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06/29/2016 ANAHEIM CITY COUNCIL SPECIAL MEETING OF JUNE 29, 2016 The special meeting of June 29, 2016 was called to order by Mayor Tom Tait at 5:06 RM. in the chamber of Anaheim City Hall, located at 200 South Anaheim Boulevard. The meeting, notice, agenda, and related materials were duly posted on June 23, 2016. PRESENT: Mayor Tom Tait and Council Members: Lucille Kring, Kris Murray, Jordan Brandman, and James Vanderbilt. STAFF PRESENT: City Manager Paul Emery, Acting City Attorney Kristin Pelletier, and City Clerk Linda Andal. INVOCATION: Pastor Nathan Zug, Magnolia Baptist Church FLAG SALUTE: Mayor Pro Tern Lucille Kring ADDITIONS/DELETIONS TO THE AGENDA: None Mayor Tait requested presentation of the item begin with staff presentation, followed by public comments, explaining staff recently made minor adjustments to the ordinance and just provided the revisions to Council and the public. With no objections from Council, staff started the presentation. David Belmer, Planning Director, explained short term rentals (STR) had been under discussion for over a year. He explained today's presentation would briefly review the background of STRs, summarize the two proposals for consideration, talk about proposed concepts for a home sharing ordinance that would come back at a future meeting, and a brief discussion of proposed fees to ensure the City can recover costs for the administration and enforcement of STRs. As background, Mr. Belmer explained the City adopted its current ordinance in May 2014, noting that some STRs were already operating in the City prior to the ordinance, as they were in many cities. He estimated there were approximately 200 STRs in Anaheim at the time of the initial ordinance adoption, with as many as 400 STRs with licenses or pending applications during the height of the application process, and presently 363 STRs with licenses or pending applications consistent with the moratorium ordinance. In the Spring of 2015, community members began voicing concerns about STRs and their incompatibility in residential neighborhoods including noise, parking, enforcement, safety issues, over-crowding, enlarged homes that no longer reflected the character of the community/neighborhood, and the transient aspect of the properties where they no longer knew their neighbors. In September 2015, the City Council adopted a moratorium on STRs that stopped the filing of new applications and extended the moratorium for approximately six months to allow for further study, with Council emphasizing the need for extensive community outreach to ensure stakeholders were engaged. In April 2016, City Council extended City Council Minutes of June 29, 2016 Page 2 of 27 the moratorium for the third and final time for one year to ensure staff had sufficient time to return with a complete ordinance for Council consideration. Mr. Belmer reported enhanced Code Enforcement efforts were made by designating officers in the evening to monitor the most troubled time period (8pm-5am), including weekend enforcement. Additionally, communication methods were developed to make it easier for residents to communicate their concerns, including a hotline to provide officers with the ability to respond immediately in the field, and a dedicated webpage and direct email address for residents to communicate. Mr. Belmer indicated this was a big change that moved to proactive enforcement rather than reactive enforcement and resulted in greater effectiveness and more timely responses. Following Council direction for significant outreach, staff hosted four workshops (two for STR operators and two for residents), provided an online survey to capture the likes and dislikes of STRs as well as suggestions for possible changes, better communication channels were implemented, and a 12-person advisory committee was formed, made up of stakeholders; he explained stakeholders elected their own representatives to serve on the committee (six operators, six residents). The committee met multiple times over many months with a purpose to identify issues that should be addressed in an amended STR ordinance. Of the issues identified, Mr. Belmer explained, the residents agreed to discuss operational issues and ways to improve the ordinance, emphasizing that a ban of STRs was their strong preference and not allowing any new STRs and to phase out/amortize those in existence was also noted. Mr. Belmer presented a matrix that documented and tracked the group's comments and recommendations to the City Council. Thesis statements were developed by both groups with residents viewing STRs as a business not compatible in residential neighborhoods and wishing to not allow any new STRs, while phasing out/amortize existing STRs. Operators, he advised, stated STRs were not a business but a residential occupancy which could be compatible through strict enforcement and, if operated responsibly, added value to the community while serving an important need. He reported, at the STR workshop held February 23, 2016, a three-phase action plan was presented: 1) new ordinance to address existing issues through new operational standards and enforcement criteria, with a recommendation for no new STRs; 2) create a new permit for home sharing to allow a place for STRs in Anaheim where the primary resident resides on the property and shares a portion of their home; and 3) opportunities to allow non-owner occupied in commercial and mixed-use zones where there would be no residential impacts. The estimated time-frame was for the first ordinance to be considered in June, the second in August, and the third in September. Comments received at the workshop from City Council and the public were incorporated into the first recommended ordinance, now known as the "STR Regulation and Ban on New STR Ordinance." Additionally, Mayor Tait requested a second ordinance to look at amortizing/phasing out existing STRs, which Mr. Belmer responded was not staff's recommendation at that time. The ordinance before Council provides for no new STRs in residential neighborhoods and effects a series of operational changes including raising the minimum age for responsible parties from 18 to 21, mandates better contact information be shared City Council Minutes of June 29, 2016 Page 3 of 27 between STRs and adjoining