Hermosa Beach will begin licensing short-term vacation rentals in its Coastal Zone after the City Council voted 3-2 Wednesday, Aug. 26, to legalize and tax the properties.
Councilmembers Rob Saemann, Michael Keegan and Dean Francois voted in favor. Mayor Mike Detoy and Councilmember Ray Jackson opposed, according to Easy Reader News, which covered the meeting.
The decision follows a March 2026 Los Angeles Superior Court ruling that found the city's decade-old ban on short-term rentals in the Coastal Zone unenforceable because Hermosa Beach never obtained California Coastal Commission approval. The council voted 4-1 in closed session in May not to appeal.
City staff estimate about 65 of the Coastal Zone's 5,404 homes will operate as rentals, generating roughly $1 million a year in transient occupancy tax (TOT) plus $25,000 in business license fees for the General Fund.
Saemann made the substitute motion for what staff labeled Option 1, which permits rentals in the Coastal Zone, bans them elsewhere and triggers a formal review after one year. Councilmember Jackson had moved for Option 2, which would have directed staff to bring a full regulatory program to the Coastal Commission.
"The closer comparison is in Manhattan Beach," Saemann said. "They lost the same case on the same grounds in 2022. Since then, they've permitted rentals in their Coastal Zone, collected the tax, kept a prohibition elsewhere and in four years, haven't found it necessary to go to the Commission. That's next door to us. Same beach, same market."
Keegan said Manhattan Beach has collected about $7 million in TOT over four years, while Hermosa Beach lost $5 million in uncollected revenue plus $400,000 in legal fees.
Recusal challenge
Resident Ira Ellman pressed Keegan and Saemann to recuse themselves during public comment, noting both own rental units in town. Ellman said he wanted the councilmembers to tell residents they did not have thousands of dollars at stake in the vote.
Keegan responded that his properties are leased on annual terms that convert to month-to-month and that he has never operated a short-term rental. City Attorney Jason Baltimore confirmed both councilmembers were legally cleared to vote.
Robert Reyes, a property manager with Sunny California Vacation Rentals who manages more than 100 long-term rentals in the area including three owned by Keegan, told the council his owners have no plans to convert to short-term rentals.
No cap on ownership
Mayor Detoy asked staff whether the ordinance would limit how many rentals one owner could operate. It would not.
Administrative Services Director Brandon Walker confirmed the framework places no limits on ownership concentration.
Resident Maggie Bove-LaMonica said other coastal cities cap short-term rentals at about 2.5% of housing stock, compared to Hermosa Beach's estimated 4%. She called the approved option one that puts profit over people.
Francois said the vote would not prevent the council from adding protections later. Staff will return in six months with data on registrations, revenue and complaints before further regulation moves forward.
The city faces a $3.2 million structural deficit projected to grow to $4.2 million within five years, according to the Hermosa Review. Operators can begin registering once the city finalizes its licensing process.
