Agenda Item
City Council
Item #: 6.2. 10/11/2022 File #: 22-0557
TO: Honorable Mayor and Members of the City Council
THRU: Rob Houston, City Manager
FROM: Will Kolbow, Assistant City Manager/Administrative Services Director
1. SUBJECT
Update on the City’s Short Term Rental Program.
2. SUMMARY
The City’sShort Term Rental Program has been in effect for one year and the 125 permits are scheduled to be renewed in the coming months. This report will update City Council on the administration of the program and status to date.
3. RECOMMENDED ACTION
Receive and file.
4. FISCAL IMPACT
None.
5. STRATEGIC PLAN GOALS
Goal 3: Enhance and promote quality of life in the community c: Support and enhance attractive, diverse living environments.
6. DISCUSSION AND BACKGROUND
History
In late Spring 2021, City Council adopted Ordinance No. 05-21 adding Orange Municipal Code (“OMC”)Chapter 5.94, regulating the licensing and establishment of short term rental businesses in the City, requiring the permitting of short term rentals; regulating the ownership, location, occupancy, and operations of such businesses; and detailing a system for addressing violations of Chapter 5.94.
Resolution 11317 established a short term rental permit fee of $150 to be congruent with a required business license for each rental property listing.
In September 2021, the City’sShort Term Rental (STR) program went live with the maximum number of 125 permits issued within the first six weeks. Currently, there are 88 interested parties on the waiting list. At the program’sinitiation, the City collected approximately $64,000 in licenses and fees.
Transient Occupancy Tax (TOT) accounted for $551,000 since the program’s inception.
Enforcement and Monitoring
All aspects of the program are monitored by Finance staff. Complaints have been minimal, with City of Orange Printed on 10/5/2022Page 1 of 3
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Item #: 6.2. 10/11/2022 File #: 22-0557
All aspects of the program are monitored by Finance staff. Complaints have been minimal, with relatively few violations incurred by permit holders, and fall within the responsibilities of the Finance and Police Departments. Complaints primarily involve street parking, trash cans, and noise. We continue to refine the complaint process, through the website, the Orange 24/7 app, and a 24-hour hotline monitored by an outside contractor (Host Compliance). Staff will be installing a more user- friendly web option, also provided by Host Compliance, to notify us of complaints such as Unauthorized STRs, Loud Party-Noise, Trash Related, Violations of occupancy limits, Parking, Advertising Violations, and Other nuisances.
To date we have issued violations to only four properties (seven major ($1,000) and five minor ($500) violations). Some have gone through the City Manager appeals process, which requires paying the fine before the appeal can be initiated. Once violations were issued and fines assessed, the complaints on those properties have all but ceased.
Staff continues to use the tools of police response for noise and parking complaints and follows up when police are dispatched to an STR-flagged property. However, of the two dozen times police have been dispatched to an STR flagged property, none have been identified as violations of the party ordinance.
Finance staff invest approximately 40 hours a week in the STR program addressing the following issues:
· Monitoring non-permitted STRs and attempting to get them delisted on the hosting platforms such as Airbnb, Expedia Group, etc.
· TOT collection efforts from both permitted and non-permitted rentals · Complaints from all incoming platforms and issuing appropriate violations. · Daily inquiries regarding the availability of additional permits. Despite notices on our website affirming the limit, many of the same parties call at regular intervals.
Through the hosting platforms, staff must first research the address to determine the assessor’s property record and the owner to identify illegally operating STRs and estimate their monthly booking.
Efforts to eliminate them start with a notice to discontinue advertising and/or renting the property on a short-term basis, cancel any existing reservations, and remove any advertisements pertaining to the short term rental of the property. Should the property owner fail to convert their rental to a period of 31 days or longer, the City will request any hosting platform to block their listing entirely. Compliance is required within 10 days.
Due to efforts being focused on program start-up and refinement of the violation process, follow-up efforts on illegal STRs began by issuing 14 letters in June, 10 letters in August, and 5 in September.
These efforts have resulted in one owner evicting a tenant due to a violation of a rental agreement. In the second case, management for the apartment complex at 3063 W. Chapman Avenue is assisting with efforts to stop the remaining nine illegal operators and assist with the collection of TOT.
Furthermore, there are 85 illegal listings that staff is currently researching to determine the owner(s).
Additionally, STR’sconfirmed to be illegally operating are reported to the hosting platforms for listing removal. Unfortunately, despite early promises by the hosting platforms to assist in combating illegally operating STRs, they have not been helpful in that regard. Accordingly, the hosting platforms have taken no action against these listings. Typically, the listings are taken down by the violators City of Orange Printed on 10/5/2022Page 2 of 3
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Item #: 6.2. 10/11/2022 File #: 22-0557
themselves.
The City Attorney’s office provided a significant investment of time assisting in developing the violations and appeals process, and continues to be a resource on a weekly basis.
Code Enforcement has only had to assist once, helping to confirm and eliminate an illegal bedroom unit being advertised by a permit holder.
STR web page
The updated STR web page includes a FAQ page, an Owner’sportal, renewal information, a listing of required documents, and examples.
Renewals
The renewal process went live September 30, 2022. As an enhancement to the program, proof of delivery of the Good Neighbor Policy (GNP) to each facing and adjacent neighbor will be a requirement of renewal approvals.
The GNP provides neighbors notice of the short term rental and the property manager’s current contact information, with the requirement to have a resolution to their complaint within 30-60 minutes.
This tool minimizes staff time as well as the need to issue violations.
7. ATTACHMENTS
· None
City of Orange Printed on 10/5/2022Page 3 of 3
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