California Appeals Court Rules Santa Barbara Can’t Enforce Vacation Rental Ban

(CN) — California’s novel coastal protection law — the California Coastal Act — protects public access along the state's entire 840-mile coast and ensures affordable accommodations are available to visitors.

Even though the 1976 law was enacted decades before popular home sharing apps like AirBnB and Vrbo turned the vacation lodging industry on its head, a state appellate court Tuesday found it effectively protects the rights of private property owners to rent their coastal residences to vacationers.

In an 11-page order, Second Appellate District Judge Steven Perren was joined by Judges Kenneth Yegan and Martin Tangeman in upholding a trial court's decision that enjoined Santa Barbara’s 2015 law regulating short-term vacation rentals as “hotels” under its municipal code — an effective ban on the income properties in the coastal zone.

The appellate order is the first of its kind in California, where state court judges have frequently upheld local governments’ short-term vacation rental rules and bans.

Rogers, Sheffield & Campbell attorney Travis Logue represents Theodore Kracke, whose company manages short-term vacation rentals (STVRs) in Santa Barbara and brought the challenge against the 2015 policy advising that “all vacation rentals or home shares that are not zoned and permitted as hotels, motels or bed and breakfasts are in violation of the Municipal Code.”

Logue told Courthouse News the order from the Second Appellate District Tuesday is a “victory for all Californians who use vacation rentals along the coast.”

“This decision sets statewide precedence that cities and counties may not outright ban STVRs in the coastal zone like Santa Barbara relentlessly tried to,” Logue said in a statement.

“They are, however, allowed to meet and confer with the Coastal Commission to enact reasonable regulations," he added. "The city of Santa Barbara elected to repeatedly ignore the commission for the last six years. Let’s hope city leaders finally see the light and comply with California law.”

The California Coastal Commission is a state agency made up of appointed members tasked with approving land use decisions in accordance with the Coastal Act.

For years, the commission has raised red flags regarding cities’ decision to enact strict regulations or bans on STVRs along the coast, which can serve as lower-cost visitor accommodations.

Former Coastal Commission Chair Steve Kinsey sent guidance to Santa Barbara — along with several other cities — six days after Kracke filed his lawsuit. He advised that vacation rental regulations must occur within the context of Local Coast Programs or coastal development permits issued by the commission for approved “development” uses along the coast.

In the letter, Kinsey noted the commission did not believe outright vacation rental bans enacted by local governments were legally enforceable, considering the Coastal Act preempted conflicting local regulations.

The Second Appellate District agreed with Kinsey in its order Tuesday.

Santa Barbara’s Local Coastal Program was certified by the Coastal Commission in 1981 “when STVRs were virtually nonexistent,” Perren wrote, in finding the city should have sought an amendment by the Coastal Commission before enacting the ban in 2015.

“The city incorrectly contends that because STVRs are not expressly included in the LCP, they are therefore excluded, giving the city the right to regulate them without regard to the Coastal Act,” Perren wrote.

Perren noted the appellate court had previously found in Greenfield that short-term vacation rental bans change the “use” of land in the coastal zone subject to the commission’s jurisdiction. That case involved an HOA ban on short-term rentals in a development in the Oxnard Shores Beach Community, which was later overturned by the appellate court.

Regulation of short-term vacation rentals in the coastal zone must be decided by both cities and the Coastal Commission, Perren wrote.

“The city cannot act unilaterally, particularly when it not only allowed the operation of STVRs for years but also benefitted from the payment of transient occupancy taxes,” Perren wrote.

“Instead of 114 coastal STVRs to choose from, city visitors are left with only 6," he added, discussing the reduction of short-term rentals since 2015. "This regulatory reduction is inconsistent with the Coastal Act’s goal of ‘improv[ing] the availability of lower cost accommodations along the coast, particularly for low-income and middle-income families.’”

The Santa Barbara City Attorney's Office and the California Coastal Commission — which is not a party to the lawsuit — did not immediately respond to a request seeking comment Tuesday evening.

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