Property Rights Hang in the Balance for Homeowners in this California Town

November 14, 2019
By Christina Sandefur

Last year, officials in Pacific Grove, California, a small coastal city in Monterey County, decided to raffle off residents’ property rights—literally. Although Pacific Grove is a tourist community where people have for decades rented out their homes to overnight guests seeking a relaxing getaway, city leaders chose to revoke the rights of some homeowners—not on the basis of whether their guests caused disturbances, or how much time and money owners invested to fix up their houses. Instead, they operated a lottery which randomly selected some property owners to have their rental permits revoked.

The Goldwater Institute sued, arguing among other things that this arbitrary action violated the Coastal Act, which requires approval from the California Coastal Commission whenever a city seeks to regulate development in the state’s coastal zone in ways that affect public access. Although Pacific Grove has been restricting home-sharing in the Coastal Zone for years, it had never bothered to comply with this legal requirement.

And we won. In June, the trial court ruled that Pacific Grove’s actions were illegal; its anti-home-sharing regulations—including its property-rights lottery—had not received the required Coastal Commission approval.

But rather than respect the rights of Pacific Grove homeowners, the city has decided to go ahead and submit its anti-home-sharing rules for Coastal Commission review at a meeting tomorrow. We sent a letter urging the Commission to reject the city’s arbitrary lottery scheme, noting that the Commission itself has repeatedly said that home-sharing “play[s] a critical role in providing lower-cost accommodations” and is a reasonable, environmentally friendly means for visitors to access California’s coastline. The Commission has even opposed bans and excessive regulations on home-sharing, on the grounds that cities should only adopt “reasonable and balanced regulations that can be tailored to address the specific issues” of a community. And those home-sharing regulations that the Commission has approved in the past have been targeted at actual disturbances—addressing specific nuisance concerns, parking requirements, occupancy limitations, and so forth—as opposed to imposing one-size-fits-all bans that are more aimed at appeasing NIMBYs than at mitigating genuine problems.

It’s unfortunate that instead of respecting the rights of its citizens, Pacific Grove has chosen to push forward with its unjust and counterproductive restrictions, including its arbitrary lottery scheme. Home-sharing is a benefit to local communities—especially to local businesses that are patronized by visitors, and to local residents who are able to afford their bills and housing payments thanks to home-sharing—but also to the environment and to the countless visitors who would otherwise have less opportunity to visit the California coast. But rather than focus on addressing specific concerns, the city is seeking to unjustly eliminate the rights of people who have committed no wrongs and harmed nobody.

Still, however the Commission decides, the court’s ruling sends an important message to California’s coastal cities: Commission approval is required before coastal zone cities deprive homeowners of the right to allow visitors in their homes. That’s significant because cities have immense authority over property owners, and that concentrated, local power is too often wielded to the detriment of local residents. Requiring cities to seek Commission approval serves as a valuable check to safeguard their rights.

Christina Sandefur is the Executive Vice President at the Goldwater Institute.