Updated: Short-Term Rental Restrictions on the Horizon

More than 300 properties are currently listed on Airbnb, Inc. for a stay this weekend in Laguna Beach, the majority unpermitted and in violation of the city’s current moratorium prohibiting the permitting of short-term rentals.

The ban, in affect through October 2016, was left in place by the City Council on Tuesday despite two hours of testimony from proponents and opponents of the flourishing practice of renting out homes and apartments through the Internet. City staff had been working feverishly since August to provide the council with further recommendations to amend the ordinance and better regulate the proliferation of short-term rentals in Laguna Beach.

Demands for regulation of weekend rentals has consumed cities across the nation, most recently in San Francisco where voters earlier this month opposed imposing tighter restrictions and closer to home in Anaheim, which temporarily halted issuing short-term rental permits in September, a month after Laguna extended its ban.

“How we handle this issue will define us as a community going forward,” Councilmember Rob Zur Schmiede said. “We have a right as a local community to govern these issues.”

“What we did in August was the right thing,” added councilmember Kelly Boyd. “Personally I think this is changing Laguna Beach. Shame on all of you that did not apply for permits.”

Longtime resident Hermien Miller was among 47 people on both sides of the issue who testified on the matter this week. “I joined Airbnb. I checked them out and they checked me out. They are a great company,” she said.

Miller, who lost her spouse not long ago, rents out two of her four bedrooms. “The Airbnb home-sharing helped me through the grieving process with my husband,” she said. “I was told by the city that I did not need an administrative use permit, and I have never had any complaints. Please end the moratorium.”

In Laguna, currently 33 short-term rental permits covering 72 units are in affect, which allow owners to rent out their property for any period less than 31 days. Twenty-three are in residential zones with the remainder occupying commercial zones, according to Ann Larson, assistant director of community development. Permit holders informed neighbors of their intentions to rent out rooms, have a valid business license and collect bed tax from their visitors that is paid to the city.

Larson outlined potential restrictions for a revision of the ordinance. These included a possible exclusion of residential areas, requiring on-site parking, noise rules, permit expiration after two years, and a ban on commercial events, among others. Also under consideration: reporting requirements for home sharing platform services, such as Airbnb.

The new regulations struck some in the audience as just the right recipe. “There is no property right to rent in an R-1 zone for under 31 days,” said resident Irene Bowie. “Please stand firm on the short-term housing policy, which is decreasing the quality of life.”

Tina Wilson, age 83 and a longtime resident, echoed the sentiment. “I live on Hillview Drive and I feel like I have a motel next door,” she said. “There are constant disturbances; it is not fair.”

Proponents of a ban focused particularly on quality of life issues and the impact of itinerant visitors in a neighborhood. “These short-term rentals take away the feeling of community,” said Ann Christoph, a board member of Village Laguna, which aims to preserve town character.

Those desiring a repeal of the ban largely cited financial concerns. “It is nice to be able to share your home; it is a great experience and a good income for me,” said resident Bruce Wheeler. “If I cannot continue to do this, I am not sure what I will do.”

Home owner Chris Prelitz revealed that if not for the ability to rent on a short-term basis, “I would have had to leave Laguna 15 years ago.”

Navid Fillouf, a resident who holds existing permits for two rentals, said a majority of complaints are incited by a handful of renters. “Nine out of 10 renters are well-to-do people,” he said. “I vet all of my tenants very carefully. I tell them if they want to have a party, go to Newport Beach,” which evoked a thunder of laughter from onlookers.

Between 2007 and 2015, the city logged 340 incident reports at permitted short-term rental properties and 462 at unpermitted sites, Fred Fix, the city’s code enforcement supervisor, said.

In August, when the council extended the temporary permit moratorium another year, City Manager John Pietig was tasked with hiring a temporary code enforcement officer at a cost of $90,000 to monitor online rental sites. That officer started performing their duties last week, according to Larson.

Proponents of a ban also cited another rationale. They suggested short-term rentals consume housing stock. “The housing element is being threatened,” said Council member Toni Iseman. “Laguna Beach is being monetized.” The popularity of the sharing economy is prompting investors to buy properties with the express intent of renting them out constantly.

Short-term rental permit holder Geri Cragnotti rebuffed that argument. She rents one of two units at 776 Cliff Dr. to short-term visitors and the other is occupied by 11-year tenant Oakley Frost. “If I did not have this capability to rent short-term, Oakley’s rent would double,” she said. “Don’t adopt an ordinance that could inadvertently impact senior citizens.”

Though they took no action this week, councilmembers seemed to reach consensus over possible revisions to the ordinance that would allow existing permit holders to be grandfathered in, forbid permits in single-family neighborhoods, require a property owner on the premises during a rental and allow home exchanges, where no money changes hands.

The Planning Commission next reviews potential changes to the ordinance before it is returned to City Council. Zoning code changes would also require approval of the state Coastal Commission, a process that could take 18 months, Larson said.