After nine years of trying to enforce a short-term rental ban that courts have now declared illegal, Hermosa Beach is poised to start collecting hotel-tax revenue on roughly 200 coastal-zone rentals it has spent the better part of a decade trying to shut down.
The Hermosa Beach City Council voted 4-1 in closed session on Tuesday, May 12, not to appeal the Los Angeles Superior Court ruling in Koerner v. City of Hermosa Beach, which struck down the city's blanket ban on short-term rentals in the coastal zone as unenforceable. The closed-session report did not identify the dissenting vote.
The decision ends the city's enforcement posture on a 2016 ordinance that prohibited stays of fewer than 30 days in residentially zoned areas.
The March 26 decision found that the STR ban constitutes "development" under the California Coastal Act because it changed the intensity of use of coastal land. The city enacted the ban without obtaining a Coastal Development Permit from the California Coastal Commission, which the court ruled was a fatal procedural defect.
The court dismissed a $2,500 citation against Manhattan Avenue resident Todd Koerner, who has rented a spare bedroom on Airbnb since 2012, and issued a permanent injunction blocking enforcement anywhere in the coastal zone until the Commission approves it. The coastal zone covers roughly 43 percent of the city's land area.
The case was brought by Santa Monica land use attorney Frank Angel, who built the controlling appellate precedent in Keen v. City of Manhattan Beach and had warned Hermosa Beach for years that its enforcement regime was legally untenable.
By declining to appeal, the city accepts both the citation dismissal and the prospective injunction. The 2016 ban remains on the books citywide but cannot be enforced inside the coastal zone unless and until the Commission approves it through the city's Local Coastal Program, a document Hermosa Beach has never managed to get certified.
Coastal-zone short-term rentals are now operating in a regulatory vacuum. The activity is not affirmatively permitted, but the city has no legal mechanism to cite operators, collect fines, or order them to cease. Outside the coastal zone, the ban technically remains enforceable.
The most immediate consequence is fiscal. With the ban unenforceable, the city loses any legal basis to refuse Transient Occupancy Tax collection from coastal-zone rentals. Hermosa Beach charges TOT at 14 percent, matching Manhattan Beach and ahead of Redondo Beach and El Segundo at 12 percent. This figure applies to hotel bedrooms and any permitted short-term rental, of which there are currently less than 20 within the small 'commercial zone'.
Longtime STR advocate Jim Holtz cited Manhattan Beach figures during public comment: 191 licensed coastal-zone operators in fiscal year 2024-25 generating roughly $1.7 million in TOT. Hermosa Beach has a comparable coastal zone and has had approximately 200 active STR listings reported by AirDNA for years, despite the ostensible ban.
That revenue stream arrives as the council works through a $3.2 million structural deficit and an unfunded capital improvement backlog estimated between $90 million and $220 million. Staff listed STR-derived TOT as one of several revenue strategies under review at the May 12 budget presentation. More detail is expected May 26.
The non-appeal also clears the path to opt into Senate Bill 346, which allows cities to require STR platforms to disclose listing and operator information for licensing and tax enforcement. Holtz urged the council twice Tuesday to bring an opt-in ordinance forward, calling it the operational backbone any licensing regime would need. No such ordinance has been agendized.
The council now faces a series of policy choices it had deferred while Koerner remained live: whether to establish a licensing framework, set a density cap, impose operational rules, and how to handle operators running without local permits.
Manhattan Beach handled the same transition after losing Keen by allowing coastal-zone STRs under a license-and-TOT framework without immediately imposing restrictive new operating rules. Holtz urged against that approach, arguing it would let the market grow unchecked, and instead recommended density caps and proactive Coastal Commission engagement.
No item on coastal-zone STR policy is currently scheduled. Any new ordinance will itself constitute "development" under the same legal logic that defeated the 2016 ban and will probably require Coastal Commission review. The city's long-uncertified Local Coastal Program complicates that path.
For now, coastal-zone short-term rentals in Hermosa Beach are legal in the sense that they cannot be cited, and untaxed in the sense that no regime exists to collect from them.
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