As California Cities Limit Home-Sharing, One State Agency Is Pushing Back

by Christina Sandefur
September 12, 2018

Cities across California are rushing to regulate—or even ban—people from renting out their homes to overnight guests for short amounts of time. But a powerful state agency is pushing back against this rampant local overreach.

The California Coastal Commission regulates development in the state’s coastal zone for the purposes of protecting the coastline, maximizing public access, and balancing utilization and conservation of resources. Local governments must submit a “local coastal plan,” including any changes to government-imposed land use restrictions and zoning ordinances, to the Commission for certification before those changes can become effective. The Commission isn’t always friendly toward property rights, but even it recognizes that home-sharing plays an important role in providing affordable access to the California coast – providing travelers with alternatives to pricey hotels, while reducing the need for new development and public facilities.

Thus, the Commission has declared that bans on home-sharing are inconsistent with the Coastal Act. The Coastal Commission has supported limiting the number of vacation rentals when necessary, but it has also implored cities to adopt only “reasonable and balanced regulations that can be tailored to address the specific issues” of the community, rather than overregulating or banning the practice outright. Indeed, many of the home-sharing regulations the Commission has approved in the past focus on abating disturbances through nuisance restrictions, parking requirements, occupancy limitations, and mandatory emergency contacts, or mechanisms for tax collection, instead of one-size-fits-all prohibitions.

But rather than making efforts to regulate more fairly and reasonably, cities are balking at being second-guessed by the Commission:

• Last year, the city of Del Mar, a popular vacation destination in San Diego County, proposed an ordinance that would limit the rights of residential property owners to rent their homes to visitors for a minimum of 7 days at a time, with a cap of 28 total days a year. The Coastal Commission rejected the ordinance and asked that the city be more flexible, allowing people to rent for a minimum of three days a week, for up to a total of 100 days a year. Rather than adjust its regulations to accommodate the Commission’s modest request, Del Mar instead filed a lawsuit challenging the Commission’s authority over home-sharing in residential neighborhoods.

• Meanwhile, San Diego officials recently voted to severely limit the properties a homeowner can rent short-term: If an individual or business owns more than one property in San Diego, or if they live outside of the city, they will be prohibited from using those homes for short-term rentals. The Coastal Commission isn’t letting San Diego off easily: It’s announced that officials will have to justify their crackdown before the agency later this year. Despite the Commission’s stance and the fact that San Diegans overwhelmingly oppose these restrictions on their property rights, attorney Christi Hogin defended San Diego’s authority to curtail homeowners’ property rights, dismissing home-sharing as “renegade” and “an outlaw.”

• And Pacific Grove, a small coastal city in Monterey County where home-sharing is especially popular for families seeking a relaxing, seaside getaway, raffled off its residents’ property rights using a bingo-style lottery. Winners—only 15 percent of Pacific Grove properties per zone—got to keep offering their homes as short-term rentals. But dozens of other homeowners suddenly and unfairly lost the right to rent their homes to generate income that helps them and their families. The selection process didn’t take into account whether the home-sharers had caused any problems, so owners who had racked up numerous complaints were allowed to keep their permits, while responsible homeowners lost theirs. Pacific Grove officials stripped homeowners of their rights without even submitting their new anti-home-sharing system or lottery to the Coastal Commission for approval. And the city’s regulations aren’t tailored to address specific problems; rather, they abruptly and arbitrarily deprive property owners of their right to let people stay in their homes. That’s why we’re in court challenging these arbitrary regulations on behalf of homeowners who have been responsibly renting their homes for years.

Local officials’ zeal for treating responsible citizens like outlaws illustrates the need for state-level engagement to protect the property rights of home-sharers, rather than deferring to cities to regulate as they see fit. Cities have immense authority over private property use, and that concentrated, local power is highly susceptible to regulatory capture from special interest groups, which often results in excessive and corrupt regulations. When city regulations stifle property rights, states have the power—indeed, they have the duty—to take action to safeguard people’s rights.

In California, the Coastal Commission is playing that role. For other states, the Goldwater Institute crafted model state legislation that allows cities to enforce nuisance rules that protect quiet, clean, and safe neighborhoods, but prohibits them from imposing one-size-fits-all bans on home-sharing that cause more problems than they solve. Arizona’s version, which has been on the books for two years, protected Glenn Odegard’s right to share his historic home with visitors and made it financially possible for him to rescue and restore the home in the first place. Other states, like Tennessee and Indiana, have followed suit. We’re encouraging states coast-to-coast to stand up for property rights and fight back against local control (or “out of” control, as the case may be).

Christina Sandefur is the executive vice president of the Goldwater Institute.