Via City of Dana Point and DP Times: The Dana Point Planning Commission will hold a public hearing on Monday, May 9, to discuss a proposed short-term rental (STR) program. If approved, the city would establish a program regulating STRs through a Coastal Development Permit.
Short-term rentals are defined as entire residential houses or apartments, or rooms within, that are rented out to visitors for a fee between one and 29 consecutive days. They are often arranged on websites such as Airbnb, HomeAway or VRBO.
The program establishes regulations for three types of short-term rentals: homestays, primary residence and non-primary residence.
Homestays are when the homeowner rents out a portion of their home for between one and 29 consecutive days and the homeowner continues to live there at all times while visitors are renting; a primary residence is when a homeowner rents out their own primary residence to visitors for between one and 29 consecutive days while the homeowner is traveling or living elsewhere; and a non-primary residence is when a property owner rents out homes other than their primary residence to visitors for between one and 29 consecutive days.
The program would institute a cap of one STR permit per owner and would require all abutting neighbors to be notified of the permit issuance. Only one STR would be permitted per apartment building.
The program would issue a maximum of 185 non-primary STR permits, revisiting the cap every five years. Should the city change the non-primary STR cap, it must amend its coastal development permit (CDP).
All three STR types would be allowed in all residential and mixed-use zones. Accessory Dwelling Units (ADUs), Junior Accessory Dwelling Units, Single Family Residential Duplexes created through SB9, and designated affordable housing would be prohibited from being rented as an STR.
Permits would be subject to HOA approval if applicable. A waitlist would be established for new STR permits once the cap is met.
The program would establish a maximum nighttime occupancy of two persons per bedroom plus two and a maximum daytime occupancy of 2.5 times the overnight occupancy, not to exceed 20 people. It would also require that renters be at least 25 years old.
Primary short-term rental permit owners shall be limited to renting their home a maximum of 60 days a year. For homestays, an owner must be on the property during the rental period between 10 p.m. and 7 a.m.
No outside noise would be allowed from 10 p.m. to 7 a.m. Operators of STRs must respond to a nuisance complaint within 30 minutes.
For nuisance violations, permit holders would be issued the maximum fine allowed per state law. Upon first violation, the permit owner would be fined $1,500, $3,000 upon a second violation and $5,000 for a third violation over the life of the permit. The permit would also then be revoked upon the third violation.
Three recent court decisions affected the city’s decision to pursue a CDP establishing regulations on STRs.
In the first case, Kracke v. City of Santa Barbara, the Court of Appeals overturned Santa Barbara’s ban on STRs in its May 2021 ruling. The ruling stated that the city required the California Coastal Commission’s (CCC) approval of a permit, local coastal plan amendment, or amendment waiver before implementing the ban.
In the second case, Keen v. City of Manhattan Beach, the appeals court similarly determined that Manhattan Beach’s ban on STRs was invalid for lack of CCC approval. The city’s local coastal plan allowed properties to be rented without placing a limit on the length of stay, so the court ruled that a restriction on the number of nights a residential property must be rented for would require CCC approval.
According to the City of Dana Point’s staff report, the local coastal plan does not include a restriction on the number of nights a residential property must be rented.
In the third case, Protect Our Neighborhoods v. City of Palm Springs, the Court of Appeals upheld a trial court’s ruling that STRs are “permissible use at residentially zoned properties.” In January 2022, the ruling upheld the city’s STR ordinance after the group Protect Our Neighbors filed a suit claiming that the ordinance violated the city’s zoning code.
The proposed resolution the Planning Commission will discuss Monday night states that “relevant court decisions … provide the framework that any regulation and/or prohibition of short-term rentals in the Coastal Zone, requires compliance with the Coastal Act, such as with an amendment to the City’s Local Coastal Program (LCP), or issuance of a Coastal Development Permit (CDP), and the California Coastal Commission has made clear that it will not support a prohibition of short-term rentals based on its interpretation of the Coastal Act.”
Dana Point received a comment letter from the CCC on April 1, suggesting modifications to the draft STR program.
Though the letter outlines some suggestions, it stated that “in general, the City’s Draft STR Program is comprehensive and addresses any of the issues and points that the Commission has historically considered for STRs in other jurisdictions along the Coastal Zone.
In response to the upcoming hearing, local groups like Capo Cares have voiced opposition to the city allowing permitted STRs. In a prepared statement, Capo Cares wrote that “the resulting draft regulations are disappointing to say the least.”
During the city’s April 11 STR Workshop, some residents suggested that the ordinance be put to a public vote. Other residents felt that the new ordinance is similar to the STR ordinance that was rescinded in 2016.
Comparing the proposed ordinance with the one rescinded in 2016, the city noted that that previous one did not have a permit cap, nor a permit limit per owner or per multi-family property.
The proposed program has a 185-permit cap on non-primary STRs but no cap on homestay or primary STRs, and limits one permit per apartment building and one permit per owner. The proposed ordinance also has a higher minimum renter age of 25, whereas the 2016 ordinance had a minimum renter age of 18.
The proposed program also increases the fines imposed per nuisance violation to the maximum allowed per state law.
No new STR permits have been issued since 2016. After residents submitted a referendum petition to rescind the STR program approved in 2013, which went into effect in 2016, the Dana Point City Council repealed the ordinance.
The 183 permits issued when the initial program began were effectively grandfathered-in and were allowed to continue operating. According to the staff report, there are 131 permits still operating throughout the city.
Since the original ordinance was appealed, the city’s STR Subcommittee has worked to develop a policy to regulate STRs. The resulting STR program will be discussed during the public hearing at the Planning Commission’s meeting on Monday, May 9, at 6 p.m.