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Injunction Filed to Halt Enforcement of Santa Monica's Short-term Rental Law HOME ad for NO on LV Initiative link

Santa Monica Real Estate Company, Roque and Mark
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Harding, Larmore
Kutcher & Kozal, LLP

Convention and Visitors Bureau Santa Monica

By Niki Cervantes
Staff Writer

October 6, 2016 -- Attorneys for Airbnb-style vacation “hosts” in Santa Monica are seeking a temporary injunction in federal court to stop the City's new short-term rental law, claiming the ordinance -- among the nation's toughest -- is unconstitutional and causing “irreparable harm” to residents.

The preliminary injunction is set for a hearing October 17 in federal court in downtown Los Angeles before Judge Otis Wright II, said attorney Robert L. Esensten, who represents retired Los Angeles public school teacher Arlene Rosenblatt and others renting space in their homes short-term through platforms such as Airbnb and HomeAway.

Esensten’s law firm filed a class action suit against the City in July over the short-term rental law adopted in May of 2015 ("Santa Monica Rolls out Strict New Law on Short-term Vacation Rentals," June 17, 2015).

City officials also created a special team to enforce the law, which has been intently engaged in enforcement since then with a battery of warnings and fines and, ultimately, litigation ("Santa Monica Enforcers Crack Down on Short-Term Rentals," March 22, 2016).

“We are seeking a preliminary injunction to stop Santa Monica from enforcing ” the ordinance until the issue is legally settled, Esensten said.

Due to the City’s “continued and rigorous enforcement of the unconstitutional ordinance, property owners and prospective travelers have been deprived of their constitutional rights, have been subjected to criminal prosecution and punishment, including imprisonment, and have suffered other irreparable injury,” the injunction said.

City Attorney Marsha Moutrie was not immediately available for comment.

Esensten would not comment on the financial impact of City’s short-term rental law so far on hosts like Rosenblatt and her husband, who had been renting their two-bedroom home for $350 per night while they were on vacation, according to the complaint.

But the suit said that by striking hosts like the Rosenblatts with such restrictions, the City is unfairly limiting the competition and opening the door to “potential for the ultraluxurious Santa Monica hotels to exploit travelers to higher hotel prices.”

It said 25 cities in California, as well as hundreds across the country, have enacted similar restrictions, and that if Santa Monica's law -– one the first and toughest -– is not stopped, more cities will follow.

That would lead to “continued diminishment of the national market for short-term rentals to the detriment of the Nation as a whole,” the litigation said.

Santa Monica, like many cities, already banned short-term vacation rentals but the law was not enforced and did not become a public issue until the market began to boom with the popularity of services such as Airbnb, HomeAway and VRBO.

As complaints from neighbors about related congestion, noise and other problems increased, cities began stepping in with regulations. It has been especially the case in cities like Santa Monica, worried about landlords worsening a housing shortage by taking units off the market to save them for more profitable vacation rentals.

Santa Monica passed some of the nation’s most stringent regulations. Among other rules, the ordinance allows residents to rent space in a home for less than 30 days only if the owner continues to live in the residence.

Registration is needed and hosts are also required to pay the City’s 14 percent hotel tax.

Although Santa Monica’s law has only been enforced since mid-2015, “the travel industry has already felt its effects,” the complaint said.

It said tourism-related jobs had increased steadily by six percent for the three preceding years in Santa Monica, but dropped two percent afterward the law was enforced.

The suit says such potential to alter the national economy “is reserved by the Commerce Clause to Congress and may not be accomplished piecemeal through individual state or local statutes.”

Airbnb also is suing the City, alleging violation of the U.S. Constitution ("Santa Monica Sued by Airbnb," September 7, 2016).

Santa Monica’s enforcement of its new law on short-term rentals, which it calls “home sharing,” has made headlines -- particularly because of its determination to enforce an ordinance those in that market believed was not truly enforceable.

The City has said it is the first in the nation to take such an aggressive approach to enforcement. As of this March, the effort had yielded more than $40,000 in fines. Enforcers removed more than 600 illegal listings and closed about 100 cases by winning compliance.

Santa Monica also is going after illegally operating hosts in court.

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