HomeMy WebLinkAbout19 - Response to Grand Jury Report: "Long-Term Solutions to Short-Term Rentals"Q �EwPpRT
c
9C/FOR
TO:
FROM:
CITY OF
NEWPORT BEACH
City Council Staff Report
July 22, 2025
Agenda Item No. 19
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
Seimone Jurjis, Assistant City Manager/Community Development
Director - 949-644-3232, sjurjis@newportbeachca.gov
PREPARED BY: Jaime Murillo, AICP, Deputy Community Development Director -
949-644-3209, jmurillo@newportbeachca.gov
Jessica Kan, Revenue Manager -
949-644-3153, jkan@newportbeachca.gov
TITLE: Response to Grand Jury Report: "Long -Term Solutions to
Short -Term Rentals"
ABSTRACT:
For the City Council's consideration is the approval of a response letter to the 2024-2025
Orange County Grand Jury Report, "Long -Term Solutions to Short -Term Rentals,"
pursuant to California Penal Code (Penal Code) Section933.05(a) and (b). The City of
Newport Beach is required to comment on the findings and recommendations pertaining
to matters under the City's control no later than August 20, 2025.
RECOMMENDATIONS:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA guidelines because
this action will not result in a direct or indirect physical change to the environment; and
b) Approve the City's response to the 2024-2025 Orange County Grand Jury Report,
"Long -Term Solutions to Short -Term Rentals" and authorize the Mayor to submit the
response to the Presiding Judge of the Superior Court of California, County of
Orange County pursuant to Penal Code Section 933.05(a) and (b).
DISCUSSION:
The Newport Beach Municipal Code limits the number of short-term lodging permits
issued in Newport Beach to 1,550. As of this report, the City has reached that cap, with
approximately 665 properties on the waitlist.
The 2024-2025 Orange County Grand Jury Report, "Long -Term Solutions to Short -Term
Rentals", was released on May 22, 2025, in response to resident concerns regarding the
impacts of short-term lodging and increased enforcement costs. The report outlines best
practices for short-term rental (STR) regulation and enforcement.
19-1
Response to Grand Jury Report: "Long -Term Solutions to Short -Term Rentals"
July 22, 2025
Page 2
Under Penal Code Section 933, the City must respond to the Grand Jury's findings and
recommendations within 90 days —by August 20, 2025. For each finding, the City must
indicate agreement or disagreement; for each recommendation, the City must state
whether it will implement the action and provide justification as required by Penal Code
Section 933.05.
The Grand Jury acknowledges the complexity of STIR regulation, particularly in coastal
areas where outright bans conflict with guidance from the California Coastal Commission.
The Commission discourages blanket bans and requires regulations to align with local
coastal programs.
The report emphasizes the importance of permitting procedures, regular inspections, and
operational standards to reduce neighborhood impacts and support enforcement efforts.
It also highlights the challenges cities face in collecting transient occupancy tax, noting
Newport Beach's current paper -based system. As described in the draft response, the
City is procuring a software upgrade to introduce digital reporting by permit number, which
will improve accuracy, compliance and efficiency.
The report includes 12 findings and nine recommendations. The City must respond to 10
findings and all recommendations. Many identified practices are already in place in
Newport Beach, and the City remains committed to continuous improvement and
modernization of its STR program.
FISCAL IMPACT
There is no fiscal impact related to the item.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2) (the activity will not
result in a direct or reasonable foreseeable indirect physical change in the environment)
and Section 15060(c)(3) (the activity is not a project as defined in Section 15378) of the
CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in a direct or indirect physical change to the environment.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Orange County Grand Jury Report
Attachment B — Newport Beach Draft Response
19-2
Attachment A
Orange County Grand Jury Report
19-3
2024-2025 ORANGE COUNTY GRAND JURY REPORT
Orsng•County vaeff lon
Amusement Parks
0 Balloon Ride
Baseball Came
Q Botanical Garden
Long -Term Solutions to
Short -Term Rentals
Grand Jury
19-4
Long -Term Solutions to Short -Term Rentals
TABLE OF CONTENTS
ACRONYMS................................................................................................................................. 3
SUMMARY................................................................................................................................... 4
BACKGROUND........................................................................................................................... 4
REASONFOR THE STUDY...................................................................................................... 5
METHODOF STUDY................................................................................................................. 5
INVESTIGATION........................................................................................................................ 6
HowCities Manage STRs......................................................................................................... 7
CodeEnforcement's Role......................................................................................................... 8
STR Policies Vary in Orange County...................................................................................... 8
CitiesWith an STR Ban...........................................................................................................
8
Cities Without a Specific STR Ordinance................................................................................
9
How Cities Collect Complaints................................................................................................ 9
Issues with STR Code Enforcement........................................................................................ 9
Tools That Help Code Enforcement Accomplish Their Goals............................................10
Legal Cases Uncover Gaps in STR Ordinances...................................................................10
ManagingPermit Scarcity......................................................................................................
11
CollectingTOT Revenue........................................................................................................12
Major Events Fuel Demand for STRs...................................................................................
13
STR Impact on Affordable Housing......................................................................................13
STRs Can be Good Neighbors................................................................................................14
FINDINGS...................................................................................................................................15
RECOMMENDATIONS............................................................................................................
16
RESPONSES...............................................................................................................................17
ResponsesRequired................................................................................................................18
Findings.................................................................................................................................
19
Recommendations..................................................................................................................
19
RequestedResponses...............................................................................................................19
Findings.................................................................................................................................
19
Recommendations..................................................................................................................
19
2024-2025 Orange County Grand Jury Page 2
19-5
Long -Term Solutions to Short -Term Rentals
BIBLIOGRAPHY....................................................................................................................... 20
ANNOTATED BIBLIOGRAPHY............................................................................................ 21
TABLES
Table1: STR policies by city.......................................................................................................... 5
Table 2: Models of short-term rentals............................................................................................. 7
Table 3: Recent selected legal findings related to STRs............................................................... 11
Table 4: STR permit limits and affordable housing needed (Housing Element) .......................... 14
FIGURES
Figure 1: A single residence may appear on multiple websites...................................................... 7
ACRONYMS
ADU
Accessory Dwelling Units
CCC
California Coastal Commission
CE
Code Enforcement
GIS
Geographic Information System
HOA
Homeowners Association
LI
Low Income
OBA
Online Booking Agency
STR
Short -Term Rental
TOT
Transient Occupancy Tax
VLI
Very Low Income
2024-2025 Orange County Grand Jury Page 3
19-6
Long -Term Solutions to Short -Term Rentals
SUMMARY
Short-term rental (STR) is defined as occupancy of a residence such as a home or an apartment
for fewer than 30 days.
Some Orange County residents complain that the growth of STRs impinges on their quality of
life and adds costs to city government for additional code enforcement. The 2024-2025 Orange
County Grand Jury (Grand Jury) investigation revealed that:
• Cities with a growing number of STRs did not always receive higher complaint volumes.
• Some cities employ effective strategies to manage complaints and other cities can learn
from their success.
