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CC AG PKT 2012-09-10 #H
9EAL e 'V r FS AGENDA STAFF REPORT DATE: September 10, 2012cq�lFORN,i TO: Honorable Mayor and Members of the City Council THRU: Jill R. Ingram, City Manager FROM: Greg Hastings, Interim Director of Community Development SUBJECT: REQUEST FOR AN EXEMPTION FROM CONDITIONAL USE PERMIT REQUIREMENT FOR THE TWO EXISTING SHORT -TERM VACATION RENTAL UNITS AT 1310 -1310 '/Z OCEAN AVENUE (OWNER: ROBERT AND NANCY BECK) SUMMARY OF REQUEST Hold a public hearing regarding the request for an exemption to the City's Conditional Use Permit (CUP) requirement for the two existing short term vacation rental units located at 1310 -1310 %z Ocean Ave. owned by Robert Beck and Nancy Beck ( "Owner"). Upon the close of the public hearing, staff recommends that the Council deny the request for an exemption, and extend the time within which the Owner may apply for a CUP from July 6, 2012 to October 10, 2012. BACKGROUND On May 14, 2012, the City Council adopted Interim Ordinance No. 1619 -U (the "Ordinance "), which extended and amended previously adopted interim regulations regarding short term vacation rentals. The Ordinance amended the interim regulations by limiting vacation rentals to Old Town and requiring all property owners wanting to rent property on a short-term basis, including those currently renting their property on a short-term basis, to obtain a CUP. The Ordinance gave the owners of the existing vacation rentals until July 6, 2012 to apply for a CUP. The City has received CUP applications from 11 of these owners, and already approved a CUP for the one located at 112 8th Street. To date, no application has been denied. The Ordinance also gave the owners of the previously operating non - conforming vacation rentals the option of requesting "an exemption from, or extension of the terms and provisions of this ordinance, in order to amortize the property owner's investment." By letter dated June 20, 2012, the Owner has applied for an exemption. The letter is attached as Attachment B. Agenda Item H DISCUSSION Police Power of Zoning It is well established that cities have the police power to regulate the use of land. Cities may adopt zoning regulations to allow land uses appropriate for a particular area and to prohibit land uses that are inappropriate for a certain area. Periodically, cities review their zoning laws to determine whether uses are compatible with other uses in the same zoning district. Prior to October 11, 2010, the City's Zoning Code did not list the business of short -term vacation rentals or short-term rentals as a permitted use for residentially -zoned property. Thus, under the Code, such uses were not permitted. Nevertheless, several property owners began to rent residential properties on a short-term basis. Further, without the knowledge of the City Council, City Manager, City Attorney or Community Development Department, the City's Finance Department issued business licenses for a number of such businesses without conferring with Community Development as to whether such business is a permitted use in residential zones. Such a business license, however, does not confer any land -use entitlement or provide any vested right to a particular use. During discussions in connection with the modernization of and amendments to the City's Zoning Code, it came to the City Council's attention that some property owners were renting residential properties on a short-term basis. The City Council decided to permit short-term vacation rentals (defined in the Code as rentals for the duration of less than 30 days) as a conditionally permitted use. Thus, upon the adoption of Title 11 in 2010, a property owner could apply for a conditional use permit ( "CUP ") to rent its residential units for terms less than 30 days. In addition, the City Council determined that property owners who had obtained a business license prior to January 1, 2010, and were paying the City's transient occupancy tax (TOT) for short-term rentals could continue to operate without a CUP. For the purposes of this staff report, such uses without a CUP will be referred to as "non- conforming uses." Earlier this year, the Council reexamined the issue of allowing such businesses in residential zones. Based upon the adverse negative impacts —e.g., noise, accumulation of trash, loitering, unsanitary conditions, overcrowding, demands on police services, traffic congestion, excessive demand on scarce parking resources, etc. —on neighboring properties associated with short-term rentals, the Council adopted Ordinance Nos. 1618 -U (effective for 45 days) and 1619 -U (the "Ordinance "), which modified Ordinance No.1618 -U and extended the term of the interim regulations for 10 months and 15 days. The City intends to schedule a public hearing before the Planning Commission in September to consider permanent regulations, and will schedule a subsequent Council public hearing to consider the Planning Commission's recommendation shortly thereafter. Page 2 The interim ordinances imposed interim regulations upon short-term rentals to alleviate such adverse impacts during the pendency of studies addressing such uses. One of the requirements of the Ordinance is that all non - conforming uses apply for a CUP by July 6, 2012 so that the City can conduct a public hearing and receive testimony and other evidence to determine whether the non - conforming use is compatible with surrounding uses. The Ordinance also allows property owners of non - conforming uses to apply for an exemption from the terms of the Ordinance or extension of the July 6, 2012 application deadline. The Owner has filed a request for an exemption. In general, the purpose of providing an opportunity for a property owner to request an exemption from the provisions of an ordinance which may result in terminating an existing use is to provide a reasonable amortization period within which the owner can recoup the economic investment spent in establishing the use. Cities have established a broad range of amortization periods depending on the evidence presented by the