As with other cities, San Diego to face challenges from home-sharing backers, Coastal Commission
For more than three decades, Coronado has made it clear its residential neighborhoods are off limits to vacationers looking to book a short-term stay.
San Francisco has seen its city’s online vacation rental listings plummet amid its fight to rein in rentals popularized by Airbnb and HomeAway.
Del Mar is preparing to go to court to defend its right to sharply limit short-term vacation stays in the beachside retreat.
While the particulars differ, cities up and down the state are joining an increasingly pitched battle to contain the proliferation of short-term rentals in residential neighborhoods. Complaints about “mini hotels” disrupting once quiet communities and fears of short-term rentals cannibalizing long-term housing have sharpened the debate.
San Diego will soon be caught up in a similar fight as it prepares to implement controversial rules approved last week that are expected to dramatically curtail short-term home stays across the city. Under the new regulations, expected to go into effect next July, vacation rentals will be limited to primary residences, meaning investors and out-of-towners will no longer be able to rent out secondary homes for stays under 30 days.
While the outcome is still uncertain, legal challenges loom as does a possible clash with the California Coastal Commission, which has repeatedly warned cities and counties from Santa Cruz to San Diego against overly restricting what it regards as an affordable option for overnight stays at the beach.
Some cities have been more successful than others in legislating tough regulations in the face of litigation and Coastal Commission objections, while others have decided to take a more permissive approach rather than face a prolonged battle.
“The sharing economy started out as a renegade, an outlaw really. It has grown to the point where it is having negative impacts,” said attorney Christi Hogin, who successfully defended the city of Hermosa Beach’s ban on short-term rentals in a lawsuit filed by homeowners. “That is when local government steps in to regulate the businesses so they can function harmoniously.
“San Diego’s initiative is just that. It is a function of local government to say, ‘This use is getting out of hand’ and address how we can get this activity in conformance with land use laws but also allow our property owners to use their properties in this new way. The city can do that through these new regulations and there is nothing in the coastal act that keeps them from doing it.”
While the new regulations approved last week by the San Diego City Council cover the entire city, the biggest impacts will be felt in the coastal neighborhoods , which account for almost half of the city’s more than 11,000 short-term rentals. The council will meet Aug. 1 for a second and final reading of the home-sharing ordinance.
A coalition of vacation rental operators known as Share San Diego already is talking about lawsuits asserting violation of constitutional property rights. And Coastal Commission staffers have not exactly embraced San Diego’s new rules. They have put the city on notice that it will have to make its case before the proposed restrictions for the coastal zone will get the commission’s blessing in a hearing expected to take place later this year.
That includes compiling an inventory of San Diego’s existing lodging by type, location and pricing, as well as an assessment of demand for overnight accommodations relative to the supply.
So pervasive are city efforts to clamp down on short-term rentals that there has been a commission agenda item related to the issue nearly every month for the last year, said Deborah Lee, the commission’s director manager for the San Diego area.
The premise behind the commission’s rejection of short-term rental bans has its roots in the 1976 Coastal Act, which includes a specific section to protect, and, “where feasible,” provide lower-cost visitor facilities, which can include overnight lodging.
There is no one-size-fits-all approach the commission takes for coastal jurisdictions, said Lee, who stressed that whatever action is taken inevitably depends a lot on how ample a supply there is of hotel rooms — and how affordable they are.
“There’s a concern that we have very limited affordable accommodations for the broader public in our coastal zone so we’re looking at each community on its own characteristics and merits,” said Lee. “If a community has an abundance of hotel rooms and a good number are affordable, then there may not be that big of an issue, but unfortunately, in much of the coastal zone there isn’t much of an inventory of affordable lodging.”
Some cities have been more successful than others in defying the commission.
Years ago, before Airbnb even existed, Imperial Beach sought to ban vacation rentals. When the commission denied the request, the city returned in 2004 with a modified plan to allow them in three mixed-use commercial districts while grandfathering them in one residential area near the coast.
Solana Beach fought for a seven-day minimum stay for short-term visits in residential neighborhoods and ultimately prevailed several years ago even though the commission felt the restriction was excessive. Laguna Beach, however, proposed a ban that was rejected last December by the commission.