• When cities ban STRs, this often leads to a never-ending game of "whack -a -mole" —as
soon as one unpermitted STR is shut down, another opens.
• Code Enforcement (CE) errs on the side of leniency.
• Some cities rarely pursue fines for STR violations or collect the Transient Occupancy
Tax (TOT) on unreported STR income.
• Some cities rely on the "honor system" for STR owners to report and pay the correct
TOT.
• The commonly held belief that STRs negatively impact affordable housing is not evident
in cities with STRs.
This report identifies best practices that city councils and their planning departments can use to
more efficiently and effectively manage their STRs. This includes modifying STR ordinances,
and for some cities, utilizing third -party digital tools for better code enforcement and data
tracking to collect unreported TOT.
BACKGROUND
For many years, Orange County has been an international destination, with its forty-two miles of
scenic coastline, Disneyland, Knotts Berry Farm, Angel Stadium, Honda Center, and other
attractions. Vacation rental properties in Orange County's beach communities go back many
decades; for instance, in the 1920s, Crystal Cove State Park offered camping sites to the public,
and in the 1940s it offered trailers.
For some, STRs are business opportunities. To others, STRs are a nuisance and impinge on
neighbors' quality of life. In response to these conflicting priorities, some cities in Orange
County have banned STRs, some have limited their number, and some have no limits.
2024-2025 Orange County Grand Jury Page 4
19-7
Long -Term Solutions to Short -Term Rentals
Table 1: STR policies by city
Policy Choice
Cities with the Policy
Banned (19)
Aliso Viejo, Brea, Costa Mesa, Cypress, Fountain
Valley, Garden Grove, Irvine, La Habra, Laguna Hills,
Laguna Niguel, Laguna Woods, Los Alamitos, Rancho
Santa Margarita, Santa Ana, Stanton, Tustin, Villa Park,
Westminster, Yorba Linda
Allowed (15)
Anaheim, Buena Park, Dana Point, Fullerton,
Huntington Beach, La Palma, Laguna Beach, Lake
Forest, Mission Viejo, Newport Beach, Orange,
Placentia, San Clemente, San Juan Capistrano, Seal
Beach
The advent of online booking agencies (OBAs) has made it even easier for homeowners (and
apartment lessees) to supplement their income by renting out their home or room and advertising
to millions around the world. As a result, STRs' visibility has increased, creating tension
between STR operators and neighbors.
REASON FOR THE STUDY
Short-term rentals are a heated topic in Orange County cities. Various news reports have covered
the impact of STRs on local communities, and this motivated the Grand Jury to investigate how
effectively Orange County cities are managing STRs.
The scope of this study includes the thirty-four cities in Orange County, with a focus on cities
with the largest number of STRs and cities with bans on STRs, as well as coastal cities.
The Grand Jury studied STR permits and the effectiveness of STR bans. Finally, the Grand Jury
examined strategies to improve the quality of life for residents and to provide city planning
departments a compilation of tools that will assist in effectively balancing the expectations of the
residents and the business owners operating STRs.
METHOD OF STUDY
The Grand Jury conducted the following:
• Research on STR management and business models
o Survey of national publications with articles on STRs
2024-2025 Orange County Grand Jury Page 5
19-8
Long -Term Solutions to Short -Term Rentals
o Review of websites, interviews, testimonials, and other materials produced by
companies serving the STR and hospitality markets or from contractors with
products for cities managing STRs
o Review of academic papers on STRs and their history
o Review of non -governmental agency white papers on STRs
• In -person interviews of city personnel
• Review of:
o City meeting minutes and recordings of residents' concerns
o Various cities' STR complaint processes
o City ordinances as well as state statutes
o California Coastal Commission guidance
o Third -party STR surveillance software used by cities
o Various cities' STR complaints from June 2022 through June 2024
o Relevant legal rulings
• Analysis of TOT
INVESTIGATION
The Grand Jury learned that in most cases, STR operators are required to obtain a business
license, register with their city for a permit, submit reports, pass an inspection, and pay TOT.
This is a city -level tax levied on any temporary lodging that is occupied for fewer than thirty
days. All hotels, motels, and bed and breakfasts must remit this tax. Short-term rentals permitting
and other policies vary by city. A short-term rental's TOT is paid either monthly, quarterly, or
annually. Most cities allowing STRs require a twenty -four-hour, in -person contact to address
complaints, within either thirty or sixty minutes.
Short-term rental operators often use one of the numerous OBAs, such as VRBO (from the
phrase Vacation Rentals by Owner), Airbnb, Zumper, and HomeAway. In addition, some
operators may advertise via direct booking sites (a website for their specific property) or through
local rental agents. Multiple OBAs mean that a unique property may have as many as a dozen
listings.
2024-2025 Orange County Grand Jury Page 6
19-9
Long -Term Solutions to Short -Term Rentals
airbnb ,,.m
VRBO—
Zumper.om
*Ho eAway om
123 Your Street Bo°IR king.°°"
holidayhomes-.
vacasa.„
evolve...,
casamundo.<-
agoda.-
onefinestay-,
flipkey._
avantstay.
EC
9flats_
Figure 1: A single residence may appear on multiple websites.
How Cities Manage STRs
In nearly every city, short-term rentals are regulated by ordinances that define operational rules,
establish fees for licensing and violations, and outline the appeals process. Often these rules
include disclosure to neighbors, a "Good Neighbor Policy" brochure for the renter, parking and
garbage policies, and quiet hours for the neighborhood. An emergency contact who would be
readily available to respond to a complaint is typically required. City ordinances may define who
can own and operate an STR. Cities may limit operation to the primary homeowner or renter, or
they may allow investors who own multiple STR properties.
The Grand Jury observed the following STR models:
Table 2: Models of short-term rentals
Hosted/Shared Housing
Owner must be on the property/in
house
Primary Housing
Rentals of an owner's primary
residence are permitted
Unrestricted
No restrictions on ownership (income -
producing property)
The Hosted/Shared model is when a homeowner or renter with an extra room rents it out for
fewer than thirty days. The host stays at the property during the guests' stay, either in the house
or in an on -property Accessory Dwelling Unit (ADU). The Primary Housing model is when the
host rents out their principal home but is not present on the property. Unrestricted STRs are
income -producing properties, often owned by corporations and managed by property
management companies.
2024-2025 Orange County Grand Jury Page 7
19-10
Long -Term Solutions to Short -Term Rentals
Regardless of the model, neighbors have the expectation that STR businesses will be operated in
a responsible and respectful manner. Owner -occupied models make it easier for a neighbor with
a complaint to get resolution. In cities that use this model, formal complaints are fewer because
neighbors can quickly resolve issues between themselves.
Code Enforcement's Role
Code Enforcement (CE) responsibilities include initial and ongoing inspections of STRs to
assure adherence to building codes, noise and parking requirements, along with monitoring city
complaint portals and searching for nonpermitted STRs. Code Enforcement officers also
investigate citizen complaints to substantiate claims and issue citations.
Revenue staff work in tandem with CE to process permits and licenses and to collect TOT and
other fees. In at least one city that has a waiting list for STR permits, revenue staff rather than
CE staff manage the list, which may delay or limit CE's ability to find unpermitted STRs.