property owner. In some instances, cities will grant an exemption where the owner has presented compelling evidence showing hardship or substantial expenditures in reliance upon existing zoning. Consider the following example: a property owner purchases a property zoned for industrial use and, in reliance upon that zoning, constructs a multi - million dollar waste recycling facility. Thereafter, the city subsequently rezones the property for residential use. In such case, the amortization period to recoup the investment could be as long as 20 -60 years before the owner would be required to discontinue the use and demolish the structure. Thus, due to the compelling evidence presented by the owner, a city may decide to exempt that property from the requirements of the Ordinance, rather than establish a lengthy amortization period. For other uses, the amortization period to recoup an economic investment is much shorter. For example, many cities have successfully eliminated non- conforming billboards by imposing a ban on such signs in conjunction with an amortization period between 1 to 3 years. In such case, the cities would not exempt the billboards from the terms of the ordinance prohibiting the use, but would, in essence, extend the time within which the property owner would have to recoup its investment prior to discontinuing the use. What constitutes a reasonable amortization period must be determined on a case -by -case basis. One important consideration is whether the case concerns a non - conforming structure or a non - conforming use. Courts have generally approved of longer amortization periods for non - conforming structures to allow property owners to recover the economic investment in building the structure. Termination of a non - conforming use that results in minimal economic hardship can therefore be amortized more quickly. Another consideration is the amount of an owner's investment in the property for the purpose of the non - conforming use. If there has been a large investment that would be lost if the use were eliminated, the amortization period must be long Page 3 enough for the owner to obtain a reasonable return on the investment. For instance, consider the following: a person pays a premium price for an existing, legally permitted restaurant that has a full liquor license. The purchase price far exceeds the price for an equivalent restaurant without a liquor license. ABC transfers the existing liquor license to the new owner, and the city issues an occupancy permit to the new owner. The new owner subsequently applies and obtains a discretionary land use entitlement and building permit to expand the bar area. In reliance upon the building permit, the owner expands the bar area, and purchases state of the art liquor dispensers. The city subsequently prohibits the sale of alcohol in the zoning district where the restaurant is located. In such case, the city must provide an adequate amortization period for the owner to recoup the substantial investment incurred in reliance upon the existing zoning at the time of purchase and the validly issued land use entitlements. Conversely, investments or property improvements that are not related to the non - conforming use or that would not be impacted by terminating the non- conforming use do not necessarily require an exemption or any lengthening of the amortization period. For instance, at the time of the remodeling of the restaurant in the above - described example, the owner installs new booths in the dining area. Such new booths can be fully utilized by patrons purchasing food and soft drinks, and thus would not be rendered useless by the prohibition on the sale and service of alcohol. Finally, there may be some established uses that are subsequently prohibited that may not require any amortization period because the property owner can still use the property for the use for which it was built. For instance, a person purchases a restaurant in a city that does not allow amplified music at restaurants. Subsequent to the purchase, a city decides to allow amplified music at restaurants. The restaurant owner hires a rock band to play at the restaurant. Based upon complaints from adjacent property owners, the city repeals the live entertainment ordinance. In that the property owner may still use his property for the permitted use at the time of his purchase, no amortization period to phase out dancing is required. Due to the unique nature of using property improved for residential use for a commercial use with frequent turnover, it may be difficult for an owner to establish that a property is entitled to an exemption from the CUP requirement. For many reasons, the traditional grounds for exempting a property from land use regulations simply do not apply to renting units on a short-term basis, including the following: • The Ordinance merely requires the property owner to apply for and receive a CUP for the ability to rent the property out for periods shorter than 30 days • If the City makes the necessary findings and issues the CUP, the short- term rental use of the property runs with the land Page 4 If the City is unable to make the necessary findings (e.g., that the proposed use of the property is not compatible with surrounding uses) to grant the CUP, the property owner can still use the property as a residence or as rental property, consistent with the zoning of the property v Unlike the above examples, Ordinance 1619 -U will not require the removal of any structures under any circumstances; if a property owner does not obtain a CUP to use the property as a short-term rental, the property owner will still be able to use the existing structure for the use for which it was built: residential use O If a property owner does not obtain a CUP to use the property as a short- term rental, the property owner will still be able to rent the property for periods 30 days or longer. The Ordinance provides that the Council may consider the following in making its determination as to a request for an exemption or extension: (i) The length of the proposed abatement period in relation to