property owners, clarifies parking requirements to eliminate loopholes, includes new language that a garage can be used as a game room under certain limitations and restrictions, introduces the concept of quiet time of 10pm to 9am, restricts how a STR home can be enlarged, reduces occupancy limits from three people per bedroom plus 2 to a table of fixed occupancies at lower levels, creates the concept of major and minor violations, contains provisions to hold both the owner and occupants accountable for bad behavior, reasonable enforcement provisions, and the ability to charge fees allowing the City to reasonably recover the costs of operating the STR program. Newly added to the ordinance for consideration are fire-life safety provisions due to concerns raised by the Anaheim Fire & Rescue Department since the workshop. Mr. Belmer stated this ordinance would apply to existing licensed STRs and pending applicants and recommended the ordinance be tested over 12 months using objective measures to assess its effectiveness with staff reporting back to City Council. Mr. Belmer continued, since the agenda published, staff was recommending additional modifications to improve the ordinance: Page 13, change "shall" to "may" to allow the Planning Director discretion regarding the potential denial of a STR permit if there are outstanding issues that may not warrant an actual denial of the permit but to allow notice to the owner regarding issues that need to be corrected; Page 18, clarify the fire- life safety provisions to protect non-ambulatory guests that exiting requirements only mandated if no bedroom on the first floor can accommodate non-ambulatory people; Page 20, the table setting new, reduced occupancy limits was originally to take effect upon the effective date of the ordinance but as current STR operators have reservations/contracts set at the old occupancy limits, staff recommends a phased-in approach to reduce potential claims by allowing the current occupancy limits until 12/31/2016 with the new limits effective 1/1/2017; Page 25, change how the City interacts with hosting platforms and provide a more reasonable 10 days for their removal of unlicensed STRs from their website upon notification by the City; Page 26, clarifiy that the ordinance is not intended to contravene or contradict protections hosting sites have under Federal law; and Page 27, insert language regarding inability to issue citations if preempted by Federal law. Mr. Belmer then explained the second ordinance, the "Amortization Ordinance" was requested by Mayor Tait and, if approved, would phase out/amortize the 363 STRs currently operating by virtue of a license or pending applications, with the exception of the Kraemer building with 21 STR units which is in a commercial zone and operates under previous approval of a Conditional Use Permit (CUP). The ordinance provides for phasing out pre-moratorium STRs within a defined period of time and sets forth a process for owners who believe that time period is insufficient to apply for a hardship extension to lengthen the amortization period. He explained that in drafting the time period for amortization, staff considered various factors including case law, legal principles that govern the amortization of lawfully established uses, recent actions contemplated or taken by other cities in the area, electronic survey results of STR owners, and analysis of comments received from residents and operators. Due to many varying perspectives on what a reasonable amortization period should be, various actions by other cities, and no court decisions specifically related to amortization of STR uses, staff left the amortization time-frame blank for City Council to determine what was City Council Minutes of June 29, 2016 Page 4 of 27 reasonable and fair. Mr. Belmer noted, however, that legal counsel believed an 18 month amortization period would be legally defensible but staff recommended a three year period as reasonable and fair to wind down operations and terminate the STR use, with the hardship provision available to extend the time as needed. Mr. Belmer further explained that Phase 2 would be consideration of a home sharing ordinance as an important piece of the program, as there was a place for STRs in the community if operating under the home-sharing model. Frequently Asked Questions (FAQs) were being developed in an attempt to show what such an ordinance would start to look like, including an owner residing in the property, one agreement for home sharing at a time, and limiting how much of a home could be used for home sharing as an accessory use for someone's primary place of residence - for example 50% of rooms in a four bedroom house would limit home sharing to two rooms. Staff proposed the home-sharing ordinance be implemented on a pilot program basis for one year to determine if it operates reasonably and responsibly without impact to neighborhoods. Mr. Belmer stated the FAQs would be posted on the City's website for a 30-day public comment period and the new home-sharing ordinance would be brought to City Council for consideration at a future meeting. He clarified that home-sharing was allowed under the current ordinance for the 363 permitted sites, but no new home-sharing applications could be filed or operated unless the current and proposed ordinance was modified or until a new ordinance was adopted with staff recommending the latter. He further explained that proposed new fees to recover City costs would be brought for Council and public review and consideration at a future meeting. Mayor Tait confirmed that home-sharing with an owner living on site, a concept which he liked, was not part of the discussion at this time, but would be brought back at a future meeting with Mr. Belmer concurring. Mr. Belmer summarized the presentation that two ordinances were before the City Council: the first was staffs original recommendation to regulate existing STRs and ban new STRs for a 12-month test period and then report the results. The second ordinance amortized the 363 existing pre-moratorium STRs, concluding that staff and Mike Rubin, outside counsel from Rutan and Tucker, were available to answer any questions. Mr. Belmer confirmed for Mayor Tait that even if Council approved the amortization ordinance, the first ordinance could be voted on to greater