Carmel announced at its Aug. 8 City Council meeting it reached a settlement agreement with a Pleasanton couple that had been violating its short-term rental ordinance for years.
In the same breath newly hired City Attorney Glen Mozingo issued both a carrot and a stick to other violators renting out homes in Carmel’s residential areas for less than 30 days.
The carrot: Come forward during a 90-day amnesty period and get a similar deal as the Jozef and Anna Wagelaar did, including reduced and waived fees.
The stick: If scofflaws don’t come forward in 90 days, Carmel is coming after them in court for the full amount for any unpaid transient occupancy taxes, interest, attorneys fees and other penalties.
The announcement comes just days before Car Week starts, referred to as “our Super Bowl” by Carmel Mayor Steve Dallas during the Tuesday meeting. Typically the city’s hotels are filled months in advance, and short-term rentals are in high demand.
In the meantime, the “Dutch Casetta” advertised by the Wagelaars on the website VRBO is sitting out Car Week as a rental. Jozef Wagelaar says he is looking for long-term renters at this point.
He tried renting out the home located on Guadalupe between Third and Fourth for 30-day periods—allowable under Carmel’s short-term rental ordinance—but most people are only interested in a week or two, he says.
The Wagelaar’s were looking at paying $42,100 in fines and fees based on four years of rental records the city subpoenaed. Mozingo said on Tuesday the city was waiving any city attorney costs, a small percentage of the transient occupancy taxes, penalties and interest.
Wagelaar says he agreed to pay $12,500 this year, and $12,500 next year, for a total of $25,000. If he does not violate the ordinance after 24 months, the city will waive the rest of the amount, or $17,100.
He went to the city without a lawyer and negotiated directly with the city attorney.
“I don’t think I could have gotten a better deal,” he says.
Wagelaar says he’s owned the home for about 30 years, and has lived there full time in the past. His former wife developed Alzheimer's and was ill for about 15 years before she died.
According to him, he incurred hundreds of thousands of dollars in debt to pay for her care and still owes $200,000.
Eventually he remarried and moved with his new wife to Pleasanton. He saw short-term rentals as a way to pay off the his debts.
“I think there’s nothing wrong with (short-term rentals),” Wagelaar says, adding that homeowners should be able to use their homes as they see fit.
In reality, he says, “You don’t own your house. You have no rights.”
Monzingo called Wagelaar “particularly cooperative,” adding, “once we got past the ‘I didn’t know it was against the law’ arguments, we had some serious discussions about what we were going to do to take care of this particular matter.”
In issuing the warning to others who may be breaking the city’s ordinance, Mozingo took up the mantle of his predecessor, Don Freeman, who authored the 1989 ordinance.
Freeman successfully defended the ordinance in the 1991 case of Ewing v. City of Carmel-by-the-Sea, all the way to the California Supreme Court, which let stand the rulings of a lower court in favor of the city.
The former city attorney filed suit against the Wagelaar’s on June 6, after overseeing what he said might be the first short-term sting operation in the state.
Contractors hired by the city conducted the operation earlier this year, arranging on two occasions to rent the Wagelaar's home for a few days.
“I wanted you to know that we are dead serious about what we are doing,” Freeman said at a city council meeting on the same day the lawsuit was filed.
Freeman retired from the position after Mozingo was hired by the council in a unanimous vote on July 11. Mozingo’s contract took effect on July 15.
Mozingo appears to be taking up Freeman’s mantle.
In issuing the warning to those still violating the ordinance, Mozingo said, “We are going to take those steps to protect the residential integrity of this town.”