Regulation & Licensing · 2026
What the Law Requires in Pismo Beach
Each jurisdiction here taxes the stay on its own terms, and Airbnb collects only part of it. The City of Pismo Beach levies an 11 percent transient occupancy tax, up from 10 percent on January 1, 2021, plus a 2 percent lodging business improvement district assessment, half for promoting Pismo Beach lodging and half for physical improvements, and the county's 1.5 percent Tourism Marketing District assessment, which the city collects and remits to Visit San Luis Obispo County: 14.5 percent in all on stays of 30 consecutive days or less. Grover Beach charges a 12 percent tax plus the 1.5 percent marketing district assessment on stays under 30 days, figured on the nightly rate and on cleaning, parking and resort fees, and it expects a monthly report even for a month with no stays. Arroyo Grande charges 10 percent, its own 2 percent tourism business improvement district assessment and the county's 1.5 percent, forwarded to the city monthly and due by the last day of the following month. In unincorporated San Luis Obispo County, which takes in Oceano and Avila Beach, the county tax collector's page lists a 9 percent transient occupancy tax, the 1.5 percent marketing district assessment and, in the areas where it applies, a 2 percent business improvement district assessment, and it names Airbnb as the only online platform that calculates, collects and remits them; rent from any other platform is still yours to report. Airbnb's California tax page matches those rates for reservations of 30 nights or fewer, cleaning fees included, and excludes Pismo Beach, Grover Beach and Arroyo Grande, and Grover Beach's FAQ says platforms can't yet remit its tax, so inside the three cities you register, collect and file the taxes yourself.
Inside Pismo Beach, the zone decides what's possible. In the residential zones, R-1, R-2, R-3, OS-1 and OS, a short-term rental is a stay of less than 30 consecutive days in a home whose owner isn't there at the same time, and the home has to be the owner's proven primary residence. Under Ordinance O-2023-006, adopted by the City Council in November 2023, the city stopped issuing new short-term rental licenses on November 7, 2023; homes licensed before then continue, and the city's permit page lists eight addresses. Chapter 17.113 of the zoning code counts a home as a primary residence only if the owner lives there 183 days or more a year and proves it every year, treats a homestay, where the owner is on site, the same way except that its rental days have no cap, and requires the owners to be individuals or trustees, not a corporation, LLC or partnership. Downtown works differently. A vacation rental is allowed in the C-1, RR and R-4 zones of the downtown core, the owner doesn't have to live there, and the city still takes applications, with no waitlist as of its current FAQ. The permit costs $781.24 plus a 5 percent digital archiving fee, $820.30 in all; the city inspects the home first for bedroom count, on-site parking and safety; owners and residents within 300 feet get written notice; a responsible party must be located within 25 miles; and the permit page lists two on-site parking spaces as a requirement. Once Planning approves the permit, you take out a business license and a TOT certificate from the Finance Department. A permit doesn't pass to a buyer, who has to apply again. Asked whether a condo or planned-development home can be a vacation rental, the city answers 'probably', under a definition built around buildings with four or fewer separate rental units, and an accessory dwelling unit can't be rented as a short-term rental. Fines start at $1,500, rise to $3,000 for a second violation within a year and $5,000 for each one after that, every night can count separately, and listing a home online for short stays without a license is a violation by itself. The city uses an outside contractor to find unlicensed rentals and takes reports on a hotline at (800) 866-4301.