the owner's investment in the use of the property as a vacation rental. (ii) The length of time the vacation rental was operating prior to the date of nonconformity; and (iii) The potential harm to the public if the unit or units are rented on a short term basis after July 6, 2012. Request For An Exemption The Owner's request for an exemption is contained in the June 20, 2012 letter (attached as Attachment B) addressed to the City Manager. Pursuant to the Ordinance, the Owner bears the burden of proof in attempting to establish a basis for its request. For the following reasons, the Owner has not met such burden because the information provided does not support the granting of the exemption. The Owner represents that he bought the property with an existing duplex in November 2005 "for the ultimate purpose of converting it to a vacation rental unit." However, short-term vacation rentals were not a permitted use in 2005. Owner has provided no information that the duplex was built as a short-term vacation rental business, or in reliance upon any zoning that permitted rental of the duplex for periods less than 30 days. The Owner admits that the property was occupied by long -term tenants at the time of the purchase, and that he continued to rent the property for periods 30 days or longer after spending $80,000 in capital improvements and incurring expenses of $58,336. According to the letter, the Owner spent over $150,000 in capital improvements "over the next two to three years." However, Owner has failed to establish that such improvements can be used only on a short-term basis. Subsequent to installing Page 5 the above - mentioned improvements and incurring the above - mentioned expenses, the Owner then applied for a business license for a "vacation rental." According to City records, the City issued the first business license for such business on November 9, 2010. The existence of a business license is not a factor as to whether the Owner is entitled to an exemption from a land use regulation. Each of the above reasons independently supports denial of the request for an exemption from the Ordinance's CUP requirement. Moreover, nothing in the letter suggests that: • The duplex cannot be used as a multi -unit residence The duplex cannot be used as rental property • The Owner cannot recoup his investment in the property by renting the units for 30 days or longer. Finally, the Owner claims that it has obtained a vested right to rent the property on a short-term basis. As noted above, issuance of a business license does not confer any vested right to a particular land use. Even if the doctrine of vested rights somehow applied to this situation (once again, it does not apply) the statements in Owner's letter support the conclusion that no rights vested to rent the units on a short term basis. Controlling case law on this subject establishes that vested rights accrue only where an owner incurs substantial expenditures after it has received a validly- issued land use entitlement. In California, an owner does not acquire a vested right to complete a proposed project unless (1) he or she has received a valid building permit or its functional equivalent and (2) the developer has performed substantial work and incurred substantial liabilities in good faith reliance on the permit. Avco Community Developers, Inc. v. South Coast Reg'1 Com'n, 17 Cal.3d 785, 791, 793 (1976). In Avco, Orange County had rezoned a landowner's acreage for a planned community development, approved a final map and issued rough grading permits for a portion of the project. Avco Community Developers had prepared studies, graded the land, and completed storm drain, culvert, and street improvements, spending over $2 million on the development. Then the voter - approved Coastal Zone Conservation Act took effect, requiring any person developing in the coastal zone to obtain a permit from the Coastal Commission. Avco argued that it was exempt from the Act's permit requirement because it had a vested right to complete development. The California Supreme Court disagreed. It held that because Avco had not yet received a building permit or its functional equivalent, it had no vested right — it could not develop without approval from the Coastal Commission. The Avco rule is still the law in California. In sum, the Owner has failed to meet its burden of proof to establish that the property should be exempted from the requirement to obtain a CUP to allow the renting of the property on a short-term basis. Page 6 RECOMMENDATION: That the Council deny the request for an exemption, and extend the time within which the Owner may apply for a CUP from July 6, 2012 to October 10, 2012. SUBMITTED BY: Greg A. astings, Interim Director of Community Development Attachment: A. Interim Ordinance No. 1619 -U NOTED AND APPROVED: LW T!/ �.� �.. - B. Correspondence requesting an exemption from Interim Ordinance No. 1619 -U Page 7 Attachment A Interim Ordinance No. 1619 -U AN INTERIM ORDINANCE OF THE CITY OF SEAL BEACH EXTENDING AND AMENDING ORDINANCE NUMBER 1618 IMPOSING INTERIM REGULATIONS ON NEW AND EXISTING SHORT -TERM VACATION RENTALS AND DECLARING THE URGENCY THEREOF ORDINANCE NUMBER 1619 -U AN INTERIM ORDINANCE OF THE CITY OF SEAL BEACH EXTENDING AND AMENDING ORDINANCE NUMBER 1618 IMPOSING INTERIM REGULATIONS ON NEW AND EXISTING SHORT -TERM VACATION RENTALS AND DECLARING THE URGENCY THEREOF THE CITY COUNCIL OF THE CITY OF SEAL BEACH HEREBY ORDAINS AS FOLLOWS: Section 1. Ordinance Number 1618 -U. On April 9, 2012, the Seal Beach City Council adopted Ordinance Number 1618 -U, imposing new interim regulations on new and existing vacation rentals. This Ordinance extends and amends the interim regulations for new and existing vacation rentals established by Ordinance Number 1618 -U. Section 2. Interim Regulations. Notwithstanding any other ordinance or provision of the Municipal Code, no property shall be used as a vacation rental while this Ordinance is effective except as permitted by the interim regulations set forth in Section 7 of this Ordinance. Section 3. Term. This Ordinance shall expire, and