Several cities employ third -party platforms offering an array of services, including STR
registration portals, a complaints hotline and/or online portal, and tax payment portals. These
platforms offer efficient and potentially cost-effective options to aid staff monitoring STRs.
Cities may also select a third -party platform option that identifies both permitted and
unpermitted STRs advertising on OBAs.
STR Policies Vary in Orange County
Each of the thirty-four cities in Orange County has its own policies. As of this writing, nineteen
of the cities had a ban on all STRs and fifteen allowed STRs (see Table 1). Unincorporated areas
of the county (e.g., Rossmoor, North Tustin) are covered by County of Orange policy through
the OC Public Works department, which issues permits; however, the Grand Jury did not observe
STR volumes in unincorporated areas warranting analysis.
Cities With an STR Ban
The Grand Jury learned that it is difficult for cities to enforce a ban. Cities report that after they
enacted a ban, the volume of STRs saw a notable decline; however, some unpermitted STRs still
continued to operate. Cities may use a rental identification database and a complaint portal to
improve compliance, often through third -party software. These databases can often identify the
address of an unpermitted STR and allow follow-up with the property owner. At least one city
with technologically savvy CE staff has performed this task without help from a third -party
platform.
All cities in the coastal zone have permits for STRs, and this is linked to mandates from the
California Coastal Commission (CCC) which issued a 2016 memo with guidance that coastal
cities provide "lower cost visitor... facilities" and beach access via STRs.
2024-2025 Orange County Grand Jury Page 8
19-11
Long -Term Solutions to Short -Term Rentals
Cities Without a Specific STR Ordinance
Some cities without an STR ordinance have operated on the assumption that because STRs are
not defined by an ordinance, they are banned. However, when an STR operator challenges a
citation, these cities have often discovered that the subsequent court ruling goes against the city,
as evidenced by recent cases described below. Cities often respond to these losses by drafting
new ordinances and amendments, but sometimes a new STR operator will find another legal gap,
and the "whack -a -mole" game continues.
Multi -unit apartment complexes may also host unpermitted STRs in cities that have bans. Photos
used in online advertising often make complexes easy to find, but identifying specific units may
be difficult. Property managers are more familiar with the units and can sometimes help CE track
these down.
Some properties without permits are advertised on foreign -language websites. Image searches
may uncover these host sites, but the Grand Jury did not identify any solution yet for this
challenge.
How Cities Collect Complaints
Many Orange County cities provide an online complaint portal as well as a telephone hotline;
these services are staffed by a third -party platform or by city staff. In cities that allow STRs,
Code Enforcement will reach out to the STR emergency contact to initiate complaint resolution.
Issues with STR Code Enforcement
Most STR operators want to avoid citations and fines. Neighbor complaints can lead to notices of
violation, fines, and ultimately revocation of the STR operating permit. With effective
enforcement, STRs that violate city codes receive a citation and/or fine. This can result in
improved behavior on the part of the STR operator.
In the fifteen cities that allow STRs, neighbors face hurdles in complaint resolution. This, along
with laxity in enforcement, may explain why fewer than ten percent of STRs record a complaint
in a given year, a number that fails to reflect the frustration of STR neighbors.
Tracking and confirmation of complaints is often difficult. In order to enforce STR ordinance
rules, code or law enforcement must first substantiate that the source is an STR. In some cities
that permit STRs, Code Enforcement works only during regular business hours. Nuisance reports
often occur in the evening or early morning, when CE may not be on duty. Therefore, residents
or other complainants do not receive a timely response and the problem is not resolved at the
time of the actual nuisance, if ever.
2024-2025 Orange County Grand Jury Page 9
19-12
Long -Term Solutions to Short -Term Rentals
Most ordinances require an emergency contact for each STR, but a review of hundreds of
complaints between 2022 and 2024 shows that in a number of cases the contact does not respond
either in the thirty- or sixty -minute required time frame.
Warnings and citations may take up to a week to issue and are recorded in an STR complaint log.
The STR operator may appeal the citation. Initial appeals are made through a city official or a
third -party administrative officer. This can take some time, during which the STR may continue
to operate. An ordinance without an appeals procedure may be challenged in the courts.
The Grand Jury learned that in most cities, CE investigates complaints with a fair bit of leniency.
First, the CE officer will visit the property and confirm the violation. The most common
complaint is noise, and this violation must be observed and verified by the CE officer. Other
complaints may involve vehicle parking, trash, and exceeding permitted occupancy. The CE
officer often works through the emergency contact to resolve problems and often will issue a
warning rather than a citation.
Tools That Help Code Enforcement Accomplish Their Goals
Cities that allow STRs would benefit from a system that geographically integrates STR owner
contact information, permit, and business license numbers. Having this information readily
available would enable CE to respond to complaints more effectively. Some of the third -party
platforms offer these tools, but using a third -party platform requires a degree of technical
knowledge and an investment in Code Enforcement training. Some cities accomplish this work
with internal tools and staff.
Beyond responding to complaints, CE in some cities proactively inspect permitted STRs and/or
confirm the emergency contacts. These inspections confirm occupancy limits, ensure that safety
equipment is onsite, and validate that no unpermitted construction has been done on the property.
Legal Cases Uncover Gaps in STR Ordinances
Recent cases up and down the state have established firm guidance for cities as they deal with
STR issues. The Grand Jury identified a few cases that clarified areas of ambiguity in existing
STR ordinances:
2024-2025 Orange County Grand Jury Page 10
19-13
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 (R1) 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 11
19-14
Long -Term Solutions to Short -Term Rentals
city can initiate proceedings to rescind the STR permit and pass it on to the next applicant on the
waiting list. However, the STR operator can appeal, and this can extend the process even longer.
Some cities allow permit holders to transfer their permit to a family member or to the new owner
of their property, thus circumventing the waiting list altogether. A system where permits expire
after a certain time would afford those on the waiting list an opportunity to be placed ahead of
renewals, thus creating a more equitable process. One city, Dana Point, has set a limit on
investor -owned properties, allowing more Hosted STRs to have priority in getting permits.
Collecting TOT Revenue
The fifteen cities that allow STRs (see Table 1) collect TOT on STR revenue, plus any fees
charged to the renter. Operators report TOT to cities either annually, quarterly, or monthly.
Monthly reporting of TOT has several advantages: cities receive TOT sooner, the STR owner
has a smoother and more predictable cash flow, and cities can quickly identify non -revenue -
producing STRs.
In cities like Dana Point and Anaheim, TOT represents a substantial percentage of city revenue;
however, nearly all of this comes from hotels. Short-term rental TOT in Newport Beach
represents thirty percent of total TOT collections, contributing two percent of city revenues.
Newport Beach has the greatest share of TOT revenue from STRs (with 1,550 units) and the
greatest number of STRs of all Orange County cities. Transient Occupancy Tax rates vary by
city from eight to seventeen percent. Despite the limited amounts, each city that collects short-
term rental TOT increases their general fund.
