City of Anaheim Office of the City Manager August 12, 2025 The Honorable Maria Hernandez Presiding Judge Orange County*

Despite the increasing media coverage of Online Booking Agencies (OBAs), STRs are not a new phenomenon in Orange County. City Response to F1: Anaheim agrees with this finding, noting that OBAs are identified as online travel companies (OTC) in the City's nomenclature.

The steady growth of STR usage in the last decade raises concerns of potential public nuisance. City Response to F2: Anaheim partially disagrees with this finding, noting that the potential for public nuisance exists when STRs are not properly managed and/or not operating in compliance with City regulations.

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. City Response to F4: Anaheim partially disagrees with this finding. While Anaheim has not yet audited OTCs for compliance with its TOT Code, changes to that Code that became effective in 2023 require OTCs to remit TOT based on all fees and charges charged to the guest. Audits of OTCs have been scheduled to begin after July 1, 2025. The audit could also identify any TOT income received from unpermitted STRs, and Anaheim will address this issue separately. S. ANAHEIM BLVD. SUITE 733 ANAHEIM, CA 92805 TEL (714) 765-5162 FAX (714) 765-5164 www.anaheim.net The Honorable Maria Hernandez August 12, 2025

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. City Response to F5: Anaheim agrees with this finding.

Direct remittance of taxes by OBAs does not capture all TOT for an STR because of direct booking practices. City Response to F6: Anaheim partially disagrees with this finding. While Anaheim has not yet audited OTCs for compliance with its TOT Code, changes to that Code that became effective in 2023, require OTCs to remit TOT based on all fees and charges charged to the guest. Audits of OTCs have been scheduled to begin after July 1, 2025.

Some cities in Orange County have outdated systems for tracking short-term rental TOT making the process less effective and more difficult for staff. City Response to F7: Anaheim partially disagrees with this finding, noting while improvements have been implemented in Anaheim, the City lacks knowledge regarding other Orange County cities.

In some cases, STRs are improperly recharacterized as long-term rentals to circumvent the collection of TOT and any applicable penalties. City Response to F8: Anaheim disagrees with this finding, noting that the City has no evidence that STRs are recharacterizing to long term rentals to avoid TOT.

Online Booking Agencies in foreign languages are outside the current capabilities of Code Enforcement to monitor and track unpermitted STRs. City Response to F9: Anaheim agrees with this finding.

Locations that have hosted major events have reported an outsized increase in demand and pricing of STRs, a situation in Orange County is likely to experience with the upcoming 2026 Los Angeles World Cup and 2028 Los Angeles Olympics. City Response to F11: Anaheim partially disagrees with this finding, noting that the City lacks knowledge and sufficient information to reach this conclusion.

City leaders have no regular communication with each other concerning STR issues, limiting opportunities to develop strategies and expertise to improve service. City Response to F12: Anaheim partially disagrees with this finding, noting that City staff and leadership have regular forums where topics such as STRs can be discussed, acknowledging that Orange County cities also vary in their regulatory frameworks.