Short-term rentals draw Yorba Linda attention

An interesting report on regulating short-term rentals with a focus on zoning and tax issues, among other topics, was presented to Yorba Linda City Council members earlier this month.

Currently, the city has 89 short-term rentals, estimated to be 36 for the entire house and 53 for single bedrooms or guest quarters. Just three have secured business licenses and none to date have paid the city's transient occupancy tax, according to the report.

Three rentals have been described as disruptive to their neighborhoods, noted the report from Finance Director Scott Catlett and Community Development Director David Brantley.

“Complaints...include an increase in the number of unfamiliar individuals in the neighborhood, additional traffic, a lack of available parking, loud music playing into the night and the hosting of parties and other types of special events that draw a large audience,” the report stated.

Single bedrooms or guest quarters rent for an average $100 per night, while some whole-house rentals go for more than $1,000 per night, according to data from Host Compliance, a San Francisco-based firm the city has hired to assist with managing the rentals.

The company will identify short-term rentals and owners doing business in the city, monitor the existing rentals for compliance, provide guidance to new or illegal rentals and check for rental activity to flag suspected properties for further analysis by the city.

Cost is $65 per property per year, which, based on 89 rentals would be $5,785, not including a 10 percent discount for a three-year contract, plus a $5,000 fee for changes allowing owners to pay occupancy taxes through the city's existing business license Web portal.

The city estimates the 10 percent transient occupancy tax, which is remitted quarterly, will total $17,600 and business license taxes $2,200 yearly, based on the 89 identified rentals.

A six-month amnesty period with no back taxes or license fees has been authorized as a one-time option that expires if an operator fails to respond “in a timely fashion” to an initial contact.

City officials believe a specific short-term rental ordinance is not needed at this time, since the city's zoning and noise ordinances and debt collection practices can handle issues. And court orders can require operators to cease doing business if they don't comply with city ordinances.

For example, city zoning rules don't allow homes to be used as “event facilities,” and only uses that complement “residential living” are permitted in the city's eight residential zones.

A noise ordinance has specific allowable decibel levels during day and evening hours, with violations subject to citation by Sheriff's deputies as a “disturbance of the peace.”

A “good neighbor” brochure with noise, parking, pet, trash and occupancy rules will be distributed to operators. The council will review short-term rental issues in six months.

Yorba Linda hires company to help city recruit, retain businesses for neighborhood centers

A city-sponsored effort to attract and retain businesses in Yorba Linda's several retail centers – which could add dollars to the city treasury through added sales tax revenue – is underway.

City Council members have approved an agreement with Jones Lang LaSalle, Inc., known by the initials JLL, that will “assist the city in providing retail recruitment and attraction services to retail centers throughout the city,” according to Economic Development Manager Pam Stoker.

The one-year pact costs the city $60,000 and includes an option for two one-year extensions. Monthly progress reports will be submitted listing the time, contacts and work completed, with deliverables including statistical reports, retail analysis and related studies specific to the city.

JLL is a worldwide real estate management and services company that traces its ancestry to a British firm founded in 1783. The New York Stock Exchange-listed company has some 300 offices in 80 counties, with the nearest to Yorba Linda located in Irvine.

In her report to the council, Stoker cited “the city's desire to work with a brokerage firm that can actively seek and attract highly desired commercial and restaurant tenants to our city's regional and neighborhood shopping centers.”

Four firms submitted proposals to the city, with JLL selected after several interviews. Stoker reported: “JLL stood out among the interviewers as having a local presence and a proven track record for assisting cities in attracting quality and unique retailers into a local market.”

The city “intends to work closely with the professional firm to provide pertinent information and assist in identifying retail leakage, site opportunities and community/neighborhood strengths,” Stoker stated.

Three specific goals are noted in the 15-page agreement, including updating research “to determine sales tax leakage and which retailers and restaurants should be within the city.”