Each city handles TOT collection differently. Newport Beach collects quarterly from agents who
operate STRs and annually from STR homeowners, using paper -based forms. This system does
not allow for easy tracking of short-term rental TOT by permit number because multiple units at
the same address (with separate permits) may be combined on the form. A digital submission by
unique permit number, such as is used by the City of Orange, is easy and provides greater detail
to the city.
The City of Anaheim has agreements called Voluntary Collection Agreements (VCAs) with a
number of Online Booking Agency platforms that enable monthly TOT remittance from short-
term rental advertising on the OBA. In most cases, OBAs share a spreadsheet with totals only;
however, at least one platform remits with detailed addresses with amounts by address. It is
possible for an OBA to send more detailed data and for the city to integrate it into its information
systems, but as yet no city appears to have negotiated with an OBA to implement this direct
reporting. Requiring an OBA to report more detail ensures that all STR tax ftom Online Booking
Agency is reported, collected, and remitted to the city, whether the STR is permitted or not.
However, this system still would not capture STRs booked directly with the operator, which may
be up to 30-60% of gross rental revenue.
2024-2025 Orange County Grand Jury Page 12
19-15
Long -Term Solutions to Short -Term Rentals
At least one city (Orange) requires that TOT reporting include the number of days the STR is
available for rent and number of days rented each month. Capturing these statistics facilitates
desk auditing.
A "desk audit" is a remote review of the STR operators' reported information to ensure
compliance with TOT reporting requirements. This is in contrast to a "business -level audit,"
which is performed by the city on site and involves verification of the reported information
against third -party records, such as bank statements.
The Grand Jury's review of a subset of Orange County cities did not identify any that did more
than desk audits on short-term rental TOT receipts. Put simply, these cities currently rely on the
"honor system." Conducting business -level audits would allow cities to discover and collect
additional funds. However, a city should consider the cost of enforcement versus the financial
benefit of STR business audits, especially in smaller cities with limited short-term rental TOT.
Major Events Fuel Demand for STRs
Reports from the 2024 Olympic games indicate that the average price per night of STRs in and
around Paris more than doubled during the Olympics, and total inventory grew by nearly fifty
percent. With the coming 2026 Los Angeles World Cup and the 2028 Los Angeles Olympics,
these surges are likely to be seen in Orange County, especially with the Honda Center and
Trestles Beach —both in Orange County —being used as Olympic venues. Orange County cities
have not yet dedicated resources to plan around STRs for these major events.
STR Impact on Affordable Housing
Some housing advocates argue that STRs reduce the inventory of much needed and mandated
affordable housing. The Grand Jury found that STRs have a negligible effect on affordable
housing in cities that currently allow STRs. The Southern California Association of
Governments, acting under the direction of the State Housing Element Law, sets a mandated
volume of new units by city for Very Low Income (VLI) and Low Income (LI) units, and this
analysis uses it as the estimate of needed affordable units.
The Grand Jury's analysis of inland cites suggests that if their existing STR units were converted
to affordable housing, they would contribute at most about eight percent (125/1,671 from Table
4) of the affordable units required (in the city of Orange), and a much smaller percentage in other
inland cities.
On the other hand, in coastal cities, the STR volumes appear to meet a sizable portion of
affordable unit goals. However, coastal cities must comply with State law enforced through the
California Coastal Commission (CCC). The CCC weighs in on all coastal development and
changes, and any modification of a city's zoning rules or limits on STRs would be subject to the
CCC's approval. The CCC's stated goal is to preserve access to public beaches and low-cost
2024-2025 Orange County Grand Jury Page 13
19-16
Long -Term Solutions to Short -Term Rentals
short-term housing, which includes STRs. It is therefore unrealistic to expect that coastal STRs
would be converted to long-term affordable housing in any sizeable number.
Table 4: STR permit limits and affordable housing needed (Housing Element)
Housing
Element 6th Series Unit Goals
Limit on
Very Low
Low
VLI+LI Unit
STR Permits
Income
Income
Goal
Inland Cities
(VLI)
(LI)
Anaheim
277
3,767
2,397
6,164
Buena Park
11
2,119
1,343
3,462
Fullerton
100
3,198
1,989
5,187
Orange
125
1,067
604
1,671
Coastal Cities*
Dana Point
115
147
84
231
Laguna Beach
300
118
80
198
Newport Beach
1,550
1,456
930
2,386
San Clemente
225
282
164
446
Seal Beach
33
258
201
459
*Subject to CCC legal requirements
Equally important is the fact that there is rarely a one-to-one relationship between STRs and
long-term housing. In many areas of the County, STRs are luxury or large-scale homes. It is
extremely unlikely that such homes could or would be easily converted into affordable housing
or demolished to create multiple affordable dwellings. Aside from the complications of such an
endeavor, the likelihood that neighbors would acquiesce to these changes is negligible.
Based on the above factors, the Grand Jury concludes that, contrary to widely held belief, STRs
should not be considered a significant factor in the availability of affordable housing in Orange
County cities with STRs.
STRs Can be Good Neighbors
The burden of getting STR operators to function in a community friendly way should be on the
operator and government, not the neighborhood residents. Best practices include the following:
• Updated ordinances that limit how STRs can advertise and specifically exclude STRs
from banned cities
• Concise city permitting guidance
2024-2025 Orange County Grand Jury Page 14
19-17
Long -Term Solutions to Short -Term Rentals
• An easy -to -use complaint system for residents
• Diligent code enforcement
• Requiring an in -person contact
• Permit numbers in all advertising
• Monthly electronic collection of TOT
Several Orange County cities, such as Seal Beach, Dana Point, and Orange, have clear permitting
procedures that explicitly outline Good Neighbor policies, yielding low complaint rates.
Anaheim and Santa Ana have made ordinance revisions that improve the odds that their cities
will prevail in appeals to STR citations. Newport Beach, Dana Point, and Anaheim perform
regular inspections on new and existing STRs to ensure units are safe and code compliant.
Incorporating the above elements in a city's ordinances and practicing effective code
enforcement would enhance the relationship between STR business operators and their
neighbors. Moreover, better communication among cities to share these best practices would
greatly improve the management of STRs.
FINDINGS
In accordance with California Penal Code Sections 933 and 933.05, the 2024-2025 Grand Jury
requires (or as noted, requests) responses from each agency affected by the findings presented in
this section. The responses are to be submitted to the Presiding Judge of the Superior Court.
Based on its investigation "Long -Term Solutions to Short -Term Rentals," the 2024-2025 Orange
County Grand Jury has arrived at twelve findings, as follows:
Fl: Despite the increasing media coverage of Online Booking Agencies (OBAs), STRs are not a
new phenomenon in Orange County.
F2: The steady growth of STR usage in the last decade raises concerns of potential public
nuisance.
F3: Even with robust Code Enforcement, a city's statutory ban on STRs is not enough to keep
STRs from operating.
F4: Anaheim's ordinance requires OBAs to report Transient Occupancy Tax (TOT) directly to
the city. This has led to the favorable consequence that unpermitted STR income is reported to
the city.