regulate the existing STRs over the amortization time period. Mayor Tait announced public comments needed to be germane to the agendized issue of the special meeting. Referencing numerous letters and phone calls received, months of discussion on the issue, and the number of people in attendance at the meeting, he proposed limiting the public comment period to one and a half minutes per speaker to move the meeting forward and allow City Council to deliberate, with no objection by council members, the Mayor open the floor for public comments. PUBLIC COMMENTS: Prior to receipt of public comments, a brief decorum statement was provided by City Clerk Linda Andal. Ms. Andal also announced that copies of the City Council Minutes of June 29, 2016 Page 5 of 27 revised ordinance provided by Planning staff were made available to the public and placed in the lobby of the City Council Chamber. Mike Eveland informed Council he was selling his house due to the decline in his neighborhood, felt "Anaheim Beautiful" and the "City of Kindness" no longer applied, and stated his belief that STRs were illegal and should not get time or warnings about ceasing operation as the neighbors weren't provided warning when they started. Michael Robbins urged Council to take back the city for its residents, noting the unity of neighbors and resort union workers on this issue. Daniel Robbins supported a complete ban of future and existing STRs with as short an amortization period as was legally allowed, sharing his belief that passage of the 2014 ordinance violated home-based business regulations and contradicted the separation of the Resort district and residential zones. Laura Robbins, life-long resident, encouraged Council restore neighborhoods by voting for a full ban with the shortest phase-out period allowed by law. Jeanine Robbins, 25 year resident, shared that almost one-third, or over 100, of all permitted STRs were owned by only eight people. She asked Council to consider the emotional investments of residents in their homes, to keep the Resort and residential areas separate, and to approve a full and complete ban on existing and future STRs with the shortest phase-out period allowed by law, referencing 1,100 petitions signed by District 4 residents that were submitted. Cecile Eveland urged a unanimous decision to preserve the city and ban all STRs and immediately phase out existing STRs, explaining the financial impacts to houses and neighborhoods directly impacted by STRs. Jill Kanzler, SOAR Executive Director, submitted and read a letter signed by multiple parties, stating visitor and resident-serving land uses do not mix and asked Council to make a permanent ban on STR permits. Beth Farnell spoke in favor of STRs stating many abandoned and poorly kept houses had been fixed and turned into beautiful STRs with which she had no problems or complaints. She enjoyed meeting the visitors from all over the world, thought STRs had increased property values and continued to be a positive influence for her neighborhood and encouraged Council to allow STRs to continue as she was nervous about what would happen if permits were revoked. Fariba Tizhoush, resident, stated she had several STRs near her and had no problems with them, as they were well kept with beautiful curb appeal and increased property values. She requested Council allow STRs to continue as she feared a drop in property values if they were stopped. City Council Minutes of June 29, 2016 Page 6 of 27 Brenda expressed support for STRs as she had been employed by Mr. & Mrs. Noteboom for seven years, cleaning houses and babysitting guests, and did not see a problem or noise issue. She indicated a ban would affect her work and her family. Vern Nelson, District 5 resident, offered comments related to STDs rather than STRs. Lourdes Otelo, as spoken by her daughter-in-law with permission by Mayor Tait, explained her history of working with the Notebooms and how the jobs gave her the opportunity to save money and send her daughter to college when she couldn't get other jobs. She expressed her hope that Council would make a good decision to support her and other families. Frances Noteboom described her history in contributing to the original STR ordinance and TOT collection for neighborhood investment, and stated a complete ban and restrictive rules would take away rights and choke out STRs. She pleaded with Council to respect the work of professional staff and responsible owners in recommending common sense changes to remove irresponsible STR operators and not listen to a small group of residents and organized factions who would not consider compromises as they did not represent most of Anaheim, She encouraged Council to pursue a balance and allow the revised ordinance a chance to prove itself. Ada Briceno, OCCORD Interim Director, announced that community residents and workers had organized for over nine months speaking at the podium, knocking on doors, and signing petitions to help residents keep their neighborhoods and help hotel workers keep their hours, continuing that OCCORD supports amortization and urging Council to vote for both ordinances. Ryan McIntosh addressed amortization and just compensation, explaining forensic accounting firms had reviewed STR revenue and expenses to determine just compensation and estimated a ban would cause approximately $60 million in losses for which the City would be liable. He reviewed different amortization periods with 3.2 years allowing 15% of STR owners to recoup losses and 10.2 years allowing 65% to recoup losses, expressed concern that the hardship extension as part of due process would cost $1,200, and saw an amortization period of 18 months to three years as a joke, urging Council to vote against any type of amortization and to grandfather all STRs that meet the current ordinance. Peter Page disagreed with the concept of due process for STR owners, stating the initial permits were issued without the consent of neighbors and residents who weren't asked if they wanted a business next door. He requested STRs be amortized on the shortest basis possible with no hardship provision as in his view they don't add to the benefit of living in Anaheim and any revenue generated by STRs was absorbed by the administrative costs of policing them. Carlos Oregal (translation: Spanish), resident, explained