As much as many like to complain about the legal fees racked up by the City of Santa Monica, the City Attorney’s Office is on a winning streak when it comes to the city’s highest profile lawsuits. Following a string of legal victories concerning the consent decree over the Santa Monica Airport, the city announced two more wins in its efforts to regulate short-term rentals made popular on websites such as AirBnB.

The first announcement concerned a final judgement made Shabi Jafri, a local real estate agent and operator of an illegal vacation rental business which unlawfully took approximately nine residential housing units off of the rental housing market. But the bigger news was the second announcement, that the city had won an appeal of its ordinance regulating short-term rentals brought by AirBnB and HomeAway. The ruling could return hundreds units to the long-term rental market, which could relieve some of the pressure on the city’s perpetually over-heated housing market.

Basically, the City’s regulations require short-term rental hosts to register with the city and obtain a business license. 187 units were registered with the city, but a review of home sharing websites showed upwards of 950 units were being offered. After similar regulations were ruled legal in Northern California, thousands of short-term rentals disappeared from the market almost immediately.

AirBnB vows another appeal and is framing the issue as the city looking for ways to keep people of lesser means from enjoying all that Santa Monica has to offer.

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“For more than two years, Airbnb sought to work with the City of Santa Monica on a solution that ensures middle and lower class families who want to visit the coast can find an affordable place to stay,” said Airbnb spokesman Charlie Urbancic to the Santa Monica Daily Press. “Despite our efforts, the city insisted on an approach that violates federal law.”

And the efforts were spread well across the board. The lawsuit against the city claimed the regulations violated two Constitutional Amendments, federal law and state law. However, the judge ruled in the city’s favor, noting a similar ruling that led to a settlement between AirBnB and the City of San Francisco last year.

The court declined to rule on whether or not the regulations violate the California Coastal Act, a state, not federal law. The homesharing websites can pursue this line of attack in state court should they see a potential advantage.

The lawsuit could have repercussions regionally, as the City of Los Angeles is undertaking a process to create its own AirBnB regulations that will be completed later this year.

Before going to court against Jafri last year,  Code Enforcement Officers first attempted to gain compliance through issuance of multiple Administrative Citations.   Instead of coming into compliance with the city’s demands, Jafri continued to operate his vacation rentals within various residential dwelling units within the City while attempting to avoid city regulators. Eventually, they caught up with him.

Jafri plead guilty to five misdemeanor counts of operating an unlawful business within the City.  Under a plea agreement with the City Attorney’s Office, the owner was placed on formal diversion with 24 months of probation and ordered to:

  1. Perform 140 hours of court approved community service.
  2. Pay restitution to the City of Santa Monica in the amount of $3,600.25 in investigation costs.
  3. Comply with all laws, including the City’s Home-Sharing Ordinance’s prohibition against hosting, facilitating, aiding, or advertising a vacation rental in the City.

“This is a positive and fair result,” said Code Enforcement Manager Sharon Guidry.  “When the Council adopted Santa Monica Municipal Code Chapter 6.20, which reaffirmed the City’s longstanding prohibition against vacation rentals in Santa Monica, it clearly reiterated its deep interest in and concerns about protecting Santa Monica’s diverse permanent rental housing stock.  My team of dedicated Code Enforcement Officers are committed to enforcing this important legislation and ensuring that Santa Monica remains a place that people from all income levels and backgrounds can proudly call home.”