The families that purchased the Dillon Beach Resort three years ago will complete the conversion of the business’s long-term R.V. housing into short-term rentals, thanks to an after-the-fact coastal permit issued this month. The owners may now add 13 new tiny homes slated for vacation rentals, with some rented at below-market rates. Their laundry list of permit conditions includes reducing beach parking fees, studying village traffic flow and restoring beach habitat.

“This project for me is bittersweet,” Donne Brownsey, the vice chair of the California Coastal Commission, said at a hearing on Feb. 12. “Obviously these new owners are trying to create this really positive space—upgrading the facilities and creating a beautiful place for people to stay, good food in the store and the café and all of that and I love that, I do. But every element of this project is either a historical violation or a current violation of the Coastal Act.”

The commission began looking into resort operations in 2019 after receiving complaints that the new owners had made unpermitted changes. Although restaurant and store improvements were approved by the county, the owners altered other aspects of their operation without permission from the coastal commission, including by replacing a 25-unit R.V. park that had provided housing for residents for up to five decades with a collection of short-term rentals. 

Commissioners refrained from issuing fines for the violations, some of which predate the current owners, and were generally supportive of the fact that the owners of the 55-acre property were maintaining vital services, such as the beach parking lot, restrooms and trash collection. A key mandate of the Coastal Act is preserving public access the coast.

Most of the commenters at the February hearing supported the new management, though some pushed the commission to address concerns about view impacts, environmental degradation and other issues. Consultants for the owners petitioned the commission to retain the higher beach parking rates, arguing that the estimated annual loss of $100,000 would impact the owners’ ability to manage the facilities.  

Ultimately, commissioners unanimously approved the permit with the conditions recommended by their staff, which address both former and current operations and bring the property into full compliance. 

The resort may keep the new tiny homes and three pre-existing cottages, but with a series of mitigation measures, including relocating a septic system they recently upgraded outside of dune habitat and keeping some vacation rentals at a lower rate. After the owners raised rents in the R.V. park by 20 percent in 2018, most of the long-term tenants left; in their place, the owners installed 12 tiny homes on wheels for rental on a nightly basis. They are now allowed to add 13 more. 

Since 1990, the California Department of Housing and Community Development, which manages R.V. parks, has issued a license to the resort for 25 units.

A new rate structure will designate six units low cost, 14 units high cost and eight in between. The low-cost units, which must be no more than 75 percent of the state’s average daily rate, will range from $99 a night in winter to $249 in summer. The units cannot be rented for more than 14 consecutive days or to one party for more than 30 days in one year.

The tiny homes stand up to four feet taller than the R.V.s, and some community members are unhappy with impacts to their views. Eileen Hayes, who has lived at 4 Beach Avenue for 30 years, said she lost 75 percent of her ocean view. “I’m someone who goes with the flow and I like some change,” she said. “I go over to the store quite often and I like the people that work there. But I really resent that I’m losing my view because they didn’t get their permits from the beginning. If they had, they could have planned better: The tiny homes are monsters.”

Yet the commission was mostly unsympathetic about viewshed impacts. Staff did include a provision that modifies the fencing between the units, lessening blocked sightlines to the ocean. They also approved of the units’ uniform size and color.

A number of speakers expressed support for the rentals. Denise Rosenbach, a sixth-generation Marin County resident, has stayed there on several occasions. “I appreciate being included in a local beach town where I didn’t feel included before,” she said.

The coastal permit also addresses the resort’s management of the 265-space beach parking lot. Though the previous owners kept parking fees at $10, the new owners doubled that rate on peak tourist weekends, a raise the commission found unacceptable. 

In addition to establishing some new windows for free parking, the commission returned the rate to $10 except on summer weekends between Memorial Day and Labor Day, when the resort can raise the cost to $15. An annual pass will be $160; it was $99 under the previous owners.

Newly, parking will be free between sunrise, when resort staff open the gate, and 9 a.m. year-round. Access will also be free between 3 p.m. and sunset during winter months and between 6 p.m. and sunset in the summer. Parking is free at all times for anyone with a State Parks Golden Bear Pass, a Marin County Free Library parks pass, or a Sonoma County park vehicle entry pass, and for anyone with an A.D.A. placard. 

Steve Kinsey, the former county supervisor and coastal commissioner who is working as a planning consultant for the resort, urged the commission to keep the parking fees higher. Property taxes, robust liability insurance and the cost of visitor services that municipalities typically absorb are high costs for the owners, who have the unique position of managing a public beach, he said. 

On a busy day, up to five staffers are manning the gate, helping direct traffic in the lot, picking up trash and cleaning the bathrooms every 90 minutes, said Vicki Hoefle, the resort’s general manager.

Commissioner Katie Rice, a Marin supervisor who sits on the commission, was sympathetic to the request to reconsider the lowered parking fees but did not press her colleagues on the matter. She said she hoped the resort would continue to be managed with care.

The coastal permit includes several other special conditions. The resort, which has cleared the extensive amounts of sand that blows into the beach parking lot since before the 1976 Coastal Act, must adhere to a new management program. The sand can only be removed once a week between June and September and once a month during the rest of the year. Since the sand is returned to the beach by the truckload, there will now be a single designated path for trucks in order to reduce the impact of driving on the beach. 

The owners have one year to develop a dune restoration plan. A restoration ecologist must guide the restoration and enhancement of portions of the beach, including by removing invasive plants, planting native vegetation, fencing off sensitive areas, establishing signage, and reporting annually to the commission.

In an 11th-hour addition made in response to public comment, staff added the provision that the resort look into moving beach fire pits further from Dillon Creek, removing a row of cypress trees planted over the years along Cliff Street that serves as a windbreak, and prohibiting dogs from entering the dune restoration areas. 

The permit requires the owners to help mitigate the extreme traffic congestion that has grown worse during the pandemic. A traffic plan must be completed within six months and include a baseline assessment, community outreach measures and a final action plan that features annual monitoring. The owners must contribute to the cost of installing an electronic sign in Tomales to display road conditions, parking availability and emergency messages.

Other aspects of the property must be brought into compliance separately. The new septic system, which the owners estimate could cost seven figures, will be permitted by the county. CalWater, which leases an unpermitted well on the property that dates back to 1989, will take the lead on legalizing that infrastructure. 

The owners—Mike Goebel, a San Anselmo resident and restauranteur who is serving as the site manager, along with Michael and Ben Smith and Kevin and Sean Shipsey—purchased the property, which was listed for $7 million, in 2018. The resort was established in the late 19th century and owned by the Lawson family from 1925 to 2001. 

Concern about the new management peaked in 2019, and the county hosted a meeting at which residents were encouraged to organize by creating a village association, which they did shortly after. After the commission’s hearing, Melinda Bell, who has been organizing the association’s administrative committee, said the group was split on the resort’s final coastal permit. 

“This is a divisive issue for the group, and we were not able to speak on it with one voice,” she said. “Instead we encouraged everyone to express concerns and opinions to the coastal commission and other authorities as individuals.” 

She herself supports the terms of the permit. “They need to get going—they have been unpermitted forever and it’s time to turn the corner. I don’t want to see the property abandoned and left derelict because no one else will take care of it,” she said.