Short-term Rentals Owned by Out-of-Towners

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More than half of the legally permitted vacation rentals in Laguna Beach are owned by people who don’t live here, according to a city planning report.

Of the 36 properties officially allowed to rent to visitors or vacationers for less than 30 days, 58 percent have out-of-town landlords, says a report compiled in March for the Planning Commission by Ann Larson, assistant director of community development.

Four of those are owned by corporations, she said. Another 25 percent list the property as the owner’s mailing address and 17 percent of the owners have a Laguna Beach mailing address, but live elsewhere in town. The permitted properties offer a total of 81 units.

“So, 17 percent might legitimately live here but they’re living in another house,” said Larson. “It seems pretty apparent that 75 percent of the existing properties are owned by individuals who do not live at the property. And it’s even higher than that because some of the people have their address listed at the home and they don’t live there.”

Based on the report’s findings, the Planning Commission unanimously voted to deny short-term housing in all non-commercial areas, passing the final decision to the City Council. On April 12, the council rejected the planning commission’s proposed ordinance banning short-term rentals in residential areas. Instead, the council asked city staff to draft an alternate ordinance that would permit short-term rentals in residential zones with the caveat that the owner live at the property or reside in town. Council member Rob Zur Schmiede dissented, supporting the commission’s ordinance.

Even though the issue wasn’t on this week’s City Council agenda, seven people spoke Tuesday against short-term lodging, urging the council to maintain stability in Laguna’s residential neighborhoods by nixing the home-stay trend popularized by online services such as Airbnb.

“I’m concerned that in hindsight we will look back at any allowance of short-term rentals in residential zones as the day Laguna sold its soul,” said local businessman and resident Mark Christy. If they’re allowed, Christy said, the city will be “flooded” with short-term rentals.

“We have not been flooded in the past,” Mayor Steve Dicterow countered. Council member Zur Schmiede corrected Dicterow’s comment. “We haven’t been flooded with legal permits,” he said. “We have been flooded with illegal use.”

Airbnb currently lists more than 300 short-term rentals available in Laguna Beach.

As a result of compelling testimony from long-term renters evicted because landlords switched to more lucrative short-term rentals, the City Council imposed a moratorium on issuing new short-term rental permits last year, which is in effect until October.

But the direction given to city staff earlier this month suggests the council is considering allowing short-term rentals under certain conditions. The council directed city staff to prepare an ordinance regulating the short-term rentals to a limited number of weeks per year if the owner resides on the property.

“You’re constantly having people come and go who you don’t know. You don’t have that connection of having neighbors who know you,” said Larson. “You can’t regulate that. You can’t condition that. The only way you can regulate it, is by not allowing short-term lodging.”

Larson says she gets calls every day from out-of-town buyers asking about the legality of short-term rentals and when the moratorium will end. “We’re a world-renowned destination. We could fill up every single house with tourists,” she said.

The commission found there were plenty of commercially zoned properties, 200 in all, that include residential units, “with many more potential allowable units” that could be rented short-term, according to the report.

Another 200 rental properties are under investigation by the city for illegally offering short-term rentals, 55 percent of them are owned by out-of-towners with another 45 percent of owners listing their address at the rental property, according to the 222-page report.

“They call it home-sharing, but in fact they’re not really sharing a home,” Larson said. “That’s not what’s happening. Entire homes are being rented and the owners don’t even live in town.”

As far as she knows, Larson said there are three permitted short-term rental properties in town where the owner is living on the property. As for residents who need to augment their income through home-sharing to continue living in their home, there are very few, she said.

The city-permitted properties range from small cottages to oceanfront homes, according to a listing in the report. “Whatever types of people who would rent a hotel room are the same types of people renting a house,” she said. “Some of these are big, huge homes. These are not inexpensive places.”

Other coastal cities are also wrestling with neighborhood disturbances stemming from the boom in home-stay rentals. In Newport Beach, short-term rentals have overtaken Balboa Peninsula with 662 units and Balboa Island with 226 units. Last year, Newport took in $2.2 million in taxes from short-term rentals alone.

In San Clemente, there are currently 510 permitted short-term rentals, said city planner Adam Atamian. And the city receives endless complaints. The city’s planning commission drafted an ordinance that slashed the number to 70 that could expand to more units in the specified area, Atamian said. If approved by the city’s council members on May 3, the remaining 430 units will be phased out over two years.

