Hermosa Beach Tried to Ban STRs in the Coastal Zone. A Court Blocked It. Now the California Coastal Commission Gets to Decide.

Over 200 short-term rentals are operating in Hermosa Beach’s coastal zone right now. Only nine of them were licensed before the court ruling. The city spent years trying to shut them all down. On March 26, 2026, a Los Angeles Superior Court judge told the city it couldn’t.

Judge James Chalfant’s ruling in Todd Koerner et al. v. City of Hermosa Beach did not legalize STRs in the coastal zone. It did something more consequential. It said the city never had the authority to ban them in the first place, because Hermosa Beach never submitted its ban to the California Coastal Commission for approval. The ban has existed since 2016. The city enforced it for nearly a decade. The court said it was unenforceable the entire time.

That ruling is five weeks old. The original court order blocked the ban and ordered the city to refund Todd Koerner’s $2,500 fine. But the next chapter is the one that matters to every STR investor operating in a California coastal zone. The California Coastal Commission now gets to decide whether Hermosa Beach can reimpose its ban, modify it, or whether the ban dies entirely.

And the CCC’s track record on blanket STR bans is not ambiguous.

What the Ruling Actually Did

Judge Chalfant ruled that Hermosa Beach’s 2016 ordinance banning short-term rentals in residential neighborhoods within the coastal zone constituted a change in coastal zone land use. Under the California Coastal Act of 1976, any such change requires a Coastal Development Permit (CDP) or a Local Coastal Program (LCP) amendment, approved by the CCC.

Hermosa Beach never applied for either.

The city’s position, argued by then-City Attorney Michael Jenkins starting in 2017, was that the STR ban fell under the city’s police power and did not constitute “development” under the Coastal Act. An appellate court rejected an identical argument from Manhattan Beach in 2022. The California Supreme Court declined to review that case. Hermosa Beach pressed ahead with its ban anyway.

The court ordered the city to stop fining STR operators in the coastal zone and to refund Koerner’s penalty. Fines had been as high as $20,000 per violation. Hermosa Beach had issued 45 citations for illegal STRs in a seven-month stretch before the ruling.

The Financial Pivot Hermosa Beach Is Already Making

Hermosa Beach Mayor Pro Tem Michael Keegan did not mince words after the ruling. “I thought it was a bad case from the beginning, but my fellow Councilmembers disagreed with me,” he told Easy Reader.

The city is already adapting. The council amended its Transient Occupancy Tax ordinance to remove the word “permitted” before “short-term rental,” which means the city can now collect its 14% TOT from every STR in the coastal zone, whether registered or not. With only nine licensed operators, annual TOT revenue was $189,000 (per a September 2025 city staff report). With 200-plus units now operating openly, the city estimates that figure could reach $600,000.

That matters. Hermosa Beach has over $100 million in unfunded Capital Improvement Projects. The next-door example is hard to ignore: Manhattan Beach collected $1.7 million in TOT revenue from 191 registered coastal zone STRs in its most recent fiscal year.

StaySTRA data shows Manhattan Beach’s STR market runs 370 active listings at a $472 average daily rate and 70.4% occupancy. Neighboring Redondo Beach tracks 397 active listings at $266 ADR and 66.7% occupancy. These are not speculative numbers. The South Bay coastal STR market is proven and productive.

Why the CCC Gets to Decide, and What That Process Looks Like

The California Coastal Commission is not a rubber stamp. It is a 12-member body (six appointed by the governor, six by the legislature) with jurisdiction over land use decisions within the coastal zone, a strip of territory extending roughly 1,000 yards inland from mean high tide along California’s 1,100-mile coastline. In sensitive areas like estuaries and wetlands, the zone extends up to five miles inland.

For Hermosa Beach to reimpose its STR ban in the coastal zone, the city must submit either a CDP application or an LCP amendment to the CCC. The Commission then evaluates whether the proposed restriction complies with the Coastal Act, which mandates “maximum access to and along the coast” for the general public and specifically protects “visitor-serving accommodations.”

The CCC has stated on the record that short-term rentals qualify as visitor-serving accommodations. They “provide a significant supplement for visitor accommodations promoting public access and visitor-serving opportunities to coastal communities,” the Commission wrote in its 2016 guidance letter to all 61 coastal city development directors.

Here is the timeline investors should expect. An LCP amendment review typically runs 6 to 18 months from submission. The CCC holds public hearings, reviews environmental analysis, evaluates housing impacts, and considers public comments. Staff recommendations carry significant weight. The Commission can approve, deny, or approve with modifications. If Hermosa Beach submits a blanket ban, the CCC can reject it and suggest a compromise: permit caps, occupancy limits, minimum stay requirements, or hosted-only restrictions.

That is exactly what has happened in the three most recent coastal city STR reviews.

How the CCC Has Handled STR Restrictions Before

The Commission has never approved a blanket STR ban in a coastal zone. Not once. But it has approved three types of restrictions.

Del Mar: The CCC approved a 129-permit cap for STRs in February 2026. Only primary residences qualify. Owners must live in the home at least half the year. Three-night minimum stays. Permit fees run $815 initially, $598 for renewal. The city originally banned STRs entirely in 2016. The CCC rejected that approach. Del Mar spent eight years negotiating the current framework.

