November election battle over P.G.'s short-term rentals is officially under way.

Election season is off and running in Pacific Grove with a battle royale over short-term rentals as its centerpiece.

On June 20, the Pacific Grove City Council officially placed the citizen-led Initiative to Preserve and Protect Pacific Grove’s Residential Character on the Nov. 6 ballot. The initiative garnered more than 1,600 petition signatures between February and April, collected by resident volunteers.

It seeks to phase out short-term rentals from residential neighborhoods—except for those in the coastal zone and commercial areas—over an 18-month period. It would not impact home sharing or room rentals in all areas.

But before council members took what was a perfunctory vote on Wednesday evening, they heard a report they commissioned a few weeks earlier about what financial impact the initiative might have.

With only a few weeks to compile and review data, a consultant from Matrix Consulting Group based in Mountain View could only give a limited idea of what the reduction in the number of short-term rentals would do to the city’s budget.

Matrix’s Courtney Ramos told council members her best estimate based on limited data was that the city could lose up to $1.25 million in transient occupancy taxes and fees each year starting in 2020. However, if the city increased TOT by two percent, it would potentially lose $546,000.

The numbers were based on assumptions that occupancy rates remain steady. They did not take into account possible reductions in sales tax revenue or increases in enforcement costs.

Initiative organizer Luke Coletti disputed the consultant’s findings, saying there would be no impact on sales tax revenue and theorizing that enforcement costs would actually be lower.

He also contended there will be a “bounce back effect,” from overnight visitors staying in P.G.’s commercial hotels and inns instead.

“Tourists are not going to stop coming to Pacific Grove,” he said.

With the city facing future deficits due to increasing pension commitments and needed infrastructure projects, Mayor Bill Kampe signaled his opposition to the initiative. He cautioned initiative supporters that even though they collected 1,600 signatures, there were 7,500 more registered voters that didn’t sign.

“There are a whole bunch of folks that really want to have a city they can feel proud to live in and feel good about,” he said. He added that the “less than 3 percent of STRs” from the city’s housing stock, “is a very small price to pay.”

Coletti argued that once all the housing units in the city that are unavailable to become short term rentals—like every homeowners association in the town banning such rentals—the percentage is more like 10 percent.

He also bristled against Kampe’s implication that people who care about the city’s financial future will want to keep the current level of short term rentals.

“The two are not mutually exclusive, you can care about Pacific Grove and want to limit short-term rentals,” Coletti said.

And while Pacific Grove Chamber of Commerce President Moe Ammar spoke in favor of the initiative as a way to protect P.G.’s commercial hotels and inns, Councilmember Cynthia Garfield had a sobering thought.

With hundreds of new hotel rooms in the queue in Sand City both inland and on the beach, she said, P.G.’s hotels may get left behind. For families wanting short-term rentals, it could be one way the city remains competitive.

“It’s a multi-faceted industry and the city needs to look at how it can diversify,” she said.