neighbors—Carmel and Monterey—continue to ban them.

While there are P.G. residents who’d prefer their city did the same thing, others say they just want the commercial businesses out of residentially zoned neighborhoods.

Short-term rental owners have been equally vocal, some saying it’s the only way they can afford to keep their homes that were inherited or purchased for their future retirement.

On Feb. 21, the council signaled its done talking about short-term rentals for the moment and voted on a new ordinance that streamlines licenses down from three to one and puts a hard cap on all allowed rentals at 250.

Currently there are about 290 licenses, and there are some blocks in town where the number of licenses exceeds 15 percent of the block, a percentage the council agreed is too much.

The new ordinance attempts to fix that with a lottery to eliminate licenses from overburdened blocks.

Over complaints by short-term rental owners that the lottery would be unfair to 40 license holders that would see their source of income eliminated, the council voted 4-1 on the new ordinance.

Councilmember Cynthia Garfield was the lone vote against the ordinance, lobbying for more time and data before making a decision about a lottery system.

Mayor Bill Kampe was exasperated at the thought of waiting any longer for action.

“I know we magically think we’ll come up with a better idea in the future,” he said. “We could talk about it for another two years and we’d still be in the same state of trying to find the magic solution.”

The council decided the lottery will be held after April 1, and those who lose the lottery will have until April 20, 2019, to close out their rental business.

In Kampe’s State of the City address on Feb. 27, he called the changes to the ordinance “modest,” and said the impacts on neighborhoods will be reduced.

Short-term rental owners are reeling at the thought of losing their businesses, however. Annee Martin, a co-owner of a vacation rental management company, Sanctuary Rentals, called the council’s inclusion of a lottery unfair.

“In every situation where you’re going to make a major change you allow grandfathering,” she said. “To penalize these owners is really unfair. That’s the part I cannot get my head around.”

But there’s a bigger problem for short-term rental owners and the city on the horizon.

A group of residents is actively collecting signatures for a Nov. 6 ballot measure that would limit short-term rentals to commercial and coastal areas of the city.

Whatever happens, the city will most likely always struggle with the issue. The small town needs the cash the rentals bring in through transient occupancy taxes and fees, totaling more than $1 million a year.

In his speech, Kampe said Carmel and Monterey can afford to forgo short-term rentals because they generate more general fund revenue per capita, in part because those cities have more hotel rooms than P.G.

“You may hear a claim that traditional hotels in P.G. can recover the loss from a STR ban,” he said. “That simply is not possible.”