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Lawsuit Challenges Vacation-Rental Crackdown

Cites State Law Mandating Affordable Overnight Lodging on the Coast

<b>NO VACATION:</b> Theo Kracke (right) speaks to the council as City Attorney Ariel Calonne listens on.
Paul Wellman (file)

The City of Santa Barbara’s escalating crackdown on short-term vacation rentals has experienced plenty of expected backlash, the latest of which claims in court that the city’s position violates California’s formidable Coastal Act, a 40-year-old law designed to balance development pressures along the coast with conservation efforts and public access. The lawsuit ​— ​filed this week by Theo Kracke, owner of Paradise Retreats, which manages 27 short-term rentals within city limits ​— ​is buoyed by state law requiring relatively affordable overnight lodging along the coast. According to the suit, “[Short-term vacation rentals] serve as a lower cost alternative to renting hotel or motel rooms for families and small groups from diverse demographic sectors and incomes to enjoy coastal access.”

Broken down on a cost-per-bedroom basis (for example, a two-bedroom West Beach cottage that rents for $2,400 weekly), Paradise Retreat offers short-term rentals that are less expensive than the average cost of a South Coast hotel room, which is $235 per night, according to hotel industry data bank STR, Inc.

City Attorney Ariel Calonne preferred not to comment on a lawsuit he hadn’t yet seen. He did point out that “the ordinances forbidding vacation rentals [in Santa Barbara] are decades old.” During the past 18 months of public hearings on the issue, his office was never contacted by the California Coastal Commission, he added, nor had Coastal Act compliance entered the conversation. “It never came up,” he said.

For years, the city permitted and taxed short-term rentals, counter to its own zoning laws, which limit such units to certain commercial and multi-unit residential areas. But as the practice surged, neighbors complained about congested streets and disrespectful vacationers. The perception that vacationers were further closing off the already strangled long-term rental housing market also weighed heavy as elected officials voted unanimously to follow the city’s own rules against the burgeoning cottage industry.

“That’s our unique legal perspective,” said Kracke, represented by Rogers, Sheffield & Campbell. “This change of behavior [by the city] is considered a ‘development’ and should have been run by the Coastal Commission.” A staff report from the Coastal Commission’s recent Lower Cost Visitor Serving Accommodations workshop states, “The Commission should continue to discourage bans and other broad prohibitions on vacation rentals, and it should continue to support local governments in developing reasonable and balanced regulations.”

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