Should the City Council wish to approve short-term residential rentals:

APPROVE THE FIRST READING OF ORDINANCE NO. _______ ENTITLED: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LA HABRA ADDING CHAPTER 5.26 “SHORT-TERM RESIDENTIAL RENTALS”, TO TITLE 5 “BUSINESS LICENSES AND REGULATIONS”; THE ADDITION OF SECTION 1.08.020(A) OF "SECTION 5.26.010 VIOLATION – NUISANCE” TO TITLE 1 “GENERAL PROVISIONS”; AND ZONE CHANGE 21-04 AMENDING TITLE 18 “ZONING” BY ADDING CHAPTER 18.08.140 “SHORT-TERM RESIDENTIAL RENTALS” AS PER EXHIBIT A

Should the City Council wish to deny short-term residential rentals:

APPROVE THE FIRST READING OF ORDINANCE NO. ________ ENTITLED:  AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LA HABRA AMENDING TITLE 18 “ZONING” BY MODIFYING SECTION 18.04.030 “TERMS DEFINED” ADDING THE DEFINITION FOR “SHORT-TERM RESIDENTIAL RENTALS” AND SECTION 18.06.040, TABLE 18.06.040.A—LAND USE MATRIX, ADDING “SHORT- TERM RESIDENTIAL RENTALS” AS A PROHIBITED USE IN THE CITY OF LA HABRA

CEQA:
This project is exempt from the California Environmental Quality Act pursuant to Section 15061(b)(3) of the California Environmental Quality Act Guidelines which covers activities with no possibility of having a significant effect on the environment, and pursuant to California Public Resources Code § 21080.17.

Short-term residential rentals (STRs) have become very popular in many communities over the past several years in what is commonly called the “sharing” economy and, as a result, many cities are reviewing the impacts of such rentals on their communities.  Online hosting platforms such as Airbnb, HomeAway, and VBRO have created a simple, user-friendly direct connection between hosts (for example, residential property owners) and travelers or other temporary visitors, making it very easy to rent a home or a room in a home for short periods of time.

Opponents of residential short-term rental properties express concern over the loss of affordable housing and the potential for change to the character of established residential neighborhoods.  Many cities receive complaints about negative impacts associated with short-term rentals, such as lack of parking, increase in traffic and noise, disruptions of the peace, excessive coming and going of people during the day and night, as well as other public safety issues.

Alternatively, proponents of short-term rentals express support for the ability of property-owners to supplement their income from rentals, allowing them to earn additional revenue to pay for property mortgages. The business community may also welcome the acknowledged positive effects of more visitors who frequent city restaurants and purchase other services.  For visitors, short-term rentals often offer more affordable and flexible options over a hotel stay, including the ability to cook and eat in the home.  There is also a perceived benefit for travelers with children, pets, and large groups. Travelers may also enjoy the feel of being in a “local” neighborhood as opposed to a typical commercial hotel district. 

This report and the attached ordinances have been prepared by staff for City Council consideration due to increasing complaints received by staff regarding the negative effects of a short-term rental unit in a particular neighborhood in the City. Although the City currently does not appear to have many short-term rental units in place, they may be regulated under the City’s police power like other land uses. 

The City has three options to regulate short-term residential rentals:

1) Prohibit short-term residential rentals;
2) Allow short-term residential rentals with the imposition of regulations to reduce potential negative impacts; or
3) Allow short-term residential rentals by right, subject to existing code regulations, such as public nuisance, noise, and parking ordinances.

Proposed Regulations
In addition to policy and legal guidance from the City Attorney's Office, Community Development Department staff reviewed several short-term rental (STR) ordinances that have been adopted by cities in the region, including the cities of Anaheim, Buena Park, Fullerton, and Placentia.  The cities of Brea, La Habra Heights, La Miranda, and Whittier do not currently have regulations on STRs.  During their research, staff also learned that the cities of Garden Grove, Irvine, Tustin, and Villa Park have adopted ordinances that completely ban STRs. 

A draft ordinance has been prepared for City Council consideration that would require a property owner to obtain a permit and satisfy specific regulations and conditions that are meant to protect the established residential nature the neighborhood. Key sections include provisions that describe:
 

The locations and conditions of operations for STRs;
The need to comply with City noise standards;
The requirement to maintain the residential character of the neighborhood;
The need for adequate parking;
Limits on the rental duration and time of use;
Provisions for revocation of a permit;
Procedures for the issuance of administrative citations for violations;
Inspection program; and
Annual renewal

Locations
Different cities employ different methods to determine suitable locations for STRs.  One method is to limit the total number of STRs citywide (e.g. Anaheim has an overall limit of 235, while Fullerton has set a limit of 325).  Another method is to utilize a distance requirement (e.g. Buena Park and Placentia have established a minimum distance of 300 feet between STRs).  The other cities surveyed have no specific limitations.

As part of its review, staff searched the internet to try to determine how many single-family homes in La Habra are currently being marketed for rental as STRs. The search is inconclusive; however, there appear to be less than a dozen that fit the STR designation. Based on the fact that the City has primarily received complaints about the operations of one specific STR property to date, staff believes it would be prudent, should the City Council elect to regulate STRs, to use a distance requirement as is used in Buena Park and Placentia, and that a 300-foot minimum distance requirement between STR's be established as a reasonable standard.  Therefore, that requirement is included in the draft ordinance.