A second is to “increase occupancy throughout the city” by targeting “void categories” as determined by analysis, as well as retail and restaurants that are requested by residents.

Third is a strategy for the shopping centers at the Imperial Highway and Yorba Linda Boulevard intersection that would identify appropriate tenants for each of the centers.

This strategy would consider the city's changing demographics, the changing nature of retail and how the city's major centers “can complement rather than compete against each other to best meet future market demands,” according to the contract.

In discussing the contract, the council members pointed to several challenges related to the city's shopping centers, including several property owners in a single center, foreign owners who are difficult to contact and family ownership with differing views from family members.

JLL must comply with the city's minority business enterprise program, affirmative action plan and other related programs.

Yorba Linda sewer report focuses on fats, oils, grease and prevention of overflows to streets

With grand openings of several eating establishments, a Regal movie theater, a Bristol Farms specialty food store and other businesses in the Yorba Linda Town Center fast approaching, a new report related to the prevention of sewer overflows merits attention.

The report, presented recently to directors of the Yorba Linda Water District, outlines the agency's programs regarding fats, oils and grease, commonly termed FOG, with a focus on restaurants and food outlets.

The water district is responsible for maintaining sewers throughout most of its service areas, although some Yorba Linda homes still utilize septic tanks. Sewers in Yorba Linda's mid-city area served by the Golden State Water Company also are maintained by the district.

The FOG program is designed to prevent buildup of the materials that clog lines and “result in sewer flows in streets, gutters and other surface areas,” according to the report prepared by Steve Conklin, the district's engineering manager.

Conklin noted that the district is required to report overflows to the state's Water Resource Control Board, which can issue fines, although “there have been very few sewer overflows and no fines assessed,” due to the district's “aggressive and on-going mitigation program.”

One aspect of the mitigation program is the development of a spreadsheet that identifies 108 “enhanced maintenance areas” in sewer lines throughout the district's service area that need more frequent clean-outs, either monthly or quarterly.

The areas need special attention due to flat slopes, sewer segments with slopes that don't maintain adequate downflow velocity; siphons, downward segments that move up again to avoid obstacles; and grit (coffee grounds, eggshells, other debris) and solid grease buildup.

Of the 108 identified problem areas, 67 reasons are noted on the spreadsheet, 40 due to restaurants and 27 for other causes, mainly residential, although lines near a high school, retirement home and oil change facility are listed. Thirty-four lines have two or more problems.

Some of the problems are due to restaurants not having gravity grease interceptors, since they only have been required by a FOG control program adopted in 2010. And some local shopping centers have private sewer systems that are not regularly maintained by owners/management.

New Town Center tenants will be visited by a district representative who will inspect the kitchen and grease retention facilities and provide a copy of an 87-page FOG control binder describing training, maintenance and compliance inspections, including the district's 2004 FOG ordinance.

Among the report's recommendations for future action is for directors to establish a “grease disposal mitigation fee” for restaurants without grease control devises that contribute to the fats, oils and grease hotspots to recover the costs of staff time and materials to clear out the problem areas.

Yorba Linda City Council to consider spending surplus cash, aka 'excess operating reserves'

A decade after the economic downturn that peaked in 2008 finds Yorba Linda's government operations on a decisive upswing, as City Council members look forward to spending some surplus cash after the books are closed at the end of the current fiscal year June 30.

The recessionary times took a toll on local government, with council members scrambling to cut as many dollars as possible from the city budget, perhaps best symbolized by a split 3-2 vote in 2010 to eliminate the town's most-watched event, the July 4 fireworks show.

The three votes retained a scaled-down event, but it's interesting to note the elected officials never touched their two fully city-funded retirement benefits, a defined-benefit plan based on their salaries and a defined-contribution plan awarding them “deferred compensation.”

(Voters took the pension matter into their own hands in the November 2014 general election by eliminating pension and other benefits for future council terms on a 16,061 to 2,714 vote.)

