The application period for San Diego hosts to enter a city-run lottery to receive one of 6,500 licenses to continue operating short-term vacation rentals is closing next week.

Hosts who plan to rent their entire home out for stays more than 20 days out of the year must apply for short-term residential occupancy licenses before applications close at 5 p.m. Wednesday, city officials said. They will learn by Dec. 16 whether they were chosen to get a license.

This signifies the end of an era where these hosts have long been able to rent their homes to visitors free of formal regulations after the City Council approved an ordinance last year.

Following years of inaction on the matter of how to legalize short-term rentals, the ordinance created regulations for short-term rentals that require hosts to obtain a license.

Now, after a stamp of approval from the California Coastal Commission in March, the ordinance will finally take effect May 1 next year.

Those who operate vacation rentals less than 20 days a year or rent out a room or two while present in their home will not be subject to a lottery for obtaining licenses. They will still need a license; however, it can be obtained at any time. All licenses will be good for a two-year period.

The vacation rental ordinance also established a cap on the number of licenses granted at 1 percent of the city’s more than 540,000 housing units, or about 5,400. An exception was made for Mission Beach, which has a long history of vacation rentals. In that community, the allocation is more generous, with licenses limited to 30 percent of the community’s total dwelling units, or about 1,100.

Under the city’s lottery system, the highest priority will be given to longer-tenured rental operators who have had no code violations associated with their units over the last two years. Points will be allocated on a weighted scale that would not necessarily guarantee a license for such individuals, but the system will improve the likelihood that “good actors” will secure a license, according to the City Treasurer’s office.

More than a year after legalizing Airbnb-style rentals in San Diego, the city has formally set an effective date of May 1 for when short-term rental hosts must have required licenses. But first they need to get chosen in a city-run lottery that will limit rental licenses to 6,500 for whole-home rentals.

City of San Diego Development Services Department Director Elyse W. Lowe advises owners not to delay in applying, as whole-home rental licenses won’t be able to be obtained next year and non-complying properties will be subject to strict enforcement.

Enforcement of unlicensed or improperly licensed properties will begin May 1. This may include administrative citation warnings or citations of up to $1,000 and civil penalties of up to $10,000 per violation. Unpaid penalties or continuing violations may also result in a property lien with the county.

To apply for any of the licenses, city staff says hosts must possess an active transient occupancy tax certificate and ensure all rental unit business taxes are in active paid status.

For more information, visit sandiego.gov/stro.

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