Citations
The ordinance as currently drafted would subject property owners who violate the provisions of La Habra Municipal Code Chapter 1.20 "Administrative Citations" and City Council Resolution 5256, adopted on Aught 6, 2007, to citation.  The current fines for violations are $100 for the first violation, $200 for the second violation, and $500 for the third violation. Additionally, staff proposes to modify Section 1.08.20 to specifically include STRs.  These policy suggestions would provide the City the option of charging violations as misdemeanors as warranted by the circumstances.  An additional proposed change would institute a requirement that a "Good Neighbor" brochure be created that provides rental occupants with notice of applicable City rules and regulations.  This brochure would specify applicable noise standards, parking standards, street sweeping and trash pickup days, along with notification that an occupant may be cited or fined by the City for violating any provisions of this chapter.

Fees, Inspections, and Renewals
Per California Government Code, the City is authorized to establish fees for services, based on the cost of the time and materials necessary to perform those services.  As it relates to STRs, staff recommends the imposition of an application fee, an inspections fee, and an annual renewal fee.  A rough estimate for the application/inspection fee will be between $750t to $1,000 (with any annual renewal fees to be determined at a later date).
Zoning Code Modifications
In addition to the creation of the Short-Term Residential Rental Permit and regulations, it is also proposed to amend Chapter 18.08 of the Zoning Code to regulate where short-term residential rentals would be allowed as follows:   

18.08.140 SHORT-TERM RESIDENTIAL RENTALS
A short-term residential rental is a permitted use in the following zones only upon the issuance of an operating permit/license by the City pursuant to Chapter 5.26 of the La Habra Municipal Code: 
 

R-1aOne-family zone
R-1bOne-family zone
R-1cOne-family zone
R-2Two-family zone
R-3Limited multiple-family zone
R-4Multiple-family dwelling zone
R-5Multiple-family dwelling zone
R-6Multiple-family dwelling zone
R-7Multiple-family dwelling zone
SP-1La Habra Boulevard specific plan

Summary
As noted above, the City has three options to regulate short-term residential rentals:  1) Prohibit them; 2) Allow them with regulations designed to reduce potential negative impacts; or 3) Allow them by right subject to existing code regulations such as public nuisance and noise.  In the event the City Council wishes to allow short-term residential rentals, staff has prepared regulations as outlined in the draft ordinance. 

The key proposed “citable” regulations include:

Alternatively, should the City Council wish to prohibit short-term residential rentals, staff has also prepared an ordinance to that effect for the City Council to adopt.

On June 28, 2021, the La Habra Planning Commission conducted a public hearing on the proposed code amendments.  All Commissioners were present, with the exception of Commissioner Bernier, who was able to participate virtually by phone.

Prior to the meeting, staff emailed a notice to the seven individuals who had registered complaints regarding the operation of a short-term residential rental property in their neighborhood, as well as to the property owner and property management company of said short-term residential rental.  A total of 14 complaints regarding that property were registered and received by the City Manager's Office, the Code Enforcement Division, and the Police Department, between July 2020 and June 2021. After the notice had been sent, six additional emails were received by the Planning Division. Those emails were forwarded to the Planning Commission (see attached). The complaints were generally related to noise, traffic, trash and debris, and large numbers of people coming and going at all hours of the day and night.

A total of 18 individuals attended the Planning Commission meeting, five of whom spoke in opposition to STRs.  Those speakers reiterated the concerns noted above and expressed their belief that the creations of STR regulations in residential neighborhoods was not an appropriate approach, instead requesting that the Commission ban STRs completely. Prior to Commission deliberation, Interim Director of Community Development Carlos Jaramillo, shared several points for the Commission to consider, including the purpose of single-family neighborhoods; their character and livability; the value that short-term rentals may bring into neighborhoods; what actions will be necessary to enforce the regulations, as well as costs the City may incur; and what actions would be necessary to modify approvals in the future should short-term rentals be allowed.

During Planing Commission deliberation, Commissioner Powell said he saw no value in an effort to regulate an "unregulatable" type of behavior that would likely continue to increase by circumventing City regulations.  Commissioner Powell strongly recommended banning all short-term residential rentals in the City of La Habra.  Commissioner Nigsarian said he was divided at first, but agreed after reviewing the potential costs to the City and in light of Commissioner Powell's statements.  Commissioner Bernier thanked the residents for their comments and emails and stated that she agreed with Commissioners Powell and Nigsarian.  Vice Chair Munoz said he supports the idea of short-term rentals but did not think that it would be appropriate in La Habra.  Chair Manley said he agreed with Commissioner Nigsarian and could not see the benefits of trying to regulate something that is difficult to regulate. They voted 4-1 (Manley) to forward to the City Council a recommendation to prohibit STRs in La Habra. 

If regulations are approved by Council allowing STRs to operation, each application for an STR permit must be accompanied by a fee established by a resolution of the City Council.  As the City Council is aware, fees are based on the actual cost of time and materials, pursuant to the City's "Master Schedule of Fees" and such fees will be brought forward at a later date for approval.

The General Plan has many goals and policies geared toward preserving neighborhoods while allowing a mix of compatible uses. The proposed regulations and permitting process provide a balance that could allow property owners the full use of their properties while preserving the quality of life for the neighborhood.

Specific policies would include: