A California appeals panel has agreed environmentalists can’t force AirBNB proprietors to obtain the same special permits typically required for large commercial resort developments within state-designated coastal protection areas.
The Coastal Protection Alliance sued AirBNB in Los Angeles County Superior Court, alleging it violated the 1976 Coastal Act by operating thousands of short-term rental commercial properties without obtaining the proper coastal development permits.
Los Angeles County Superior Court Judge David Sotelo granted AirBNB’s motion to dimiss the complaint without leave to amend. The plaintiffs challenged that ruling before the California Second District Appellate Court, which issued its opinion Sept. 5.
The Alliance alleged “short-term rentals increase the density and intensity of use of land in the Coastal Zone by increasing access to homes and residential investment properties by the guests who rent them and by increasing access to the coastline by such guests.” It also said such properties “increase the intensity of use of water and access thereto in the Coastal Zone because guests use water when they stay in STRs and have increased access to the coastline.”
According to court records, AirBNB has never applied for a coastal development permit nor has it advised its hosts to do so before listing a property. In dismissing the complaint, in August 2021, Judge Sotelo found the short-term rental properties aren’t “developments” under the Coastal Act’s definition.
“As relevant here,” Heidel wrote, “a development is defined to include a ‘change in the density or intensity of use of land.’ ” While the Alliance argued “development” happens when a residential property takes on a commercial use, thereby increase access, the panel noted a literal interpretation of that position “would apply any time there is an increase in the number of occupants at a residence.”
For example, if one couple sold a home to a family of four, the property use would intensify. The same would be true if that couple had a baby, an overnight visitor or a live-in nanny.
“Even interpreting development broadly, this argument is untenable,” Heidel wrote. “CPA counters that such ‘hypothetical absurdities’ would likely be exempted or excepted from the Coastal Act,” but the provisions it cited to support that contention wouldn’t apply in the suggested manners.
“It is neither reasonable nor practical to require homeowners to obtain a waiver any time there is a change in the number of occupants at their residence,” Heidel wrote. “Moreover, beyond identifying STRs as impermissible, CPA offers no principled basis for determining when an increase in residents would qualify for a waiver.”
The panel also rejected the Alliance’s position that change to land use density and intensity is untethered to its current use. Existing residential properties have a residential use, the panel said, and if short-term rentals are consistent with that approach, permits aren’t required. Heidel explained state court precedent on the topic bolsters AirBNB’s position that short-term rentals needn’t be treated equivalent to commercial hotels and further noted the Alliance misapplied a 2012 California Supreme Court opinion, Pacific Palisades Bowl Mobile Estates v. Los Angeles.
That ruling, Heidel said, “held that the conversion of a mobile home park from tenant occupied to resident owned constituted a development under the Coastal Act. The court determined that the proposed mobile home conversion was a type of subdivision, and therefore expressly included in the definition of development.”
While the Alliance insisted that meant any change constitutes a development, the panel found a distinction between a change in the way one homeowner uses a home and the potential the court explored in a situation where one mobile home landlord gave way to several owner-occupied lots.
Taking the Alliance’s interpretation of the Coast Act, Heidel wrote, “is neither reasonable nor consistent with the Act’s acknowledged reliance on ‘local government and local land use planning procedures and enforcement’ in carrying out the Act’s goals. Such an interpretation would also undermine the Coastal Act’s goal of maximizing public access to the coast, by limiting the availability of STRs as affordable accommodations for short-term renters.”
Because it agreed with Judge Sotelo’s dismissal and refusal to allow leave to amend, the panel said it did not need to address the parties’ dispute over the influence of Coastal Commission materials on their dispute. It also awarded AirBNB the costs of its appeal.
The Alliance is represented by attorneys Michael C. Zellers, Peter L. Choate, Amanda Villalobos and Benjamin C. Sasse, of the firm of Tucker Ellis.
AirBNB is represented by attornyes Russell Hayman, Jon S. Dean, Jason D. Strabo, and Sarah P. Hogarth, of the firm of McDermott Will & Emery.