Grover Beach allows two kinds of host and caps one of them. An owner-occupied rental, where the owner is home from 10 p.m. to 7 a.m. and the house is the primary residence on the tax bill, has no citywide limit. A non-owner-occupied rental is capped at 40 in the Coastal Zone, generally west of North 4th and South 5th Streets, and 60 outside it; the city says none are available and keeps a first-come waiting list. The development code holds a non-owner-occupied rental to two overnight renters in a studio and two more per bedroom, up to ten for four bedrooms or more, plus up to five daytime guests between 7 a.m. and 10 p.m., depending on size. It requires on-site parking with a site plan posted by the front door, smoke detectors in each bedroom and the hall, a carbon monoxide detector and a kitchen fire extinguisher; it bans outdoor sound from 10 p.m. to 7 a.m. and any sign advertising the rental; and it requires every advertisement to show the city's permit number and the maximum overnight occupancy. A local contact must answer around the clock and, under the posted code, be able to reach the house within 30 minutes of a complaint. On February 26, 2024, the council adopted amendments that give the contact 45 minutes to get there while keeping a 30-minute limit to respond, allow each waitlisted property one pass when a permit opens and end short-term rentals in accessory dwelling units; the changes went to the Coastal Commission for approval, and the city's announcement gave no date for them to take effect, so ask the city which rules apply today. A non-owner-occupied permit needs at least 12 overnight stays in a permit year to be renewed, every permit expires on July 31, permits can't be transferred, and after a sale the code requires a new application within 60 days. Fees since July 1, 2023 are $330 for a new non-owner-occupied permit, $275 for an owner-occupied one and $218 to renew, plus a $64 business tax certificate. Arroyo Grande capped vacation rentals at 90 citywide in Ordinance No. 718, adopted October 11, 2022, has passed that number and isn't granting new approvals; complete applications go on a waiting list. Vacation rentals, where the owner isn't present, and homestays, with at most two rooms in an owner-occupied home, both need a Minor Use Permit–Plot Plan Review and can't be within 500 feet of another short-term rental or a school, and vacation rentals aren't approved in planned unit developments. A vacation rental allows two overnight guests per bedroom plus two, needs two off-street spaces and needs an emergency contact who lives within a 15-minute drive and answers within three hours by day or 30 minutes between 9 p.m. and 7 a.m.; a homestay guest can stay 14 days at most, with a seven-day gap before the next stay. Three instances of an unresponsive contact within twelve months, two citations or two arrests for guest behavior within twelve months, or failing to remit the city's minimum tax, set at half the average annual tax remitted by all of its vacation rentals and paid at least once every six months, start revocation. These standards cover rentals approved after November 11, 2022; older approvals stay under the city's earlier Ordinance 663.
Oceano and Avila Beach are unincorporated, so San Luis Obispo County sets their rules, and the two towns follow different paths. In Avila Beach, a home that meets the location standard in Section 23.08.165 of the county's coastal zone land use ordinance needs a vacation rental zoning clearance plus a county business license and a certificate to collect transient occupancy tax, and a house that doesn't meet the location standard can still qualify through a Minor Use Permit. In Oceano, as in Los Osos, San Simeon and the rural coast, the county's user guide calls for a Minor Use Permit from the start. The coastal standards then apply alike: guests can't exceed two per bedroom plus two or what the on-site parking can hold, renters may never park on the street, the local manager's services must be available 24 hours a day to answer tenants and neighbors, loud noise is judged by whether it carries 50 feet past the property line, and a home may host no more than four separate tenancies in a calendar month. The county's clearance page rules out an accessory dwelling unit, a guesthouse or agricultural worker housing as the rental, asks for a will-serve letter from the community water and sewer supplier, and has the applicant mail a notice letter to every owner within a 200-foot radius, the Sheriff's Office, the local sheriff substation and the local fire agency. The license stays with the seller: a buyer applies for a new one with a new zoning clearance, and if the old license has gone inactive by then, the house has to qualify all over again as a new vacation rental. The business license costs $50 a year, and the Board of Supervisors approved an annual review fee for every short-term rental starting in January 2026. On inland county land, such as parts of the Arroyo Grande Valley outside the city, the guide says no land use permit is required and only a business license is, though the Tax Collector needs the Planning and Building Department's approval of the application first. The county takes complaints online and on a hotline, (805) 723-2500, answered Fridays from 5 to 9 p.m. and on weekends and holidays from 8 a.m. to 9 p.m.
Associations and the coast add one more layer. Grover Beach's code says a permit doesn't override covenants that are enforceable under California's Davis-Stirling Act, Pismo Beach gives condo and planned-development owners a 'probably' rather than a yes, and Arroyo Grande won't approve vacation rentals in planned unit developments, so read the association's documents before you buy. Rules for land in the Coastal Zone also answer to the California Coastal Commission, so a local change can wait more than a year to take effect: Grover Beach's 2024 amendments went to the Commission for approval, and the county's December 2020 ordinance amending its coastal vacation rental section, written mostly for Los Osos, came before the Commission in February 2022. Use this section to get oriented, not as legal advice, and confirm what applies today with the planning office, the tax collector and any homeowners association before your first booking. Cavmir handles the marketing side; the permit file, the inspections and the tax filings belong to you and the professionals you hire.