Title
Title 5 (Business Licenses & Regulations) & Title 17 (Planning & Development Code) Amendments Related to Short-Term Rentals (City Code Chapter 5.114, Section 17.228.104, and Article II of Chapter 17.228) (M25-026) [Published 02/06/2026]
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FileID
File ID: 2025-01885
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Location
Location: Citywide
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Recommendation
Recommendation: Conduct a public hearing and upon conclusion, pass a Motion: 1) determining the ordinance is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Sections 15060(c)(3), 15061(b)(3), and 15378(b)(5); and 2) recommending City Council adopt an ordinance amending City Code Chapter 5.114, Section 17.228.104, and Article II of Chapter 17.228, all related to short-term rentals.
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Contact
Contact: Kevin Colin, Zoning Administrator, (916) 808-5260, kcolin@cityofsacramento.org, Community Development Department; Bryan Howard, Finance Manager, (916) 808-4847, bdhoward@cityofsacramento.org, Department of Finance
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Presenter
Presenter: Kevin Colin, Zoning Administrator, (916) 808-5260, kcolin@cityofsacramento.org, Community Development Department
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Attachments
Attachments:
1-Description/Analysis
2-City Code Chapter 5.114 (Short-Term Rentals)
3-City Code Section 17.228.108 (Special Use Regulations)
4-Redline Ordinance
5-Clean Ordinance
6-June 24, 2025 Law & Legislation Committee Staff Report
7-Staff PowerPoint Presentation
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Description/Analysis
IssueDetail
Issue Detail: The City’s short-term rental (STR) regulations were adopted in 2016 through the creation of City Code Chapter 5.114 (Short-Term Rentals) (Attachment 2) and amendments to Section 17.228.104 (Special Use Regulations) (Attachment 3). Aside from some minor code amendments (e.g., to enhance enforcement, collect district assessments, regulate use of multi-unit dwellings), most of what was enacted in 2016 remains in effect today.
On June 24, 2025, the Finance Department sought and obtained direction from the Law & Legislation Committee on an ordinance amending Chapter 5.114. The Committee concurred with staff’s recommendations seeking to standardize the regulatory practice for primary residences, reduce complaints associated with short-term rentals, and, for long-term rental housing units, support both the preservation of those existing and increase in the construction of new units, namely Accessory Dwelling Units (ADUs).
A single ordinance has been prepared to facilitate the Law & Legislation Committee’s direction, incorporating amendments to both Title 5 and 17 of the City Code. Amendments to both titles of City Code are necessary to ensure a consistent regulatory program able to achieve the City Council’s policy goals. The Planning & Design Commission is invited to comment on the entire ordinance but required by City Code Section 17.916.010(B) to provide a recommendation on amendments specific to Title 17.
City Code Chapter 5.114 (Short-Term Rentals) Amendments
City Code Title 5 (Business Licenses and Regulations) is generally administered by the Finance Department. Chapter 5.114 regulates short-term rentals through prescribed standards and an annual permit requirement. The following summarizes substantive amendments to that chapter.
Change #1 (Residency): Require short-term rentals to be at the property owner’s primary residence.
Rationale: Chapter 5.114 presently allows permittees the ability to rent their primary residence - where the permittee resides at least 184 days a year - with no limit on total amount of rental days. Permittees renting out property that is not their primary residence are limited to 90 rental days per year. The Finance Department has found an increasingly high percentage of Short-Term Rental Permit applications are for non-primary residences. Those permit locations constituted approximately 2/3rds of all complaints in 2025.
To prevent the purchase of residential properties for the sole purpose of running a permanent short-term rental business, as well as to reduce the disruptive nature of non-primary residence short-term rentals, the ordinance removes the option for applicants to rent out properties that are not their primary residence. This aligns with nearby jurisdictions and ensures a balance between allowing property owners to supplement their income and maintaining the integrity and safety of our community.
Change #2 (Permittees): One Short-Term Rental Permit per property owner.
Rationale: Chapter 5.114 presently allows either an owner, lessee, or holder of a similar interest in a dwelling unit to obtain a Short-Term Rental Permit. Short-Term Rental Permit applications to the Finance Department often concern applicants who have long-term leases for property (i.e., are not property owners). Some applicants provide information to satisfy the burden of proof for primary residency (i.e., to enable lodging for 365 days/year rather than 90 days/year) but do not actually reside at the property.
