Imagine a scenario where the Executive Director of the California Coastal Commission is frustrated because four different times in recent months, "his" Commission has over-ruled the recommendations of his staff, in granting approvals for fractional-ownership hotels in California’s coastal development zone. Then imagine that the Executive Director, rather than talking with the staff about adjusting their guidelines to stay in concert with the majority of the Commission, instead goes out and recruits a liberal extremist State Assemblyman to introduce legislation to have 
California ban the very type of "condominium hotels" that were being approved… Sound like the classic story of the tail wagging the dog? Well that may be, in fact, what you have with Peter Douglas, the longtime Executive Director of the Coastal Commission (pictured on the cover of City Beat magazine).
At their March 16 Coastal Commission meeting, several commissioners were questioning Douglas about the circumstances surrounding the introduction of Assembly Bill 1459 by Assemblyman Lloyd Levine, whose district does not include any of the coastline, but is entirely located in the heart of the San Fernando Valley in Los Angeles County. Douglas was asked if he had met with Levine on this bill, and while Douglas acknowledged that he had, he was somewhat vague on exactly when he had done so…
Before we talk more about this unfortunate political situation developing between the Coastal Commission and it’s top staffer, let’s look more at the legislation in question, AB 1459 — but first let’s look at it’s author. FR readers will recall that many of Lloyd Levine’s bills have been getting a lot of media attention because of their extreme content. One such example is his bill to ban incandescent light bulbs. Another would be a proposed law to literally mandate the number of debates that must take place in the race for Governor. And let us not forget his bills to reign in the epidemic of cruelty to captive elephants in zoos and to require pet owners to spay or neuter their dogs and cats! In short, Levine has carved out a reputation as being one who will introduce all kinds of extreme legislation.
Which bring us to AB 1459. The bill itself is rather short, but the subject matter is slightly complicated….
The California Coastal Commission currently regulates all development along our state’s coastline. Lately there have been a number of applications coming to the commission seeking for the approval of what are called ‘fractional ownership’ properties. This is where a developer may be proposing a hotel where each of the rooms is actually sold to individual buyers, like condominiums would be, except that it is a hotel property. Typically there is some deal worked out between the developers and the Commission with strict guidelines on an owners residency, such as an owner only being able to stay there a set number of consecutive days — typically no more than 90 days in a year, and no more than 29 days in a 60 day period. The rest of the time, these rooms must be made available to the public and rented out as hotel rooms. Even with this, the Commission typically will also cap the total percentage of rooms that can be "sold" to private buyers.
The reason why these kinds of ‘fractional ownership’ hotels are being constructed is that the costs of building these coastal resorts is very high (construction costs have been ballooning at an astronomical rate) and this method of selling ownership is a way for a developer to bring in much needed capital for completing the project. Over the past year and three months, the members of the Coastal Commission have voted, with lots of restrictions to guarantee public access, to let four of these projects move forward despite recommendations from the Commssion staff that the projects be denied.
Why are Douglas and his staff opposed to these proposals? I have been told that they oppose the construction of condominiums, timeshares or fee ownership properties in what are called "vistor-serving commercial" areas where the existance of all of these privately owned units would potentially inhibit public access to the coastline. Never mind, of course, the property rights of those that own this land — or in many cases this is city-owned land, and the local cities have partnered with a developer.
AB 1459 by Lloyd Levine (which some theorize may have been introduced at the behest of Mr. Douglas) is very straightforward, and quite possibly unconstitutional. It does two things — first, it prohibits the sale or transfer of a an existing timeshare, or fractionally owned property, to someone else to use it the same way. Secondly, it prohibits someone who owns, say a hotel, to convert any rooms into timeshares or fractional ownership.
Levine’s bill is so draconian that one is forced to assume that he wrote this extreme measure in order to try to achieve some sort of fall-back position. This would seem to fit in, if you buy the "Peter Douglas is involved" story, because the recommendation of the staff to the Coastal Commission is not to oppose this bill (which would actually make sense since this legislation curtails the decision-making authority currently in the Commission’s hands) but rather to accept a compromise, banning only the conversion of existing hotels into fractional ownership hotels.
So this current legislation, AB 1459, takes discretionary authority away from the Coastal Commission, and would actually end up being a major de facto ban on new fractional-owner facilities — even new ones. After all, who would want to invest in a timeshare or a fractional ownership if you were prohibited, by law, from then selling that to someone else later? The answer, of course, is no one. And of course, there is the constitutionally challenging aspect of all of this — which is how do you tell the owner of every condominium unit, timeshare and fractional property that the value of their property has lost most of its value because it may never be sold!
Frankly, the members of the Coastal Commission should see right through Levine’s ill-advised legislation and oppose the bill. Furthermore, the Commission should also reject the recommendation of Douglas’ staff (page 9 after the link) to agree to some ‘compromise’ legislation that would still create a large blanket prohibition on converting any fractional ownership hotels. There may, in fact, be times when such a conversion, properly mitigated, might make sense. The Commission should not be supporting legislation to weaken its own authority, and Commission Members should be very concerned, indeed, when their own staff is bringing them recommendations to do just that!
Of course, with the Democrats in control of the legislature, there is an air of uncertainty as to what will happen with Levine’s bill. If the Coastal Commission doesn’t come out strongly against it, there is a very decent chance that it will make it to the Governor’s desk… In the meantime, just the uncertainty caused by the mere progress of such a bill through the legislature process will have a chilling effect on proposed new projects…
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