****Support: I support reductions in Police and Fire not because I oppose those departments but this the only way to get people to understand there is a problem.
**** Oppose: I object to increasing the number of STRs because STRs take away housing and are so problematic that they come with their own Code Enforcement operations. I object to the sale of Taft Library because the land will be used for housing which brings costs not fully paid for by property taxes remitted to the City. I object to cuts to overnight security in parks which will lead to homeless encampments and damage to park property. I object to cuts to Orange Elderly Services because this is a vulnerable population with limited resources. **** Future is bleak for City of Orange unless more revenue is obtained via a sales tax measure and economic development. There is already little to cut from the budget without causing damage due to neglect by prior Councils. If the sales tax measure does not pass, the City needs to look at long term viability and needs to act before the City fails to be a going concern. Our City may need to go out of business or merge with another city if we can't turn this around this year.
I oppose any expansion in the number of short-term rentals in Orange. STR businesses have the effect of removing affordable housing from Orange’s housing market. Expanding the number of STRs would have the opposite effect of the agreements made by the city to increase affordable housing in the Housing Element. Please review our full set of comments on the attached document.
Expanding the program by doubling the number of STR permits will prove to be a big mistake over time. The city is making a false assumption that by doubling the number of permits issued will also double the TOT tax revenues collected by the city. To achieve this goal, it would also require doubling the number of STR guests who want to stay in Orange at the very same time.
Applying simple supply and demand principles will prove to contradict this assumption. As you increase supply it will increase competition among current permitted STRs and will most likely lower nightly rental rates or spread the same level of demand over twice as many STRs. Thereby having the effect of reducing the amount of nightly TOT collected from our current permit holders.
Looking at the current list of STR permit holders there are currently 107 permits issued and 5 pending. This indicates a high turnover ratio and probably provides evidence that more permits should not be issued. If this STR proposal fails, the city will have doubled the number of staff hours required to implement and regulate the STR program by administrative staff, code enforcement, police and fire. This would be done without any guarantee of recouping these fixed costs to the city. This is the exact opposite of what Councilmember Gyllenhammar has been talking about on the Dais.
Additionally, the council has talked about raising the TOT from its current rate to possibly 15%. That may mean that the current STR operators will also have the burden of paying 50% more TOT tax.
Regarding the paragraph 4 proposal to “annual impact fees for all residential investment properties” I support a bigger concept of having each and every business operating in Orange apply for a business license. This should be applied across the board to residential, commercial and industrial properties.
I am the owner of 2 long-term residential rentals in Orange. As a result, I create affordable housing opportunities for Orange residents. I do not support the concept of singling out a subset of residents without cause or justification to levy some sort of “annual impact fees for residential investment properties”.
Owners of long-term residential rentals pay their fair share of property taxes and both state and federal income taxes. How will you justify to the voters that occupy long-term residential rentals in Orange that they are somehow different than other Orange residents and should be charged, whether directly or indirectly, some sort of arbitrary “impact fee”?
Yes, the city is in a budget crisis. The best decisions will be made in a fair, level-handed and reasonable manner with a justifiable need to charge impact fees. Snap decisions without proper justification will harm affordable housing. In the case of STRs, doubling the number of STRs in Orange will further degrade the quality of life in our City. Just ask someone who lives in the vicinity of an STR.
Doug and Karen Hamilton
Orange Residents for 37 years
The Orange Short-Term Rental Alliance would like to share thoughts on 4 of the recommendations listed in the FY 2025 Proposed Revenue Enhancements report:
1. Increase STR permits to 250 - $500k
At the May 14, 2024 council meeting, we submitted a public comment that this might not be the appropriate time to raise the cap on STRs, ldue to the city’s limited resources to monitor and issue new permits.
We propose the city complete the issuing of the 125 permits allowed under the current code. Issuing the 10-15 outstanding permits – with associated revenue in permits, licenses and TOT – could add another $100k/year without changing the current code; simply just activating it.
In the future, we suggest the City of Orange consider implementing a process to vet new permits and add to the total number of permits progressively, say in increments of 25 annually so they can be properly monitored and evaluated as a net-positive small business model in our community.
