Short-term rentals in Morro Bay, explained properly.

Sec. 17.30.220(F)(6) says permit applications and renewals are subject to fees under the City's master fee schedule, including the reasonable cost of processing and inspection. The master fee schedule was not fetched and no fee schedule date is shown, so no application, renewal or inspection fee is stated. The City's page says joining the waitlist for a full-home residential permit takes a completed application and a one-time $50 waitlist fee; the page shows no effective date for it.

Permits are valid for no more than twelve months unless renewed (Sec. 17.30.220(C)(1)). Renewals are submitted 60 days before expiration on a City form signed by the owner, listing any changes (bedrooms, ownership, guests, parking). A renewal filed late but before expiration may delay reissuance, and a permit that expires before the renewal issues is suspended until it does, during which the property may not be rented. A renewal filed after expiration is deemed abandoned, and reapplication is accepted only in full compliance with the section, including the density limits. The City's page says an expired permit cannot be reinstated and no grace period is available. Inspections happen at the initial application and every four years at renewal, with a signed self-inspection form in other renewal years.

The City's page says to email a completed application to [email protected]; after intake and payment of fees a planner reviews it and an inspection is scheduled, and staff encourage a talk with them first about zoning, parking, occupancy, insurance and house rules. The application form lists as required for intake: house rules, proof of insurance including STR, a copy of any valid STR permit held for another property in the City, copies of STR advertisements on hosting platforms, a photo of signage and a copy of the Good Neighbor Brochure; it asks for the zoning designation, home-share or full-home type, bedrooms, maximum occupancy, guest parking and hosting platforms, and whether a permit was suspended or revoked in California, or the owner was asked to stop advertising on a platform, in the previous two years. The City must tell the applicant within thirty days if an application is incomplete and must approve, conditionally approve or deny within forty-five days of a completed application (Sec. 17.30.220(F)).

Sec. 17.30.220(C)(13) prohibits using a guest house as a short-term vacation rental unless it is rented as a home-share vacation rental with the host on site in the primary residence throughout the stay. The home-sharing definition also covers guest houses on that basis.

Sec. 17.30.220(C)(5). The same subsection list also bars rentals in vehicles, non-habitable or illegally constructed structures (such as sheds, unconverted garages and unpermitted rooms), on boats in the harbor, and in recreational vehicles unless permitted through the conditional use permit process.

Sec. 17.30.220(D)(5) says multi-family developments in residential districts may not be used as short-term vacation rentals. The definition of a home-sharing rental in subsection B includes any unit in a multifamily dwelling of no more than four units where the host lives in the primary residence or in one of the units, and the spacing rule mentions abutting or intervening lots with attached single-unit dwellings or multi-unit residential. The text does not say how these fit together, so this rule is marked for review.

Sec. 17.30.220(I)(7). Children three and older count toward the limits. The application certification also refers to occupant limits under California Health and Safety Code section 17922(a)(1) and Uniform Housing Code section 503(b)(3).

Sec. 17.30.220(I)(3): rentals must provide sufficient on-site parking spaces for guests, no off-site or other street parking is allowed, and on-site parking should be in the legal spaces required for the housing type. The inspection report checks for sufficient off-street parking.

Sec. 17.30.220(I)(9). The local contact person is an individual reachable by telephone at all times who can start corrective action within one hour of being notified and has authority to address violations or disturbances. The City must hold current contact information for the contact person and host. Guests must also be given the contact's name and number, the City's hotline number and the house rules (I)(10)(c).

Sec. 17.30.220(J). Operators must also tell guests about the City's licensing requirement and include the permit number in the hosting platform advertisement (I)(4).

Sec. 17.30.220(I)(1) and (I)(11). The sign must identify the property as a short-term vacation rental with the permit number and give 24-hour contact information.

Sec. 17.30.220(I)(5).

Sec. 17.30.220(F)(2). The inspection report covers exits, conformance with the application, off-street parking, signage, the good neighbor brochure and other applicable code requirements. Properties may also be inspected to confirm violations are corrected.

Sec. 17.30.220(I)(10). The host must keep the information for two years and make it available to a City officer on request, and must give guests the good neighbor brochure, the local contact's name and number, the City hotline number and the house rules. Trash containers may not be left curbside earlier than the day before pickup or later than one day after (I)(12).