family-owned businesses support families of STRs guests and asked Council to consider their decision because people depended on vacation rentals. City Council Minutes of June 29, 2016 Page 7 of 27 Sal Chavez spoke in favor of STRs as they allowed diversity in bringing more business to the region outside of Disneyland itself, stimulating the entire area. Jamal, 28 year resident, described his positive experience with a long-term rental in his neighborhood. Amir stated he cleans and takes care of pools for vacation homes as a way take care of his family, asking Council to support vacation rentals and keep him in business. Susana Jose expressed her support to keep STRs so she could continue to support her children and send them to college. Rachel Garcia, resident, described a property in her neighborhood that was overbuilt for the area with seven bedrooms and her initial concern. Instead, she stated vacation rentals started and the house has been impeccably maintained with no parking issues. Bob Donelson, resident, encouraged Council to ban all current and future STRs with a short amortization period and any hardship extensions should require justification of investments, particularly as he believed many properties have already recouped their investment. He suggested immediate amortization upon ordinance effective date with STR owners to then come to the City to justify their needs. Luisa Lam asked Council to ban current and future STRs with the shortest amortization period defendable by law, and to immediately shut down those operating illegally or without a license. Sam Lam, Sherwood Village resident, asked Council to support a ban of current and future STRs with the shortest amortization period legally possible to support residents and restore residential communities. Mike Morrison, resident, encouraged Council to heed and follow the recommendations of SOAR, the Disneyland Resort, and residents to ban STRs and phase out existing STRs as expeditiously as possible. He believed there was no need for a test ordinance as the number & severity of violations spoke for themselves and described his experience feeling squeezed out of the market as a resident seeking to purchase a single family home. Larry Thomas, 61 year resident, described his experience living across the street from a STR, having to retreat to the back of his house due to noise and disturbances. He requested a complete ban of STRs. Pam Donelson, urged Council to ban current and future STRs to restore neighborhoods, communities, and quality of life, with a 90 days amortization period as sufficient time for STRs to cease businesses. She submitted 63 signatures to ban STRs. City Council Minutes of June 29, 2016 Page 8 of 27 Diane Guenette, Sherwood Village resident for over 40 years, described the challenges of buying a townhouse for first-time homeowners who had to compete with STR owners who had cash. She expressed her desire for a quiet friendly neighborhood and submitted an article from Clearwater, FL where STRs were banned. Charlotte Seidnematollah, 30 year resident, supported a total ban on current and future STRs from residential neighborhoods with the shortest amortization period as allowed by law for existing STRs. She expressed her view that residents should not be forced to police for their own quality of life. Martin Lopez explained that residents had suffered adverse consequences during the past two years since City Council allowed STRs in residential zones and urged a ban of current and future STRs by adopting both ordinances immediately with a short amortization period and a requirement to justify the need for a hardship extension. He also suggested strong enforcement language so websites would be held accountable, the immediate shut down of unpermitted STRs, and to continue to regularly convene the task force to monitor and regulate STR behavior during the short time they continued to exist. Matthew Mariscal recognized there were good and bad sides to every issue, asking Council to ban STRs as they were elected to represent the people of Anaheim, not tourists. William Fitzgerald, HOME, stated tax funds should be used for Code Enforcement and police to address the STR problem rather than to benefit the Disney Corporation. A male resident explained his livelihood was directly tied to the vacation rental industry, which if banned would put him and many others out of a job. He urged Council to consider the amount of people who would be affected economically and would have to leave Anaheim if a ban were implemented. Frank Jones, Disneyland Hotel valet runner, described his four hour commute due to the inability to find affordable housing in Anaheim and fewer hours at work due to STRs and supported a complete ban on STRs. Joan Miller, Sherwood Village resident, stated her complex was highly impacted by 51 STRs through guests overrunning the pool, the inability for young people to purchase their first home or Resort employees to rent there, and also expressed her fear of not knowing who lives in the complex. Cynthia Ward explained the general plan divides commercial/recreational zoning from residential zoning to preserve the integrity of existing single-family neighborhoods, referenced a previous SOAR initiative that required an environmental impact report, financial statement, and vote of the people when residential use would have intruded on tourism, and questioned why the same was not required when tourism intruded on residential zoning, urging the Council to protect the zoning of Anaheim. City Council Minutes of June 29, 2016 Page 9 of 27 Kandee Beas, STR owner/resident and member of the STR task force, spent many hours working together to draft the new ordinance and to add teeth to existing regulation and would like to see City Council give the new ordinances 12 months to test them and then reevaluate and make a decision, rather than implementing a ban right now. Steve Acterman, resident and member of the STR task force, disagreed with trying another ordinance for 12 more months as the multiple-pages of regulations would not help the residents. He stated STRs was fundamentally incompatible with residential neighborhoods and joined others in requesting a ban of STRs and to phase them out as quickly as possible. Randy Lahr explained he was a general contractor with a city