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HOA regulations trump city ordinance as far as short-term vacation rentals are concerned
By Andrea Papagianis
Nearly a week after the Jan. 15 application deadline for vacation rental permits, speakers stood before the City Council Tuesday night asking officials to accept their requests.
As the five-member body moved toward its final vote allowing rentals of less than 30 days in residential neighborhoods, five speakers from Niguel Beach Terrace urged the city to recognize their applications.
The city has so far denied permits in the condo community off Selva Drive because the neighborhood’s covenants, conditions and restrictions do not allow vacation rentals, City Attorney Patrick Munoz said.
But speaker after speaker contested this Tuesday, urging the city to issue permits or lose out on revenues.
“I view myself as a business owner in the city of Dana Point,” said Aaron Albertson of Laguna Beach, who owns two rentals in the complex.
“The mayor commented on the city’s desire to have strong relationships with the business owners,” Albertson added. “I hope we get that service and are granted our permits.”
The city’s changes now allow vacation rentals in communities where homeowners associations also allow them. The issue has long been debated in a vacation town, where residents and rentals owners try to strike a balance between day-to-day and vacation lifestyles.
Up to this point, city codes were silent on the issue, meaning vacation rentals were viewed as an illegal practice. But it was an unlawful use that went unregulated and unenforced. Now, owners of short-term vacation rentals must go through a permitting process, which involves an inspection, in order to operate.
Under the city’s change, short-term rentals will be subject to the Transient Occupancy Tax (TOT) that hotels, inns and campsites are. This 10 percent bed tax is placed on revenue generated by short-term rentals of less than 30 days.
According to a staff report, the city could collect roughly $400,000 annually from existing rentals. For now, at least, monies from Niguel Beach Terrace will not come.
Munoz said the city’s rental ordinances were structured to give neighborhoods the right to choose. He added that homeowners needed to vet the vacation rental issue internally, without city involvement.
Multiple owners mentioned a recent Niguel Terrace HOA rule change allowing vacation rentals. But with the homeowners association’s CC&R reading, “No owner shall be allowed to lease his unit for hotel and transient purposes,” according to Munoz, that rule is invalid.
“We have long interpreted our rules and regulations … to allow short-term vacation rentals,” said Betha Everett of Laguna Niguel. “We view this as a right of our home ownership.”
Councilmen Scott Schoeffel and Steven Weinberg expressed a desire to stay out of the neighborhood’s dispute, and encouraged homeowners to come to a resolution on their own.
Mayor Lisa Bartlett echoed the sentiment.
“You have a number of units there that are rented right now on a short-term vacation rental basis, and I think it is incumbent on those homeowners to get together,” Bartlett said, “If your association agrees at large that they want to have short-term rentals, then amend your CC&R and we can all move forward.”
The ordinance was approved in a 4-1 vote, with Councilman Carlos Olvera dissenting.
A recent search on www.vrbo.com (Vacation Rentals by Owner), shows about 220 rentals in Dana Point and Capistrano Beach. The site shows nearly 140 rentals in the Monarch Beach area, with many searches pulling up condos located in Niguel Beach Terrace, which neighbors Strand Vista Park.
Tuesday, Albertson estimated between 45 and 65 units in the complex are used as vacation rentals, which could account for a majority of such rentals—highly concentrated in one area—in the city.
Regardless of their numbers, no permits will be granted to Niguel Beach Terrace vacation rental owners until the neighborhood’s CC&R allows such rentals, staff said.