EXECUTIVE SUMMARY
The Carmel-by-the-Sea Municipal Code prohibits timeshares. The proposed ordinance confirms the existing prohibition of time shares, and adds new prohibitions with respect to advertisement and sale of timeshares and fractional interest ownerships. The City’s Planning Commission has recommended adoption of these amendments, with an additional recommendation for Council to have a policy level discussion in the future about whether or not timeshares should continue to be prohibited in the Village.
BACKGROUND
Existing provisions of the Carmel-by-the-Sea Municipal Code prohibit timeshare uses. Specifically, timeshares are prohibited in all zoning districts of the City, and are defined in Section 17.28.010 to include any land use that is a “timeshare project”, “time share program,” or “time share occupancy.” These are defined in Section 17.70.020 as follows:
Time-Share Occupancy. An occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, room(s), hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the time-share project which is involved has been divided. The right or entitlement to occupancy may attach in advance to a specific lot, parcel, unit, room(s) or portion of a hotel, or segment of real property, or may involve designation or selection of the same at a future time or times.
Time-Share Program. Any arrangement for a project whereby the use, occupancy, or possession of real property has been made subject to a time-share estate, use, or occupancy, whereby such use, occupancy, or possession circulates among purchasers of the time-share intervals according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year, but not necessarily for consecutive years.
Time-Share Project. A project in which a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, annually or on some other periodic basis, for a period of time that has been or will be allotted for the use or occupancy periods into which the project has been divided.
As a result of recent enforcement efforts related to timeshares, City staff have reviewed the existing city code provisions and recommend that they be revised to confirm the existing prohibition, and additionally, that new prohibitions be added with respect to advertisement and sale of timeshares and fractional interest ownerships, which are treated identically under the existing City code.
On October 12th, 2022, the Planning Commission was presented these draft amendments, and received testimony from the public. Following discussion, the Commission approved a resolution recommending that the City Council adopt the ordinance as drafted by staff. The Commission also crafted an additional recital recommending that Council have a policy discussion in the near future to explore whether or not timeshares should still be prohibited in the City of Carmel-by-the-Sea. This additional recommendation arose from deliberations during the hearing, in which the Commissioners discussed the number of vacant homes in the Village and whether a form of timeshare use could present a solution to filling them. The Commission’s additional recommendation is for Council to hold a separate hearing in the near future to have a policy level discussion and decide whether or not to refer an item back to the Planning Commission to remove or modify the prohibition on timeshares in Carmel-by-the-Sea.
STAFF ANALYSIS
The changes proposed by the ordinance include:
- Section 17.70.020 is modified to simplify the City’s existing definitions with respect to timeshares. The City’s existing definitions include definitions of time-share estate, time-share use, time-share occupancy, and time-share property, which are based on similar definitions in state law (the Vacation Ownership and Time-Share Act of 2004, as set forth in Business and Professions Code section 11210 et seq.). However, the existing definitions with respect to timeshares in 17.70.020 are multiple and reference each other, and introduce unnecessary complexity into the City’s zoning regulations. While not a substantive change in the scope of the City’s regulations, the proposed ordinance would simplify definitions to prohibit the use of real property under a “time-share plan.”
The definition of “time-share plan” would mean “any arrangement, plan, scheme, or similar device, whether established by membership agreement, sale, lease, deed, license, right to use agreement, articles of organization or incorporation, operating agreement or bylaws, or by any other means, whereby a purchaser, in exchange for consideration, receives the right to exclusive use of real property or portion thereof, according to a fixed or floating time schedule, for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years.”
The code would specify that a time share plan exists “whenever such recurring rights of exclusive use to real property are created, regardless of whether such exclusive rights of use are a result of a grant of ownership rights, possessory rights, membership rights, rights pursuant to contract, or ownership of a fractional interest or share in real property, and regardless of whether they are coupled with ownership of a real property interest such as freehold interest or an estate for years in the property subject to the time-share plan.”
The code would be revised to make clear that a prohibited timeshare is created whenever any right is established for exclusive use of the property that is periodic on a recurring basis, regardless of the form. The definition of “timeshare plan” would now specifically mention that fractional ownership is one way a timeshare can be created, which is also not a substantive change. “Time-share use” and “fractional interest use” are defined to mean exactly same thing, so that it is clear to all potential violators that there is no difference between a fractional interest use and a timeshare use.
- 17.14.040, prohibiting timeshares in commercial zones, is modified to use the updated definitions.
- 17.28.010.A, prohibiting timeshares in all city zoning districts, is updated to use the updated definitions. Additional subsections are added to this section to make advertisement of timeshares subject to criminal penalties as well as the City’s administrative civil penalty process. The code also specifies that each day a violation occurs is a separate offense, for purposes of deterring violations by increasing the visibility of potential consequences.
While the existing municipal code prohibits fractionalized interest ownership, as a timeshare is created based on the allocation of exclusive rights of use to real property, the proposed code amendments would clarify the prohibition and strengthen enforcement efforts.
Additionally, the proposed ordinance would expressly prohibit the advertisement and sale of timeshares and fractional interest uses; this would allow for proactive enforcement by the City against those involved in the creation, advertisement, and sale of such prohibited land uses, rather than just the purchaser or owner of a timeshare or fractional interest use.