The San Diego City Council has rejected a proposal by council president Sherri Lightner to ban short-term rentals, such as Airbnb and HomeAway, in most of the city’s single-family neighborhoods. The council voted 7-2 against the proposal, which needed five votes to pass, following a nearly seven-hour public hearing that drew hundreds of residents on both sides of the issue. The council directed city staff to prepare a comprehensive ordinance to regulate short-term rentals, which will be considered sometime over the next four months, the San Diego Union-Tribune reports.

Lightner, an outgoing council member, said the intent of her proposal was to clarify that residential zones are for residents and ensure single-family home zones retain the desired quality of life. She said a city code already prohibits commercial lodging in residential zones, but contains vague language. Lightner’s proposal would have banned the rental of homes for less than 30 days in most residential neighborhoods and less than seven days in multifamily zones. The proposal had called for a $2,500 fine per violation and maximum fine of $250k/parcel of land.

Other major California cities have implemented tough short-term rental regulations. San Francisco only allows rentals if the hosts are full-time residents, rentals are capped at 90 days and all hosts must register with the city. Santa Monica has the toughest short-term rental regulations in the US. Effective June 2015, anyone putting a listing on Airbnb in Santa Monica must live on the property during the renter’s stay, register for a business license and collect 14% occupancy tax for the city. The new regulations have eliminated 80% of Airbnb listings in the city.

San Francisco-based Airbnb, by far the most prominent short-term rental service in San Diego with 4,900 hosts renting homes, rallied local hosts to attend the public hearing. Following the council vote, the company issued a statement saying it was pleased that “common sense prevailed,” and said it is committed to working with the council on “reasonable, simple home-sharing rules that allow San Diegans to share their homes to earn supplemental income, support neighborhood businesses and increase additional revenue share for the city.” [SDUT]