The city of Carlsbad had also hoped to bar short-term rentals because of resident complaints, but realized it would have a fight on its hands with the Coastal Commission. Instead, the city enacted regulations in 2015 that allow such rentals in its coastal zone but bans them everywhere else.
“We decided to not look at banning them because we didn’t want to have a battle with Coastal and we knew they wouldn’t approve that in the coastal zone,” said Debbie Fountain, Carlsbad’s community and economic development director. “There has been some push from residents who say they like San Diego’s model but right now the council isn’t looking at changes.”
The city of Del Mar, though, has no intention of being compliant. The Del Mar council decided last year to limit vacation rentals to a minimum of seven days at a time, and no more than 28 days per year. The commission countered with a more permissive proposal.
Unwilling to accept looser restrictions, the City Council said last week it will file suit to clarify the Coastal Commission’s authority over home-sharing in residential neighborhoods.
Del Mar could well get some guidance from Hermosa Beach, which was sued by homeowners over its short-term rental ban. An appellate court early this year rejected the legal challenge, concluding the rental ban did not violate the Coastal Act and that the city is not required to get permission from the Coastal Commission to enforce the ban.
The homeowners had also asserted at the lower court level that their property rights were violated but abandoned that argument on appeal.
“The Coastal Commission has taken a very broad view of its own authority, but that theory hasn’t held up in court,” said Hogin, who works for a private law firm but also is assistant city attorney for Hermosa Beach. “The property rights argument doesn’t concern me as a lawyer because a city can enact regulations as long as they’re rational. In this case, the legitimate government purpose is to maintain the residential character of the neighborhoods.”
The city of Santa Monica is embroiled in a similar legal fight, although its courtroom foes are Airbnb and HomeAway. The city’s home-sharing regulations are especially strict, prohibiting homeowners from listing their properties on sites like Airbnb unless they are present during the stay.
Although the city prevailed in U.S. District Court this year, the case is on appeal. Attorneys for the home-sharing sites argued, among other things, that the city’s regulations run afoul of the Coastal Act.
Scott Shatford, who at one time had seven short-term rentals in Santa Monica several years ago before getting shut down by the city, believes much of the momentum driving larger cities to crack down on Airbnb listings is fueled by the hotel industry looking to quash competition.
“As long as the Coastal Commission doesn’t lose their motivation and ambition, we’ll continue to see these debates,” said Shatford, co-founder of Airdna, a data analytics firm catering to Airbnb hosts and investors. “Local communities don’t have the perspective they need to think about the greater implications of what these bans mean for property rights, tourism, coastal access.”
For those cities that insist on toughening regulations, effective enforcement that requires the cooperation of the online rental platforms is crucial, said Shatford. In New York and Santa Monica, which have some of the most stringent regulations, he said the number of listings have not diminished.
That is not the case, however, in San Francisco, where the city battled Airbnb and HomeAway in court to enlist their support in providing listings data needed to ensure vacation rentals are legally registered.
In the case of San Francisco, Airbnb’s beef with the city was less about the home-sharing restrictions themselves than the platform accountability the city was insisting on, say city officials. Like San Diego’s new rules, San Francisco’s regulations limit short-term rentals to one’s primary residence but only for 90 days out the year instead of San Diego’s 180-day maximum limit.
San Diego officials say they are modeling the city’s enforcement program after San Francisco’s.
“We didn’t have a major constituency here saying, I want to engage in short-term rentals and do what I want with my property,” said Omar Masry, senior analyst in San Francisco’s short-term rental office, which was established in 2015 to support the city’s new regulations. “In San Francisco, the planning code (before 2015) was clear. Short-term rentals were illegal.”
Meanwhile, Coronado, which outlaws all short-term stays of 25 days or less, does not intend to change its regulations. It has taken multiple property owners to court over illegal rentals and prevailed, said Assistant City Manager Tom Ritter.
“In the city’s most recent citizens survey, we asked, ‘Do you think Coronado should change the policy and allow short-term residential rentals for shorter periods of time,’” Ritter said. “Seventy-six percent said no. We are a beach town and also a bedroom community and people want to preserve their neighborhoods’ residential character.”
San Diego Union-Tribune