Encinitas: The CCC approved a 2.5% citywide cap on non-hosted STRs (654 total permits) with a separate 4% cap in the coastal zone west of Interstate 5 (376 STRs). Two-night minimum for non-hosted rentals. A 200-foot distance requirement between non-hosted properties. Single-family homes and duplexes only.

Seal Beach: The CCC approved a cap of 47 STR permits, roughly 1% of the city’s 4,700 coastal homes.

Pacifica: Still waiting. The city passed STR regulations in July 2025 that already apply outside the coastal zone, but the CCC postponed the coastal zone hearing from February 2026. Another hearing is expected later this year.

The pattern is clear. The CCC will negotiate. It will allow caps, limits, and operational rules. It will not approve a ban that eliminates visitor-serving accommodations from the coastal zone entirely.

The Cities Watching This Play Out

Hermosa Beach is the third coastal city to lose this fight in court. Santa Barbara was first. In Kracke v. City of Santa Barbara (2021), the California Court of Appeal affirmed an injunction blocking the city’s 2015 STR ban in the coastal zone. The court held that Santa Barbara could not unilaterally eliminate a use it had allowed for years, especially one that generated transient occupancy tax revenue, without Coastal Commission approval.

Manhattan Beach was second. In Keen v. City of Manhattan Beach (2022), the same appellate district reached the same conclusion. Manhattan Beach appealed to the California Supreme Court. The Supreme Court declined to take the case. The city spent approximately $1 million in legal fees fighting a battle it ultimately lost.

All three cases were brought by Angel Law, led by attorney Frank P. Angel, who has built a practice around challenging coastal zone STR bans under the Coastal Act. Angel told media outlets after the Hermosa Beach ruling that he is confident “the Coastal Commission will never approve it.”

The CCC’s own enforcement record supports that confidence. In December 2016, then-CCC Chair Steve Kinsey sent a letter to every coastal jurisdiction in California stating that local STR regulations in the coastal zone “require a coastal development permit.” The Commission specifically named cities including Pismo Beach, San Clemente, Santa Monica, and Laguna Beach as jurisdictions where existing or proposed STR restrictions needed CCC review.

That is why this is not just a Hermosa Beach story. Any coastal city that enacted STR restrictions without CCC approval is potentially vulnerable to the same legal challenge. There are 61 cities and 15 counties in California’s coastal zone. StaySTRA tracks 362 distinct STR markets across the state.

SB 1318: The Bill That Could Change Everything

There is one legislative wildcard that could flip this entire dynamic.

California Senate Bill 1318 would require the Coastal Commission to approve local coastal program amendments that restrict or prohibit non-owner-occupied short-term rentals, regardless of the availability of other visitor-serving accommodations. That last clause is the crucial one. The Coastal Act’s visitor-serving accommodation mandate is the legal foundation for every court ruling that has blocked coastal STR bans. SB 1318 would remove that foundation.

The bill passed the Senate Natural Resources and Water Committee on April 21, 2026, by a 5-1 vote and was re-referred to the Committee on Appropriations. If it passes both chambers and is signed by the governor, it would give cities like Hermosa Beach a clear path to reimpose blanket bans without the CCC blocking them on visitor-access grounds.

Investors should track this bill closely. If SB 1318 becomes law, the legal landscape for California coastal zone STRs shifts in ways no court ruling can predict. If it stalls or fails, the CCC’s existing precedent holds, and blanket bans remain effectively impossible in coastal zones.

What Investors Should Do Right Now

The worst move is to assume a permanent outcome in either direction. The Hermosa Beach ban is blocked today. The CCC review has not started. SB 1318 is advancing. All three of these things are true simultaneously.

If you own or operate an STR in a California coastal zone, here is the framework.

Register and pay TOT now. Hermosa Beach is collecting its 14% transient occupancy tax from all operators regardless of permit status. Other coastal cities will follow this model. Collecting revenue while the CCC process plays out is the rational city response. Make sure you are compliant on taxes, even if the permit framework is in flux.

Watch SB 1318. If it passes the Appropriations Committee and moves to a floor vote, the calculus changes for every coastal city considering STR restrictions. If it fails, the CCC’s track record of rejecting blanket bans holds.

Look at the CCC’s compromise model. Del Mar, Encinitas, and Seal Beach all ended up with permit caps instead of bans. If your market goes through a CCC review, the likely outcome is restrictions, not elimination. Permit caps favor existing operators. Get registered early.

Don’t ignore the non-coastal zone. The Hermosa Beach ruling only applies to the coastal zone. Outside that zone, cities retain full authority to restrict STRs. Manhattan Beach’s ban is still enforceable outside its coastal zone. If your property sits outside the coastal zone boundary, the Coastal Act does not protect you.

We do our best to keep our reporting accurate and up to date, but situations evolve and we are only human. Always verify current details directly with local officials and sources before making decisions.

California’s coastal zone STR market is not going away. It is being reshaped by courts, commissions, and legislators all at once. The investors who come out ahead will be the ones who tracked the process, registered early, and positioned themselves before the rules solidified.

Use the StaySTRA Analyzer to run the numbers on any California coastal market. Compare ADR, occupancy, and revenue projections across the 362 California markets StaySTRA tracks, from Hermosa Beach to Half Moon Bay. Explore California STR data here.

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