the interim regulations established hereby shall terminate 10 months and 15 days after the date of its adoption unless extended by the City Council at a regularly noticed public hearing pursuant to California Government Code Section 65858. Section 4. CEQA Finding. The City Council hereby finds that it can be seen with certainty that there is no possibility the adoption of this ordinance, and establishment of the interim regulations thereby, will have a significant effect on the environment. The ordinance imposes greater limitations on vacation rentals in the City than the limitations currently required under the Municipal Code, and will thereby serve to reduce potential significant adverse environmental impacts. It is therefore exempt from California Environmental Quality Act review pursuant to Title 14, Section 15061(b)(3) of the California Code of Regulations. Section 5. Penalty. Violation of any provision of this Ordinance shall constitute a misdemeanor and shall be punishable by a fine not to exceed $1,000 or by imprisonment for a period not to exceed 6 months, or by both such fine and imprisonment. Each and every day such a violation exists shall constitute a separate and distinct violation of this Ordinance. In addition to the foregoing, any violation of this Ordinance shall constitute a public nuisance and shall be subject to' abatement as provided by all applicable provisions of law. It shall be a violation of this Ordinance for a property owner to permit or fail to correct within 3 days of receiving notice: (i) any violation by a vacation renter of this Ordinance or Chapter 7.15 of the Municipal Code (Noise) or (ii) any public nuisance created by a vacation renter in violation of Chapter 7.35 of the Municipal Code. Section 6. Legislative Findings. On May 12, 2012, the City Council considered the adoption of this Ordinance at a duly noticed public hearing and on the basis of the record thereof finds the following facts to be true. a. The City's location and proximity to the coast makes it a popular destination for tourists, many of whom choose to stay in residential units such as, but not limited to, single - family and multiple - family dwelling units, apartment houses, condominiums, cooperative apartments, triplexes, and duplexes on a fewer than 30 days basis as vacation rental units. b. Based on experience in the City and in other jurisdictions, it is known that short -term vacation rentals have the potential to create negative land use impacts for neighboring residential uses. These include but are not Ordinance Number 1619 -U limited to noise disturbances due to late night arrivals and parties with numerous guests and amplified music, insufficient parking, and unsanitary and unsightly trash accumulation. These problems are exacerbated when multiple units on the same property are rented on a short -term basis at the same time and/or to large groups. Moreover, because short-term occupants do not stay in the residence for longer periods, they and their guests have less personal incentive to moderate their behavior to avoid negatively impacting neighboring residents. C. The City Council previously enacted Section 11.4.05.135 of the Municipal Code, which requires vacation rentals to meet certain minimum operational standards. Notwithstanding enactment of Section 11.4.05.135, some vacation rentals in the City have continued to negatively impact neighboring residents. d. After the adoption of Ordinance Number 1618 -U, the City Community Development Department began to study the adequacy of its existing ordinances regulating vacation rentals. The Planning Commission, the City Council and the people of Seal Beach require a reasonable, limited, yet sufficient period of time to consider and study legally appropriate and reasonable policies regulating vacation rentals in order to prevent negative impacts on neighboring residents. Given the time required to undertake the study and planning this situation calls for, the City Council finds that it is necessary to enact interim regulations to ensure that operation of vacation rentals that may be in conflict with the contemplated new development policies are not permitted in the interim. The City Council has the authority to adopt an interim ordinance pursuant to the City Charter and Government Code Section 65858 in order to protect the public health, safety, or welfare. e. Accordingly, the City Council finds that there is a current and immediate threat to the public health, safety and welfare presented by operation _ of vacation rentals not in conformance with the interim regulations set forth below in Section 7. The summer rental season is rapidly approaching and the operation of vacation rentals pursuant to the City's existing regulations will result in that threat to the public welfare unless the interim regulations are immediately effective. Due to the foregoing circumstances, it is necessary for the preservation of the public health, safety and welfare for this Ordinance to take effect immediately. This Ordinance is an urgency ordinance for the immediate preservation of the public peace, health, and safety within the meaning of Government Code Section 36937(b) and therefore shall-be passed immediately upon its introduction and shall become effective immediately upon its adoption. f. All legal prerequisites to the adoption of, this Ordinance have occurred. Section 7. Interim Regulations. Notwithstanding any other ordinance or provision of the Municipal Code of the City of Seal Beach, vacation rentals must comply with the following interim regulations. a. Conditional Use Permit Required. No vacation rentals shall operate or be established unless the property owner obtains a conditional use permit ( "CUP ") in compliance with Chapter 11.5.20 of the Municipal Code. To mitigate the impacts of such rentals on the surrounding neighborhood and City — infrastructure and services, the City may impose reasonable conditions of approval including but not limited to maximum occupancy levels, maximum visitor levels, off - street parking requirements and traffic mitigation measures. b. Limited to