Honorable Mayor and Members of the Hermosa Beach City Council
Regular Meeting of April 9, 2024
Title
DISCUSSION OF ADMINISTRATION CITATION FINES FOR CANNABIS DELIVERY AND SHORT-TERM VACATION RENTALS AND A RESOLUTION OF THE CITY OF HERMOSA BEACH, CALIFORNIA, AMENDING THE ADMINISTRATIVE CITATION FINE SCHEDULE TO INCLUDE RECENTLY ADDED VIOLATIONS SUBJECT TO ADMINISTRATIVE CITATION PROVISIONS AND FINDING THE SAME EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT
(Community Development Director Carrie Tai)
Body
Recommended Action:
Recommendation
Staff recommends City Council:
1) Discuss and provide direction on the cannabis delivery administrative citation fines;
2) Discuss and provide direction on the short-term vacation rental administrative citation fines; and
3) Adopt a resolution (Attachment 1) amending the City’s administrative fine schedule and finding the action to be exempt pursuant to the California Environmental Quality Act.
Body
Executive Summary:
The City’s existing administrative citation procedure was implemented in 2007. City Council recently updated administrative fines, posed questions about fines relating to cannabis delivery and short-term vacation rental violations, and added new violations to the administrative citation provisions. Staff recommends City Council discuss the current cannabis delivery and short-term vacation rental administrative fines and adopt a resolution (Attachment 1) amending the City’s Administrative Fine Schedule to reflect recently added violations.
Background:
At its August 14, 2007 meeting, City Council approved the creation of an administrative citation process. At its October 9, 2007 meeting, City Council approved the establishment of a tiered approach of citation fine amounts and deadlines to incentivize compliance. Since then, City Council routinely added to the list of violations subject to the administrative citation provisions. On multiple occasions and in certain cases, City Council approved violation-specific fines.
Hermosa Beach Municipal Code (HBMC) Section 1.10.040, Administrative Citations and Penalties, includes a list of violations that are subject to administrative penalty procedures. The section was created to provide the City with civil enforcement procedures separate from the criminal misdemeanor and infraction categories referenced in the HBMC. Administrative citation provisions allow the City to penalize certain offenses under civil procedures, as opposed to the "criminal" procedures for infractions and misdemeanors. Violations may be cited as often as daily. Section 1.10.010 of the HBMC states that the use of administrative citations does not prevent the City from using other methods of enforcement or abatement, including prosecution or arrest for misdemeanors.
As part of updating the City’s policies and practices regarding enforcement of HBMC provisions, staff reviewed the City’s administrative citation provisions, fines, and internal procedures to identify opportunities for improvements; with the main goal being to ensure enforcement provisions remain effective in gaining voluntary compliance in a timely manner. To date, staff reviewed and improved internal administrative citation and documentation procedures, added hearing officer capacity for administrative citation appeal hearings, and developed a collections referral process.
The City’s process of issuing administrative citations generally consists of a warning letter and an opportunity to correct the violation. If compliance is not reached within the specified amount of time, the City may issue an administrative citation, which is accompanied by a fine. The citation recipient, or responsible party, may appeal the citation by paying the fine and submitting a request for an appeal. If appealed, the case is heard by an independent hearing officer. Administrative citations that are not appealed, and not paid, are referred to collections.
The City’s current Administrative Citation fines are as follows:
• All violations-$250 (first), $500 (second), or $1,000 (third/subsequent), except:
- Social host liability (underage drinking at private parties)-$2,500 to $10,000
- Encroachment permit-$500 to $1,000
- Stormwater violations-$500 to $1,000
- Short-term vacation rental violations-$2,500 to $15,000 for each violation
- Cannabis delivery violations-$20,000 for each violation (The City Manager may waive the citation for the first violation if applicant submits complete application for City permit).
Past Board, Commission, and Council Actions
|
Meeting Date |
Description |
|
August 14, 2007 |
City Council adopts administrative citation provisions in the Municipal Code. |
|
October 9, 2007 |
City Council adopts Resolution No. 07-6569 establishing a tiered approach for administrative citation fines. 1) $100-first violation 2) $200-second violation 3) $500-third and subsequent violations |
|
June 14, 2016 |
City Council adopts Resolution 16-7033 establishing fines for Short Term Vacation Rentals and Social Host Ordinance. |
|
September 12, 2023 |
City Council adopts Ordinance 23-1469 allowing cannabis delivery and adopted Resolution No. 23-7389 establishing administrative fines for violations. |
|
November 28, 2023 |
City Council adopts Ordinance 23-1472 establishing the City’s pavement moratorium program. |
|
January 23, 2024 |
City Council adopts Resolution No. 24-7413 updating the administrative citation fines for most violations to: 1) $250-first violation 2) $500-second violation 3) $1,000-third and subsequent violations City Council requests future discussion on administrative citation fines for cannabis delivery and for short-term vacation rentals. |
|
March 12, 2024 |
City Council adopted an ordinance adding violations relating to special events and outdoor fitness on public property, solid waste collection, and use of the City logo, seal and insignia to the administrative citation provisions. |
At its January 23, 2024 meeting, City Council adopted Resolution No. 24-7413 updating the administrative citation fines. At the meeting, City Council requested future discussion on administrative citation fines for cannabis delivery and short-term vacation rentals.
