Fountain Valley City Council rejects short-term rental license ordinance, seeks to ban practice

After pondering a decision on whether to allow short-term rentals for more than a year, Fountain Valley City Council unanimously rejected an ordinance Tuesday night that would have done so.

Going further, the council also asked staff to prepare an ordinance explicitly banning short-term rentals in the city.

Between August and December last year, the board met three times to consider short-term rentals. These discussions indicated that a majority of the board was interested in allowing short-term rentals with certain restrictions.

The ability to enforce short-term rental regulations was a major contributor to the council’s decision not to pass the ordinance. Fountain Valley has one code enforcement officer, and the projected revenue from the transitional occupancy tax would not have been substantial enough to cover the cost of the additional officers.

Councilman Glenn Grandis revealed he operates short-term rentals in Big Bear and Palm Desert. He said code enforcement personnel cost about $100,000 per person, based on conversations he’s had with people familiar with short-term rentals and code enforcement in Big Bear.

“The problem I see is that we don’t have the enforcement capacity like they do in Big Bear,” Grandis said. “At Big Bear, they have four full-time code enforcers. They work nights, they work weekends. For us to do this in Fountain Valley, we would need the same.

Dozens of people gathered in the council chamber to weigh in on the issue, some watching from outside. There was significant public pressure to vote against short-term rentals, as the majority of the roughly 40 speakers on point voiced their opposition to the practice, expressing concerns over noise, parking, privacy and Security.

Some speakers also denounced the argument that tourists would boost local businesses, saying those staying in short-term rentals were more likely to travel to nearby towns to visit beaches and theme parks.

Councilor Ted Bui asked Police Chief Matt Sheppard how officers respond when residents call about harmful behavior occurring in a short-term rental.

“I have heard here several times tonight that [the public] witnessed or experienced behavior that is a nuisance, and did not call the police when they would have liked to call the police,” Sheppard said. “I would like them to call the police because we can come out and we can help curb this behavior.”

Mayor Patrick Harper noted a desire to prioritize residents over businesses.

“I’m not against short-term rentals, in general, but I just don’t think they’re right for Fountain Valley,” Harper said. “I favor the hosted method – perhaps these could be considered on a case-by-case basis. If there are difficulties or someone has a particular situation they want to apply for, we can consider that, but I think the most reasonable thing to do would be to ban rentals and also develop some sort of enforcement mechanism to make sure we enforce the ban.”

Several nearby towns, including Costa Mesa, Huntington Beach and Irvine, have not allowed short-term rentals.

Since the city code did not expressly allow short-term rentals, city officials had taken the position that those running short-term rentals were doing so illegally. The city collects a transitional occupancy tax at a rate of 9%, and Grandis again pledged to hold accountable those who had not paid the tax.

“I now want to make sure we tackle the back taxes due,” Grandis said. “I don’t want it to just go through. It really bothers me, and I think we need to put an order in place that says we’re going to prosecute them. We have to come up with a policy, and I want it to be really strict and strong.

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