Hermosa Beach’s effort to curb short-term vacation rentals in the city survived its first test last week, when a Los Angeles County Superior Court Judge denied a request to halt enforcement of recently passed laws prohibiting the practice in residential areas.
The ruling, from Superior Court Judge James Chalfant, allows Hermosa to enforce the prohibition during the time leading up for trial on the merits, which Chalfant tentatively set for March 17. While it does not provide a definitive statement on the ordinance’s ultimate fate, the ruling made clear the judge’s thinking on some of the underlying issues, and sets a high bar for challenges to the city’s enforcement scheme.
Chalfant said that “irreparable harm” was unlikely to result from enforcement of the law in advance of a trial, because summer — peak season for short-term rentals — was drawing to a close. Although the ordinance became effective June 24, city officials said during debate over its enforcement that they would likely not issue any fines until after Labor Day.
“After Labor Day, I’m going to stop wearing my light-colored suits — vacation is over,” the judge said to laughter in the downtown Los Angeles courtroom.
The plaintiff in the suit is Jim Holtz, a San Pedro resident who operates a short-term rental in South Hermosa. Holtz has been operating the rental since 2009 using popular rental website VRBO. Holtz said he tried to rent the unit on a long-term basis in 2010 for $4,500 a month, but found no takers, and now stands to lose considerable income if prohibited from renting the unit on a short-term basis.
“$4,500: For a short-term rental, that’s a bad month in January,” he said.
The Council passed the ordinance at issue in May at a packed city council meeting in May where 60 people spoke about short-term rentals. Although the speakers that night were equally divided, complaints about problems associated with the rentals had been pouring in for more than a year, and more than 300 residents signed a petition urging a complete ban.
The ordinance explicitly prohibits short-term rentals in residential areas, makes advertising of such properties unlawful, and imposes a schedule of escalating fee on violators.
Holtz’s claims turn on the California Coastal Act, a 1976 state statute that preserves public access to the coast. Under the act, municipalities with territory in the coastal zone — usually defined as the area within 1,000 yards of the mean high-tide line — are to create a Local Coastal Program (LCP), which enables them to make local zoning decisions in comportment with the act. Cities that do not have an LCP certified by the commission must obtain a Coastal Development Permit (CDP) from the commission for all “development” taking place in the coastal zone.
Hermosa, like nearly three dozen other coastal areas of California, does not have a certified LCP. (The city is currently in the process of getting its LCP approved, and has received grants from the commission to help in the process.) Holtz claims that the city violated the act by passing the law without first receiving approval from the commission.
Alan Block, Holtz’s attorney in the case and a former Coastal Commission attorney, said during oral argument that Hermosa has 174 hotel rooms in the coastal zone, but has identified at least 351 short-term rental units in the area. The disparity, he argued, means that prohibiting short-term rentals clearly impacts the “intensity” of use of Hermosa’s coastal resources, and is therefore development under the commission’s jurisdiction.
Coastal Commission staffers previously sent two letters to Hermosa, each one only hours before city council meetings where the issue was being discussed, warning that the proposed legislation could run afoul of the Coastal Act. At the time, city council members questioned whether these letters reflected the feelings of voting commission members.
Arguing on behalf of Hermosa, attorney Christi Hogin said that while the Coastal Commission is a powerful land-use agency, its authority is not absolute. The agency, she said, does not have the power to meddle in all land-use decisions of cities that happen to be on the coast.
“The Coastal Act has been in effect since 1976. It has never issued a CDP for a zoning ordinance of general application,” Hogin said.
Chalfant sided with Hermosa on jurisdiction, which Block said greatly surprised him. Denying the commission jurisdiciton here has the potential to create a perverse incentive, he argued, in which cities get more latitude by virtue of not having a certified LCP.
Despite the win for Hermosa, Chalfant was less certain about another issue that has dogged the city throughout the case: whether the short-term rental ordinance was a new law.
“Plaintiff’s strongest position is that this is a change in law. Plaintiff’s weakest position is that this falls under Coastal Commission jurisdiction,” Chalfant said.
City officials maintain that short-term rentals have long been prohibited in Hermosa, and that the latest ordinances were merely clarifications of a preexisting ban, needed for enforcement in response to the skyrocketing popularity of websites like VRBO and Airbnb. They cite portions of the city’s municipal code, including the definition of “dwelling,” to argue that short-term rentals constitute a commercial operation, not permitted in residential areas.
A finding that the law is new would likely not help Holtz unless a different result is reached on the issue of Coastal Commission jurisdiction. But it would impact another lawsuit filed against Hermosa over the law. That case, Johnston v. Hermosa Beach, makes alternative claims that depend on the law being deemed new, and will be in court later this year.
Block and owners of short-term rentals say that the city could have curbed problems associated with short-term rentals by regulating the practice instead of banning it completely. They say the party-house image is a caricature, noting that many of their customers are families or business travelers.
“I think this could have severe consequences for anyone wanting to use the coast in Hermosa Beach,” Block said. “I totally get local owners wanting to protect property values. In certain instances there are people who use these to hold a party. But it seems that this is the exception rather than rule.”
But Chalfant said the city’s decision to address the issue through a ban, rather than enforcement of nuisance laws, was a policy decision with which he could not interfere. Additionally, many residents have said that constant turnover in a residence is problematic regardless of how well behaved the occupants are. According to a declaration filed in the Holtz case by Community Development Director Ken Robertson, rentals of less than 30 days “create a social and economic environment that is different from residential neighborhoods where people [live] on a more permanent basis.”
Following the decision, Holtz said he will come into compliance with the law. He is looking for longer-term tenants to fill the unit, but believes that he will likely end up selling the property.
Although there is a possibility of obtaining a different result at trial, he said he and his wife have extensive medical expenses to cover, don’t want to be “caught flat-footed” in March.
“We have to start the process of selling the place and find some other sort of income to match what we were getting before,” Holtz said. “But so far we haven’t found anything.”
Note: A previous version of this article stated that Holtz and his wife have a financial interest in the property. In fact, only Holtz does.
