Short-Term Rental Rules Rejected

Bruce Wheeler prefers short-term renters in his Laguna Beach home to the nuisance of barking dogs and cramped parking created by long-term tenants.

Carl Kikerpill chafes at city restrictions preventing him from renting his property part-time.

On the other side of the short-term rental debate, Judi Mancuso predicted sanctioning citywide lodging for stays of less than 30 days will drain the city’s inventory of long-term rentals.

And John Thomas questioned the affordability of short-term rentals compared to local hotels if averages tossed out the skewing cost of Montage resort stays.

The four Laguna Beach residents were among 30 speakers, nearly equally divided in their opinion, who testified last Thursday, Dec. 14, before the California Coastal Commission meeting in Dana Point.

The commission, which must authorize land use changes among coastal cities, voted 9-2 to reject Laguna Beach’s short-term rental ordinance because it would restrict alternate lodging opportunities and public access. The proposed city rules would prohibit short-term lodgers in neighborhoods and restricted them to commercial areas.

In a second 7-4 vote, the commission approved regulations in Laguna’s ordinance for 14 conditions required of property owners seeking a short-term rental permit, including requiring off-street guest parking and setting permit expiration at two years.

None of the rules are effective until Laguna’s elected officials vote to accept the commission’s ruling, according to Greg Pfost, the city’s development director. That likely won’t take place until early next year, said Pfost, who is trying to determine if Laguna can resubmit a revision to its regulations for future approval.

In the meantime, the city’s old regulations that allow short-term rentals in residential areas still prevail, Pfost said. “Regardless of the decision, we’ve been processing applications in the residential zone,” he said, citing seven approvals and four denials of short-term rental permits since October 2016. Adjusted for the new approvals, about 43 property owners, covering at least 87 units, are legally permitted to host short-term renters in town. Most are embedded in neighborhoods.

Last October, a year-long moratorium on issuing new short-term rental permits was lifted following 11 public hearings. Then, elected officials agreed to the ordinance banning short-term rentals from neighborhoods, which the Coastal Commission acted on a year later. The tighter regulations came in the wake of nuisance complaints about weekend lodgers and the proliferation of unregulated home stays offered online. Operators of permitted short-term rentals pay city bed taxes.

“I understand what motivated the City Council,” said commission member Donne Brownsey. “However, we’re asked to take the broader view.”

“It’s not that we’re rejecting your intentions,” commissioner Mark Vargas said. “But there are other ways to reach the outcome without a general blanket ban in residential areas.”

Commissioner Ryan Sundberg echoed the testimony of some speakers in support of the city’s proposed law. “There is no doubt many vacation units changes community character,” he said. “But a total ban is not the right thing.”

In arguing for approval of the city’s ordinance, City Manager John Pietig urged commissioners to support the city’s efforts to preserve community character by factoring in the hospitality the city extends to 6 million annual visitors, including 38 beach access points and free weekend and summer trolley service.

City Council member Toni Iseman, a former commission member, said “we worked hard to craft a thoughtful solution.” She pointed to second-home ownership, estimating it at 15 percent of Laguna’s home inventory, already pulling at the community’s fabric. “We’d like to share our jewel, but neighborhoods are the essence of community.”

She described short-term rental properties as “fraternity houses without a house mother.”

Pfost, too, argued that the city’s ordinance aims to shield distinct neighborhoods by shifting short-term rentals towards Coast Highway commerce, where other visitor-serving amenities, such as restaurants and trolleys, are already available.

In August, about 383 legal and illegal short-term rentals were offered online in Laguna Beach, he said. “We think we can accommodate that in the commercial corridor,” Pfost said.

That assessment and prediction drew a challenge from Deputy Director Karl Schwing. He pointed out that small lot sizes in much of the city’s commercial district would not meet rules to allow residential development.

“Turnover or attrition in the commercial zone is much slower,” agreed commissioner Steve Padilla, who said he found no evidence that Laguna’s ordinance will result in an increase in the availability of short-term rentals in commercial areas. “This is a net loss,” he said.

Commission Executive Director Jack Ainsworth said Laguna’s city staff proved unwilling to negotiate on the matter because elected officials had already voted on the ordinance. “We felt pushed into a corner,” said Ainsworth.