FOUNTAIN VALLEY, Calif.—The city of Fountain Valley may become Orange County’s next city to ban short-term rentals, with the city council primed to discuss either banning the operation or adding regulations to the practice at its Dec. 21 council meeting.
Short-term rentals are defined by the city as renting a living space for less than 30 days. Available options are commonly listed by homeowners on websites such as Airbnb and Vrbo.
According to the city, short-term rentals are already illegal, given that they are not mentioned in the city code and therefore not expressly allowed. However, without an explicit prohibition in the codes, it’s difficult to hold violators accountable.
Also, renting out a room for less than 30 days is classified as doing a business, and all home-based businesses are required to have a permit to host and a license to do business.
At previous city council meetings in August and November, the councilmembers narrowed their approaches from a range of options to two: either prohibit short-term rentals completely or allow them with a “moderately restrictive level of regulations,” according to an executive summary by the city staff. The council will likely decide at the Dec. 21 meeting which option to take.
Based on internet searches conducted by the city, there are approximately 175 locations classified as short-term rentals, in which about 55 percent rent out the entire house and 45 percent offer rooms within a house for rent.
If Fountain Valley decides to ban the practice, it would be the eighth Orange County city to do so, joining Garden Grove, Irvine, Villa Park, Tustin, Yorba Linda, Santa Ana, and Brea.
On the other hand, many other cities, including Huntington Beach, Newport Beach, and San Clemente, allow short-term rentals with varying levels of restrictions.
To outlaw the practice completely, the prohibition needs to be expressly laid out in the city code. According to the executive summary, penalties can include $1,500 for the first violation, $3,000 for the second violation within one year, and $5,000 for every violation from then on within one year of the first violation.
If short-term rentals are to be allowed with moderate restrictions, the city needs to implement a permitting process, through which one license per owner would be issued. A maximum of 100 unhosted short-term rentals would be allowed, whereas the number of hosted operations—where the owner is living in the house with tenants—is not limited, according to the executive summary.
Additionally, homeowners renting spaces out short-term would be required to pay a transient occupancy tax, have a city-approved license number for all advertisements, and list rules of conduct in rental agreements to avoid or minimize disruptions in the neighborhood. The city council also plans to require tenants to be at least 25 years old and stay for at least 3 nights.
The city staff estimates a potential revenue of $175,000 to $225,000 per year in transient occupancy tax based on current projects.
Fountain Valley city councilmembers didn’t respond to a request for comment by press time.