business license who had been remodeling homes for over three years, helping STRs add value to the community by taking houses that were run-down eyesores and making them better and, he believed, also inspired other homeowners to fix up their homes in the area. He continued with his view of STR benefits and encouraged Council to not let the needs of the few outweigh the needs of the many. Chuck Robinson, STR advisory committee member, commented that instead of enforcing existing codes when it became aware of STRs, the City licensed, permitted, and created a set of rules that couldn't be enforced leading to the existing problems. He described a neighborhood meeting of over 60 attendees when a house on this cul-de- sac was permitted for 27 guests due to its nine bedroom and seven bathrooms amongst houses averaging three bedroom, 1 1/2 bathrooms. He recognized there were some responsible STR owners but he recommended a ban of STRs. Judy Carroll, Sherwood Village resident, urged a complete ban of all existing and future STR businesses in residential neighborhoods, allowing the STR owners sell or rent for 30 days or longer just as other property owners do. She believed a failure to ban current and future STRs would do a great disservice and harm to residents and if current STRs grandfathered in, there would be more difficulty for adjacent property owners who wished to sell. She encouraged Council to follow the example of Irvine, Santa Monica, Huntington Beach, Los Angeles, and Costa Mesa and ban STRs. A male speaker requested a complete and total ban of STRs, noting stark divisions that have become evident in the community. He believed the City would struggle with disproportionate service issues to the community as it became more difficult and costly to manage and that projected taxation would not cover hidden costs and urged the Council to not let STRs be their legacy to the city. Alan Bynder, owner of two STRs, purchased his vacation home with his retirement money only after speaking with city staff and learning they were legal so he felt it was a safe investment and prudent decision. His recommendation is that he and others could sell their properties and be reimbursed $200,000 per hour by the City. In response to questions from Mayor Tait, Mr. Bynder explained he purchased his first house in July 2014 for $559,999 and put $400,000 into it as a general contractor of higher end homes and stated it would take more than 12 years to recover costs. He rented his first house City Council Minutes of June 29, 2016 Page 10 of 27 in January 2015 and the second in June 2015 and has had good tenants with no problems. He continued the average charge for the 5-6 bedroom homes was $474- $495/night and they were rented about 17-18 nights per month, slightly more in the summer. Lynn Cudd, resident for over 60 years, stated she and her husband bought their house across from Sunkist Library 28 years ago to raise their family in a lovely residential neighborhood which no longer has the integrity of being a residential neighborhood but acts as a business and resort with three of the five houses adjacent to her operating as STRs. She supported a ban of STRs and to phase out the existing to maintain residential neighborhoods, but did offer support to homes with a mother-in-law suite or similar with someone watching what happens on the property. Tal Price, working through legal counsel Jean Usher and as a member of the Anaheim Rental Alliance (ARA) of over 200 STR owners, had sent a series of letters/studies over the last two months, for which a series of speakers would review the concepts and walk through 11 changes being requested for the regulate and ban ordinance. Mr. Price indicated the ARA agreed with the City mission to ensure all STR operators were excellent and respectful neighbors, with many already achieving that standard, but they would not be satisfied until 100% complied and they could seamlessly co-exist and support the community. He continued that the 2014 ordinance was eight pages while the new one is 32 pages and quite complex, expressing hope that the City was sincere and not just creating a tall order so STR operators would fail. Tamar Balian addressed the first provision pertaining to Section 4.05.040.120 related to square footage of bedroom and while they support the intention of not overgrowing the size of the structures, stated that as written it denied STR owners the same basic property rights as other property owners. She suggested the ordinance be changed to prohibit new square footage in bedrooms in excess of the average existing homes on the block to strike the right balance so STRs could grow to the same average size of surrounding neighborhood homes. The second requested change was to Section 4.05.060.070 regarding potential denial of renewals if there are any outstanding code violations. She explained that not all code notices issued are actual violations so a Notice of Violation should not be a basis for denying a renewal, instead suggesting denials be allowed only when suspensions or revocations are underway, following existing procedures. Britta Wagner stated Section 4.05.070.080 wiped out revocation/suspension procedures of the ordinance as even a minor violation could result in denial of a renewal, and suggested it be rewritten to allow a renewal unless revocation/suspension proceedings were underway and warranted. Addressing the fourth requested change, while supporting fire safety, the ARA found Section 4.05.100.0103(e) not fair or reasonable as it would require every STR to install an interior automatic fire sprinkler system if their permitted occupancy was over 10 persons, noting that thousands of homes in Anaheim met this level but said requirement did not apply to them, i.e. group homes and expressed concern over how the 10 person occupancy was decided upon. City Council Minutes of June 29, 2016 Page 11 of 27 Dharnendra Patel also addressed fire safety provisions in Section 4.05.100.0103(j), questioning why such provisions did not apply to group homes, with doors directly to the exterior for STR bedrooms and new hallway doors. Ms. Patel requested this provision be removed until it applied to all group homes and properties where non-ambulatory people might live as there was no basis for singling out STRs for this requirement and also expressed