Suit Contests Laguna’s Short-Term Rental Law

By Cassandra Reinhart, Special to the Independent

When Hermien Miller’s husband died almost four years ago, both her heart, and her Laguna Beach home, felt vacant.

“Thank god my daughter lives close and I have a grandson.”

Married 35 years, Miller’s loneliness from the loss reverberated off the walls of her four-bedroom home like an echo in the canyon. With most of her family living in her native Holland, her sister had an idea.

“She said ‘you should start Airbnb.’ And I did. And I loved it.”

Miller started renting out a portion of her home to visitors looking for a short-term rental. But this fall that ended after a new Laguna Beach ordinance stripped the bed on homeowners renting out their homes or a portion of their homes for less than 30 days.

“It paid my utilities. I did it really fair, I didn’t charge much,” Miller said.

Miller is one of several Laguna homeowners associated with the BEACH Vacations Coalition (“Backing Everyone’s Access to Coastal Housing.”)  The group filed a lawsuit Thursday, Nov. 10, in Orange County Superior court against the City of Laguna Beach and the California Coastal Commission, alleging they violate environmental land use laws with the ordinance by changing long-established land usage in neighborhoods that have offered short-term rentals for years. The lawsuit asks the court to step in and stop the ordinance, saying the city did not comply with California Environmental Quality Act (CEQA) regulations and guidelines prior to adopting this ordinance. Specifically, the suit says that “…it is a project that results in significant impacts on the environment that have not been adequately assed or mitigated in accordance with CEQA” and its procedural requirements.

Laguna Beach City Attorney Phil Kohn said he hasn’t seen the petition as the city has not yet been served with the lawsuit, and adds that the new city ordinance is not a radical idea. “Restrictions on short-term lodging are not a rocket science field,” Kohn said.  “Laguna Beach is not the only local agency that has adopted regulations.”

The lawsuit states that by adopting the ordinance, the city violates a state planning and zoning law that bans discriminating against low-income renters or vacationers.  “A few outspoken Laguna residents do not want to share their city with visiting and vacationing persons and families of very low, low and moderate income and began prodding the city to ban the short-term rental units these persons can afford,” the suit states.

Jennifer Welsch-Zeiter, a practicing attorney and spokesperson for the coalition, says large families can’t afford to rent three hotel rooms in Laguna Beach.  “Just having a house serves a much better family purpose as well as a much more affordable vacation rental,” Welsch-Zeiter said.

Online sites like VRBO, Airbnb, and HomeAway are portals for homeowners looking to rent out their homes on a short-term basis, and the groups are fighting similar opposition to short-term rentals elsewhere as cities clamp down on rental regulations.

As passed, the ordinance bans renting out a home or portion of a home for less than 30 days in residential areas. Already established permitted rentals were grandfathered in under the ordinance, which otherwise restricts such rentals to commercial districts of town, like hotel areas or apartments above commercially-zoned businesses.

Miller says she asked the city if she needed a permit to become an Airbnb host, and at the time they said no. Had she secured one, she would have been grandfathered in to the new ordinance.

“I would have gladly paid for a permit,” Miller said.

Because a significant part of Laguna lies within the coastal zone it is governed by a coastal land use plan, which falls under the jurisdiction of the California Coastal Commission. The city’s newly adopted ordinance is scheduled for review by the commission in December.

Coastal Commission spokeswoman Noaki Schwartz said the commission has not yet been served with the lawsuit. “This lawsuit seems premature since the commission has not taken any recent action on the situation in Laguna Beach,” Schwartz said.  “We just received the city’s application to regulate short term rentals.”

Welsch-Zeiter says the coalition feels strongly that the California Coastal Commission will not support Laguna’s ban on short-term rentals, and has previously voiced support for short-term rental access in coastal zones.

“We are trying to get the city to come to the table and renegotiate a reasonable regulation that works for the neighbors, the city and the renters as a compromise,” Welsch-Zeiter said. “I think it will come to a head at a state level. This is about constitutional rights, property rights, and it’s not going to go away until a reasonable compromise is found.”

Kohn says the city stands by the ordinance.  “Without knowing what their lawsuit claims, I can tell you we took the time to study the issue.  We are confident in the ability to defend the action that the city council took.“

For 71-year-old Miller, she just wants the chance to offer her home to travelers again, if not for the money, for the companionship.

“It kept me busy and it has really helped me getting over the loss of my husband,” Miller said.  “I miss it.”