Short-term Rentals Get Long-term “No”

Facing a room full of residents and nearly 90 minutes of individual comments, the city council unanimously voted Tuesday to prohibit short-term rentals in residential zones.

The council had two choices: to uphold a proposal from the city’s Planning Commission that relegated short-term lodging to commercial zones and prohibited them in residential zones, or to support a subsequent proposed ordinance from a council subcommittee that recommended short-term rentals for a limited time each year in neighborhoods.

The residents were there to voice their support for the Planning Commission’s version. Council members said they received hundreds of emails before Tuesday’s meeting overwhelmingly opposing the expansion of short-term lodging into neighborhoods. Forty-five people spoke on the topic Tuesday.

“I counted today on my computer system I had over 500 emails from people in town urging us to prohibit short-term rentals in residential neighborhoods,” Mayor Steve Dicterow said. That’s more than any other issue I’ve ever dealt with here, even the village entrance. And it was a 10-1 ratio against.”

Discourse on the village entrance reflects a decades-long debate over developing a parking/retail structure or park as a gateway coming into downtown on Laguna Canyon Road.

The council placed a moratorium on short-term lodging last May that expires on Oct. 1, when the new ordinance will take effect.

The Planning Commission’s proposed ordinance was presented to the council in April. Council subcommittee members Bob Whalan and Steve Dicterow met with Community Development Director Greg Pfost twice after that to draft another ordinance allowing short-term rentals with restrictions. The subcommittee meetings were open to the public and drew capacity crowds with the majority opposing neighborhood short-term rentals.

Proponents of short-term rentals say it’s the property owner’s right and that the income is sometimes necessary to afford living in Laguna.

“I’m in favor of property rights and a balanced, reasonable regulation,” said resident Jennifer Zeiter. “Please do not needlessly expose the city and our taxpayer dollars to litigation.”

Several other coastal cities, such as Hermosa Beach, are facing lawsuits citing individual property rights and California Coastal Commission requirements of public access under the state Coastal Act.

Hermosa Beach, which, unlike Laguna, lacks a local coastal plan, banned short-term lodging in May. The city was sued by Jim Holtz in Los Angeles Superior Court on June 27. Holz claims the city cannot enforce the ban legally without first seeking approval from the Coastal Commission.

San Clemente is also facing a lawsuit by the San Clemente Vacation Rental Alliance, which sued the city in Orange County Superior Court on June 20.

Opponents of short-term rentals in neighborhoods say they threaten property values.

“Buyers do not want to buy homes next to short-term rentals,” said realtor Loraine Mullen-Kress. The value could be lowered by up to 10 percent, she said. “That’s huge.”

“Anybody who says this isn’t a commercial use just has rocks in their head,” said council member Rob Zur Schmiede, who supported the planning commission’s recommendation last April and opposed establishing a subcommittee. “If somebody is in a financial fix, they can rent their house, they can rent a room. Why don’t you rent a room to one of the art students out at the college? Those are the sorts of things we should be doing. Not taking the fast buck.”

Zur Schmiede also took exception to a letter from the Coastal Commission staff cautioning the city about limiting more affordable, short-term vacation rentals.

“This is about marketing, money, and I’m going to add one more m, misguided bureaucrats,” said Zur Schmiede. In another city, Imperial Beach, the coastal commission staff ended up in the same position as the city’s soon-to-be-effective ordinance, Zur Schmiede said. “To the Coastal Commission staff, if they are listening, I think they need to take a look at our ordinance in detail,” he said.

Short-term vacation rentals worked for a time when they were advertised through realtors or local flyers such as the Pennysaver, council members commented. Computer technology and social platforms such as Airbnb, which lists more than two million short-term rentals in 191 countries, have changed the game, potentially reducing property values for homeowners, they said.

The ordinance will also Indirectly conserve the city’s long-term rental properties, which have depleted from 31.6 percent to 26.7 percent in the last 20 years, according to the city’s report. Short-term rentals, said Zur Schmiede, “cannibalizes that housing stock.”

Regardless of the ban, enforcement will still largely depend on residents’ complaints, said Dicterow.