concern about the possible defacement of neighborhoods with so many doors added to facades. The sixth change requested was to Section 4.05.100.0111, reducing the per bedroom occupancy for most STRs by 25-30% from what is currently allowed. Julie King presented the seventh recommended change to allow STR owners and guests to park cars in a respectful manner in front of the house and in the driveway rather than being prohibited from parking on a public street; she stated that limiting STR parking was discriminatory and unfair and disallowing parking on a public street may be unlawful. Ms. King explained the eighth item was related to "loud unnecessary unusual noise" stating there was no objective way to test this provision and recommending such language be removed and to require STRs to comply in full with the City's existing noise ordinance. John Noteboom, 20 year resident, STR owner of two properties, and ARA member, explained the 11 requests were not being presented in order of importance but in order they appeared within the ordinance, stating the ninth change may be the most important as it addressed major and minor violations in Section 4.05.140.030 where the Planning Director may revoke a permit for 2 major & 4 minor violations of same type in 12 months. Mr. Noteboom stated a minor violation could include every possible infraction, such as a trash can out after 8pm on collection day, car wheels parked over the curb 1- 2 inches, which were now included within 33 pages of rules and provided for no warning notices for even minor violations. He believe this invited STR opponents to continue the current campaign of filing multiple complaints against STRs and would cause STR owners to lose hundreds of thousands of dollars for matters so technical and obscure. Andy Emory, ARA member, commented that Section 4.05.170 where it stated that STRs don't have vested rights had no place in the ordinance as state and federal laws have already conferred vested rights on STR permit holders. He continued that the only lawful tool for revoking vested rights was to provide STR permit holders with just compensation for which a 10 year or longer amortization period may be lawful to compensate for rights taken away. He continued that the eleventh change is not currently in the ordinance but should be added to grandfather contracts already held by STR owners for use of the short term rentals that require performance after the effective date of the new regulations. He added, STR permit holders should not be forced to make a choice between breaching their contracts or violating the new ordinance. Hank Kahs, forensic accountant retained as an independent CPA by counsel for ARA, reviewed data based on 54 properties, about 15% of total STRs, and estimated if they were sold now there would be approximately $60 million in un-recouped investments, which included not just the purchase prices of the properties but also renovations, furniture, decor, bedding, kitchen, and all things needed for the rental to operate. He City Council Minutes of June 29, 2016 Page 12 of 27 cited three methods for calculating an amortization period under current case law: 1) fair market value; 2) investment method; and 3) replacement cost. He reported he had utilized all three methods in his analysis and found a 10 year amortization period would allow 65% of STRS to recoup their money, while the city-recommended three years would allow only 15% of STRs to recoup their money. Upon question by Mayor Tait, Mr. Kahs reported the sample was chosen by the ARA and submitted a document. Jane Usher, ARA attorney, commented that the city owed the same legal duty to STR owners as it did to anyone else who received a permit from the City and who invested in reliance of that permit and that STRs were entitled to fair rules, not arbitrary nor discriminatory ones and equal protection. Upon review of the ordinances under consideration, she found they did not respect basic legal principles. She submitted copies of letters that were provided over the past couple of months that set out the legal principles in greater detail, highlighting two in particular—the proposed amortization period and burdensome/oppressive rules that would ensure STR owners would not receive just compensation. She continued that any changes to Title 18 of the Zoning Code were required by the Anaheim Municipal Code to first be heard by the Planning Commission and offered to answer any questions. Ramirez Camilla, resident and employee of Anaheim Hilton Towers, stated employees did not support STRs. Ana Martinez requested a ban of STRs. Roak Cotze, vacation rental operator and ARA member, provided updates on best practices to improve the quality of life for neighbors and controlling activities of guests, including hiring services for trash can pick up/drop off, looking into security services for better monitoring of homes, establishing guidelines for best practices, greater communications/screening with guest, controlling noise, and using technology to gain a better understanding of what is happening at a property. Leslie Anderson found stated STRs were businesses trying to make money with strangers in his neighborhood and questioned how home-sharing would be enforced, and further requested a complete, immediate ban on current and future STRs. Lorena Fierro (Translation: Spanish) asked for a complete ban of STRs due to loss of hours/days of work at hotels. Keith Christian, 13 year resident, supported a complete ban on STRs, as the two STRs directly behind him caused numerous issues and he felt threatened in his own backyard. He also spoke of not wanting to move as he lived walking distance to his job but also felt he could not sell his house as it was adjacent to STRs and he would not be able to find a buyer. Shawn Christian, AUHSD student, reported his home life was ruined by STRs as he dreaded going home and requested Council ban STRs. City Council Minutes of June 29, 2016 Page 13 of 27 Nicole Christian, full time student, explained it was difficult for her to study at home because of the loud nature of STRs. Gilbert Moreno believed STRs were a business in a residential area, particularly as they were trying to recoup business costs. He recommended the Department of Justice investigate the entire situation as STRs were displacing senior residents and