The City of Fullerton has passed a new ordinance regulating short-term rentals, joining other neighboring cities in Orange County, California, in increasing oversight of a growing market that residents say is out of control.
The Fullerton City Council voted 4 to 1 to pass the measure, with the lone opponent arguing against unnecessary regulations forced by a “lame duck” council. The new ordinance passed in early November, just prior to the general election.
Fullerton joins Newport Beach, which recently passed an ordinance increasing restrictions on short-term rentals within its jurisdiction. Costa Mesa passed an emergency moratorium on all short-term rentals on Nov. 10 while its council analyzes the situation.
The Fullerton ordinance was passed partly in response to some short-term housing rentals becoming “party houses” and disturbing neighbors. The ordinance mandates new taxes on the rentals, establishes a “good neighbor” policy requiring owner oversight, and sets a limit on the number of short-term housing rentals.
Fullerton Mayor Jennifer Fitzgerald told The Epoch Times that the city approved short-term rentals with increased regulations rather than banning them outright like some neighboring cities.
“I think the regulations we put in are too much, but it's as good as I could get,” Fitzgerald said.
Owners seeking to rent units for less than 30 days are now required to purchase permits, pay an annual $25 fee, and charge a 10 percent transient occupancy tax (TOT) that is paid with the rent. The property must be free of debris in and around the home, trash cans cannot be put out 24 hours before pickup day and must be taken in promptly after they are emptied, and quiet hours are from 10 p.m. to 7 a.m.
“[The owners] have to get a business license. They have to get a short-term rental permit. The people who stay in the short-term rentals need to pay the transient occupancy tax [TOT], just like they do if they stay in a hotel or motel,” Fitzgerald said.
“We established a ‘good neighbor’ policy, and required that they have a 24-hour hotline that if something happens, neighbors can call to be able to report things. And we issued a maximum number of short-term rentals that can be permitted in Fullerton, and the number is basically limited to 1 percent of our total single family home housing stock.”
The mayor, who estimated there are about 200 full house short-term rentals in town, said she didn't want to put any cap on the number of full house rentals or limit property rights, but “had to compromise in order to get an outcome that allowed short-term rentals.” She said her family uses short-term rentals when they travel.
“There were people on the council that wanted to ban short-term rentals entirely,” she said.
Councilman Bruce Whitaker voted against the increased oversight. He told The Epoch Times that the council wants to be “very heavy-handed when it comes to regulating and trying to control the environment.”
“Certainly city governments are not the most informed or capable entities to operate or run people's businesses for them,” he said. “And this happens with small businesses of almost every sort, where you have city governments and administrations injecting themselves into the free market.”
He called governmental micromanagement “a very disturbing trend.”
“We are so highly regulated and highly taxed that at the end of the day, if we can't make decisions involving our own property, our own property rights and our own assets—if this government is going to be that intrusive—to me it means that we really do have to institute a great deal of change and reestablish those freedoms,” he said.
“Those freedoms are essential, and they've helped make us the economic envy of the world. We have to stick with those principles. To abandon them makes no sense whatsoever.”
Whitaker said short-term rentals meet a demand by tourists for “portable lodging” for families, especially during the pandemic.
“Right now, it makes even more sense when you look at these social distancing things. A family can be able to have … a private home all to themselves as opposed to being in a busy hotel lobby and elevators and things like that,” he said.
Mayor Pro Tem Jan Flory, who voted in favor of the ordinance, said short-term rentals in Fullerton have been lacking regulations.
“Short-term rentals have increased exponentially here in Fullerton. There are now over 300 that are currently being rented out, and this is having an impact on neighborhoods,” Flory said.
She said the new rules are designed to protect single families from predatory investors who buy multiple homes in the neighborhood to use as short-term rentals.
“If these are going to be existing in our neighborhood, they're going to be regulated for purposes of trash, noise, parking, etc.,” Flory told The Epoch Times.
“There isn't anything existing right now. Absolutely nothing. We get scattered reports from people who are very unhappy with homes that are being used for this purpose. When there's a problem, there's no one to call,” she said.
“One of the provisions in the ordinance, for example, was that all homes within a certain distance from the short-term rental will have a person to call 24/7 if there's a problem,” rather than calling the police department for noise complaints or a fight out in the street.
But Whitaker said those reports are exaggerated.
“They find a few extreme examples of a party house where ... people have clustered to create a party house for … a few days and drive the neighbors crazy, and then make it sound like that is the norm. But I think it's very much the exception,” Whitaker said.
“And those should be dealt with with normal laws and controls that we have on the books, with code enforcement, law enforcement, … noise complaints, parking issues, those sorts of things. But as far as inside the home, that's more between the owner and whomever is leasing.”
He said there are many responsible owners who rent and “they don't want their properties abused any more than you would or I would.”
Whitaker also wanted to postpone the vote for another reason: both Fitzgerald and Flory are leaving the council and being replaced with new members.
“We have two lame-duck council members who this will be their last meeting [on Nov. 17]. I actually advocated that this should be punted forward and allow the new council to deal with it, and not have these two unaccountable votes,” he said, instead of the measure “possibly being launched the wrong way.”
Whitaker said the current council is trying to “press their advantage” and push the ordinance through before the new members take their seats on Dec. 1.
“The new counsel arguably could reverse or undo anything that's done here. But of course once something's put in place, it has a certain amount of inertia that accrues,” Whitaker said.
City staff have estimated the new regulations would bring in over $340,000 for the city annually, according to the Daily Titan newspaper.
The ordinance, barely passing by a 4-3 vote at the council’s Oct. 13 session, established a minimum three-night stay requirement for short-term rentals. It also put a cap on citywide short-term lodging permits at 1,550, instituted a waiting list, and established a new minimum-age requirement of 25 for those looking to rent.
The Costa Mesa City Council voted unanimously on Nov. 10 to temporarily halt all short-term rentals within city limits until it can study the matter further. The 45-day temporary measure, which can be extended for months when it ends with another vote after a public hearing, was enacted in response to increased complaints from residents.
The council cited the nuisance factor, general health concerns due to the COVID-19 pandemic, and the impact of short-term rentals on affordable housing in the city as reasons for the moratorium.
Short-term rentals have become increasingly popular thanks to companies such as Airbnb and Vrbo, but have also come under fire for putting additional stress on tight housing markets.
