Vacation rentals have become a hot topic in Carlsbad real estate circles.
In a surprise move, the Carlsbad City Council recently banned them–at least for all properties east of El Camino Real as well as certain areas in the Village and around the lagoon. Little regard was given by City Council to existing rental contracts, airline reservations made by tourists coming to Carlsbad or owner property rights where there are no CCR’s and Homeowner Associations limiting property use.
It’s a ruling that could land the City of Carlsbad in the courts.
Stunned Owners at La Costa Chateaus
This recent ruling has been a blow to many Carlsbad real estate investors, many of whom poured retirement savings into properties such as the La Costa Chateaus, which have always served as vacation getaways and ideal vacation rentals for individuals or couples seeking a La Costa vacation. Moreover, CCR’s for the Chateaus have always allowed for vacation rentals and have never disallowed them.
The La Costa Chateaus, sit squarely behind the semi-guarded gates of La Costa and
are far from any residential neighborhoods. The residents and vacationers tend to be the quiet sort, with most noise coming from the resort itself–as with the most recent Memorial Weekend Jazz Festival, where shuttle buses park right in front of the buildings. These two buildings at 2003 and 2005 Costa Del Mar have served as short term residences for as long as anyone can remember–and many of these 791-square foot condos have been turned into vacation rentals over the years.
No one with Carlsbad City Council has yet responded to any of the numerous letters La Costa Chateau owners have written to the Council, Mayor and City Manager–though they promised to do so in a recent San Diego Union Tribune article by Phil Diehl.
There is reason for these La Costa property owners to be concerned. For many, this ruling will cause a loss of both retirement assets and income. According to an exhaustive vacation rental study done by the National Association of Realtors , there is evidence that when existing vacation rentals are disallowed, values plummet:
“The value of a home that was used as a short-term rental prior to the adoption of restrictions, but is either prohibited or restricted from future use as a short-term rental, can be expected to decrease. That is particularly true in vacation destination communities, where homeowners often purchase second homes as investment properties.”
A Theft of Personal Property?
The second reason for city staff’s multiple recommendations to exempt the Buildings from Ordinance No. CS-272 is that, given these facts, applying Ordinance No. CS-272 to the Buildings amounts to a regulatory taking for which the city must compensate the owners in the Buildings.
But perhaps the most serious issues at stake center on basic property rights protected by both the 4th Amendment and 14th Amendment to the Constitution. Brian Brady, San Diego mortgage lender, member of the Central Committee of the Republican Party and founding member of the San Diego Republican Liberty Caucus writes:
One of five key principles, for a free and prosperous society, are the rights to own and enjoy property. When governments infringe on how owners enjoy their property, they infringe on the ownership of it. We know that property ownership produces better protection, care and value of property. To infringe on those rights is to promote the eventual decay of property.