by Mark McDermott
A Superior Court judge has ordered the City of Manhattan Beach to pay the attorney fees for a resident who successfully challenged the legality of its short-term rental ban.
Judge Mitchell Beckloff ordered the City to pay resident Darby Keen $146,124 in attorneys fees. The fees were incurred during the City’s appeal of the original judgment against the short-term rental ban enacted by the City Council in 2019. Another $500,000 in legal fees remain in contention over the original case, in which Superior Court James Chalfant ruled against the City’s ban. Those fees are under consideration by an appeals court.
Attorney Frank Angel, who represented Keen, said that there are larger issues for the City than just the fee award. He said that the City repeatedly made decisions that were both legally and financially unsound.
“The City Council could have saved itself this expense and the expense of paying their own attorneys had they not been so stubborn in fighting us all the way up to the California Supreme Court, based on legal theories that made no sense for the coastal zone,” Angel said. “Within days after we filed suit in July 2019, we offered to dismiss the case in return for the City’s agreement to follow the Coastal Act by submitting its STR ban to the California Coastal Commission for the commission’s approval, or simply refrain from enforcing it — what the courts ultimately ordered the City Council to do. The City Council tersely rejected our offer. Had they accepted it, they would have saved themselves hundreds of thousands of dollars in fees — the award plus the fees charged by the City Attorney and his law firm — and would have avoided the loss of millions of dollars in TOT [bed tax] income.”
The City Council enacted a ban on short-term rentals in 2015 and then passed a more aggressive ban in 2019. The latter included the hiring of an outside firm to pursue not only short-term rentals but to identify the offering of such rentals on popular online platforms such as Airbnb, HomeAway, and Vrbo. The 2019 ban included $1,000 per day fines for short-term rentals.
The Council at the time was responding to a widespread resident concern. As online platforms like Airbnb proliferated, hundreds of short-term rentals were listed in Manhattan Beach. At public hearings and during the City Council election just prior to the 2019 ban, residents expressed concerns that such commercial activity would erode neighborhood character.
But Angel argued the Council overreached in its attempt to regulate short-term rentals and in so doing flew in the face of the Coastal Act, which is intended to protect public access to the coast. The Coastal Commission has been explicit in its protection of STRs, and in 2016 issued a statement warning cities not to enact outright bans. Angel noted that the Coastal Commission has routinely worked with cities that have sought to regulate short-term rentals. Santa Cruz, for example, banned new non-owner occupied short-term rentals (older ones are grandfathered in) and capped off those rentals to 250 permits citywide. In San Francisco, only permanent residents who occupy the unit annually for at least 275 days can engage in short-term rentals, and unhosted rentals are capped at 90 days per year. Both of those cities arrived at their regulations through a Coastal Commission approval process. The City of Manhattan Beach met with Coastal Commission staff in 2015 and 2016 but did not broker an amendment to its Local Coastal Plan (which is overseen by the commission) and instead went forward with its ban.
“The vast majority of coastal cities in California understand their responsibilities under the Coastal Act,” Angel said. “They have worked with the California Coastal Commission to enact reasonable regulations of short-term rentals — regulations that serve to protect the interests of all stakeholders.”
The City’s ban outside the coastal zone, which includes the areas west of Highland, remains intact. City leaders have argued that the very character of Manhattan Beach is at stake. At the time of the California Supreme Court’s ruling against the City, Councilperson Steve Napolitano argued that the courts were ignoring the larger negative issues that short-term rentals cause in cities. He believed that the Coastal Commission, which governs coastal access and has thus supported STRs in coastal zones, needed to be corrected by the courts.
“The California Supreme Court made a big mistake,” Napolitano said. “This is an issue of statewide importance — not just because it’s an issue of local control, it’s also an issue of housing. The Coastal Commission has made it clear that they want to force us to allow short-term rentals, however, that flies in the face of what we’ve been told is the State’s number one priority, which is housing. All this does is ensure that long-term renters in our coastal zone will be kicked out to make way for short-term rentals with a revolving door of people who aren’t invested in our community. Profits over people is a direct threat to what makes Manhattan Beach special and it’s time everyone wakes up and realizes that before it’s too late.”
The City released a statement regarding the legal status of short-term rentals that suggested its efforts to curtail STRs were in keeping with state law.
“The California State Legislature characterizes short-term rentals (STRs) as ‘commercial’ uses, declaring in the Housing Crisis Act of 2019 that local governments may adopt policies that prohibit the commercial use of land that is designated for residential use, including STRs, to avoid taking away permanent housing from the market,” the statement said. “The Court of Appeal in this case did not disagree with the importance of housing; the Court’s very limited holding was that the City must amend its Local Coastal Program before prohibiting STRs in the City’s Coastal Zone. The City received notification of the recent award issued by the Superior Court and will consider its options.”
Angel has suggested that the City refund all the people fined for having short-term rentals under the illegal ban. He has also been sharply critical of the City’s handling of the case, arguing that another law firm should have assessed the case for the City prior to appeal. City Attorney Quinn Barrow and the private firm for which he is a partner, Richards, Watson, and Gershon, have handled the case. Angel suggested this presents a possible conflict of interest since the firm would have a financial incentive to appeal even a weak case.
“Any City Council with some understanding of ethics would have hired another law firm to at least review the merits of the legal theory [employed by Barrow’s law firm],” Angel said.
Angel and his client, Keen, have attempted to discover how much the City paid Richards, Watson, and Gershon for its work on fighting for the City’s ban. He said the City has refused to share what those costs are.
“That’s a cover-up, right?” Angel said. “It’s a cover-up of what years of meritless defense litigation have cost the City.” ER
