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Santa Barbara News Press

Santa Barbara was dealt a minor blow as officials for a third time try to get a lawsuit over the city's short-term vacation rental ban thrown out of Ventura County Superior Court.

"This is a victory for those people who could not otherwise enjoy the Santa Barbara coastline."
--Theo Kracke

News Press Front PageJudge Mark Borrell overruled the city's response to four causes of action in a lawsuit filed by Theo Kracke, who owns a short-term vacation rental on Arrellaga Street and operates Paradise Retreats, which operates 27 such rentals in Santa Barbara in the city's coastal zone.

The city attorney's office now has until July 20 to argue how the judge erred in, among other things, ruling that the City Council's 2015 ban on short-term vacation rentals constitutes a "development" under the state Coastal Act in that it changed intensity of use and of access to the shoreline.

For decades, these rentals offering alternative lodging near the coastline operated undisturbed. Owners were issued business licenses and the city collected from them the transient occupancy tax, or bed tax, just as it does from hotels and motels.

City officials even offered an amnesty program in 2010 and 2014 to identify and bring into compliance owners who had not paid their bed taxes.

Some residents have complained about the rentals, which, as a result of the ban, dropped from 349 registered units in Santa Barbara in June 2015 to 215.

Mr. Kracke decided to fight the ban on the grounds it violates the Coastal Act and the city's own local coastal plan, land-use regulations, zoning ordinances, zoning district maps and implementing actions that, together, determine future development on the coast.

He also claims the city should have applied for and received a coastal development permit to obtain approval of the ban.

In its objection or demurrer to Mr. Kracke, the city wanted Judge Borrell to dismiss his request that the judge consider the local coastal plan in his pre-trial deliberations, City Attorney Ariel Calonne arguing it is irrelevant to the lawsuit.

But the judge disagreed.

In his June 26 ruling, the judge says given Mr. Kracke's amended petition is premised, in part, on the requirements of the local coastal plan "and on allegations the city failed to conform to those requirements in issuing a short term vacation rentals ban, the terms of the LCP are relevant."

The judge ruled Mr. Kracke met the burden to allege the ban constitutes a development, even though there is no physical work being done.

Theo Kracke "will now have to prove that enforcement of existing law meets the legal definition of development.... That will be hard for him to do." 
--Ariel Calonne,Santa Barbara city attorney

The California Coastal Commission is of the opinion that regulating short-term vacation rentals "represents a change in intensity of use and of access to the shoreline, and thus constitutes development to which the (state) Coastal Act and (local coastal plans) must apply."

It further states that a prohibition on these rentals "is contrary to the California Coastal Act."It further states that a prohibition on these rentals "is contrary to the California Coastal Act."Instead of a ban, "a fair and narrowly tailored" approach to regulating these rentals "will promote and expand affordable coastal visitor opportunities while addressing neighborhood concerns."

Santa Barbara's local coastal plan even states "lower cost visitor-serving uses shall be protected and encouraged."

In addition, preservation of lower-cost lodging and restaurants is important.

Judge Borrell found that Mr. Kracke's allegations establish that the city, through the ban, intended to change the density or intensity of use of land or of access to the coastline, thus constituting a development.

"The legislature has decided that the provisions of the Coastal Act are to be construed liberally to accomplish its purposes and objectives. Interpreting the definition of 'development' as the court has here complies with that mandate," the judge writes.

"The fundamental purposes of the Coastal Act are protecting California's coastline and ensuring state policies prevail over local concerns," the judge writes. "Requiring the city to obtain a (coastal development permit) before implementing a prohibition on residential areas of Santa Barbara's coastline is in harmony with both."

The city argued that the council merely acted to enforce existing ordinances.

Judge Borrell found otherwise.

"The allegations (by Mr. Kracke) describe an identifiable choice between two existing yet conflicting policies to allow and tax STVRs or prohibit them. The City Council chose to prohibit them as a deliberative body after public hearings."

It also provided funds to prosecute offenders.

Mr. Calonne could have chosen not to prosecute. But the Kracke complaint establishes something else.

"To the contrary," writes Judge Borrell, "the facts alleged show that these prosecutions were, as the council intended, 'competently and aggressively managed.' "

Mr. Calonne was upbeat in his assessment of the ruling, telling the News-Press, "The trial court has now twice rejected Kracke's request for an injunction. This means that the demurrer ruling does not stop the city from continuing its vacation rental enforcement actions. We intend to continue to pursue these enforcement actions."

The Borrell ruling is "not a setback," he said. "We were not able to get the case thrown out without a trial."

Mr. Kracke, he added, "will now have to prove that enforcement of existing law meets the legal definition of development" under the Coastal Act.

"That will be hard for him to do.""That will be hard for him to do."

In a statement, Mr. Kracke, who is represented by Travis Logue and Jason Wansor of the Santa Barbara law firm Rogers, Sheffield & Campbell LLP, said he is thankful "for the court's thoughtful and well-reasoned decision.

While acknowledging his case is far from won, "This is a victory for those people who could not otherwise enjoy the Santa Barbara coastline," he said.

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This article was written by Scott Steepleton and originally appeared in the Santa Barbara News Press on July 9, 2017. You can email the author at: ssteepleton@newspress.com


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