Short term rentals are legal again in Hermosa Beach

Published July 18, 2026

A judge struck down Hermosa Beach's 2016 short term rental ban, and the city voted not to appeal. Roughly 200 coastal zone properties can now operate legally.

The short version. On March 26, 2026 an LA Superior Court ruled that Hermosa Beach's 2016 short term rental ban was an unlawful change under the Coastal Act, because the city never got Coastal Commission approval, and issued a permanent injunction against it. On May 12 the City Council voted 4 to 1 not to appeal. Roughly 200 coastal zone properties can now legally operate short term rentals, and the city is already eyeing its 14 percent transient occupancy tax. Here is the plain read.

For ten years the city told a whole stretch of oceanfront owners that a certain use of their own property was simply off the table. Then a judge looked at how the city did it and said the authority was never there. That is not a small correction. Most of the coverage I have seen stops at the headline, so I want to walk through what it actually changes for someone who holds a building here.

How a ban became the thing that got struck down

The old rule was blunt. Short term rentals, the kind you list for a weekend, were banned outright, and the ban dated to 2016. Owners near the sand had long since stopped thinking about it. It was settled, or so everyone assumed.

The twist is that the ban itself became the legal problem. In Koerner v. City of Hermosa Beach the court found the 2016 ban was a form of development under the California Coastal Act, because it changed the intensity of use and the pattern of access along the coast, and the city had pushed it through without the Coastal Commission sign off the Coastal Act requires. On March 26, 2026 the court struck it down and issued a permanent injunction. Then came the part that turns a ruling into reality: on May 12 the City Council voted 4 to 1 not to appeal. A ruling can get reversed. A city that declines to fight it has decided to live with it.

The practical upshot, per the same reporting, is that roughly 200 properties inside the coastal zone can now legally operate as short term rentals. And the city, having lost the fight over whether the use is allowed, is now eyeing the one thing it gets to keep from all this, which is its 14 percent transient occupancy tax on those stays.

The quieter door that was open the whole time

Lost in the noise around the court case is that Hermosa already had a second, permitted path to a legal short term rental, and it never closed.

In September 2025 the city adopted Ordinance 25-1489, which extended the Short Term Vacation Rental Pilot through October 25, 2027. That pilot lives in the commercial and mixed zones, not the residential coastal blocks, and it runs on an annual permit with a building official inspection at each renewal. It is a structured program, and it predates the court ruling entirely.

So by the middle of 2026 there are two separate ways to be legal, and they cover different parcels. Coastal zone owners lean on the court ruling. Commercial and mixed zone owners lean on the pilot ordinance, permit and inspection included, kept current every year. Figuring out which one your property sits under is honestly the whole exercise, because the two frameworks do not share the same rules or the same paperwork.

Legal is not the same as unregulated

I would not read this as a permanent free pass. A city that just lost a ban it spent years defending is exactly the kind of city that writes new rules quickly, and the court struck the old ordinance without handing the coast anything permanent in its place. Whatever Hermosa drafts next, and it will draft something, is the thing to keep an eye on. That 14 percent transient occupancy tax is the tell. When a jurisdiction starts talking about the revenue side of a use, it has decided to formalize and tax it rather than fight it.

There is also a real business question hiding under the legal one. A short term rental is a different animal than a long lease. More turnover, more hands on management, occupancy that rises and falls with the season, and a tax layer an annual tenant never triggers. For some coastal Hermosa properties the nightly math is genuinely strong. For plenty of others, a steady year long tenant still wins. What changed on March 26 is not that nightly is now the right answer. It is that the choice is finally yours to make, which it was not a few months ago.

It helps that the demand side of this town keeps firming up. Pier Plaza has been quietly reinventing itself, with Tiki Kai opening on Pier Avenue and LA Ale Works taking over the former Rok Sushi space, alongside a remodeled Deck and Good Neighbor on Hermosa Avenue. A visitor economy that keeps reinvesting in itself is the backdrop that makes a coastal nightly rate pencil out.

Where I would start if this were your building

The first move is not a spreadsheet. It is a boundary check. Coastal zone and commercial or mixed zone are governed by two different frameworks right now, and which side of that line your parcel falls on decides what you are allowed to do and what you have to file. This is not something to eyeball from the street address, and it is cheap to confirm before you build any plan on top of it.

Once you know your framework, run the real numbers against your actual property rather than the version in your head. Weigh the nightly upside against the turnover, the management load, the seasonal swings, and the tax, then set it beside what a reliable annual lease brings in with far less friction. Sometimes the answer surprises the owner who was sure they wanted to go nightly. The win of this ruling is optionality, not a mandate, and optionality is worth the most to the owner who actually does the arithmetic.

If you own here and you have been sitting on the assumption that nightly rentals are permanently off limits, it is worth a fresh look, because as of this spring that assumption is out of date.

This is general information, not legal or tax advice. Confirm with a licensed professional before you act.

Topics: market, hermosa-beach, south-bay, short-term-rental, regulation

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