Now that property, sales and other tax revenue streams have rebounded, officials find the city treasury's reserve funds increasing more than conservatively predicted in the council-adopted budgets each year.

Last year, council members put into practice a newly adopted policy regarding what they called “excess operating reserves,” which are considered to be revenues above the long-standing council policy of keeping 50 percent of a year's operating budget in reserve funds.

At that time, the council had some $4 million in excess reserves, with members allotting about $3.2 million for various projects, including nearly $2 million to repay an outstanding balance of funds loaned from reserves for the Town Center project.

Other uses for last year's excess: $320,490 sent to the state's Public Employees Retirement System to continue a 20-year pay down of the city's unfunded pension liability from 30 years and $200,000 deposited to a trust fund for the city's unfunded retiree healthcare liability.

Also, $670,000 was appropriated to speed up one phase of landscape transition for street medians and $75,000 for consultant hours to assist staff with various landscaping projects.

This year's excess reserves are currently estimated at $2 million or 6 percent above the 50 percent of a year's operating budget required under council policy, an amount that could be higher by the end of the fiscal year June 30.

With $800,000 set aside so the city will meet the 50 percent reserve policy due to growth in budget expenditures, $1.2 million is available now for added council-directed spending. As council did last year, members deferred action on using excess reserves until after June 30.

Among recommendations for immediate use of the excess were faster landscape street median transitions, funds for a Main Street-Lemon Drive improvement project and more contributions to reduce pension and retiree healthcare liabilities.

Latest Yorba Linda financial update 'remains positive' as surplus is expected this fiscal year

Several times each year Yorba Linda's City Council reviews reports prepared by Finance Director Scott Catlett that focus on the financial health of city governmental operations in relation to revenues and expenditures, among other fiscal matters.

One document is a two-year budget usually adopted by council members in June of odd-numbered years, supplemented by quarterly, mid-year and mid-term updates comparing budget projections with actual income and listing possibilities for additional spending.

The latest report presented in February indicates that a projection for the fiscal year ending June 30 “remains positive, with a general fund budget surplus of $1.3 million and operating

reserves of 56 percent of general fund expenditures,” according to Catlett.

Reserves are “safely above” the council's minimum balance policy of 50 percent of general fund expenditures, Catlett reported. Total operating income is projected to be $36.3 million.

Here are some other noteworthy items from the 10-page update:

--The largest revenue increase is the $586,000 that was transferred to the general fund from uncashed city-issued checks and unclaimed deposits, as outlined in two of my past columns.

Other increases: $221,000 from the North Orange County Public Safety Task Force, offset by an increase in the Sheriff's Department contract; $212,000 from federal and state agencies for 2017 rainstorms; $121,000 in taxes from property transfers; and $118,191 in property taxes.

--Spending increases of $465,000, including funding for Information Technology Division and Town Center parking garage projects, correction of an error in figuring library retiree medical insurance, a new vehicle for the senior landscape inspector and council travel expenses.

Parking garage projects include electric vehicle charging stations and a system providing garage users with a visual indication of the number of parking spaces on each of the four levels, using $140,000 of $1 million in Air Quality Management District funds.

--Interestingly, the city will replace 2.5 “full-time equivalent” contract employee positions with 3.0 city positions and save $5,000 each year. The new positions will be a Senior Landscape Inspector, Senior Public Works Inspector and Maintenance Worker II.

According to Catlett's report, the city has determined that contract employees for public works inspections, landscape duties and maintenance work cost the city more than expenses for in-house staff, partly due to “the current prevailing wage rates charged for construction workers.”

--Property and sales taxes remain the city's top two income sources, bringing in an expected $18.4 million and $7.3 million, respectively, this fiscal year. Third is income from the franchise fees residents pay with utility bills, including cable television, with some $2 million anticipated.

Revenue from building permits is projected to be nearly $1.6 million by June 30.