Sec. 17.30.220(K) deems violations a public nuisance, treats each day as a new violation, and allows punishment as infractions or misdemeanors under Chapter 1.16 or by administrative fines under Chapter 1.03 as set by City Council resolution. Sec. 1.03.050(D) (added by Ordinance No. 674, January 27, 2026) sets fines for violations of Sec. 17.30.220 that pose a threat to public health or safety at $1,500 for a first violation, $3,000 for a second within one year of the prior violation and $5,000 for each additional violation within one year of the first; these include operating without a valid permit, a material false statement on an application or self-inspection form, and a material violation of the operational requirements. A permittee seeking a hardship waiver uses the appeal procedure in Chapter 1.03.070. The fine schedule set by resolution and the Chapter 1.16 penalties were not read. The owner of an illegally operated rental on the waitlist is removed from it and barred from reapplying for any property for two years (K)(5).

Sec. 17.30.220(G) and (H). Grounds include a material misrepresentation, non-compliant dwelling, a platform withdrawing permission to advertise, violating the operational requirements (presumed if a disturbance is not addressed within one hour of notice or a violation is not corrected before the next guest arrives), and a suspension or revocation within the preceding two years. The permit holder has 15 days to submit evidence after a notice of intent and the city manager decides in writing within a further 15 days. An appeal goes in writing to the city manager within 15 days of the decision with an appeal fee under the master fee schedule, is heard by an independent hearing officer within 30 days, and the hearing officer's decision is final subject to court review under Code of Civil Procedure sections 1094.5 and 1094.6. After revocation the owner may not reapply for that or any other property for two years.

Chapter 3.24: each operator registers with the tax administrator within thirty days after starting business and posts the certificate (3.24.060), collects the tax with the rent and states it separately (3.24.050), and files a return on City forms with full payment on or before the last day of the month following each calendar quarter, or at the close of any shorter period the tax administrator sets (3.24.080). Late remittance carries a ten percent penalty, a second ten percent penalty after thirty days, twenty-five percent for fraud and interest of one-half of one percent a month (3.24.090). The City's page says registered operators can file through the City's Community Portal, by phone, by mail or in person. Exemption claims need a form for each month claimed.

Sec. 17.30.220(C)(11) and the application certification both state the $500 annual minimum.

California Revenue and Taxation Code section 7280 lets the legislative body of any city, county, or city and county levy a tax on the privilege of occupying a room or other living space in a hotel, inn, tourist home or house, motel or other lodging, unless the stay is longer than 30 days. A county's tax applies only in its unincorporated areas. The rate, registration and filing rules are set by each city or county, so the local tax is shown in the city's own section of this page.

Government Code sections 50990 to 50996 (Senate Bill 346, 2025) apply only in a city or county that adopts an ordinance making them apply. Where they apply, a booking platform must, on the local agency's request, report the physical address with nine-digit ZIP code of each short-term rental it facilitated (no more often than every 3 months, or monthly if the local tax is remitted monthly), and must include in each listing any applicable local license number and any transient occupancy tax certification issued by the local agency. The local agency may fine a platform that does not report. The act does not stop a city or county from regulating short-term rentals, platforms or tax collection in other ways.

Government Code section 66333(g) requires a city's junior accessory dwelling unit ordinance to require that a rental of a junior ADU be for a term longer than 30 days (as amended by Assembly Bill 1154, in force January 1, 2026). Section 66323(e) requires a city to require that a rental of an ADU created under that section (the ministerial, by-right approvals) be for a term longer than 30 days. For other ADUs on a lot with a single-family home, section 66315 bars standards beyond section 66314, including owner occupancy, except that a city may require that the property be used for rentals of terms 30 days or longer. Cities can be stricter in their own codes; see the city section.

Civil Code section 4741 says an owner in a common interest development is not subject to a governing-document provision that prohibits, has the effect of prohibiting, or unreasonably restricts renting or leasing a separate interest, ADU or junior ADU, and an association may not cap rentals below 25 percent of the separate interests. The same section says it does not prohibit an association from adopting and enforcing a provision that prohibits transient or short-term rental of a separate property interest for 30 days or less. Check your association's governing documents.

Civil Code section 1940 applies the chapter on hiring of real property (Civil Code sections 1940 to 1954.071) to tenants, lessees, boarders, lodgers and others who hire dwelling units, but excludes a person in transient occupancy in a hotel, motel, residence club or other facility when the stay is or would be subject to a transient occupancy tax under Revenue and Taxation Code section 7280 (stays of 30 days or less). Stays longer than that are not covered by this exclusion.

In a December 6, 2016 letter to coastal cities and counties, the California Coastal Commission said that regulating short-term or vacation rentals in the coastal zone must happen within the local coastal program or under a coastal development permit, because it changes the intensity of use and access to the shoreline and so counts as development under the Coastal Act. The Commission said it does not believe outright bans adopted outside that process are legally enforceable in the coastal zone, that it has not historically supported blanket bans, and that it has supported limits such as caps on numbers by area, limits on days, occupancy limits, 24-hour response, parking, noise and signage rules and payment of transient occupancy tax. This applies only to places inside the coastal zone.