Orange County Grand Jury Issues Report on Short-Term Rentals: "Long-Term Solutions to Short-Term Rentals"

The Orange County Grand Jury has released its 2024-2025 report, titled "Long-Term Solutions to Short-Term Rentals," offering insights and recommendations on how cities manage the complexities of Short-Term Rentals (STRs). The report was publicly released on May 22, 2025, after being provided to city officials, such as Buena Park Mayor Joyce Alin, a few days prior.

The Grand Jury's comprehensive study aimed to understand how effectively Orange County cities are managing STRs, which are defined as the occupancy of a residence (like a home or apartment) for fewer than 30 days. While vacation rentals have a long history in Orange County, dating back decades in beach communities like Crystal Cove State Park, the advent of Online Booking Agencies (OBAs) like Airbnb and VRBO has made them far more visible and accessible, intensifying tensions between STR operators and neighbors.

The report notes that Orange County is a major international destination due to attractions like Disneyland, Knotts Berry Farm, Angel Stadium, and miles of scenic coastline, contributing to the demand for STRs. Cities across the county have adopted diverse approaches to STRs: nineteen cities have banned them, fifteen allow them, and some have no specific ordinances. Unincorporated areas of the county are covered by County of Orange policy, though the Grand Jury did not observe STR volumes there warranting analysis.

Key Findings from the Grand Jury Investigation:

The Grand Jury's investigation revealed several critical points about STR management in Orange County:

• Enforcement Challenges: Cities that ban STRs often face a "whack-a-mole" scenario, where shutting down one unpermitted STR leads to another opening elsewhere. Despite this, cities report a notable decline in STR volume after a ban is enacted.
• Lax Enforcement and Uncollected Taxes: Code Enforcement (CE) tends to err on the side of leniency, and some cities rarely pursue fines for violations or collect the Transient Occupancy Tax (TOT) on unreported STR income. Many cities rely on an "honor system" for STR owners to report and pay the correct TOT.
• Impact on Affordable Housing: Contrary to a commonly held belief, the Grand Jury found no evident negative impact of STRs on affordable housing in cities where they are allowed. The report argues that converting existing STRs to affordable housing would contribute minimally in inland cities and is unrealistic in coastal cities due to California Coastal Commission (CCC) mandates to preserve low-cost visitor facilities and beach access.
• TOT Collection Issues: While STR operators are generally required to obtain business licenses, permits, undergo inspections, and pay TOT, direct remittance of taxes by OBAs does not capture all TOT due to direct booking practices. Some cities have outdated systems for tracking STR TOT, making collection less effective.
• Complaint Management: Cities with growing STR numbers did not always see higher complaint volumes, and some employ effective complaint management strategies. However, neighbors often face hurdles in complaint resolution, and CE may not be available during nuisance hours (evenings/early mornings).
• Legal Gaps: Recent legal rulings have highlighted gaps in city ordinances, providing grounds for appealing STR citations. Specificity in zoning language is necessary, and merely defining a property as "residence" is insufficient to ban STRs.
• Major Event Impact: Locations hosting major events like the Olympics have seen a significant increase in demand and pricing for STRs. Orange County is expected to experience similar surges with the upcoming 2026 Los Angeles World Cup and 2028 Los Angeles Olympics, but cities haven't yet dedicated resources to plan for this.
• Lack of Inter-City Communication: The report notes a lack of regular communication among city leaders regarding STR issues, which limits opportunities for sharing strategies and expertise.

Grand Jury Recommendations:

The Grand Jury made nine recommendations to address these issues, urging cities to:

• Update ordinances regularly to align with court findings and legislation.
• Develop plans for upcoming major events to manage the surge in STR demand and TOT.
• Evaluate Voluntary Collection Agreements (VCAs) with OBAs for direct TOT submission.
• Collect TOT on a monthly basis by individual property.
• Require STRs to include days rented per month for better desk audits.
• Implement strategies to manage permit waiting lists and remove non-revenue-generating licenses for fair access.
• Allocate resources to update STR TOT tracking systems.
• Consider random multi-year audits to confirm TOT.
• Engage in regular discussions with other city leaders to share STR management strategies.

City Responses: Buena Park and Los Alamitos

Cities are required or requested to respond to the Grand Jury's findings and recommendations within 90 days of the report's publication.

Buena Park's Response (as of July 22, 2025):

The City of Buena Park provided a detailed response to the Grand Jury's findings and recommendations.

• Agreements: Buena Park agrees that STRs are not a new phenomenon, that proactive home inspections improve code enforcement, and that direct OBA remittance does not capture all TOT due to direct booking. They also agree on the likely surge in STR demand for major events.
• Partial Disagreements: Buena Park partially disagrees that STR growth has been a substantial source of public nuisance in their city since their 2020 ordinance adoption. They also partially disagree about having outdated TOT tracking systems, stating they successfully utilize RentalScape (Deckard) for STR tracking and TOT, a widely used software platform. They also partially disagree on the difficulty of monitoring foreign-language OBAs, noting RentalScape tracks over 10,000 sites.
• Disagreements: Buena Park disagrees with the finding that city leaders lack regular communication about STR issues, citing existing forums like the Planning Directors Association of Orange County (PDAOC), Municipal Management Association of Southern California (MMASC), and the League of California Cities.
• Recommendations Implemented: Buena Park has already implemented recommendations such as regularly updating its STR ordinance and monitoring state legislation. They also already require monthly TOT remittance for hotels and STRs, contract with RentalScape for tracking systems, and authorize their Finance Department to conduct multi-year audits of STRs. Furthermore, their city staff is already engaged in regular inter-city discussions on STR management.
• Recommendations for Future Implementation/Analysis: Buena Park is planning to develop a plan for major events like the World Cup and Olympics. They will evaluate the benefit of Voluntary Collection Agreements (VCAs) with OBAs and evaluate amending their Municipal Code to require STRs to disclose days rented per month for audit assistance.
• Not Warranted: The recommendation regarding permit waiting lists is not warranted for Buena Park, as they do not have one and review applications immediately.

Los Alamitos' Response (as of July 21, 2025):

The City of Los Alamitos also received the report and prepared a response. Los Alamitos considers Short-Term Rentals to be defined as Hotels or Motels, which are permitted only in commercial and industrial areas of the city. A 2023 public survey conducted by the city revealed that 80% of respondents were against allowing STRs in residential zones. This led the city to not pursue the issue further at that time.

The Orange County Grand Jury's report and the subsequent city responses underscore the ongoing challenges and varied approaches to managing STRs across Orange County, as well as efforts to improve oversight and revenue collection in this evolving sector.