requested a ban of STRs. Mark Dedola reported he had purchased an operating STR with his family in September 2015 after investigating the program and speaking with neighbors who had positive things to say. They went to great lengths and expense to create a clean wholesome environment with careful vetting of renter, spending approximately $200,000 over appraised value, justified by its potential income. He announced that if their ability to operate was removed, they would lose that investment plus an additional $20,000 on improvements and would devastated, suggesting many other U.S. communities co-exist with STRs and reap rewards and asked Council to consider the potential benefits and to create a plan to maximize such benefits. Ruth Moore, District 4 resident, informed Council she was an STR owner but was against STRs in Anaheim. She explained her STR was near Yosemite in a resort community that does not negatively impact a residential neighborhood whereas in Anaheim the STRs are mixed in with residents who need to work and rest and expressed concern that Code Enforcement officers were not able to address most of the problems. A male speaker informed Council that the attendees wearing white t-shirts were well- organized but did not represent the majority voice in Anaheim as there were not even 1% of Anaheim's 360,000 residents opposing STRs. He explained that he mortgaged his home to bring his money to Anaheim, invested in STRs, and was a part of, and committed to, the community. He continued that if the city no longer wanted him, here it could buy him out and he'd go elsewhere. Mark Daniels, Anaheim resident, believed STRs interrupted the quality of life and asked Council to act on behalf of residents with a full and complete ban on current, pending, and future STRs. Luz Gomez (Translation: Spanish) reported her hours at the Sheraton had been reduced as the hotel industry decreased due to STRs housing 20-25 people. Rocio Armstrong represented hotel workers and asked for the removal of STRs indicating many STR owners were not aware of what was going on at their properties and may think differently if they stayed next door. Pastor Donald Wilson requested a ban of current and future STRs as they were hurting communities, pushing affordable housing out, and discriminating against minorities. City Council Minutes of June 29, 2016 Page 14 of 27 Nancy Bravo described how she started working for Valerie's Vacation Rentals and was then able to start her own cleaning company, Medrano's Housekeeping, and employ others to fulfill dreams, create better lives, and provide educations. She stated a ban of STRs would leave people unemployed and crush her dreams. George Gogglanian purchased two STRs with his family, overpaying the value as they were ongoing STRs, and informed Council that a ban would cause him and his family severe hardship as the new rules would destroy them. Valerie stated that the many comments about raging parties at STRs were unfounded as statistics showed four parties and nine citations for loud noise in 2015. She referenced a similar case in San Clemente that recently ruled that payment for use of a home was not sufficient to establish operation of a business so homeowners were free to lease their home to tenants for compensation, asking Council to consider the ruling when making their decision. Mark Cheng supported STRs as they have kept him employed and expressed fear that a ban of STRs would cause most properties to turn into sober living houses having a greater detrimental effect on living as a whole. Elizabeth Orrembu supported STRs as her husband worked as property manager for many STRs. She reported this was their main source of income and believed STRs could exist in a peaceful and respectful way. Jeffrey Tanck, resident, expressed support for STRs as he worked for a vacation rental company and saw how regular residents treated the City and behaved poorly while STRs were kept up nicely. Ethel Halpern, 50 year resident, suggested the City could not sustain both STRs and infill development and asked the City to make a choice between the two, stating there were likely more STRs than the 365 known about. She added, the partying nature of STRs was violating the rights of residents to quiet enjoyment of their homes. Roxana Herrera, resident and hotel worker, requested a ban of STRs as residents needed homes and safe neighborhoods not strangers, and hotel workers needed to keep their jobs. Ghianny Valencia, resident, Disneyland Resort worker, and task force member, commented SIR owners had little care for workers and were focused on making money. She stated hotels complied with fire code safety and occupancy laws which STRs did not, thought STRs took away hours from hotel housekeepers and valets, and requested a ban of STRs. Javier Gonzales, hotel worker, believed workers in STRs were not paid as well as hotel workers and didn't enjoy benefits and secure futures as the owners were looking for profit. City Council Minutes of June 29, 2016 Page 15 of 27 Shakeel Syed, Executive Director of Islamic Shura Council and incoming executive director of OCCORD, believed STRs were a long term disaster as homes were sacred sanctuaries for residents and requested STR advocates to revisit their moral compass. Sam Olson, STR owner, reported he had worked on making homes beautiful throughout Orange County by repairing vacant properties and appeased neighbor concerns regarding STRs through good management. Ken Butterfield, resident, lived next door to the previous speaker and was leery of STRs until he experienced the many families that visited Disneyland and the proper management of the location, and decided to purchase his own property for use as a STR. A ban now, he stated, would be devastating to his family and cause them to lose two homes. Jose Hernandez, OCCORD and Anaheim resident, encouraged Anaheim to set a precedent and ban STRs and questioned how the $60 million figure was determined. Gabriel Chufas, resident, explained he had invested in his own home and improved the neighborhood but cannot enjoy it due to the parties held at the STR near his house and did not feel comfortable letting his children play outside due to strangers. Diane Patterson encouraged a complete ban of STRs and for STR owners to turn their properties into residential care facilities