Item 10 - Receive and File - Orange County Grand Jury’s Investigative Report, Findings, and Recommendations Regarding Long-Term Solutions to Short-Term Rentals

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Long-Term Solutions to Short-Term Rentals Table 3: Recent selected legal findings related to STRs Case Decision People v. Venice Suites, LLC, 71 Specificity in zoning language is necessary. Cal. App. 5th 715, 732-34 (2021) Length of occupancy was not specified in code and therefore STR usage would be permitted. Keen v. City of Manhattan Beach, 77 The term "residence" alone is not effective in Cal. App. 5th 142 (2022) banning STRs. A specific STR ordinance is necessary. Coastal Protection Alliance Inc. v. Operation of STRs in coastal zones does not Airbnb, Inc., 95 Cal. App. 5th 207, in and of itself constitute an increase in 270 (2023) density or intensity requiring changes in zoning. Kracke v. City of Santa Barbara, 63 Coastal cities need to secure and comply with Cal. App. 5th 1089 (2021) Coastal Commission rulings before drafting any limiting ordinances pertaining to STRs. These rulings highlight gaps in city ordinances and may provide grounds for appeal of STR citations. In light of these rulings, the cities of Anaheim and Santa Ana amended their codes to incorporate language that plugs the gaps, resulting in more effective STR enforcement. Managing Permit Scarcity Limits on the number of STR permits create a quasi-monopoly. In some cities, the permit limit was set at a point in time when no limit existed. The cities selected a number slightly greater than the inventory then in existence. Once the limit was set, these cities saw an acceleration in applications up to the limit. In some cities, STRs are excluded only in certain zones. Single family home (Rl) zones and Homeowner Associations (HOAs) often have exclusions. Other cities permit unlimited STRs in a "vacation home zone" near the beach or an attraction. Still others allow one STR in a fixed radius (typically 300 feet), which effectively limits permits. At least three cities (Newport Beach, Dana Point, and Orange)have created waiting lists in response to having more applications than available permits. However, STR operators rarely voluntarily relinquish their permits. If an STR has been converted to a long-term rental, then it is no longer subject to TOT. Unless the STR operator informs the city of the conversion, a city that only collects TOT annually (as at least one city does)will not know for a year that the unit is no longer operating as an STR. At that point, as they have not received any TOT from the unit, the 2024-2025 Orange County Grand Jury Page I I