LOS ANGELES _ A federal appeals court on Thursday unanimously upheld a Santa Monica, Calif., ordinance banning most short-term, vacation rentals.
A three-judge panel of the U.S. 9th Circuit of Appeals rejected a potential class-action lawsuit against the city, which passed the law in 2015 on the grounds that visitors who rent through Airbnb Inc. or other companies "sometimes disrupt the quietude and residential character of the neighborhoods."
The ordinance prohibits vacation rentals of 30 days or fewer, except when a primary resident remains in the home.
Santa Monica resident Arlene Rosenblatt had been renting out her home for $350 a night when she and her husband traveled. She charged in a lawsuit that the ordinance hindered commerce in violation of the federal Constitution.
Online short-term rental companies allowed tourists access to affordable lodging over "the ultra-luxurious, highly occupied and pricey hotels in the city," the lawsuit argued.
Santa Monica's real intent in passing the ordinance, Rosenblatt contended, was to boost demand for the hotels and reverse a decline in revenue from the city's 14% transient occupancy tax, paid by hotels but not by short-term renters.
The lawsuit alleged that the ordinance illegally denied travelers from out of state access to Santa Monica's residential neighborhoods. The 9th Circuit rejected that contention, concluding the city offered reasonable alternatives to the vacation rentals.
The ordinance "does not discriminate against persons outside of Santa Monica, who stand on equal footing with Santa Monica residents in their ability to purchase Santa Monica property and reside there," Judge Jacqueline H. Nguyen, an Obama appointee, wrote for the court.
The 9th Circuit also rejected a challenge of the law earlier this year by Airbnb and Expedia Group Inc.'s HomeAway.