2. Expand STR definitions to Include Residential Rentals of 1-year or less
Some questions:
• Would this include all the same requirements as STRs, including pulling a business license, permit and paying monthly TOT?
• What is the estimated revenue that could be generated from this proposal?
• What would stop a landlord from creating a 366-day contract and rebating months of non-use (i.e. how would these private contracts be monitored)?
• Would it be possible to consider instead the LTR landlord business license and add an additional fee for student housing (similar to STRs who currently pay a higher business license rate)?
3. Implement Long-Term Rental Fee - $500k
Our recommendation from the May 14, 2024 council meeting was not for a fee but instead to consider a business license requirement for landlords operating long-term rentals (LTRs). This recognizes the business in a residential area and would provide equal footing with short-term rentals (STRs) who already pull business licenses to operate. Based on the number of non-owner occupied units in Orange, we estimate this revenue would be north of $1m/yr if licenses were required for each property at the current City of Orange business license rate of $80/yr (even though STR rates for business licenses are higher than $80/yr).
58.9% of homes in Orange are owner occupied (https://datausa.io/profile/geo/orange-ca/) out of 45,308 housing units (https://www.point2homes.com/US/Neighborhood/CA/Orange-Demographics).
That means 18,822 are possible rental units. At $80/license, that’s a potential $1.5m in net-new revenue. This could be adjusted for apartments vs homes and/or higher rates for different rental use cases (e.g. student or single family housing).
4. Implement Annual Impact Fee for all Residential Investment Properties ($250) $2.5m
STRs are newer small businesses in our community, and STRs have come on-board in a methodological way considering neighborhood impact and STRs already contribute into the city budget in multiple ways, including: STR permit fees, business license fees, real estate tax, sales tax and TOT. With potential future additional contributions for the City of Orange TDI and a state-imposed STR tax of 15%, further fees will severely impact our ability to operate profitably. Our suggestion is to avoid one-time impact fees or placing further burden on STRs, instead focusing on businesses which can become new and annual contributors to the city budget.
****Support: I support reductions in Police and Fire not because I oppose those departments but this the only way to get people to understand there is a problem.
**** Oppose: I object to increasing the number of STRs because STRs take away housing and are so problematic that they come with their own Code Enforcement operations. I object to the sale of Taft Library because the land will be used for housing which brings costs not fully paid for by property taxes remitted to the City. I object to cuts to overnight security in parks which will lead to homeless encampments and damage to park property. I object to cuts to Orange Elderly Services because this is a vulnerable population with limited resources. **** Future is bleak for City of Orange unless more revenue is obtained via a sales tax measure and economic development. There is already little to cut from the budget without causing damage due to neglect by prior Councils. If the sales tax measure does not pass, the City needs to look at long term viability and needs to act before the City fails to be a going concern. Our City may need to go out of business or merge with another city if we can't turn this around this year.
City Councilmembers and Mayor Slater,
I oppose any expansion in the number of short-term rentals in Orange. STR businesses have the effect of removing affordable housing from Orange’s housing market. Expanding the number of STRs would have the opposite effect of the agreements made by the city to increase affordable housing in the Housing Element. Please review our full set of comments on the attached document.
Expanding the program by doubling the number of STR permits will prove to be a big mistake over time. The city is making a false assumption that by doubling the number of permits issued will also double the TOT tax revenues collected by the city. To achieve this goal, it would also require doubling the number of STR guests who want to stay in Orange at the very same time.
Applying simple supply and demand principles will prove to contradict this assumption. As you increase supply it will increase competition among current permitted STRs and will most likely lower nightly rental rates or spread the same level of demand over twice as many STRs. Thereby having the effect of reducing the amount of nightly TOT collected from our current permit holders.
Looking at the current list of STR permit holders there are currently 107 permits issued and 5 pending. This indicates a high turnover ratio and probably provides evidence that more permits should not be issued. If this STR proposal fails, the city will have doubled the number of staff hours required to implement and regulate the STR program by administrative staff, code enforcement, police and fire. This would be done without any guarantee of recouping these fixed costs to the city. This is the exact opposite of what Councilmember Gyllenhammar has been talking about on the Dais.
