AirBnb has shifted its strategy to overturn Santa Monica’s restrictive short-term rental ordinance, amending a legal complaint against the city to focus on the California Coastal Act in addition to Federal law.  The legal maneuver came as the Coastal Commission overturned Laguna Beach’s outright ban on AirBnb rentals in residential neighborhoods.

Lawyers for AirBnb say Santa Monica’s ordinance, which only allows home-sharing when the host is present, severely restricts the supply of lower-cost vacation rentals, making it harder for low and moderate-income Californians to access the coast.  Under the ordinance, home-sharing sites are responsible for collecting Transit Occupancy Taxes and can be held accountable for illegal listings.

“All the things that make Santa Monica unique and attractive also can cause some of those lucky enough to call it home to be proprietary, exclusive, and protectionist, with the City’s policies historically reflecting an antigrowth mindset,” reads the complaint.  Lawyers for AirBnb referenced recent hotel industry research that shows Santa Monica hotel occupancy exceeding historic levels, resulting in escalating hotel room costs.

“The 1,100 miles of California coastline is an invaluable public resource, and state law mandates that access to that publicly-owned land be expansive and available for all of California’s residents, not just those with sufficient resources to live near the ocean,” reads the complaint.

Cities up and down the coast have grappled with how to best balance neighborhood concerns over the negative impacts of short-term rentals like noise and disorderly conduct by guests with visitor access.  In Laguna Beach, the city instituted an outright ban on short-term rentals in residential zones while allowing them in commercial districts.

Last week, the Commissioners voted 9-2 to reject the ordinance and uphold staff recommendations to block the ban from the city’s local coastal plan.

“I think in this case we felt that the restrictions for the entire residential area in Laguna was overreaching,” executive director Jack Ainsworth said during the Dec. 14 meeting in Dana Point.  “We could have certainly worked with the city to have a more revised, nuanced, focused area of the city that may have some bans. We have approved those sorts of things in certain jurisdictions. We felt it was too expansive.”

The Commission has not weighed in on Santa Monica’s ordinance.  However, city leaders argue, while restrictive, the home sharing ordinance actually expanded access affordable lodging in the city.

“Santa Monica had a multi-decade history of prohibiting all vacation rentals within its residential neighborhoods,” said public information officer Constance Farrell.  “In 2015, the City adopted a new vacation rental ordinance which liberalized the longstanding restriction against vacation rentals, by creating opportunities for short-term rentals of residences called ‘home-sharing.’”

The City Attorney’s office maintains the Commission does not need to sign off on the rules.

“The City adopted the Ordinance as a traditional and unremarkable exercise of its constitutional police power,” Farrell said.  “The Ordinance does not conflict with the Coastal Act or the Commission’s authority.”

AirBnb lawsuit also alleges the Communications Decency Act prohibits municipalities from holding websites liable for third-party content on their sites.  When AirBnb and HomeAway sued the city of Anaheim over the same Act, city leaders dropped the local provision that penalized websites for posting illegal listings.  The core of Anaheim’s ordinance that banned short-term rentals, however, stayed the same.

Kate Cagle

Senior reporter for the Santa Monica Daily Press