Old Town. Vacation rentals are conditionally permitted only in Old Town (Planning Area 1 excepting Surfside). Vacation rentals are prohibited in all other Planning Areas, including but not limited to the areas commonly referred to as the Hill, Leisure World, College Park East, and College Park West. Ordinance Number 1619 -U C. Business License Required. The property owner must obtain a business license prior to operating or establishing a vacation rental. d. Transient Occupancy Tax. The property owner must complete the Transient Occupancy Tax Remittance form prior to operating or establishing a vacation rental and shall pay the Transient Occupancy Tax in accordance with the Seal Beach Municipal Code. e. Maximum Length of Stay. Visitor occupancy shall be limited to a maximum of 29 consecutive days. f. Fire and Life Safetv. The property owner shall implement and conform to fire and life safety requirements required by the Orange County Fire Authority and the City's Building Division. These requirements include, but are not limited to approved smoke detectors in each lodging room, installation. of an approved fire extinguisher in the structure, and the inclusion of an evacuation + plan posted in each lodging room. g• Annual Inspection. The property owner shall comply with the i annual fire and life safety certification procedures of the Orange County Fire Authority. h. Secondary Use. A vacation rental in commercial zones shall be conditionally allowed only in conjunction with an approved commercial use. i. Check -in Time. First -day arrival at a vacation rental is prohibited after 9:30 p.m. All lease or rental agreements must include this prohibition. j. Check -out Time. Vacation renters must vacate the unit before noon on the final day of their tenancy. k. Renter Information and Acknowledgement. Prior to occupancy of a short-term vacation rental unit, the owner shall: (i) obtain the name, address, and a copy of a valid government identification of the primary adult occupant of the short-term vacation rental; and (ii) require the primary adult occupant to execute a formal acknowledgement that he or she is legally responsible for compliance with all applicable laws, rules and regulations pertaining to the use and occupancy of the short-term vacation rental by all occupants of the short-term vacation rental or their guests. The acknowledgement must include the text of Section 7.45.010 of the Municipal Code, which provides as follows: "Upon the initial response of the police department to any disturbance involving loud, unnecessary and unusual noise, the chief of police may, in lieu of or in addition to taking other action authorized by law, give notice to the person or persons in actual or apparent control of the activity creating the disturbance, or to the person or persons in actual or apparent control of the property or premises wherein the disturbance has occurred, or both, that liability may be imposed upon the person or persons receiving such notice for the costs to the city of any subsequent response by the - police department in connection with any continuation or resumption of such disturbance. Such notification shall be in such form as may be approved by the chief of police. The costs of any subsequent response shall be assessed to the person or persons receiving such notice and shall include all costs reasonably incurred by the city in providing law enforcement services and equipment at the scene of the disturbance, including the cost or value of the time expended by police department personnel in making any subsequent response. The method of computing such costs shall be established by the chief of police and approved by the city council. The finance department shall invoice such costs to Ordinance Number 1619 -U the person or persons liable therefor, under this chapter, and such costs shall constitute a debt to the city and be collectible by the city in the same manner as in the case of an obligation under a contract; provided, however, that in no event shall a person's liability hereunder exceed $1,000 for any single subsequent response." This information and acknowledgment shall be maintained by the owner for a period of three years and shall be readily available upon request of any . police officer or employee of the city authorized to enforce this Ordinance or any applicable law, rule or regulation pertaining to the use and occupancy of the short -term vacation rental. I. Trash. Trash and refuse must not be left stored within public view, except in proper containers for the purpose of collection by the City's authorized waste hauler on scheduled trash collection days. The owner or property manager must provide sufficient trash collection containers and service to meet the demand of the occupants. M. Lease Terms: Each new lease or rental agreement for a short -term vacation rental must have a copy of these Permit and Operational Requirements attached to it and must include the following terms, notifications and disclosures, which shall also be posted in a conspicuous location inside the unit: i. The trash pick -up day and applicable rules and regulations pertaining to leaving or storing trash or refuse on the exterior of the property. fl. Notification that the occupant may be cited or fined by the City for violation of any provision of the Municipal Code, including but not limited to amplified sound, including radios, televisions and other electronic devices, that creates a noise disturbance in violation of Chapter 7.45 of the Seal Beach Municipal Code. iii. A recommendation that the occupant participate voluntarily in neighborhood quiet hours by avoiding parties and loud social events between the hours of 10:00 p.m. and 7:00•a.m. iv. The name of the owner or property manager and a telephone number at which that party may be reached at all times. n. Response to Complaints. The property owner or manager must provide the City with a phone number at which he or she can be contacted on a 24 -hour basis regarding nuisance complaints arising at of from the use of the property as a vacation rental. Upon receipt of a nuisance