Hermosa Beach’s law prohibiting short-term rentals withstood another test last week, when a Los Angeles County Superior Court judge refused to enjoin the city from enforcing the law.
Judge Amy D. Hogue declined Friday to issue a preliminary injunction in the case of Johnston v. Hermosa Beach, allowing the city to continue to enforce the law in advance of a potential trial on the merits. Hogue concluded that the plaintiffs failed to show “a likelihood of prevailing” on any of the various arguments they had launched against the law. The ruling marks Hermosa’s second successful defense of the law, and upheld many of the arguments that city staff have made since the law was being debated earlier this year.
Hermosa’s city council unanimously passed a ban on rentals for terms of fewer than 30 days in residential areas just before the beginning of summer. The issue attracted significant attention from both detractors, who stood to lose income from the loss of the lucrative trade, and supporters, who claimed that the practice frays neighborhood bonds and diminishes quality of life for those living near short-term rental properties.
The city has already begun issuing citations under the ordinance. Those advertising a property for use as a short-term rental face a first-time fine of $2,500.
“Let there be no confusion: short-term rentals…are not legal and the city will prosecute violators,” Mayor Hany Fangary said in a statement.
The bulk of Hogue’s written order is devoted to rebutting the plaintiff’s claim that, by passing the ordinance, Hermosa violated the state Coastal Act, an argument made and denied during proceedings in the prior case, Holtz v. Hermosa Beach. The plaintiff in that case, Jim Holtz, withdrew his claim after Judge James C. Chalfant denied a request for a preliminary injunction.
Plaintiffs in the Johnston lost on some of the same claims that were denied in the Holtz case. But they also argued that the ordinance was “inconsistent with the California Coastal Act” and decisions of the California Coastal Commission because it impinged on the act’s protection of low-cost visitor facilities. Hogue disagreed, indicating that these protections did not prevent coastal cities like Hermosa from enacting “general zoning provisions.”
Although not strictly part of the decision, whether short-term rentals actually provide affordable coastal lodgings has been a point of controversy since the law’s inception. Backers say they can provide a cheaper alternative to hotels such as the Beach House, especially for larger groups. And, in advance of council meetings where the law was to be discussed, the city received two letters from the Coastal Commission warning that the prohibition could run afoul of the low-cost lodgings provision. But many of the properties listed on sites such as Airbnb and VRBO in Hermosa charge thousands of dollars for a single weekend. Additionally, the incentive to pursue those high margins has led landlords in other cities to dump long-term tenants in favor of using units as a full-time short-term rentals, leading to claims that the phenomenon contributes to the affordable housing crisis.
“We estimate that short-term rental listings have cost Los Angeles 11 units of housing per day,” according to a widely cited 2015 report from the liberal Los Angeles Alliance for a New Economy.
Hogue’s decision also rejected the claim that the ordinance violated the plaintiffs’ rights under the doctrine of “pre-existing use,” under which some compensation is due when a previously permitted use becomes no longer conforms with zoning regulations. The plaintiffs argued that short-term rentals had historically been permitted, citing their own anecdotal experience, and that this year’s regulations represented a break from that.
City officials have long said that the ordinance merely clarified a previously existing prohibition to facilitate enforcement, a position questioned by Chalfant in the Holtz case. But it appeared to convince Hogue. She said there was “no dispute” that the city’s zoning code “did not expressly permit STVRs in residential zones” prior to the ordinance, signalling a narrow reading of what the former code permitted.
Dr. Robert Freilich, one of the attorneys for the plaintiffs filing the case, said that he plans to appeal the denial of the injunction to the California Courts of Appeal, rather than wait for a trial to conclude. Such appeals are rarely heard, Freilich said, but the novel legal issues could tempt the justices.
“Normally that’s difficult where it’s a basic civil suit between parties,” Freilich said. “But this concerns the Constitution, and the Coastal Act. The Courts of Appeal might be interested.”
