Long-Term Solutions to Short-Term Rentals

Despite the increasing media coverage of Online Booking Agencies (OBAs), STRs are not a new phenomenon in Orange County. Response: The City of Laguna Beach agrees with the finding. STRs have long existed and Laguna Beach has had regulations in place since 1999.

The steady growth of STR usage in the last decade raises concerns of potential public nuisance. Response: The City of Laguna Beach agrees with the finding. The City has strengthened its regulatory framework through recent Municipal Code updates, including the proposed addition of Chapter 5.84, which establishes a comprehensive compliance system. This framework includes nuisance response plans, proactive monitoring, technology integration, and coordinated enforcement efforts among Community Development, Code Enforcement, and the Police Department to minimize potential nuisances.

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. Response: The City of Laguna Beach agrees with the finding. Inspections are required under Laguna Beach’s permitting process, and the new licensing ordinance will enhance this 505 FOREST AVE. ● LAGUNA BEACH, CA 92651 ● TEL (949) 497-3311 ● FAX (949) 497-0771 Honorable Marie Hernandez, Presiding Judge September 23, 2025 further.

Direct remittance of taxes by OBAs does not capture all TOT for an STR because of direct booking practices. Response: The City of Laguna Beach agrees with the finding. The new ordinance includes enhanced reporting and audit provisions to help address gaps in TOT collection.

Some cities in Orange County have outdated systems for tracking short-term rental TOT making the process less effective and more difficult for staff. Response: The City of Laguna Beach agrees with the finding. The City recognizes the need to improve financial oversight and has adopted a new ordinance (proposed Chapter 5.84) that requires short-term lodging unit operators to obtain a Short-Term Lodging Unit Certificate. This certificate enhances the City’s ability to track rental activity, verify compliance with Transient Occupancy Tax (TOT) and Tourism Marketing District (TMD) assessments, and enforce reporting obligations more effectively. System improvements are planned as part of the licensing implementation.

In some cases, STRs are improperly recharacterized as long-term rentals to circumvent the collection of TOT and any applicable penalties. Response: The City of Laguna Beach agrees with the finding. To improve compliance, the City has partnered with Granicus Host Compliance, a third-party monitoring service that tracks online short-term rental listings in real time. The system captures listing metadata, screenshots, and advertisement changes over time, helping to identify rentals that are misrepresented as long- term stays but are operated as short-term rentals. This evidence enables Code Enforcement to take appropriate enforcement actions under the City’s Municipal Code.

Online Booking Agencies in foreign languages are outside the current capabilities of Code Enforcement to monitor and track unpermitted STRs. Response: The City of Laguna Beach agrees with the finding. Monitoring foreign-language listings presents challenges; however, the City’s partnership with Granicus Host Compliance enhances multilingual monitoring across major STR platforms. Staff continues to explore additional tools to support enforcement.

Cities that fail to routinely review their STR waiting lists potentially lose TOT revenue and contribute to a greater prevalence of unpermitted STRs. Response: The City of Laguna Beach agrees with the finding. Under the new Short-Term Lodging ordinance (Chapter 5.84), licenses for short-term lodging units do not renew automatically, and revoked licenses carry a minimum three-year waiting period before reapplication. These provisions help ensure that only active, compliant operators maintain 505 FOREST AVE. ● LAGUNA BEACH, CA 92651 ● TEL (949) 497-3311 ● FAX (949) 497-0771 Honorable Marie Hernandez, Presiding Judge September 23, 2025 licensing privileges, thereby helping reduce potential revenue loss associated with inactive or underused licenses.

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. Response: The City of Laguna Beach agrees with the finding.

City leaders have no regular communication with each other concerning STR issues, limiting opportunities to develop strategies and expertise to improve service. Response: The City of Laguna Beach partially agrees with the finding. While there is no formal regional STR coordination body, City staff regularly engages with counterparts in neighboring jurisdictions to share best practices, enforcement strategies, and policy updates. The City supports increased collaboration and is open to participating in broader regional efforts to address STR issues.