complaint or upon notification that any occupant or guest of the short -term vacation rental has created unreasonable noise or disturbances, engaged in disorderly conduct, or committed violations of the Municipal Code or any state law, the owner or property manager must respond within 45 minutes of receiving such notification and must promptly take corrective action to immediately prevent a recurrence of such conduct by those occupants or guests. Failure to timely respond to calls or complaints as required or take timely corrective action regarding the condition, _ operation, or conduct of occupants of the short-term vacation rental shall be a violation of this Ordinance. Nothing in this Ordinance shall be construed to require or authorize an owner or property manager to act as a peace officer or to intervene in situations that pose a risk to personal safety. The owner or property manager must maintain records of the name, violation, date, and time of each complaint, disturbance, and response and corrective action by owner. Such records must be maintained for at least three years. . o. On -Site Property Owner or Property Manager Required for Vacation Rentals In Excess of 2 Units. A property owner or property manager shall reside on each site that contains more than 2 vacation rental units. Such Ordinance Number 1619 -U property owner or property manager shall be responsible for compliance with the operational and performance standards set forth in this Ordinance. p. Additional Conditions. Additional conditions on the use of any given short term vacation rental unit to ensure that any potential secondary effects unique to the subject vacation rental unit are avoided or adequately mitigated may be imposed pursuant to any CUP required by this Ordinance. Section 8. Abatement and Amortization: Licensed Vacation Rentals. i a. In order to continue renting any unit as a vacation rental, the property owner of any existing, licensed vacation rentals shall file an application for a conditional use permit on or before July 6, 2012. For the purpose of this ordinance, "licensed' shall mean a vacation rental as to which as of January 1, 2010, the property owner had' and, thereafter, has continuously maintained a valid business license, and has registered to pay the Transient Occupancy Tax, and has paid such tax in full compliance with the Title 4: Revenue and Finance, I Chapter 4.35: Transient Occupancy Tax of the Municipal Code. b. Interim Ordinance Number 1618 -U provided an opportunity for each property owner of an existing, licensed vacation rental to continue renting vacation rentals if he or she supplied to the City proof of a rental agreement for use of a vacation rental unit after the effective date of that Ordinance, subject to certain provisions contained therein. The City did not receive any such proof either within the prescribed time, or as of May 3, 2012. C. On or before July 6, 2012, any property owner may request from the City Council an exemption from, or extension of the terms and provisions of this ordinance, in order to amortize the property owner's investment. Such request must be made in writing setting forth the reasons for the request, a proposed abatement period after which the owner either ceases renting any unit for use of a vacation rental unit or obtains a CUP to permit such use, and all -- supporting evidence. The owner shall bear the burden of proof. The City Council shall consider the request at a public hearing and may consider the following: (1) the length of the proposed abatement period in relation to the owner's investment in the use of the property as a vacation rental; (ii) the length of time the vacation rental was operating prior to the date of nonconformity; and (iii) the potential harm to the public if the unit or units are rented on a short term basis after July 6, 2012. The decision of the City Council shall be final. Section 9. Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this ordinance or any part thereof is for any reason held to be invalid, such invalidity shall not affect the validity of the remaining portions of this ordinance or any part hereof. The City Council of the City of Seal Beach hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases be declared invalid. Section 10. The City Clerk shall certify to the passage and adoption of this Ordinance and shall cause the same or a summary thereof to be published and posted in the manner required by law. Ordinance Number 1619 -U PASSED, APPROVED AND ADOPTED by the City Council of the City of Seal Beach at a meeting thereof held on the 14th day of MaV 2012. ATTEST: 11"'; Quinn M. Barrow, City Attorney STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } I, Linda Devine, City Clerk of the City of Seal Beach, California, do hereby certify that the foregoing ordinance is an original copy of Urgency Ordinance Number 1619 -U on file in the office of the City Clerk, passed, approved and adopted by the City Council of the City of Seal Beach, pursuant to the City Charter and Government Code § 36967(b), at a meeting held on the 14th day of May , 2012 by the following vote: AYES: Council Members r NOES: Council Members `` ABSENT: Council Members /,0A, ABSTAIN: Council Members and do hereby further certify that Urgency Ordinance Number 1619 -U has been published pursuant to the Seal Beach City Charter and Resolution Number 2836. A rk Attachment B Request for Exemption June 20, 2012 LAW OFFICES OF BECK & BROWNING 3828 CARSON STREET, SUITE 100 TORRANCE, CALIFORNIA 90503 Phone (310) 316 -4332 Fax (310) 316 -0324 ROBERT BECK ROB ERT. B EC KAB ECKANDB R O W NING. COM TOM HUTCHINSON TOM .HUTCHTNSON(rQBECKANDBROWNING COM June 20, 2012 Jill Ingram, City Manager City of Seal Beach 211 Eighth Street Seal Beach CA 90740 Re: Interim Ordinance 1619 -U Request for Exemption Section 8(c) REtaIE ED JUN 2 5 2012 NICHOLAS BROWNING, III (1947 -2011) This letter is being written on behalf of my wife, Nancy L. Beck and myself, Robert W. Beck, who are the owners of two, two -unit vacation rental units in Seal Beach at 1310 & 1310 %2 Ocean Avenue and 247 17th Street, Seal