Pop go 51 short-term rental licenses in Pacific Grove.

It was an unusual site in Pacific Grove City Hall on May 22: The Council Chambers, where normally staid, formal meetings are held, was transformed into a sort-of bingo parlor featuring a shiny round pingpong ball machine—like those used for state lotteries and the NBA draft, according to city staff—roped off from the public by white plastic chains.

Instead of bingo cards, around 50 audience members held long 11-by-17 pink and white sheets with a list of 34 P.G. blocks. People scrutinized the forms and made marks as any determined bingo player might, with hopes of winning big prizes.

Far from a game, it was Pacific Grove’s first short-term rental license lottery, a coordinated attempt by the city to reduce the number of 12-month licenses in those 34 blocks of the city considered to be overly dense with the rentals.

The City Council approved the lottery on Feb. 21, as part of its latest short-term rental ordinance, which puts a cap on all rentals in the city at 250 licenses, and no longer allows more than 15 percent of a residential block to be used for that purpose.

The ordinance also creates a 55-foot buffer around the rentals, known as the zone of exclusion.

Originally the lottery was scheduled for April, but a group of short-term rental owners, calling themselves STRONGpg, sued the city asking for an injunction; the lottery was then put on hold until a court hearing on May 11, when Monterey County Superior Court Judge Marla O. Anderson ruled that the city's lottery could proceed.

City staff rented the pingpong ball machine from a national company, Smartplayer International, and worked out a set of complex rules with local CPA firm Hayashi Wayland.

On May 22, those rules were explained in painstaking detail to short-term rental owners and others who came to watch the historic event.

The rules explanation and three test demonstrations of the system took more than 20 minutes.

“This is ridiculous,” one man in the audience uttered.

Another woman turned to ask others at one point if hors d'oeuvres were going to be served during the long meeting—which started at 3pm and took more than three hours—to slog through all 34 blocks in question.

The elaborate lottery system included small brown paper gift-type bags representing each block. Those bags held pingpong balls that represented “winning” licenses, meaning those licenses that would not be forced to sunset in April of 2019.

The “losing” balls went into a small glass bowl called the “sunset bowl.”

After each round the staff carefully recorded winners and losers, and the results were checked by a Hayashi Wayland representative.

The result: 51 licenses will have to sunset next year, out of 256 that were included in the lottery, says City Manager Ben Harvey.

That means more room will open up for new licensees in the spring of 2019, since the total number will dip well below the 250 cap.

Members of STRONGpg were swift in their criticism, calling the process “Russian roulette.”

A press release the group sent out within hours of the lottery process shared stories of owners who will be hurt by losing their licenses, including two teachers and a “local family whose ex-Army father is handicapped. Ditto for the family who uses the income to support a bedridden sister with multiple sclerosis.”

They also said that owners “with pages of complaints lodged against their rental got to keep their license. Owners without a single complaint lost theirs.”

“That’s not factually based,” City Manager Ben Harvey says. The lottery was only focused on blocks that exceeded the city's density threshold, and the 55-foot zone of exclusion, rather than neighbor complaints. “We were very clear about that.”

All licenses are reviewed for complaints when they come up for renewal, which means even if a license holder was chosen for renewal next year in the lottery process, it doesn’t mean that renewal is automatic.