2024-2025 Orange County Grand Jury Page 15
19-18
Long -Term Solutions to Short -Term Rentals
F5: Proactive home inspections of new and renewing STRs, which have been implemented in
some Orange County cities, improve code enforcement and STR compliance with city
ordinances.
F6: Direct remittance of taxes by OBAs does not capture all TOT for an STR because of direct
booking practices.
F7: Some cities in Orange County have outdated systems for tracking short-term rental TOT
making the process less effective and more difficult for staff.
F8: In some cases, STRs are improperly recharacterized as long-term rentals to circumvent the
collection of TOT and any applicable penalties.
F9: Online Booking Agencies in foreign languages are outside the current capabilities of Code
Enforcement to monitor and track unpermitted STRs.
F10: Cities that fail to routinely review their STR waiting lists potentially lose TOT revenue and
contribute to a greater prevalence of unpermitted STRs.
Fll: Locations that have hosted major events have reported an outsized increase in demand and
pricing of STRs, a situation Orange County is likely to experience with the upcoming 2026 Los
Angeles World Cup and 2028 Los Angeles Olympics.
F12: City leaders have no regular communication with each other concerning STR issues,
limiting opportunities to develop strategies and expertise to improve service.
RECOMMENDATIONS
In accordance with California Penal Code Sections 933 and 933.05, the 2024-2025 Grand Jury
requires (or, as indicated, requests) responses from each agency affected by the
recommendations presented in this section. The responses are to be submitted to the Presiding
Judge of the Superior Court.
Based on its investigation described herein, the 2024-2025 Orange County Grand Jury makes the
following nine recommendations:
Rl: Cities should review and begin to update ordinances to keep up with the rapidly changing
nature of court findings and legislation related to STRs, by December 31, 2025, and no less
frequently than every three years thereafter. (F4, F12)
R2: Cities should consider developing a plan for upcoming major events that are expected to
create a surge in demand for STRs and its associated Transient Occupancy Tax, by December
31, 2025, and no less frequently than every two years thereafter. (F11)
2024-2025 Orange County Grand Jury Page 16
19-19
Long -Term Solutions to Short -Term Rentals
RI Cities that allow STRs should evaluate the benefit of ordinances facilitating Voluntary
Collection Agreements requiring OBAs to submit TOT directly, by June 30, 2026. (F4, F12)
R4: Cities that allow STRs should evaluate the benefit of collecting TOT on a monthly basis by
individual property, by June 30, 2026. (F7, F8)
R5: Cities should require STRs to include the number of days rented per month per permit to
facilitate short-term rental TOT desk audits by November 30, 2025. (F7, F8)
R6: Cities with a permit waiting list should implement strategies to remove non -revenue -
generating licenses to allow for fair access by December 31, 2025, and annually thereafter. (F7,
F10)
R7: Cities that allow STRs should consider allocating resources to update their short-term rental
TOT tracking systems by September 30, 2026. (F7, F8, F10)
R8: Cities that allow STRs should consider random multi -year audits to confirm TOT by June
30,2026, and annually thereafter. (F6, F7, F8)
R9: City leaders should have regular discussions with each other to share STR management
strategies on a biannual basis commencing no later than January 1, 2026. (F12)
RESPONSES
The following excerpts from the California Penal Code provide the requirements for public
agencies to respond to the Findings and Recommendations of this Grand Jury report:
Penal Code Section 933:
(c) No later than 90 days after the grand jury submits a final report on the operations of any public
agency subject to its reviewing authority, the governing body of the public agency shall comment to
the presiding judge of the superior court on the findings and recommendations pertaining to matters
under the control of the governing body, and every elected county officer or agency head for which
the grand jury has responsibility pursuant to Section 914.1 shall comment within 60 days to the
presiding judge of the superior court, with an information copy sent to the board of supervisors, on
the findings and recommendations pertaining to matters under the control of that county officer or
agency head and any agency or agencies which that officer or agency head supervises or controls. In
any city and county, the mayor shall also comment on the findings and recommendations. All of these
comments and reports shall forthwith be submitted to the presiding judge of the superior court who
impaneled the grand jury. A copy of all responses to grand jury reports shall be placed on file with
the clerk of the public agency and the office of the county clerk, or the mayor when applicable, and
shall remain on file in those offices. One copy shall be placed on file with the applicable grand jury
final report by, and in the control of the currently impaneled grand jury, where it shall be maintained
for a minimum offive years.
2024-2025 Orange County Grand Jury Page 17
19-20
Long -Term Solutions to Short -Term Rentals
Penal Code Section 933.05:
(a) For purposes of subdivision (b) of Section 933, as to each grand jury finding, the responding
person or entity shall indicate one of the following:
(1) The respondent agrees with the finding.
(2) The respondent disagrees wholly or partially with the finding, in which case the response shall
specify the portion of the finding that is disputed and shall include an explanation of the reasons
therefor.
(b) For purposes of subdivision (b) of Section 933, as to each grand jury recommendation, the
responding person or entity shall report one of the following actions:
(1) The recommendation has been implemented, with a summary regarding the implemented action.
(2) The recommendation has not yet been implemented, but will be implemented in the future, with a
timeframe for implementation.
(3) The recommendation requires further analysis, with an explanation and the scope and
parameters of an analysis or study, and a timeframe for the matter to be prepared for discussion by
the officer or head of the agency or department being investigated or reviewed, including the
governing body of the public agency when applicable. This timeframe shall not exceed six months
from the date of publication of the grand jury report.
(4) The recommendation will not be implemented because it is not warranted or is not reasonable,
with an explanation therefor.
(c) However, if a finding or recommendation of the grand jury addresses budgetary or personnel
matters of a county agency or department headed by an elected officer, both the agency or
department head and the board of supervisors shall respond if requested by the grand jury, but the
response of the board of supervisors shall address only those budgetary or personnel matters over
which it has some decision -making authority. The response of the elected agency or department head
shall address all aspects of the findings or recommendations affecting his or her agency or
department.
(d) A grand jury may request a subject person or entity to come before the grand jury for the purpose
of reading and discussing the findings of the grand jury report that relates to that person or entity in
order to verify the accuracy of the findings prior to their release.
(e) During an investigation, the grand jury shall meet with the subject of that investigation regarding
the investigation, unless the court, either on its own determination or upon request of the foreperson
of the grand jury, determines that such a meeting would be detrimental.
69 A grand jury shall provide to the affected agency a copy of the portion of the grand jury report
relating to that person or entity two working days prior to its public release and after the approval of
the presiding judge. No officer, agency, department, or governing body of a public agency shall
disclose any contents of the report prior to the public release of the final report.
