Yorba Linda's short-term rentals now pay transit occupancy taxes, obtain business licenses

An update on Yorba Linda's short-term rentals shows there are fewer operating than originally thought and most have become compliant with city requirements, including having a business license and paying a 10 percent transit occupancy tax.

Earlier this year, the city pegged the number of short-term rentals at 89 – 36 entire houses and 53 single bedrooms or guest quarters. Just three had business licenses and none had paid the transit occupancy tax, as noted in my March 29 column.

At the time, three of the rentals were described as disruptive to their neighborhoods, with the complaints including unfamiliar people in the neighborhood, additional traffic, lack of parking, loud music and hosting parties and other special events drawing a large audience.

The city hired a San Francisco-based company, Host Compliance, to inventory short-term rentals, monitor rentals for compliance with city regulations, provide guidance to the rental operators and flag suspected rental properties for further analysis by the city.

And the city authorized a six-month amnesty period with no back taxes or license fees as a one-time option that would expire if an operator didn't respond “in a timely fashion” after an initial contact.

Based on 89 rentals, the city estimated collecting $17,600 in transit occupancy taxes and $2,200 in business license fees each year. Per-night rents for single bedrooms were said to average $100, with entire homes averaging $1,000, based on Host Compliance data.

Currently, according to the latest report, Host Compliance is tracking 52 short-term rentals, since some of the original 89 identified were in neighboring jurisdictions and others weren't rentals.

After receiving letters from the city, a majority of the operators either came into compliance or delisted their properties upon learning the requirements for a business license and the transit occupancy taxes, noted the updated report from Scott Catlett, the city's finance director.

Of four non-compliant rentals, two were determined to be listings posted by previous owners, which were not removed when they sold their homes. Two cases were unresolved at the time of the report, with enforcement eventually possible through actions by the city attorney.

“Revenue collected from these businesses is anticipated to fully offset the costs of the Host Compliance agreement and generate a small amount of additional revenue for the General Fund,” Catlett's report stated.

Current city zoning laws don't allow homes to be used as “event facilities,” and only uses that complement “residential living” are permitted in residential zones. And a city noise ordinance lists specific allowable decibel levels during day and evening hours.

Zoning and noise ordinance violations are subject to citation by city enforcement officers, including sheriff's deputies, so, at present, the city is not considering a specific short-term rental ordinance.