At its March 12, 2024 meeting, City Council adopted an ordinance adding violations relating to special events and outdoor fitness on public property, solid waste collection, and use of the City logo, seal, and insignia to the administrative citation provisions.
The agenda item provides the opportunity to conduct a discussion on administrative fines for cannabis delivery and short-term vacation rentals. It also includes a request to amend the restated administrative fine schedule to include the violations added to the administrative citation provisions. Should City Council desire to change the cannabis delivery or short-term vacation rental fines, the draft administrative fine schedule may also be amended at this time to reflect changes.
Discussion:
Cannabis Delivery-Administrative Fine
The current administration citation fine for violation of the cannabis delivery regulations are as follows:
|
|
Violation |
First |
Second |
Third + |
|
25 |
Chapter 5.80, Cannabis Delivery; |
$ 20,000 |
$ 20,000 |
$ 20,000 |
As described in the September 12, 2023 City Council staff report (Attachment 5), the administrative fines for violating the City’s cannabis delivery provisions were designed as a penalty to encourage and obtain compliance. Administrative fines are not based on cost recovery, but rather set at an amount that would deter non-compliant activities. Due to the lucrative nature of the potential cannabis delivery market, as well as the severe level of potential harm from illicit operations, a larger amount of fine is necessary to ensure residents are protected and those lawfully complying with the City’s regulatory program are not disincentivized. As such, the City Council established an administrative penalty amount of $20,000 for each day that unpermitted activity occurs, with each day or occurrence considered a separate and distinct offense. To encourage legalization of delivery activities occurring within the City and to ensure the fine amount is not too punitive, City Council granted the City Manager the option to grant forgiveness of a first-time offense if the business operator submits a complete application for a cannabis delivery permit. Excessively high fines, or the perception that the fines are unreasonable or unattainable, may discourage compliance with regulations rather than encourage it.
The City of Los Angeles Municipal Code similarly includes a penalty of $20,000 per occurrence for unlicensed commercial cannabis activity, while the County of Los Angeles has set its administrative penalty at $30,000 per occurrence. Precedence for penalties at the recommended level was also set by legislation aimed at controlling unlawful cannabis related activities at the state and local levels. Assembly Bill 1138, passed in 2021, includes a $30,000 penalty for abetting unlicensed commercial cannabis activity and Assembly Bill 141 Budget Act of 2021 includes a $30,000 per occurrence fine for violating licensure regulations of the California Department of Cannabis Control.
As part of the 2023-2024 California legislative cycle, proposed Assembly Bill No. 1684 would impose a limit of $1,000 per violation or $10,000 per day for violations of unlicensed commercial cannabis activity. Staff is actively monitoring this bill, which if passed as currently proposed, would require City to amend its administrative fine schedule.
Since the administrative fine for cannabis delivery violations was recently adopted, and the City has not yet encountered any violations for cannabis delivery, staff does not recommend altering the administrative fine at this time.
Short-Term Vacation Rental (STVR) Administrative Fines
The current administration citation fines for violation of the STVR regulations are as follows:
|
|
Violation |
First |
Second |
Third + |
|
15a |
Short Term Rentals (<= 2 bed) |
$ 2,500 |
$ 5,000 |
$ 7,500 |
|
15b |
Short Term Rentals (>= 3 bed) |
$ 5,000 |
$ 10,000 |
$ 15,000 |
The City Council adopted administrative fines for STVR at its June 14, 2016 meeting. Staff initially proposed fines of $2,500 for the first violation, $3,000 for the second violation, and $3,500 for the third violation, as these were proposed based on the rates advertised for a weekend for properties at or near the beach in the City. The goal of the fines is to serve as a deterrence, and insufficient fines have the potential to simply be absorbed as the cost of doing business. After the meeting discussion, City Council adopted a modified resolution creating a two-tiered fine structure for short-term rental units with two or fewer bedrooms and three or more bedrooms to reflect the difference in rates, resulting in the administrative fines currently administered.
The City created an STVR Pilot Program allowing nonconforming residential units in certain non-residential zones to obtain permits to operate STVRs. Thus far, there have been approximately 14 units permitted.
Since 2016, the City has actively engaged in enforcement of STVRs. The City contracted with firms that specialize in the industry to assist in the monitoring and identification of STVRs. The City issued 44 violations or citations thus far in Fiscal Year 2023-2024. The majority of cases are resolved with a warning, however, a small percentage of violators do persist in continuing to either advertise or rent units as STVRs.
