District Court Upholds City of Santa Monica’s Home-Sharing Ordinance

Court dismisses challenge brought by Airbnb and Homeaway.com

June 15, 2018

District Court Upholds City of Santa Monica’s Home-Sharing Ordinance

SANTA MONICA, Calif. — A federal district court has upheld the City of Santa Monica’s home-sharing law in the face of a challenge brought by Airbnb and Homeaway.com. 

Airbnb and Homeaway.com filed a lawsuit seeking to invalidate those portions of the City’s “Home-Sharing Ordinance” that penalize online platforms for booking short-term rentals of unlicensed properties.  The Honorable Otis D. Wright II, U.S. District Judge, Central District of California, initially rejected the platforms’ request that he enjoin the City’s law and then, on June 14, 2018, dismissed their lawsuit in its entirety.

“The City of Santa Monica has consistently dedicated policies to producing, protecting and preserving housing in our community,” said City Attorney Lane Dilg.  “Today’s decision affirms that cities can take reasonable steps to preserve precious housing supply in the face of an ever-expanding vacation rental industry that threatens to convert homes, and particularly affordable rental units, into de facto hotels.”

In dismissing the platforms’ challenge to the Home-Sharing Ordinance, Judge Wright agreed with the City and a prior federal court ruling that the Ordinance is not preempted by the Communications Decency Act because it does not penalize the platforms’ publishing activities and “does not have such a ‘significant expressive element’ as to draw First Amendment protection.”  And Judge Wright also dismissed claims brought under the Fourteenth Amendment, the Stored Communications Act, and the California Coastal Act.  

“We are pleased that the Court found the City’s Home-Sharing Ordinance to be fully consistent with all applicable laws, including the First Amendment, the Communications Decency Act, and the California Coastal Act,” said Chief Deputy City Attorney Yibin Shen. “We agree with the Court that the Ordinance is a constitutional exercise of the City’s legislative authority to protect the health, safety, and welfare of residential neighborhoods.”

Home-Sharing in Santa Monica

After maintaining a multi-decade prohibition against short-term rentals in residential districts, in 2015, the City eased this prohibition by authorizing a form of short-term rentals known as Home-Sharing, wherein a resident is free to host visitors for compensation for a period of less than 31 days, as long as the resident and visitor are both present in the home. Un-hosted short-term rentals of residential housing, known as Vacation Rentals, remain unlawful in Santa Monica. This landmark legislation struck an important balance by enabling current and prospective residents to supplement income through home-sharing to meet increased rents and housing prices, while ensuring that Santa Monica’s housing units, and particularly affordable units, would not be surreptitiously or openly converted into de facto hotels.

This legislation also imposed modest regulations on businesses, such as AirBnB and HomeAway, that engage in booking transactions for short-term rentals of housing units for profit. The Ordinance prohibits such businesses from specific conduct: providing and collecting a fee for booking services for unlicensed (and therefore unlawful) short-term rentals.

For more information on the City’s Home-Sharing Ordinance or to apply for a Home-Sharing License, visit www.smgov.net/homeshare.

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