Responses Required
Comments to the Presiding Judge of the Superior Court in compliance with Penal Code Section
933.05 are required within 90 days of the date of the publication of this report from:
2024-2025 Orange County Grand Jury Page 18
19-21
Long -Term Solutions to Short -Term Rentals
Findings
City Councils of the following cities:
Dana Point, Fullerton, Huntington Beach, Laguna Beach, Newport
Beach, San Clemente, San Juan Capistrano, Seal Beach
Costa Mesa, Irvine, Santa Ana
Anaheim
Recommendations
City Councils of the following cities:
Anaheim, Dana Point, Fullerton, Huntington Beach, Laguna Beach,
Newport Beach, Orange, San Clemente, San Juan Capistrano, Seal
Beach
Costa Mesa, Irvine, Santa Ana
Requested Responses
F1, F2, F5, F6, F7,
F8,F9,F10,Fll,F12
F1, F2, F3, F12
F1, F2, F4, F5, F6,
F7, F8, F9, F11, F12
R1, R2, R3, R4, R5,
R6, R7, R8, R9
R1, R2, R9
Comments to the Presiding Judge of the Superior Court in compliance with Penal Code Section
933.05 are requested within 90 days of the date of the publication of this report from:
Findings
City Councils of the following cities:
Buena Park, La Palma, Lake Forest, Mission Viejo, Placentia F1, F2, F5, F6, F7,
F8,F9,F10,Fll,F12
Aliso Viejo, Brea, Cypress, Fountain Valley, Garden Grove, La F1, F2, F3, F12
Habra, Laguna Hills, Laguna Niguel, Laguna Woods, Los Alamitos,
Rancho Santa Margarita, Stanton, Tustin, Villa Park, Westminster,
Yorba Linda
Recommendations
City Councils of the following cities:
Buena Park, La Palma, Lake Forest, Mission Viejo, Placentia R1, R2, R3, R4, R5,
R6, R7, R8, R9
2024-2025 Orange County Grand Jury Page 19
19-22
Long -Term Solutions to Short -Term Rentals
Aliso Viejo, Brea, Cypress, Fountain Valley, Garden Grove, La R1, R2, R9
Habra, Laguna Hills, Laguna Niguel, Laguna Woods, Los Alamitos,
Rancho Santa Margarita, Stanton, Tustin, Villa Park, Westminster,
Yorba Linda
BIBLIOGRAPHY
Better Neighbors LA. "BNLA Annual Report 2022." February 24,
2023. https:Hstaticl.squarespace.com/static/5fc9845732f65217775cb3a5/t/63f8e87357c8lbl848
48b95b/1677256830192/BNLA_Annual+Report 2022-web.pdf.
California Coastal Commission. "Short Term Vacation Rental Memo to Coastal Planning and
Development Directors." December 6,
2016. hgps:Hdocuments.coastal.ca.gov/assets/la/Short Term Vacation_ Rental_ to Coastal_ Plan
ning & Devt_Directors _120616.pdf
California Coastal Commission. "Recent LCP Policy Examples for Lower Cost Overnight
Accommodations." 2023. hgps:Hdocuments.coastal.ca.gov/assets/lower-cost-coastal-
lodging/LCOA-Doc2.pdf.
Costar. "Summer Olympics Drove Paris Room Rates to All -Time Highs." CoStar, August 11,
2024. hgps://www.costar.com/article/54408592/summer-olympics-drove-paris-room-rates-to-all-
time-highs.
Dubetz, Alissa, Matt Horton, and Charlotte Kesteven. "Staying Power: The Effects of Short -
Term Rentals on California's Tourism Economy and Housing Affordability." Milken Institute,
June 1, 2022. hgps://milkeninstitute.org/content-hub/research-and-reports/reports/staying-power-
effects-short-term-rentals-califomias-tourism-economy-and-housing-affordability
Humphreys, Lucy. "Regulating Short -Term Rentals in California's Coastal Cities: Harmonizing
Local Ordinances with the California Coastal Act." Loyola of Los Angeles Law Review 52
(2019): 309.
Jin, Ginger Zhe, Liad Wagman, and Mengyi Zhong. "The Effects of Short-term Rental
Regulation: Insights from Chicago." November 19, 2023.
SSRN. https:Hssm.com/abstract=4638022 or http://dx.doi.org/10.2139/ssm.4638022.
Reinhard, D., and J.J. Roth. "Renting Trouble? An Analysis of Crime and Calls to Police at
Addresses with Different Rental Types." Crime Science 13, no. 35
(2024). https://doi.org/l0.1186/s40163-024-00232-8.
2024-2025 Orange County Grand Jury Page 20
19-23
Long -Term Solutions to Short -Term Rentals
Safely. "The Best Alternatives to Airbnb and VRBO: The Rise of the Niche Platforms." Safely,
February 17, 2025. https:Hsafely.com/articics/the-best-alternatives-to-airbnb-and-vrbo-the-rise-
of-the-niche-platforms/.
Thompson, Robert. "Affordable Twenty -Four Hour Coastal Access: Can We Save a Working
Stiff s Place in Paradise?" Ocean and Coastal Law Journal 12, no. 1
(2006). hgps:Hdigitalcommons.mainelaw.maine.edu/oclj/vo112/issl/5/.
Urevich, Robin. "Is My Short -Term Los Angeles Rental Legal?" ProPublica, September 3,
2024. https://www.propublica.org/article/is-my-short-term-los-ageles-rental-legal.
Wachsmuth, David, and Danielle Kerrigan. "Short -Term Rentals in Los Angeles: 2022 Report."
Urban Politics and Governance Research Group, McGill University, 2022.
https://upgo.lab.mc ilkpublication/strs-in-los-angeles-2022/Wachsmuth_LA_2022.pdf.
ANNOTATED BIBLIOGRAPHY
Airbnb. "Vacation Rentals, Homes, Experiences & Places." Airbnb.com. Accessed January 6,
2025. hgps://www.airbnb.com.
Leading booking platform for STRs.
AirDNA. "Short -Term Rental Data & Analytics." AirDNA.co. Accessed January 6,
2025. hgps://www.airdna.co.
Platform that tracks the STR market, claiming listings of ten million properties that are then
linked to partner data to detect reservations and calculate market performance. Market -level
volumes are reported with projections. Subscriptions allow for detailed searching and market
reports.
Booking.com. `Booking.com: Hotels, Apartments, Villas, Hostels & More." Booking.com.
Accessed January 6, 2025. https://www.booking.com.
Leading booking platform includes hotels and STRs.
Deckard. "Deckard Technologies." Deckard.com. Accessed January 6,
2025. https://www.deckard.com.
Owner of Rentalscape product, a third -parry platform working with cities, offering STR
detection with address identification, complaint platform (call -center, web reporting), and tax
collection.
Granicus. "Host Compliance." Granicus.com. Accessed January 6,
2025. https:Hgranicus.com/product/host-compliance/.
Third -party platform working with cities offering STR detection, a complaint platform and tax
collection. Host Compliance product recently integrated into Granicus.
2024-2025 Orange County Grand Jury Page 21
19-24
Long -Term Solutions to Short -Term Rentals
Rabbu. "Short -Term Rental Property Management." Rabbu.com. Accessed January 6,
2025. hops://rabbu.com.
One of several investment platforms that does market analysis for STR buyers.
STR. "Hotel Industry Data & Benchmarking." STR.com. Accessed January 6,
2025. hops://www.str.com.
Part of the Costar Group of real estate data companies; tracks data on hospitality markets with a
primary focus on hotels, but STR data such as prices and volumes are also tracked.