Staff also conducted a recent survey of administrative fines for other cities; results as follows:
|
Short Term Vacation Rentals Violations Fines |
|
Jurisdiction |
Notes |
First |
Second |
Third |
|
Hermosa Beach |
(<= 2 bed) |
$ 2,500 |
$ 5,000 |
$ 7,500 |
|
|
(>= 3 bed) |
$ 5,000 |
$ 10,000 |
$ 15,000 |
|
Beverly Hills |
Per Violation |
$2,500 |
$2,500 |
$2,500 |
|
El Segundo |
--- |
$2,500 |
$5,000 |
Revocation |
|
Laguna Beach |
|
$1,000 |
$1,000 |
$1,000 |
|
Long Beach |
--- |
$100 |
$200 |
$500 |
|
Huntington Beach |
Daily |
$1,000 |
$1,000 |
$1,000 plus revocation |
|
Malibu |
Daily |
$1,000 or 2x rental rate |
$1,000 or 2x rental rate |
$1,000 or 2x rental rate |
|
Manhattan Beach |
Non-coastal |
$1,000 |
$1,000 |
$1,000 |
|
Newport Beach |
Daily |
$1,000 |
1-year suspension |
Revocation |
|
Rancho Palos Verdes |
--- |
$2,500 |
$5,000 |
$7,500 |
|
Redondo Beach |
--- |
Up to $1,000 |
Up to $1,000 |
Up to $1,000 |
|
Santa Barbara |
--- |
$1,500 |
$3,000 |
$5,000 |
|
Santa Monica |
Ad without price |
$1,000 |
$2,000 |
$5,000 |
|
|
Ad with price |
4x daily rate |
6x daily rate |
8x daily rate |
|
Seal Beach |
Daily |
$1,000 |
$1,000 |
$1,000 |
|
West Hollywood |
--- |
$1,000 |
$2,500 |
$5,000 |
Given that the City’s goal is compliance and that a high percentage of instances is resolved with a warning, staff would not recommend increases to the fine at this time.
Amended Administrative Fine Schedule to Reflect Newly-Added Violations
As stated earlier in the staff report, the standard administrative citation fine, unless otherwise adopted by City Council is $250 for a first violation, $500 for a second violation, and $1,000 for third and subsequent violations.
Staff recommends City Council consider specifying the standard administrative citation fines on the administrative fine schedule. Violations of Chapter 12.09 Pavement Moratorium were previously added, but not the administrative fine schedule. The proposed revised administrative fine schedule is included as Attachment 1.
|
|
Violation |
First |
Second |
Third + |
|
28 |
Chapter 12.09 Pavement Moratorium |
$ 250 |
$ 500 |
$ 1,000 |
|
29 |
Chapter 8.12 Solid Waste Collection and Disposal |
$ 250 |
$ 500 |
$ 1,000 |
|
30 |
Chapter 12.30 Special Events on Public Property |
$ 250 |
$ 500 |
$ 1,000 |
|
31 |
Section 12.28.030, Permit requirement for outdoor fitness classes in city parks and on the beach |
$ 250 |
$ 500 |
$ 1,000 |
|
32 |
Chapter 1.06, Custody and Use of the City Seal, Logo, and City Insignia |
$ 250 |
$ 500 |
$ 1,000 |
Violations of the HBMC are misdemeanors (Government Code section 26900(a)), unless designed by the City as infractions. Misdemeanors are punishable by imprisonment in the County jail, not exceeding six months, or by fine not exceeding $1,000. Government Code Section 36900 provides that infraction violations are punishable by a civil fine. Administrative penalties on the other hand are not limited by these amounts. The City has routinely set in place administrative penalties for violations commensurate with the impact of the violation and to ensure these amounts are proper deterrents such that violators will be incentivized to correct the violation.
General Plan Consistency:
This report and associated recommendation have been evaluated for their consistency with the City’s General Plan. Relevant Policies are listed below:
Governance Element
Goal 2. The community is active and engaged in decision-making processes.
Policy:
• 2.6 Responsive to Community Needs. Continue to be responsive to community needs.
Goal 7. Community sustainability and health are a priority in policy and decision-making.
Policy:
• 7.6 Livability Principles. Amend or update policies that may run counter to livability principles.
Environmental Determination:
Pursuant to the California Environmental Quality Act Guidelines section 15061(b)(3), it can be seen with certainty that there is no possibility that the activity contemplated by this ordinance may have a significant effect on the environment.
Fiscal Impact:
If adopted, the administrative fine schedule would generate some revenue as citation fines are assessed to violators. However, the main objective of administrative penalties is to encourage voluntary compliance, not to generate revenue. Staff does not have an estimate of the potential revenue at this time.
Attachments:
1. Draft Resolution
2. August 14, 2007 City Council Staff Report
3. Link to October 9, 2007 City Council Staff Report
4. Link to June 14, 2016 City Council Staff Report
5. Link to September 12, 2023 City Council Staff Report
6. Link to November 28, 2023 City Council Staff Report
7. Link to January 23, 2024 City Council Staff Report
8. Link to March 12, 2024 City Council Staff Report
Respectfully Submitted by: Carrie Tai, AICP, Community Development Director
Noted for Fiscal Impact: Viki Copeland, Finance Director
Legal Review: Patrick Donegan, City Attorney
Approved: Suja Lowenthal, City Manager