Beach. My wife and I applied for and were issued business licenses for both of the units, License # RNB0001 and #RNB0002. When we applied for the business license the City issued them under our names in care of our home address of 46 Encanto Drive, Rolling Hills Estates California. We informed the City that we intended to rent these units as vacation rental units. The City issued the business license, it was the City that described the business type as `Vacation Rentals' and the business class as "Room and Boarding Houses" on our business license and continued to classify our units as "vacation rentals ". We understand that the City issued similar business licenses to other owners of vacation rental units. At no time did the City ever inform us that "vacation rental units" were not an approved nor legal use of our property. We registered our units with the City under the Transient Occupancy Tax Ordinance (TOT) and continue to comply with the provisions of the TOT ordinance. Since receiving the letter dated May 16, 2012, from the Interim Community Development Director, Greg Hastings, I have written and called the City for clarification of portions of the Interim Ordinance which we find to be ambiguous. After our recent meeting with Council Member Deaton, Mr. Hastings and the City Attorney we left with the understanding that the City agrees that the Ordinance requires clarification. We also understand that the City intends to conduct further studies, obtain input from residents and owners of vacation rental units and draft a "permanent" ordinance under the "normal" process of adopting an ordinance. We would like to be part of that process. As an attorney and former member of another City Council (and Planning Commission) I feel that I can provide valuable input to the process. MWB- PERSONAUSeal Beach'Letters %Ltr to City Council N3 (exemption request -fine ).doe Jill Ingram, City Manager June 20, 2012 Page 2 of 5 Without prejudicing our right to challenge the Ordinance, we will attempt to comply with those provisions that are clearly expressed, e.g. disclosures to tenants /occupants of the noise ordinance, quiet hours, check in restrictions and compliance with "fire code" regulations. This letter is a request that both of our units be declared exempt under Section 8(c) without conceding that the ordinance is enforceable. We contend that the ordinance was not properly adopted nor are many of its provisions enforceable given our rights under the "Vested Rights Doctrine" (See Davidson v. County of San Diego 49 CaUpp.4`h 639 (1996) and because some of the provisions are vague and ambiguous. As we read Interim Ordinance 1619 -U, we, as property owners, may request from the City Council an exemption from all of the provisions of the interim ordinance. Our interpretation of Section 8(c) is that a property owner may request an exemption from the ordinance, which means that we would never have to apply for a CUP. As written the ordinance provides that an owner may, in addition to or in lieu of a request for an exemption, request an extension of time before we are required to comply with the terms and provisions of Interim Ordinance 1619 -U. The ordinance lacks any elements or any criteria in order to be granted an exemption from this ordinance. (This point was essentially conceded by the City in our recent meeting, that there is no criteria in the ordinance for an exemption: In fact we learned that the insertion of the term "exemption" may have been an oversight, that possibly it should be removed or deleted from the language in 619 -U.) Even the "criteria" for an owner to obtain an extension is not clear based upon our discussion at the recent meeting. It was revealed to me and another owner that the City is interpreting the extension criteria to mean that the City will base the amortization period for an extension on any lease /agreement that an owner entered into prior to the adoption of the ordinance. E.g.: if an owner entered into a lease for their unit(s) whereby the term of the lease ends in December of 2012, that the extension of time within which the owner must file for a CUP is extended until after that lease expires. (this assumes that the lease is a vacation rental lease covered by TOT ordinance). This interpretation is what we were told was the meaning of the term "investment" of the owner under 8 © of 1619 -U. Notwithstanding our challenge to this ordinance, we nonetheless provide the following information: We acquired 1310 and 1310 %z Ocean Avenue in November of 2005 with an acquisition cost of $1,008,208.00 (which includes loan costs). This unit is a duplex and was in substantial disrepair. It was being occupied by "long term tenants ". The garage was being used as living quarters. We immediately started the process to remove one tenant and stopped the use of the garage as living quarters. We purchased this unit for the ultimate purpose of converting it to a vacation rental unit. In 2006 we invested almost $80,000 in capital improvements, for, among other things, upgrading of the entire electrical system, plumbing (including a new main line from meter to the house), remodeling the garage, painting, flooring, etc. In that year we incurred expenses of $58,336. We allowed the tenant in one the units to remain in possession until they were prepared to vacate that unit. After spending a considerable sum of money to bring the unit Jill Ingram, City Manager June 20, 2012 Page 3 of 5 up to current building and safety standard we leased the units until we were ready to convert them to vacation rental units. Over the next two to three years we spent a considerable amount of money to make both units into furnished vacation rental units of the highest caliber. We then applied for and obtained the business license and registered as a vacation rental unit with the City. In 2007, 2008 & 2009 we had capital investment of over $100,000.00. Similarly for 247 17'' Street, we acquired in 2006 for $940,674 (which included loan costs). Over the course of the next 3 years we made over $150,000 capital improvements. We accomplished the same result