Vacasa. "Vacation Rentals." Vacasa.com. Accessed January 6, 2025. https://www.vacasa.com.
Vacation rental management and booking site. Provides services to owners and customers.
VRBO. "Vacation Rentals by Owner." VRBO.com. Accessed January 6,
2025. hops://www.vrbo.com.
Leading booking platform, part of Expedia travel group. Integrated Home Away in 2019.
Zumper. "Apartments for Rent." Zumper.com. Accessed January 6, 2025. http://zumper.com.
One of many aggregating sites for rentals across platforms. Limits searches to strict city
boundaries when searching.
2024-2025 Orange County Grand Jury Page 22
19-25
Attachment B
Newport Beach Draft Response
19-26
CITY OF NEWPORT BEACH
100 Civic Center Drive
Newport Beach, California 92660
949 644-3004 1949 644-3039 FAX
newportbeachca.gov
Mayor
Joe Stapleton
Mayor Pro Tern
July 22, 2025
Lauren Kleiman
Council Members
Michelle Barto
Noah Blom
Robyn Grant
The Honorable Maria D. Hernandez
Sara J. Weber
Presiding Judge of the Superior Court
Erik Kenneth Weigand
700 Civic Center Drive West
Santa Ana, CA 92701
RE: Response to Grand Jury Report, "Long -Term Solutions to Short -Term
Rentals"
Dear Judge Hernandez,
The attached is the City of Newport Beach's formal response to the above -
noted Grand Jury Report.
If you or any members of the Grand Jury have questions about our response,
please contact Jaime Murillo, AICP, Deputy Community Development
Director, at (949) 644-3209 or jmurillo(abnewportbeachca.gov.
Sincerely,
Joe Stapleton
Mayor of Newport Beach
Long -Term Solutions to Short -Term Rentals
Orange County Grand Jury 2024-2025
FINDING
AGREE OR
RESPONSE
DISAGREE
(Include portion of the finding that is disputed and
include an explanation of the reasons
F1
Despite the increasing media coverage of Online Booking
Agree
The City of Newport Beach (City) has a long history of
Agencies (OBAs), STRs are not a new phenomenon in Orange
allowing short-term lodging (STR) beginning in the
County.
1960s. The City started regulating STRs in the municipal
code in 1992. The City established Newport Beach
Municipal Code (NBMC) Chapter 5.95 which includes
permitting requirements, standard operating conditions,
and penalties. As they proliferated over the years, the
municipal code was amended several times to tighten
regulations. Additional restrictions were added to Title 20
(Planning and Zoning Regulations) in 2010 and Title 21
(Local Coastal Program Implementation Plan) in 2021 of
the NBMC.
F2
The steady growth of STR usage in the last decade raises
Agree
A common complaint from residents received by the City
concerns of potential public nuisance.
Council regarding STR is that they often result in the
commercialization of residential neighborhoods, and they
create land use conflicts between established residents
and STR users. Residents experience increased
exposure to noise, trash, and parking impacts.
F5
Proactive home inspections of new and renewing STRs, which
Agree
In early 2024, the Newport Beach City Council directed
have been implemented in some Orange County cities, improve
the implementation of a robust proactive program related
code enforcement and STR compliance with city ordinances.
to the enforcement of STR permits. This new
enforcement program includes instituting a new
mandatory inspection program for all STR units, checking
for health and safety violations, property maintenance
violations and confirming information on STR
applications is correct.
F6
Direct remittance of taxes by OBAs does not capture all TOT
Agree
NBMC 5.95.050 currently allows the hosting platforms to
for an STR because of direct booking practices.
collect and remit TOT if authorized by the Finance
Director. The City has not authorized Online Booking
Agencies (OBAs) to remit Transient Occupancy Tax
(TOT) directly on behalf of property owners or operators.
OBAs typically provide only a lump -sum remittance
without accompanying line -item detail that identifies
specific properties or transactions. Without such detail,
the City lacks the necessary information to reconcile TOT
Page 1
19-28
Long -Term Solutions to Short -Term Rentals
Orange County Grand Jury 2024-2025
FINDING
AGREE OR
RESPONSE
DISAGREE
(Include portion of the finding that is disputed and
include an explanation of the reasons
payments with individual STIR activity and, as a result, is
unable to perform adequate audits or ensure full
compliance. Requiring operators to report and remit TOT
directly provides a higher level of transparency and
accountability.
F7
Some cities in Orange County have outdated systems for
Agree
The City is procuring a software upgrade to improve the
tracking short-term rental TOT making the process less
tracking and collection of TOT from STR operators.
effective and more difficult for staff
The upgrade would introduce an online reporting portal
and allow for more frequent and automated submissions.
These enhancements are expected to improve efficiency
for both City staff and STIR operators, streamline
compliance monitoring, and ensure more accurate and
timely TOT collections.
The City remains committed to leveraging technology to
modernize internal processes and strengthen fiscal
accountability.
F8
In some cases, STRs are improperly recharacterized as long-
Agree
The City actively monitors long-term rental listings
term rentals to circumvent the collection of TOT and any
through the Airbnb Compliance Portal to identify
applicable penalties.
properties that may be operating as illegal STRs under
the guise of long-term tenancy.
In 2025, the City issued five citations for illegal STRs
activity involving properties falsely listed as long-term
rentals. In such cases, the City also issues TOT demand
letters to provide the necessary forms for remittance.
However, current regulations do not provide sufficient
enforcement tools to compel collection or remittance
when a property has operated illegally without a valid
short-term lodging ermit STLP .
F9
Online Booking Agencies in foreign languages are outside the
Disagree
The City is not currently aware of foreign -language
current capabilities of Code Enforcement to monitor and track
booking platforms marketing unpermitted STRs in
unpermitted STRs.
Newport Beach. Most major platforms use synced
calendars, which allows staff to monitor activity across
sites effectively. While foreign -language platforms are not
Page 2
19-29
Long -Term Solutions to Short -Term Rentals
Orange County Grand Jury 2024-2025
FINDING
AGREE OR
RESPONSE
DISAGREE
(Include portion of the finding that is disputed and
include an explanation of the reasons
a significant issue at this time, the City will explore
additional tools if needed to improve enforcement.
F10
Cities that fail to routinely review their STR waiting lists
Agree
The City actively manages and reviews its STLP waitlist
potentially lose TOT revenue and contribute to a greater
on a biannual basis to ensure accuracy, eligibility, and
prevalence of unpermitted STRs.
regulatory compliance.
As part of this review process, staff evaluates the top
portion of the waitlist, typically the top 100 properties out
of approximately 700 entries, focusing on those closest
to receiving a permit. This includes verifying property
ownership, identifying any transfers or sales, and
checking for evidence of illegal short-term rental activity.
Properties found to be ineligible or non -compliant are
removed from the waitlist.
This biannual review process helps preserve the integrity
of the STLP program, ensures equitable access to
permits, discourages unpermitted activity, and protects
the Cit 's ability to collect appropriate TOT revenue.
