The Dana Point City Council on Tuesday night, March 7, voted, 3-1, to impose a $500 fee for homeowner associations to apply for coastal development permits that would restrict or prohibit short-term rentals (STR) within their communities.
Councilmember Michael Villar was the lone no vote, while Councilmember John Gabbard was absent from Tuesday’s meeting.
City staff late last month conducted a virtual meeting to discuss the coastal development application process with HOA representatives. When the council met Tuesday night, it considered a fee schedule for such applications.
With the council’s vote, the fee for an HOA to apply for the permit to regulate short-term rentals will be a nonrefundable $500 per application. According to a city staff report, the fee reflects the costs of reviewing the application.
There are approximately 53 HOAs within the city’s coastal zone, according to the report.
After the city officially adopted programs to regulate vacation rentals within and outside of Dana Point’s coastal zone, some HOAs are looking to prohibit homes in their communities from being used as STRs.
During its Feb. 7 meeting, the City Council voted to accept an STR program approved by the California Coastal Commission in late November 2022. The program only permits and regulates vacation rentals within the city’s coastal zone.
At the meeting, councilmembers also voted to adopt—through an urgency ordinance—the program that regulates STRs outside of the coastal zone. The urgency ordinance was approved in a 4-1 vote and bypassed the need for a second reading of the ordinance to officially adopt the program.
For an HOA within the coastal zone to legally prohibit or limit vacation rentals—and for its ban to hold up in court should it be sued—its restrictions must either predate the 1976 Coastal Act or it must obtain a coastal development permit, according to the staff report.
Though the city’s program governing vacation rentals in the coastal zone does not require HOAs to acquire a coastal development permit to prohibit STRs, the city has created a streamlined application process to assist HOAs in applying for the permit.
In the report, the city noted that it “honors the desires of each HOA’s decision to prohibit or allow STRs,” and will ensure covenants, conditions and restrictions (CC&Rs) are followed by requiring vacation rental applicants to include a letter from the association confirming that STRs are permitted within the community.
The city said it will not issue an STR permit without HOA approval, according to the staff report.
HOAs outside the coastal zone do not need to apply for a coastal development permit to prohibit or restrict vacation rentals.
Ahead of Tuesday’s meeting, some residents voiced concerns with the effect that banning short-term rentals within HOAs could have on the density of vacation rentals outside of the associations.
Dana Point resident Mark Zanides, one of the people who appealed the city’s STR program to the California Coastal Commission in July 2022, pointed to the city’s $4,628 fee for a residential development permit for a structure within the city’s coastal zone to argue against the reduced permit application fee.
In a letter to the City Council, Zanides said that staff should be “scrupulously neutral in this matter” and not assist HOAs with CDP requests.
The city explained in its staff report that because the coastal development permit review “is based on a program and not a physical development, as is typical of a CDP application, the reduced fee is justified.”
Capistrano Beach resident Toni Nelson wrote that those living outside of HOAs “will not only be burdened with at least double the STR saturation contemplated in the approved program, but City funds that would otherwise be spent on services to benefit all of us will be used to harm our neighborhoods.”
During Tuesday’s council meeting, Councilmember Jamey Federico explained that he envisioned the CDP application review process to include a review of an HOA’s CC&Rs to show that it includes a ban on short-term rentals.
Community Development Director Brenda Wisneski explained that the CDP application review will entail staff requesting a letter from an HOA’s board indicating its request for a prohibition of vacation rentals. The coastal development permit application will then be reviewed by the Planning Commission.
Wisneski clarified that the application fee is not a subsidized fee, as some public comments had stated, and represents the staff time needed to review applications.
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