Larson, who is retiring June 30, was criticized as being biased in her report by members of a new group called Home Sharing Laguna Beach at the April 12 City Council meeting. “You can get thousands of dollars for a week,” said Larson. “I can totally understand why people want to do it. And if you don’t live here in town, I mean, who would care if the town turns into a tourist attraction? I’m trying to protect and implement the requirements of the general plan and the zoning code. It won’t take a zillion study sessions to figure out what’s going on. We could do this pretty quickly.”

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10 COMMENTS

  1. I am not disputing the necessity of revamping current STVR rules, I think we all agree on that. Hopefully, the City Council will not react with the standard knee-jerk reaction we have seen in the past and fail to see a moderate course of action that can appease both sides of this issue rather than take a cross-the-board stance with no consideration for an opposing point of view.

    I do find it interesting that a resort owner, Mark Christy, speaks long and loud against those residents, even out of town property owners, that wish to partake of the vacation rental market the same as he. Is it a little competition he is afraid of? Has he a means of guaranteeing guests of his establishment are more respectful and less destructive than those a resident may choose? Is the private residence rental market cutting into his fat, black bottom line? One must wonder.

    Which is it Laguna? Support our tourism business or limit it just to the big business owners? Those of us struggling to survive and continue to live here who are able to do so by virtue of this little piece of a huge market would like to know…

  2. Taking issue with Mark Christy, whom I do not know, is a total obfuscation of the facts surrounding this issue. All that matters legally, frankly, is property zoning.

    Christy’s resort (and all other hotels and motels) are commercially zoned for short stays. Those who buy residential properties in or near those resorts, hotels or motels, do so with the complete understanding of their location and the potential downsides. Those of us who live in Laguna’s residential neighborhoods, however, do so based on the integrity of those neighborhoods. We likely chose our locations carefully, and did not do so expecting a neighbor to run a business out of their home with all of the resulting issues (noise, traffic, trash, etc.) that we have now learned often result from short-term rentals.

    While no government entity can prohibit a person from leasing their property for longer terms, the city owes its residents a reasonable amount of regulation that protects the interests of ALL. While one can argue that a long-term rental constitutes a business, it can also be said that long-term tenant neighbors have a vested interest in the integrity, and the “quiet enjoyment”, of their neighborhood.

    If you wish to rent your home on a short-term basis, nobody says you cannot. But buy a home in a location where the zoning supports your plans. Do NOT impeded on the integrity of my neighborhood for purposes of your greed.

  3. I do take exception with any cross the board generalization that suggests all short term rentals are utilized by people who party loudly, throw trash, contribute to parking problems, etc. when, in fact, that behavior is not seen or condoned by the majority of rental property owners.

    I do believe those who allow that kind of behavior should lose their privilege to rent their property and those renter should be asked to leave by the LBPD. Many, many of us who live in residential neighborhoods have rented our properties for decades without out incident or one complaint from our neighbors. We should not be punished for others who choose not to observe everyone’s right to quiet enjoyment. This is not a one size fits all issue. Rules and regulations need to be in place to insure that all homeowners are considered. Let’s all work toward finding give and take compromises that eliminate the need to punish the innocent along with the guilty. This issue needs to be decided on a rental by rental basis.

  4. I live in my home in SoCal and have done both short and long-term rentals (1 night to 6 months while I took a job in another state). There are pros and cons to both types of rentals. My home is large so I could rent it long term to a family with 10 kids, five cars and four dogs 365 days per year. If I do this option, the neighborhood suffers and I have to move away from my home and my house deteriorates. Instead I rent it for less than half a year on a short term basis (1 night to as long as 2 months). When it is rented, I take a room next door so I remain a neighbor in my neighborhood and can keep an eye on the tenants. If they make noise, I can text them or walk over and have a chat. If they have too many people in the house and think they can get away with a party, I can walk next door and shut it down. The best part about short term renting is that if you get a bad tenant, they are gone in no time at all. If you get a bad tenant on a long-term rental, the neighborhood is stuck with them forever. What I also like about short term renting is that when the house is not rented, it’s just me in the house: one single woman, no pets, no noise, no car. Super quiet. This is my home. I have the right to rent it, to contract with whomever I want for the period of time that works best for both of us. The issue is NOT the term of the contract. The issue is the quality of the people who stay. I keep my prices high enough to eliminate kids who want to party and keep my house in great condition so I get great renters willing to pay a premium for a nice house. I do NOT aim for 100% occupancy rate (365 days/year). Bad tenants are a nightmare, short or long-term, so I do my best to avoid them! Thanks!

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