Morro Bay Vacation Rental Regulations: A Timeline
Recent Updates
2018–2019: Beginning the Conversation
As vacation rentals became more popular in Morro Bay, the city began gathering input from residents, local businesses, and property managers. We were part of these early discussions, helping the city understand how vacation rentals support tourism while still protecting neighborhood quality of life.
2020: Adoption of the Short‑Term Rental Ordinance
The City of Morro Bay adopted its first comprehensive STR ordinance in 2020, establishing the regulatory framework in effect today. Key components include:
- Cap on Full‑Home STRs: A maximum of 175 full‑home STRs is allowed in residential zones.
- 175‑Foot Buffer Rule: New full‑home STRs must be at least 175 feet from another STR (property‑line to property‑line).
- STR Permitting Requirements: All operators must obtain an STR permit, a business license, and a Transient Occupancy Tax (TOT) account before renting.
- Annual Renewal: Permits must be renewed every year.
- Inspections Every 4 Years: Properties undergo periodic inspections to ensure compliance.
- Home‑Share Exemption: Home‑share STRs (owner‑occupied) are not subject to the cap or buffer.
- Commercial Zones: STRs in commercial or mixed‑use zones are not subject to the residential cap.
We actively participated in this process, offering feedback on practical, guest‑friendly standards that still respect the surrounding community.
2021–2023: Improving Compliance & Guest Experience
During these years, the city focused on making sure all STRs were properly licensed and identifying illegally operating STRs.
2024: Stronger Enforcement & System Updates
In 2024, Morro Bay announced it would begin enforcing the ordinance more actively, especially for unlicensed rentals. This included:
- Notices to non‑compliant operators
- Fines for illegal rentals
- Requirements to update expired permits
We supported these efforts, as they help protect guests and ensure the city’s rules are applied fairly.
2025: Full Permit Renewals & Inspections
Starting in 2025, all STR operators must complete a full renewal process, including updated inspections. Inspections are conducted by the city and inspect for compliance with Safety, Parking, Guest Occupancy Limits, and Neighborhood compatibility.
Where we are Today
In addition to the new permit and inspection process, the city has removed inactive and incompatible licenses from the list, finally making room for the hundreds on the wait list to gain their vacation rental license. However, the city is now discussing only allowing 5 new vacation rentals per year off the wait list, regardless of how many STRs are currently operating.
Community members and local businesses have expressed concern that these new limits may go beyond the original intent of the ordinance and could reduce the availability of visitor lodging in the future.
If the city continues considering further restrictions, guests and residents may have opportunities to share feedback through public meetings or comment periods. Supportive voices can help ensure vacation rentals remain part of Morro Bay’s visitor‑friendly economy, while still respecting neighborhood balance.
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