F11
Locations that have hosted major events have reported an
Agree
The City acknowledges that while we are not a host city
outsized increase in demand and pricing of STRs, a situation
for the 2026 World Cup or the 2028 Olympic Games,
Orange County is likely to experience with the upcoming 2026
nearby communities are hosting games and events. Our
Los Angeles World Cup and 2028 Los Angeles Olympics.
reputation as a premier coastal destination may attract
increased visitor activity during these international
events. We anticipate that this could impact demand for
STRs, even in the absence of directly hosted events.
To address this, the City will closely monitor STR activity
during these timeframes and ensure proactive code
enforcement is in place. Our focus will be on preventing
violations related to occupancy, noise, and unpermitted
rentals.
F12
City leaders have no regular communication with each other
Disagree
The City regularly communicates with other Orange
concerning STR issues, limiting opportunities to develop
County jurisdictions to share strategies and best
strategies and expertise to improve service.
practices related to STRs. City staff participate in monthly
meetings with Code Enforcement Supervisors from
across the county, which include focused discussions on
Page 3
19-30
Long -Term Solutions to Short -Term Rentals
Orange County Grand Jury 2024-2025
FINDING
AGREE OR
RESPONSE
DISAGREE
(Include portion of the finding that is disputed and
include an explanation of the reasons
STIR enforcement. Staff also attend professional training
and conferences through organizations such as the
California Association of Code Enforcement Officers and
the American Planning Association. These efforts
promote ongoing collaboration and improve enforcement
strategies.
RECOMMENDATIONS
ACTION
(1-4
Below)
SUMMARY/EXPLANATION
R1
Cities should review and begin to update ordinances to keep up
1
The City of Newport Beach has a long-standing history of
with the rapidly changing nature of court findings and legislation
regulating STRs, beginning with the adoption of Chapter
related to STRs, by December 31, 2025, and no less frequently
5.95 of the Newport Beach Municipal Code in 1992.
than every three years thereafter. (F4, F12)
Since then, the City has routinely amended its regulations
to address changing conditions, community concerns,
and legal requirements. Notable updates have included
prohibiting STRs in certain residential zones, establishing
a citywide cap of 1,550 permits, implementing minimum
stay requirements, and tightening enforcement
provisions. The most recent amendment, approved by
the California Coastal Commission, proposes new caps
and expanded STIR allowances in specific mixed -use
coastal zones with added conditions, such as
professional management and parking requirements.
Final adoption by the City Council is anticipated in August
2025. The City remains committed to reviewing its STIR
ordinance regularly to ensure it reflects current best
practices and remains responsive to legal and policy
developments.
R2
Cities should consider developing a plan for upcoming major
4
The City receives anywhere from 20,000 to 100,000
events that are expected to create a surge in demand for STRs
tourists daily during the summer months. Therefore, it
and its associated Transient Occupancy Tax, by December 31,
has an established action plan in place to manage large-
2025, and no less frequently than every two years thereafter.
scale events, which typically bring significant increases in
(F11)
both population and STIR occupancy, not only during the
summer season, particularly during the Fourth of July, but
during other times of year such as during spring break.
Page 4
19-31
Long -Term Solutions to Short -Term Rentals
Orange County Grand Jury 2024-2025
RECOMMENDATIONS
ACTION
SUMMARY/EXPLANATION
(1-4
Below)
To proactively address potential issues associated with
these peak periods, the Newport Beach Police
Department distributes informational flyers and produces
targeted social media content to inform visitors of local
rules and regulations. Additionally, the City's Code
Enforcement Division sends reminder emails to STR
permit holders, emphasizing the conditions of their
permits and highlighting the historical rise in violations
during this time of year.
Following the spring break period, the Finance
Department, Police Department and Code Enforcement
Division conduct a debriefing session with the three
largest property management companies. This
collaborative meeting focuses on identifying challenges
and developing coordinated strategies for improved
compliance and public safety in the future.
R3
Cities that allow STRs should evaluate the benefit of ordinances
4
NBMC 5.95.050 currently allows the hosting platforms to
facilitating Voluntary Collection Agreements requiring OBAs to
collect and remit TOT if authorized by the Finance
submit TOT directly, by June 30, 2026. (F4, F12)
Director. The hosting platforms currently collect and remit
TOT to the owners. If a property is managed by an agent,
the agent will remit TOT quarterly. If the property is
owner -managed, TOT will be remitted to the City on a
quarterly basis. The City will reanalyze if voluntary
collection agreements impact remittance amounts and
staff resources prior to June 30, 2026.
R4
Cities that allow STRs should evaluate the benefit of collecting
3
Using the City's current system, the collection of TOT on
TOT on a monthly basis by individual property, by June 30,
a monthly basis would be unmanageable for City staff
2026. (F7, F8)
and would create a strain on staff resources. Prior to June
30, 2026, the City will evaluate if we can transition
systems to allow owners to report quarterly and agents
monthly without a negative impact to staff resources.
R5
Cities should require STRs to include the number of days rented
2
The City will update the TOT form to include this
per month per permit to facilitate short-term rental TOT desk
additional information, as well as require owners to
audits by November 30, 2025. F7, F8
Page 5
19-32
Long -Term Solutions to Short -Term Rentals
Orange County Grand Jury 2024-2025
RECOMMENDATIONS
ACTION
SUMMARY/EXPLANATION
(1-4
Below)
provide a book summary for the reporting period and a
detail for each reservation.
R6
Cities with a permit waiting list should implement strategies to
1
The City currently closes permits that have not reported
remove non -revenue generating licenses to allow for fair
TOT to the City for two (2) years. Closed permits can be
access by December 31, 2025, and annually thereafter. (F7,
reinstated if an application for reinstatement is filed within
F10)
30 days of closure.
R7
Cities that allow STRs should consider allocating resources to
2
The City is actively seeking a vendor to provide a system
update their short-term rental TOT tracking systems by
that modernizes and integrates STR permitting into other
September 30, 2026. (F7, F8, F10)
City systems. This upgrade will improve the City's ability
to track TOT.
R8
Cities that allow STRs should consider random multi -year
2
The City is preparing a TOT audit plan with the intent of
audits to confirm TOT by June 30,2026, and annually thereafter.
launching the new audits in FY26-27.
F6, F7, F8
R9
City leaders should have regular discussions with each other to
3
The City is open to collaborating with other cities. Code
share STIR management strategies on a biannual basis
Enforcement Supervisors will continue to attend the
commencing no later than January 1, 2026. (F12)
monthly Orange County Code Enforcement Supervisors
meeting to facilitate the exchange of ideas, share
resources, discuss recent court rulings affecting local
jurisdictions, and provide a platform for guest speakers to
address all county agencies collectively.
ACTIONS
(1) The recommendation has been implemented, with a summary regarding the implemented action.
(2) The recommendation has not yet been implemented, but will be implemented in the future, with a time frame for implementation.
(3) The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis or study, and a time frame for the
matter to be prepared for discussion by the officer or head of the agency or department being investigated or reviewed, including the governing body
of the public agency when applicable. This time frame shall not exceed six months from the date of publication of the Grand Jury report.
(4) The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefore.
Page 6
19-33