Issuing one permit per property owner works in concert with the primary residency requirement described above to the same ends - discouragement of permanent short-term rental businesses, allow owners to supplement their income (e.g., to repay construction loan for ADU), and maintain the safety and integrity of our community (e.g., by putting the person with legal control and self-interest closest to the short-term rental). It also supports the preservation of existing rental housing (e.g., multi-unit buildings) for long-term rather than short-term use.
Change #3 (Accessory Dwelling Units): Allow a property owner’s primary residence to be either a primary dwelling or accessory dwelling unit (ADU).
Rationale: City Code Chapter 5.114 presently treats properties with ADUs differently than those without them. Because short-term rental permits are issued by dwelling unit and ADU’s are a separate dwelling unit (i.e., from the primary dwelling), applicants cannot claim the ADU as their primary residence and, if granted a short-term rental permit for the ADU, they are limited to 90 days of rental annually.
Finance Department staff have received complaints from permittees and applicants that constructed an ADU with the intent of using it as a short-term rental (e.g., allowing for ADU construction cost recovery, establishment of an additional source of income). Treating all dwellings on a property the same while also limiting short-term rental permits to one per property owner supports both the production of new housing and economic activity through tourism.
The greatest challenge to ADU construction is the cost. This regulatory change provides another avenue for recouping those costs while at the same time supporting the construction of a dwelling that will last 50 years or more and serve many purposes over its lifetime (e.g., rental housing, aging in place or with family, short-term rental).
Note: Most accessory dwelling units are permitted in accordance with the City’s local ordinance (i.e., City Code Section 17.228.108) rather than State prescribed standards at Government Code Section 66323 which require a rental term longer than 30 days.
Change #4 (Multi-Unit Dwellings): Limit Short-Term Rental Permits to lots with four or fewer dwelling units.
Rationale: City Code Section 17.228.104 allows short-term rentals in multi-unit buildings when a conditional use permit is approved and the property is located within the R-4, R-4A, R-5, OB, OB-2, OB-3, SC, C-2, C-3, C-4, M-1, M-1(S), M-2, M-2(S), MRD, M-T or HC zones. Since that section was enacted in July 2020, only three conditional use permits have been approved for a total of ten dwelling units. Each permit allows short-term rental for 365 days/year.
Community Development staff filter inquiries for short-term rentals in multi-family buildings through applicable housing policies, including those emphasizing the need to increase housing supply (for rental, in particular) and those that strive to avoid displacement. Anecdotally, it appears staff’s responses on those points discourage most prospective Conditional Use Permit applicants from proceeding.
Consistent with Law & Legislation Committee direction, the proposed ordinance will allow properties with multi-unit buildings of up to four (4) dwelling units a total of one (1) short-term rental permit. The stated reason for this aligns with that described at Change 3 (Accessory Dwelling Units) above - to also facilitate the construction of Missing Middle Housing in accordance with Interim Ordinance No. 2024-0027. All the restrictions described above will also apply (i.e., one short-term rental permit per property/owner; property owner has primary residence on site).
Change #5 (Online Hosting Platforms): Require hosting platforms to provide more information to reduce the number of properties operating without a Short-Term Rental Permit.
Rationale: Most short-term rentals are advertised on online hosting platforms such as AirBnb and VRBO. Currently, City Code Chapter 5.114 requires these platforms to keep and preserve all records deemed necessary to determine the amount of the Transient Occupancy Tax (TOT) permittees are liable for. This is to enable permittees to collect the TOT and remit to the City.
The proposed ordinance will additionally require hosting platforms to provide the City, on a regular basis, with the following information:
• Permit number
• Name of the party responsible
• Street address of the rental
• Number of days booked within the reporting period.
This additional information will allow the City to reduce the number of properties operating without a short-term rental permit through better informed and more efficient enforcement practices.
City Code Section 17.228.104 (Special Use Regulation) Amendments
Existing short-term rental zoning regulations within Title 17 can be summarized as follows:
• Allowed within single-unit and duplex dwelling units when:
o Lodging is for six or fewer people at any time; and
o 365 days annually, if the dwelling unit is the permittee’s primary residence; and
o 90 days annually, if the dwelling is not the permittee’s primary residence.
