Ninth Circuit Upholds City's Short Term Rental Ordinance
Last Thursday, the 9th Circuit Court of Appeals dismissed a class action suit brought against the City of Santa Monica that challenged the City’s short-term rental ordinance on the basis of the dormant Commerce Clause. Rosenblatt v. City of Santa Monica.
The
City’s ordinance prohibits property rentals of 30 days or less but has an
exception for rentals where a primary resident remains on the property. A
resident and homeowner in Santa Monica who rents out her house on Airbnb filed
a lawsuit against the City claiming that the ordinance directly and indirectly
regulated and burdened interstate commerce in violation of the dormant Commerce
Clause. She also argued that the real purpose for the ordinance was to increase
demand for the City’s luxury hotels that pay a 14% hotel tax to the City after
the City experienced sharp declines in hotel tax revenues.
In upholding the dismissal of the case, the Court found that the complaint failed to allege a Commerce Clause
violation because the ordinance does not favor in-state over out-of-state
interests. The Court noted that the ordinance applies equally to persons
nationwide and to Santa Monica residents who rent a home from another resident.
Moreover, the Court also found that the home-sharing exception had no obvious
advantage for Santa Monica residents over out-of-state homeowners. At most, the Court
found that the ordinance resulted in “less accessible, available, and
affordable” travel lodging in Santa Monica. However, this was not enough to meet
the high burden of a dormant Commerce Clause claim, and there was a strong
enough governmental interest in “preserving the City’s available housing stock
and the character and charm which result, in part, from cultural, ethnic, and
economic diversity of its resident population.”
Post Authored by Rain Montero & Julie Tappendorf
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