Additionally, the council has talked about raising the TOT from its current rate to possibly 15%. That may mean that the current STR operators will also have the burden of paying 50% more TOT tax.
Regarding the paragraph 4 proposal to “annual impact fees for all residential investment properties” I support a bigger concept of having each and every business operating in Orange apply for a business license. This should be applied across the board to residential, commercial and industrial properties.
I am the owner of 2 long-term residential rentals in Orange. As a result, I create affordable housing opportunities for Orange residents. I do not support the concept of singling out a subset of residents without cause or justification to levy some sort of “annual impact fees for residential investment properties”.
Owners of long-term residential rentals pay their fair share of property taxes and both state and federal income taxes. How will you justify to the voters that occupy long-term residential rentals in Orange that they are somehow different than other Orange residents and should be charged, whether directly or indirectly, some sort of arbitrary “impact fee”?
Yes, the city is in a budget crisis. The best decisions will be made in a fair, level-handed and reasonable manner with a justifiable need to charge impact fees. Snap decisions without proper justification will harm affordable housing. In the case of STRs, doubling the number of STRs in Orange will further degrade the quality of life in our City. Just ask someone who lives in the vicinity of an STR.
Doug and Karen Hamilton
Orange Residents for 37 years
Honorable Mayor and council members,
The Orange Short-Term Rental Alliance would like to share thoughts on 4 of the recommendations listed in the FY 2025 Proposed Revenue Enhancements report:
1. Increase STR permits to 250 - $500k
At the May 14, 2024 council meeting, we submitted a public comment that this might not be the appropriate time to raise the cap on STRs, ldue to the city’s limited resources to monitor and issue new permits.
We propose the city complete the issuing of the 125 permits allowed under the current code. Issuing the 10-15 outstanding permits – with associated revenue in permits, licenses and TOT – could add another $100k/year without changing the current code; simply just activating it.
In the future, we suggest the City of Orange consider implementing a process to vet new permits and add to the total number of permits progressively, say in increments of 25 annually so they can be properly monitored and evaluated as a net-positive small business model in our community.
2. Expand STR definitions to Include Residential Rentals of 1-year or less
Some questions:
• Would this include all the same requirements as STRs, including pulling a business license, permit and paying monthly TOT?
• What is the estimated revenue that could be generated from this proposal?
• What would stop a landlord from creating a 366-day contract and rebating months of non-use (i.e. how would these private contracts be monitored)?
• Would it be possible to consider instead the LTR landlord business license and add an additional fee for student housing (similar to STRs who currently pay a higher business license rate)?
3. Implement Long-Term Rental Fee - $500k
Our recommendation from the May 14, 2024 council meeting was not for a fee but instead to consider a business license requirement for landlords operating long-term rentals (LTRs). This recognizes the business in a residential area and would provide equal footing with short-term rentals (STRs) who already pull business licenses to operate. Based on the number of non-owner occupied units in Orange, we estimate this revenue would be north of $1m/yr if licenses were required for each property at the current City of Orange business license rate of $80/yr (even though STR rates for business licenses are higher than $80/yr).
58.9% of homes in Orange are owner occupied (https://datausa.io/profile/geo/orange-ca/) out of 45,308 housing units (https://www.point2homes.com/US/Neighborhood/CA/Orange-Demographics).
That means 18,822 are possible rental units. At $80/license, that’s a potential $1.5m in net-new revenue. This could be adjusted for apartments vs homes and/or higher rates for different rental use cases (e.g. student or single family housing).
4. Implement Annual Impact Fee for all Residential Investment Properties ($250) $2.5m
STRs are newer small businesses in our community, and STRs have come on-board in a methodological way considering neighborhood impact and STRs already contribute into the city budget in multiple ways, including: STR permit fees, business license fees, real estate tax, sales tax and TOT. With potential future additional contributions for the City of Orange TDI and a state-imposed STR tax of 15%, further fees will severely impact our ability to operate profitably. Our suggestion is to avoid one-time impact fees or placing further burden on STRs, instead focusing on businesses which can become new and annual contributors to the city budget.
Susan Tillou