By Bridget McDonald

In an April 6, 2022 published decision, the Second District Court of Appeal upheld a trial court order enjoining the City of Manhattan Beach (City) from enforcing two ordinances that banned short-term rentals in the City’s coastal zone. The Court of Appeal held that the City’s existing zoning code authorized short-term rentals, therefore any such ban constituted an amendment to the code that required approval from the California Coastal Commission (Commission). [Keen v. City of Manhattan Beach, 77 Cal.App.5th 142 (2nd Dist. 2022).]

Background

The City’s Coastal Zoning Ordinances

The Coastal Act requires coastal governments to develop a Local Coastal Program (LCP). The LCP must contain two parts: 1) a land use plan and 2) a local implementing program. The implementing program consists of zoning ordinances, maps, and other actions. The Commission must review the program and if it finds the program conforms to Coastal Act policies, it will approve it. Once approved, the local government may amend the program, but only if it submits any amendments to the Commission for subsequent approval. Absent Commission approval, program amendments have no force.

The Commission certified the City of Manhattan Beach’s land use plan in 1981, and the local implementing program and underlying zoning ordinances in 1994. In the decades that followed, people rented residential units in the City on both long- and short-term bases. The City knew about this practice but only rarely received complaints about those properties.

The City’s Short-Term Rental Ban Ordinances

In 2015, following the advent and popularity of online platforms such as AirBnB® and VRBO®, the City’s short-term rental landscape began to noticeably change. Though the City had not received a “tremendous” number of complaints, it still sought to take an active stance on the number of short-term rentals. The City claimed its current zoning ordinances—including those enacted with the LCP in 1994—implicitly prohibited short-term rentals. The City Council thus passed two ordinances that reiterated the City’s supposedly existing ban on short-term rentals (2015 ordinances).

The resolved to submit the ordinance that affected the coastal zone to the Coastal Commission for certification. The City met with Commission staff, who recommended that the City allow some short-term rentals to facilitate visitor access to the coastal zone. Shortly thereafter, the Commission wrote to all coastal cities, stating any municipal regulation of short-term rentals in the coastal zone required cooperation with the Commission. The Commission’s 2016 letter explained that short-term rentals facilitate the Coastal Act’s coastal access goals by providing an important source of visitor accommodations. The City subsequently withdrew its 2015 request for approval, stating that the ordinance worked no change in the existing law.

In 2019, the City Council adopted an ordinance that created an enforcement mechanism for its short-term rental ban (2019 ordinance). The ordinance required online short-term rental platforms to inform the City of “who was renting out what,” and prohibited the platforms from collecting booking fees. Shortly thereafter, short-term rentals in the City markedly dropped from 250 to 50 units.

At the Trial Court

Petitioner, Darby Keen, owned property in the City’s coastal zone that he rented on a short-term basis. In July 2019, the City sent Keen a Notice of Violation of the City’s short-term rental ban ordinances. In response, Keen petitioned for a writ of mandate seeking to enjoin the City from enforcing the 2015 and 2019 ordinances. At the trial court, the City conceded that any new prohibition on short-term rentals would require Commission approval, but nevertheless maintained that its 2015 ordinances merely reiterated what the Commission had approved in 1994.

The trial court disagreed, finding that neither the history or text of the ordinance, nor the record, supported the City’s position that it had always banned short-term (i.e., fewer than 30 days) rentals. The court thus held that the City’s ban functioned as a “new amendment” under the Coastal Act that required Commission approval, for which it did not have. The court enjoined enforcement of the ban on short-term rentals pending Commission approval. The City appealed.

The Court of Appeal’s Decision

The City’s Ordinance Has Always Allowed Short-Term Rentals

Under an independent standard of review, the Second District Court of Appeal agreed with the trial court and held that the plain language of the City’s ordinance had always allowed short-term (and long-term) residential rentals. The City’s ban on short-term rentals via the 2015 ordinances amended the status quo, thereby requiring Commission approval, which the City never got. For these reasons, the City’s ban was invalid.

