Pacific Grove charts new territory after short-term rental restrictions win at ballot box.

For 24 of the past 26 years, Eric Emanuel and his family enjoyed quiet living on Monterey Avenue, a Pacific Grove street lined with quaint homes built in the 1920s. Then two years ago, the duplex two doors down from him was sold and the new owners obtained two short-term rental licenses from the city, one for up to seven occupants and another for up to five. The quiet was shattered by the comings and goings of vacationers.

As heat surrounding the short-term rental controversy rose in 2017, Monterey Avenue residents spoke out at City Council meetings and sent emails asking for stricter limits on short-term rentals. When the controversy boiled over into Measure M – a Nov. 6 ballot measure to limit short-term rentals in P.G. – Emanuel got busy walking precincts.

Despite warnings from outgoing Mayor Bill Kampe and other Measure M opponents that the city would face dire financial consequences from losing more than $1.4 million a year in tax revenue, the measure passed handily, with nearly 58 percent of the vote. (Measure U – which will raise the city’s transient-occupancy tax rate from 10 percent to 12 percent – also won and is expected to raise $1.1 million a year.)

“I didn’t give a hoot about the money,” Emanuel says. “I just cared about living in the quiet residential neighborhood that I bought into.” He’s hoping peace will return in the next 18 months as the city phases out short-term rentals in neighborhoods except the coastal zone and commercial areas, as required by Measure M.

Mayor-elect Bill Peake – who supported Measure M, and beat Councilmember Rudy Fischer, who opposed it – says he disagrees with predictions of financial catastrophe. He believes careful budget management will keep the city on track. That’s despite a rising CalPERS liability, which this year is projected to be $2.2 million.

Meanwhile, potential legal challenges are on the horizon. One week after the election, on Nov. 13, P.G. lawyers appeared in Monterey County Superior Court for two ongoing lawsuits filed earlier this year by short-term rental owners.

Christina Sandefur, an attorney representing William and Susan Hobbs, told Judge Lydia Villarreal that she is still discussing with her clients how to proceed now that M passed. The Hobbs’ short-term rental is just outside the coastal zone, but other defendants in the class action lawsuit are inside the zone, which is exempt.

In another case against the city filed by Short Term Rental Owners Neighborhood Group of P.G., attorney David Lanforman said the owners wanted more time to research the case. The next hearings in both cases will be in 2019.

Editor's Note: The print version of this story stated that the Hobbs' home is inside the coastal zone and exempt from Measure M, based on a statement made by their attorney. The home is just outside of the zone.