Morro Bay HOA Guide: Local Rules for Boards and Owners

Short-term rentals are allowed in Morro Bay under the 2020 ordinance, now Municipal Code section 17.30.220, but only with a city STR permit, a business license and a transient occupancy tax account. The city recognizes two types. A full-home rental is a home rented for 30 consecutive days or less with the host not present. A home-share is a rental where the host lives on site and stays on the property throughout the guest’s stay.

The point that matters most for boards is on the city’s STR application worksheet. It asks owners a set of yes-or-no questions before they apply. One asks whether the property is in a housing development that is subject to CC&Rs, and an owner who answers yes is told to stop and contact the city. That question applies to both full-home rentals and home-shares, and the worksheet asks the same about duplexes, triplexes and other multifamily homes. If an owner in your community says they have or are seeking a city permit, ask the city to confirm how that rule applies to your development.

Your association can also act on its own. California Civil Code section 4741 does not stop an association from prohibiting rentals of 30 days or less.

The city’s ADU brochure lays out the local rules. A single-family home may have one ADU and one junior ADU. The ADU section of the zoning code is section 17.30.040.

• Detached ADUs may be up to 1,000 square feet for a studio or one-bedroom, or 1,200 square feet for two or more bedrooms.
• Attached and conversion ADUs may be up to 1,000 square feet, plus 150 square feet for an entry. Junior ADUs are limited to 500 square feet.
• Most ADUs need no extra parking. A junior ADU that displaces parking must replace it.
• Vacation and short-term rentals of less than 31 days are not allowed. Long-term rentals are.

The coastal step adds time. The city reviews the application, issues a completeness letter, runs a 10-day public notice period and then issues the coastal development permit. Only then does the owner apply for the building permit. Extra review may apply for homes over 50 years old or in sensitive habitat or cultural resource areas.

Associations have limited room to say no. Civil Code section 4751 makes void any CC&R provision that effectively prohibits or unreasonably restricts an ADU or JADU on a lot zoned for single-family use. Your architectural review can still apply reasonable design standards, and the public notice period is a natural time for the board to look at the plans.

When we checked, the city’s water conservation page showed a current condition of Moderately Restricted under Municipal Code section 13.04.345(b). The city’s 2020 Water Shortage Contingency Plan describes what each level requires, and each level includes the ones before it:

The plan says violations of irrigation limits, flagrant waste or failure to fix a leak within three days of notice can lead to water shutoff after written notice. Stricter levels add watering days by address and limits on refilling pools.

The city’s rebate terms list Cash for Grass at $0.50 per square foot of lawn removed, from $100 for 200 square feet up to $500 at 1,000 square feet or more. An irrigation retrofit rebate pays $0.25 per square foot of overhead sprinklers removed, up to $100. Both require a city site review before any work starts, allow one rebate per address or parcel and depend on available funding. Cash for Grass is first come, first served. The terms do not say whether association common areas qualify, so ask before you plan around them. Both documents also remind applicants to check their CC&Rs and HOA rules.

A state law passed in 2023 (AB 1572) bars the use of drinking water on nonfunctional turf in HOA common areas starting January 1, 2029. On owners’ own lots, Civil Code section 4735 prevents an association from banning low-water plants or artificial turf.

On private association streets, your own parking rules and state towing law do most of the work.

Morro Bay’s noise rules are in chapter 9.28. Section 9.28.030 lists these as violations:

The city’s tree chapter (12.08) covers trees in the public right-of-way, such as street trees along an association’s frontage. Before removing a large tree on association land, ask Planning whether a permit or coastal review applies.

In a September 2023 notice, the city said no state fire hazard severity zones were inside city limits, though state high and very high zones bordered parts of the city. That has since been reviewed. The State Fire Marshal released updated maps for local responsibility areas on March 10, 2025. A city memo dated March 17, 2025 said the Fire Department was reviewing them and would take them to the City Council for adoption within 120 days. We could not confirm the result, so ask the Fire Marshal which zone each common-area address is in.

There is good news for insurance. On July 1, 2026, the Morro Bay Fire Department was added to the Board of Forestry’s Fire Risk Reduction Communities list. The city says communities on the list may get a discount on insurance costs, and owners can send their insurer the Board of Forestry resolution and the Fire Department’s certificate. Ask your association’s insurance broker whether that applies to your master policy.

If a home is in a high or very high zone, state law can require the seller to give the buyer documentation of defensible space compliance, or to sign an agreement for the buyer to get it, depending on whether the local agency has an inspection ordinance or offers inspections (Civil Code section 1102.19).

The Morro Bay Fire Department runs an annual weed and vegetation abatement program under Municipal Code chapters 1.03 and 8.12 and the California Fire Code. Its guidelines are the minimum for every parcel in city limits, whatever the fire hazard zone. The 2026 notice asked owners to do the work between May 15 and June 15.

The notice is the only one owners receive. It says the city does not abate properties in violation. Instead, later inspections can lead to an administrative citation. If late rains bring regrowth before the June 15 inspection, it must be cut again. For an association with open space or slopes at the edge of town, the 100-foot rule is the one to budget for.