• Conditional use permit required if located in a multi-unit dwelling building within the R-4, R-4A, R-5, OB, OB-2, OB-3, SC, C-2, C-3, C-4, M-1, M-1(S), M-2, M-2(S), MRD, M-T and HC zones.
The ordinance will streamline existing short-term rental regulations by removing all the above requirements and, instead, rely on Chapter 5.114 of City Code. As amended (and described above), that chapter provides regulations that also support and reinforce those of the 2040 General Plan and Housing Element.
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PolicyConsiderations
Policy Considerations: The following goals and policies of the 2040 General Plan (including Housing Element) are relevant when considering the ordinance:
• Land Use & Placemaking Policy LUP-2.1 (Overall Balance of Uses): The City should encourage a balance and a mix of employment, residential, commercial, cultural, and tourism-related uses, as well as a full range of amenities and services necessary to support a thriving city.
• Historic & Cultural Resources Element Policy HCR-3.3 (Heritage Tourism): The City shall work with the local tourism industry, property owners, businesses, non-profit organizations, and other public agencies to develop and promote Heritage Tourism opportunities, integrating efforts with ongoing initiatives for economic development and promotion of the creative economy.
• Housing Element Goal 3 (Promoting Accessory Dwelling Units): Facilitate the construction of at least 600 accessory dwelling units by 2029.
• Housing Element Goal 4 (Advancing Equity and Inclusion): Create more equitable and inclusive neighborhoods.
• Housing Element Goal 5 (Protecting Residents from Displacement): Protect residents at-risk of displacement from their homes and their communities.
• Housing Element Goal 6 (Preserving the Existing Housing Stock): Preserve, maintain, and rehabilitate existing housing to ensure neighborhood livability and promote continued housing affordability.
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EnvironmentalConsiderations
Environmental Considerations: The proposed ordinance is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Sections 15060(c)(3), 15061(b)(3), and 15378(b)(5). The ordinance concerns the regulation of lodging which must occur within an existing dwelling. The ordinance does not create new or alter existing regulations for development resulting in physical changes to the environment. For amendments to Title 5 of the City Code, the ordinance makes non-substantive amendments concerning administrative matters (e.g., who may obtain permits, how many permits, responsibilities of hosting platforms) and reduces the number of potential permits per property to one. For amendments to Title 17 of the City Code, the ordinance relocates existing criteria (i.e., maximum number of guests) to Title 5 and removes the potential for increasing the number of guests or increase in lodging days per year (i.e., through a Conditional Use Permit). For all these reasons, it can be seen with certainty and there is no possibility the ordinance will have a significant effect on the environment and, therefore, is exempt from and not subject to CEQA.
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Sustainability
Sustainability: Not applicable.
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Commission/Committee Action
Commission/Committee Action: On June 24, 2025, the Law & Legislation Committee reviewed, discussed and provided direction to the Finance Department on the preparation of an ordinance amending City Code Chapter 5.114 (Short-Term Rentals). The Committee concurred with the approach presented and directed staff to present an ordinance to the full City Council, without further review by the Committee. See Attachment 4 for the staff report prepared for the Committee.
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RationaleforRecommendation
Rationale for Recommendation: The proposed ordinance will simplify existing regulations and accomplish the following:
• Greater protection of existing housing stock from commercial use for lodging purposes exclusively.
• Support homeowner’s ability to construct accessory dwelling units and missing-middle housing through a clear financial means of recouping costs.
• Preserve existing rental housing for long-term rather than short-term use.
• Continued support of local economic activity (e.g., through tourism).
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FinancialConsiderations
Financial Considerations: Not applicable.
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Public/Neighborhood Outreach and Comments
Public/Neighborhood Outreach and Comments: City staff have been keeping the Housing Policy Working Group (HPWG) informed on this ordinance, including this public hearing before the Commission. The HPWG is a body established by the City of Sacramento in 2019 composed of housing advocates, market rate/affordable developers, architects, and neighborhood representatives, among others. Its primary purpose is to vet and gather ongoing feedback on housing-related planning and policies. Additionally, city staff provided notice of this hearing to all registered community groups.
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