with that unit, by making substantial capital expenditures to both units, creating very high quality vacation rental units. Some of our first tenants after the conversion were long term, over 30 days. One such tenant was a starting pitcher for the California Angels, who leased one of the units for the entire regular season and post season. Our rental agreements emphasize the importance of respect for the neighbors, prohibiting loud and raucous partying, maintaining quiet time in the evening and providing sanctions for violating our rules. We enclose a copy of our standard rental agreement. We certainly want our tenants to enjoy the unit and the many attractions the City has to offer, but we insist that they not disturb the neighbors with loud music, partying or other activities that will disrupt the quiet enjoyment of the neighborhood. We encourage our tenants to patronize the local businesses, restaurants and the quaint little stores on Main Street. Each of our units has a brochure that features all of the local restaurants, stores, and recreational activities offered by Seal Beach. It also directs them to the local grocery stores, pharmacy and other places where they can purchase goods and services that they may require while staying at our unit. Thus, we think that not only do the local businesses benefit but the City also enjoys additional sales tax revenue from the purchases made by our tenants. Our units are within walking distance of Main Street which is an attractive feature to our tenants. We have found that they enjoy the quiet, small town features of the City. They tend to be people that come to relax and enjoy the many amenities offered by the City, all of which are within walking distance. Except for an occasional trip to Disneyland and other amusement parks, they tend to park their cars in the garage available to every unit and take leisurely strolls to Main Street in the evening or to the beach during the day. Long term tenants (non vacation rentals) are more likely to drive to work, patronize the larger discount stores (Home Depot, Costco, etc.) which does not benefit the local businesses or the City. Given that the City issued us a business license for both units, classified by the City as a "vacation rental" business, we were never informed that the vacation rental use was not permitted, we complied with the Transient Occupancy Tax ordinance, and we have a considerable investment in both units, we contend that we are entitled to an exemption from this Jill Ingram, City Manager June 20, 2012 Page 4 of 5 ordinance and that we can continue to operate it as vacation rental units and not be subject to the proposed restrictions set forth in 1619 -U. Section 8(c) unequivocally states that on or before July 6, 2012, we can apply for an exemption from the terms and provisions of the Interim Ordinance 1619 -U. Notwithstanding our objection and opposition to many of the provisions of the ordinance, we will comply with the City's noise ordinance and assure the City that our occupants are aware of the penalties associated with violations of the City's noise ordinance. We will have them acknowledge the same in writing, basically in a format as outlined in Interim Ordinance 1619 -U, Section 7 k, l & m. As my wife and I will be out of the country through June 30, 2012, it has given us little time within which to apply for the exemption and, if necessary, to apply for a CUP by July 6, 2012. I was informed at the recent meeting with Council member Deaton, that the City no longer requires copies of leases, in accordance with Interim Ordinance 1618 -U. However, our understanding is that the City will be using any leases that provide an expiration/termination date in the future as the measurement for an extension request. What is not clear to me is the date those leases or agreements were entered into or the date that we are legally bound to lease the unit to a tenant. If the City intends on using those leases /agreements to determine the length of any extension, then when is the "starting" date for them? Is it April 9, 2012 (in accordance with 1618 -U) or a later date? As my wife handles all of these transactions, and she is presently out of the country, I am not in a position to identify those leases /agreements. I can confirm by a quick review of her lease files that she had lease commitments in February of 2012 for occupancy in December 2012. We have many repeat tenants that book a unit way in advance of the occupancy date, so it would not surprise me if she had booked a unit before April 9, 2012 for occupancy in 2013. It does bear repeating that we were not aware of Interim Ordinance 1618 -U until May 10, 2012, well past the "compliance" deadline for submitting those leases /agreements. Again this is a request for an exemption from Interim Ordinance 1619 -U is without prejudicing our rights to challenge this ordinance should the City elect to deny our exemption request and enforce Interim Ordinances 1618 -U and 1619 -U against us. It is not our desire to formally challenge this Ordinance, we would rather work with the City to adopted an ordinance that satisfies the objectives of the City but is not vague or ambiguous and exempts those units that have complied with the other ordinances, including the City's noise ordinance. I called Mr. Hastings to inquire about whether we need to apply for a Public Hearing and any fees associate therewith. I have not received a response. In the meeting with Council Member Deaton, Mr. Hastings and the City Attorney, I asked the same question, but no one was able to answer that question. If I am required to file for a public hearing and pay a fee, then please advise me in writing and I will comply. The Ordinance in question does not specify any procedures for this exemption request, but it does provide that the matter will go before the City Jill Ingram, City Manager June 20, 2012 Page 5 of 5 Council. I will be out of the country starting June 22 until June 30, 2012. But I will have access to email, so I ask that any communicatio gar g this request be sent to me via email. wL W. BECK, ESQ. RWB /mg