Fountain Valley moving toward permitting short-term rentals

Facing a reality that there were already dozens of listings within the city, the Fountain Valley City Council favored moving toward allowing short-term rentals, with regulations, by a vote of 3-2 on Tuesday night.

The Fountain Valley municipal code did not expressly permit short-term rentals, leading the city to take the position that properties operating as such were doing so illegally. Web searches showed about 175 short-term rentals in Fountain Valley, with about 55% of those listings being for the whole property and the others being for rooms within a house, according to a staff report.

A draft ordinance brought to council to help drive the discussion set limits of one license per owner and no more than 100 unhosted short-term rentals within the city. It also established quiet hours and required on-site parking to be provided.

About a dozen speakers approached the microphone during the public comments for the agent item, many of whom said they were short-term rental owners.

“I am delighted to see what it has done for my personality and age,” resident and short-term rental owner Barbara Kossen said. “I’m 87 now and I get to talk to some of these people who visit, and I get to hear different languages in my own home, so I sometimes feel like I’m running a United Nations if we all get together.”

Several short-term rental owners offered their own suggestions on potential short-term rental policy, including the implementation of a minimum night stay. The draft ordinance in the staff report required renters to be at least 25 years old and stay for no less than three days.

Former Fountain Valley mayor Cheryl Brothers said she wanted code enforcement to be present on the weekends.

“Everyone that spoke tonight sounds like they do a great job [as short-term rental hosts],” Brothers said. “However, we all know from past experience and stories that not all agents are responsible, and while I don’t oppose short-term rentals, I’m pleased to hear the restrictions that you’re considering.

“I hope you do consider them, and with the money from the permits and [transient occupancy tax], I hope that is dedicated in the budget to code enforcement.”

If short-term rentals are permitted, the city would be able to collect transient occupancy tax, which is 9% in Fountain Valley. Based on properties advertising short-term rentals, the city estimated that property owners could benefit to the tune of $2.1 million per year, entitling the city to $189,000 in tax revenue.

Between transient occupancy tax and permit fees for short-term rentals, city officials believe the city could receive between $175,000 and $225,000 annually.

Councilman Ted Bui, who along with his council colleagues Michael Vo and Glenn Grandis, voted to pursue having short-term rentals permitted in the city, asked Fountain Valley Police Chief Matt Sheppard if the city had experienced issues related to such properties.

“Within the last two-year period, we did have a few calls from a specific location in the city just east of us,” Sheppard said at City Hall. “We were able to manage that through issuing citations for parking violations and compliance through the noise ordinance, but it was really limited to one specific location.”

Sheppard recommended if the council planned to move forward with short-term rentals that the department be equipped with the enforcement capability to promptly address issues that may arise.

Grandis said he was leaning toward allowing short-term rentals with restrictive regulations, but he issued a stern warning to bad actors.

“I absolutely am not happy about those that have collected an occupancy tax and haven’t paid it,” Grandis said. “I think that we need to really crack down on that. I think it’s fraud, in my opinion, that people have collected a tax and haven’t paid it, so if that’s you, I would suggest you somehow figure out how to get the city some money.”

Mayor Patrick Harper and Mayor Pro Tem Kim Constantine cast the dissenting votes.

“You’re looking at about $250,000 right before you as far as revenue,” Constantine said. “That’s the gross. We have to pay a lot of staff, hire code enforcement. It’s going to be a lot of policing in every single meaning of the word policing, and it’s very, very taxing.”

Constantine said she was unwilling to compromise beyond a minimum stay of a week, adding that the city needed to provide a proper ordinance for residents and “encourage hotels” to come to Fountain Valley.

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