by Kevin Cody
A pilot program that permits Short Term Vacation Rentals (STVRs) in Hermosa’s commercial zones was extended for two years by a unanimous vote of the City Council at its Tuesday, September 9 meeting. (STVRs are residential rentals under 30 days.)
The program applies only to the 212 nonconforming residences scattered throughout the downtown, and along Pacific Coast Highway, and Aviation Boulevard. STVRs remain illegal in the city’s residential neighborhoods, under a 2016 ordinance.
In response to questions from the Council Tuesday night, city staff members said only nine of the city’s 212 eligible STVRs have obtained STVR permits, which cost $1,500 annually. STVRs must also pay the city 14% TOT (Transient Occupancy Tax) hotel tax.
The nine licensed STVRs paid $189,000 in TOT taxes last year.
Staff members said they didn’t know how many unpermitted STVRs are operating in the city.
Last year, the city hired Host Compliance to help identify illegal short term rentals.
According to the STVR website Airbtics.com, Hermosa currently has approximately 300 STVRs advertised on websites such as Airbnb and vrbo. Hermosa STVRs average $60,000 annually in revenue, according to Airbtics.com.
Hermosa is presently facing a lawsuit from resident Todd Koerner that argues Hermosa’s ban on STVRs in the residential Coastal Zone is illegal. (The Coastal zone extends roughly from The Strand to Valley Drive.)
Koerner sued the city in March after a city hearing officer denied his appeal of a $2,500 citation issued for advertising a short term rental for a room in his Manhattan Avenue home last October.
Koerner is represented by attorney Frank Angel. In 2019, Angel filed a similar suit against the City of Manhattan Beach, on behalf of client Darby Keen, who rented out a short term rental in Manhattan’s residential coastal zone. Like Hermosa, Manhattan’s Council passed a city-wide ban on short term rentals in 2016.
Angel prevailed against Manhattan in the lower courts on the basis that a Coastal Commission permit is required to regulate short term rentals in the coastal zone. In 2022, the California Supreme Court declined to hear Manhattan’s appeal of the case. Angel’s client was awarded approximately $150,000 in attorney fees.
Manhattan now allows STVRs in the coastal zone, and receives over $1 million annually in STVR TOT taxes.
In July, Superior Court Judge James C. Chalfant issued a preliminary injunction prohibiting Hermosa from enforcing its STVR ban against Koerner. But the injunction applies only to Koerner.
Koerner’s suit is scheduled for trial next March. The council has met several times in closed session to discuss the lawsuit, but has not discussed the suit publicly.
Last year, prior to being appointed Hermosa’s interim city manager, former Manhattan Councilman Steve Napolitano served as a Hermosa hearing officer during two STVR citation appeals. In both cases, Napolitano ruled the city’s ban on STVRs in the Coastal Zone was legally “unenforceable.” The city refunded the fines.
Napolitano served on the Manhattan Beach City Council when Manhattan’s ban on STVRs in the Coastal Zone was found to be illegal by Judge Chalfant, the judge now assigned to Hermosa’s pending case. ER
