City Settles Lawsuit with Vacation Rental Owners

By Shawn Raymundo

The coalition of vacation rental owners and environmentalists who challenged San Clemente’s authority to regulate short-term lodging (STLU) within the coastal zone reached a settlement with the city last week.

In a unanimous decision, the city council voted on Tuesday, April 21, in favor of settling the lawsuit that the San Clemente Coastal Access Alliance and the Coastal Environmental Rights Foundation had filed in November 2018.

The lawsuit alleged that the city didn’t have the authority to enforce its ordinances that govern STLUs within the coastal zone without first having the California Coastal Commission’s approval to do so.

The council had briefly discussed the settlement at its previous meeting on April 7 before deciding to postpone the vote until the subsequent meeting. 

During the April 21 meeting, outgoing Mayor Dan Bane said that the settlement “does the most to protect the community from catastrophic results, which is effectively opening up the coastal area to (short-term lodging) units.”

Under the terms of the settlement, the city will pay the groups $125,000—$25,000 to the Foundation and $100,000 to the Alliance—for attorney’s fees.

The city would also agree to extend an amortization period to certain STLU operators who previously held licenses and were in good standing when the ordinance went into effect in the spring of 2018.

In return, the Access Alliance and the Rights Foundation would dismiss the suit and also agree not to sue the city again “except to enforce the terms of this Agreement.”

Livia Borak Beaudin, attorney for the Alliance, submitted a public comment to the council at the April 21 meeting, acknowledging that while there are some vacation rental owners who “have been less than ideal,” her clients look forward to working with the city.

“My clients endeavor to be good stewards of our precious coastal resources and neighbors,” her comment stated and which was read aloud during the meeting.

According to the city, about 25 to 30 licensees could qualify for the amortization hardship extension. Such qualifying licensees are STLU operators who had active licenses and were in good standing when the ordinances were put in place in 2018.

The amortization period would extend to May 17, 2026, or until the property is sold or transferred—whichever comes first.

While casting his vote in favor of the settlement, Councilmember Chris Hamm said he was doing it “begrudgingly,” as he wasn’t happy with the outcome.

“But in regards to protecting the rest of the coastal area in the city of San Clemente, I think ultimately it’s the right decision,” he said.

Had the council not agreed to settle the lawsuit, the city estimated that ongoing litigation could have cost the city approximately as much as $350,000 if it had lost.

Mayor Pro Tem Laura Ferguson said she was glad to see the city bring the lawsuit to a conclusion before noting that she was not in favor of moving forward with the case last year. She had also pointed out that, aside from the $125,000 settlement, the city’s total legal cost to defend against the suit is $97,225.

In May of 2016, amid a myriad of complaints related to the businesses operating in residential neighborhoods, the city had adopted ordinances to regulate STLUs and establish designated areas of San Clemente where such rentals could be permitted.

The action, however, prompted a legal challenge by a separate group of vacation rental owners and property managers, called the San Clemente Vacation Rental Alliance. The proponents of the STLUs had argued that the city should punish only people who cause distress for their neighbors while noting such a business is a primary means of income, news files state.

To settle that lawsuit, the city council in the fall of 2017 had proposed to relax many of the provisions in the ordinances. Some of the amendments included the elimination of STLU-specific parking standards and expanding the allowed areas to include lots on Avenida Montalvo and Buena Vista, according to previous city reports.

Per that settlement with the Vacation Rental Alliance, the city extended an amortization period for 19 properties to continue operating as vacation rentals until 2026. That settlement agreement was finalized in April 2018.

During the process of settling that previous lawsuit, the city, according to its agenda report on the most recent settlement agreement, has been working with the Coastal Commission to have the amendments to the STLU ordinances incorporated into San Clemente’s proposed Local Coastal Program (LCP)—a planning tool used by local governments to guide development.

The SC Coastal Access Alliance and the environmental group, however, believed that the city’s enforcement of those amended STLU ordinances without first having its LCP in place is unlawful. And in doing so, the groups claimed, there are fewer affordable accommodations to those looking to visit San Clemente, particularly around the coastal area.

Shawn Raymundo
Shawn Raymundo is the city editor for the San Clemente Times. He graduated from Arizona State University with a bachelor’s degree in Global Studies. Before joining Picket Fence Media, he worked as the government accountability reporter for the Pacific Daily News in the U.S. territory of Guam. Follow him on Twitter @ShawnzyTsunami and follow San Clemente Times @SCTimesNews.