The only issue the court considered was whether the City’s 1994 ordinances permitted short-term rentals. The statutory history of the ordinances demonstrated that they did. The court noted that the City had always permitted renters, regardless of whether they rented on a “long-term” vs. “short-term” basis. Absent some legal distinction, the law must treat long-term rentals as short-term rentals—i.e., if long-term rentals are legal, so too are short-term rentals.

Because the ordinances offered no textual basis for temporally distinguishing between rental duration, the court held the City could not credibly insist that those ordinances have “always” banned short-term rentals. The court found support in the text of the ordinance, which authorized construction and habitation of “Single-Family Residential” and “Multi-Family Residential” buildings in residential zones. The ordinance’s use of the word “residence” did not imply a minimum length of occupancy—likely because it is possible to reside somewhere for a night, week, or lifetime. The City failed to point to a legally precedented way to draw a line between the number of days that makes a building a “residence” vs. a non-residence. For these reasons, and in accord with common experience, the City’s zoning code permits individuals to rent a house or apartment, regardless of length of stay.

The court also found the City’s proposed distinction of short-term rentals as “Hotels, Motels, and Time-Share Facilities” unavailing. The ordinance defined such facilities as those that offer lodging on a weekly-or-less basis and as having kitchens in no more than 60 percent of the units. Here, on the other hand, the short-term rentals that the City sought to prohibit included single- and multi-family residences, which conventionally have kitchens. Earlier ordinances that pre-dated the 1994 ordinance did not change this distinction, nor were they relevant.

For these reasons, the court held the Commission-certified ordinances expressly authorized rentals of single- and multi-family residences in residential zones for any duration, including short-term rentals of the AirBnB variety. The City’s new ban on those rentals constituted an amendment thus requiring Commission approval.

The City’s Remaining Arguments Lack Merit

The court also rejected the City’s four other outstanding arguments. First, as to the City’s argument that the court’s statutory interpretation would be an affront to the doctrine of “permissive zoning”—i.e., zoning ordinances prohibit any use they do not permit—the court held that the City’s ordinances do permit short-term rentals in residential zones, and thus did not run afoul of the doctrine.

Second, the court was not persuaded by the claim that the City’s interpretation of its own ordinance was owed deference. Here, deference was not an issue—the court gave “simple words their obvious meaning” and the City’s “contrary interpretations” were “unreasonable.” Third, the court debunked the City’s reliance on recent state statutes, which characterized short-term rentals as commercial uses. The court explained that those statutes dealt with different issues than the municipal ordinances here, and thus not germane to the court’s interpretation

Finally, the court rejected the City’s contention that the trial court interpreted the Coastal Act as to require the City to provide short-term rentals in residential areas. Here, the issue centered on the Commission’s approval of amended laws within the coastal zone—not whether the Commission has required the City to allow short-term rentals. As evidenced by the record, the Commission did not review the City’s ban on short-term rentals because the City had incorrectly maintained that the ban was “nothing new.” Because the ban is new, it requires Commission approval. Thus, there was nothing erroneous about the trial court’s interpretation of the Coastal Act.

Conclusion and Implications

The Second District Court of Appeal’s opinion offers a direct interpretation of a zoning ordinance that has plainly and historically allowed such uses. The court’s pointed analysis cuts through layers of nuanced arguments to find that that the City of Manhattan Beach’s new ban on short-term rentals within the coastal zone required Coastal Commission approval. The court’s reasoning hinged on the existing ordinances’ silence on “length of stay”—a term that would otherwise distinguish a banned “short-term” rental from an authorized “long-term” rental. The court’s decision follows other recent opinions that have been apprehensive to entertain outright bans on short-term rentals, particularly when such bans lack any basis in the underlying zoning code. (See, e.g., Protect Our Neighborhoods v. City of Palm Springs, 73 Cal.App.5th 667 (2022); People v. Venice Suites, LLC, 71 Cal.App.5th 715 (2021).)

A copy of the Second District’s opinion is available online at: https://www.courts.ca.gov/opinions/documents/B307538.PDF