Short-term vacation rentals taxed city employees and tested the patience of Hermosa residents over the last year as Hermosa debated and implemented a ban on the practice in residential areas. But the issue is emerging once again, this time in other parts of the city.
The Hermosa Beach City Council will consider adopting a pilot program in the coming weeks that would regulate and tax short-term rentals in nonconforming residential units in commercially zoned areas. Although the details of such a program are still being worked out and no ordinance has been voted on, a majority of council members at a recent meeting spoke favorably of the prospect at a recent council meeting.
Citing a host of quality of life issues, the council unanimously enacted a ban on the rentals in residentially zoned areas last year. And while attitudes among council members have not slackened about the problems created by problem rentals, a pair of considerations appears to be driving the altered approach.
One is that the negative impacts complained of with short-term rentals in residential areas — which drove hundreds of residents last year to sign a petition seeking a ban — would not be as pronounced in commercial areas. And second, it is possible that tentative approval of the units closer to the beach could assist the city in achieving approval of its Local Coastal Program from the California Coastal Commission.
“We would be hard-pressed if we didn’t make some accommodations,” said Mayor pro tem Jeff Duclos, who served as an alternate on the Coastal Commission’s governing board.
About 55 properties containing 168 residential units would be potentially affected. The units exist because, until 1980, the city allowed residential uses in commercial areas, under a planning philosophy that has since changed but was then in wide use. These parcels are now “grandfathered in.”
The plan would create a temporary program in which the units may be rented out for periods of less than 30 days in return for paying the city’s Transient Occupancy Tax on all stays, and complying with a number of regulations. These include a plaque, visible from the street, identifying the property as a short-term rental and providing contact information for an owner or property manager in case of problems; and a limit of at most two people per bedroom, to discourage “party houses.”
The regulations were developed by the Planning Commission over the course of several months last year. Despite the attention given to the proposal, commissioners ultimately voted, 3-2, to recommend against the regulated short-term rentals. Then, as now, a key concern was how the proposal would be perceived by the Coastal Commission. Some felt that any hope of currying favor was the Coastal Commission through approval of regulations of the units was speculative, and that the city was better off waiting for firmer indications, like an appellate court decision interpreting the Coastal Act on the subject.
“If we are doing this to appease the Coastal Commission, I think we should dig in our heels and say no,” Commissioner Rob Saemann said at the time.
Hermosa is in the process of obtaining approval of its Local Coastal Program (LCP) from the California Coastal Commission. (The program was approved by the Planning Commission last week.) Like some three dozen other coastal cities in California, Hermosa does not have a certified LCP. Under the California Coastal Act, all “development” in the coastal zone in cities without an LCP requires a Coastal Development Permit (CDP) from the state commission.
In a letter sent Dec. 6 to planning directors in Coastal Cities across the state, Steve Kinsey, at the time the chair of the Coastal Commission, indicated that a blanket prohibition done in a city without an approved plan may violate the Coastal Act. (Neighboring Manhattan Beach has also enacted a ban on short-term rentals, but has an approved LCP.)
“We do not believe that regulation outside of the LCP/CDP context (e.g. outright vacation rental bans through other local processes) is legally enforceable in the coastal zone, and we strongly encourage your community to pursue vacation rental regulation through your LCP,” the letter stated.
City Attorney Michael Jenkins said that the idea that the Coastal Commission had a right to influence a local land use decision like this one was “an overreach.” But Jenkins did agree that approving a provisionary program would likely be seen as an accommodation, and could boost the plan’s odds of approval. Nonetheless, he said that legal considerations did not obligate the council to approve the plan, and that it was ultimately a matter of discretion for the council.
Along with Duclos, Mayor Justin Massey and Councilmember Hany Fangary voted to support the project. They noted that the units could already be used as short-term rentals under existing code, and argued that it was better to impose some regulations upon them.
It is not clear how many of the properties are currently being rented, whether on a traditional long-term basis or for periods of less than 30 days. (Robertson said a recent estimate indicated that as many as 41 of the properties may currently host short-term renters, but the actual number could be smaller.)
Even with the obligation to pay TOT, short-term rentals are usually far more lucrative for landlords than traditional leases, and approval could incentivize more to adopt the practice. Several studies, including a widely cited one focusing on Southern California by the Los Angeles Alliance for a New Economy, show that the increasing prevalence of short-term rentals drive up rents for long-term tenants in the area.
Councilmembers Carolyn Petty and Stacey Armato were the No votes, questioning the ability of staff to properly enforce the impacts likely to arise from sanctioning the units.
Robertson said that the number of advertisements of short-term rentals in residential Hermosa had declined since enforcement of the ordinance began last fall. (The law makes the advertising of a rental a fineable offense.) However, he acknowledged that these numbers could change during summer, traditionally the busiest time of year for vacation rentals in the city.
At least two property owners have fought the penalties imposed, saying they received citations based on advertisements that they did not create and over which they had no control.