for the elderly (RCFEs), recommending Santa Barbara and Ojai as precedents. Bob stressed the loss of neighborhoods due to STRs that have caused single-family residence zones to turn into motel districts without any changes to the General Plan, Zoning Code, CUPs, or variances. He estimated that with 400 STRs there were 2000- 3200 impacted residents. He asked Council to correct an error by phasing out STRs as quickly as legally possible. Mayor Tait thanked Bob of his years of service as chairman of the Planning Commission. Austin Lynch, Local 11, believed there was impact from the Kraemer Building STRs by removing 21 rental units which impacted the housing crisis, and stated the quality of the jobs in STRs was less due to no paid overtime or following of laws, recommending jobs be returned to hotels. He noted he had submitted 'tweaks" to the ordinance, with his lawyer here to discuss, which would make the law stronger and stated the initial amortization period should be enough time to file hardship extension paperwork. Eduardo Vera, resident, supported a ban of STRs stating neighborhoods needed real neighbors. A male speaker described his background and experience as an STR owner who rents out his master bedroom. He noted he found 40 houses online renting out for less than three days which is against permit, suggesting if he could find those then the City should also be able to find them for enforcement purposes. City Council Minutes of June 29, 2016 Page 16 of 27 Peter Fischer, licensed STR owner and ARA member, asked Council to consider good reasons to vote in favor of stricter STR regulations. He reported about 50% of this guests valued the ability to share a house and if banned, vacationers would look for other accommodates outside of Anaheim, causing the city to lose TOT and sales tax to surrounding cities. Maritza Gonzalez, resident, felt STRs were affecting the lives of residents and changing neighborhoods, making them feel unsafe and reducing money for schools by not having children in the neighborhoods. She described her experiences with a STR near her with vans, buses, and loud parties. She invited Council to visit her neighborhood and requested a ban of STRs. John Dunton thanked staff for their work and expressed concerns of the business community regarding first responders and the need for more money to be set aside for public safety. Ron Bengochea, resident, supported STRs. He opined that the TOT collected from STRs contributed to the stability of the general fund and helped pay for city services. He recognized STRs as beautifying neighborhoods and raising property values and suggested the City strictly enforce current policies to eliminate many of the problems. Kevin Boethling, resident, expressed he was not in favor of STRs but was for the free market and offered two suggestions if STRs were to continue: 1) limit the number of STRs on each street segment; and 2) create a waiting list so that once a grandfathered STR was sold it could no longer be used as an STR allowing someone from the waiting list to have a STR instead. Antonio Correa, Sherwood Village resident, felt blindsided by STRs because they took over his community and requested a community not a Resort. Audrey, Sherwood Village resident, informed Council she felt weird having STRs, vans, trucks, and strangers in her neighborhood and feared for children and pets. Autumn, Sherwood Village, explained her class schedule and difficulty sleeping due to STRs. A male speaker compared an STR house to a non-STR home. He emphasized that a lot of money had been invested in Anaheim to improve neglected properties. He noted that change was difficult but encouraged Council to not ban STRs due to poor managers that were exceptions. Cathryne Warnock, Kalediscope, reported she had rented her property for 10 years and the last tenant tore it up, but now with STRs, she had guests who appreciated the alternative lodging for their families. She explained the benefits for families of staying in a STR rather than a hotel for children with special needs who need open space and places to play, those with cultural needs, and the need to cook meals economically. City Council Minutes of June 29, 2016 Page 17 of 27 Jeff LeTourneau spoke to the government being obligated to support the people who live and work in Anaheim rather than those with money, financial interests, and political power and urged Council to represent people not money by banning STRs. Adam Waugh explained he and his wife had invested their savings into a vacation rental to support their family and had no complaints for three and a half years, stating that a properly-managed STR can perfectly integrate within a neighborhood. A male speaker claimed STRs were unsupervised, mini hotels operating in neighborhoods that damaged the social fabric and caused him concern for the safety of his family, stating STRs should be in commercial not residential zones, and requested a ban of existing and future STRs. Sarah Lee asked Council for consideration of her and her affordable STR within walking distance of Disneyland where she was proud to provide accommodations to many families with children with severe food allergies who rely on home-cooked meals and where she had made modest upgrades while preserving the 1950s charm of her property. Michelle Biggs believed STRs and B&Bs did not have to be negative and requested Council not ban them but consider more controlling and more police officers. Emily Stamets, District 3 resident and task force member, described her position living next to a full-time STR and also sharing her own home through Airbnb. She explained she gave back to the community through the guests that stayed with them who otherwise could not afford to visit Anaheim. She requested Council consider home- sharing separately and to also support continuing STRs and developing working relationships. Tyler Stamets, resident, expressed support for sensible STRs and strict code enforcement, requested home-sharing be considered separately from other STR rules, and shared his experience with no complaints with the STR next door but numerous issues with the non-STR house behind him, stating bad neighbors were a factor of living in a neighborhood but not all STRs were bad neighbors. Ted, explained he relies on income from managing a vacation rental in Anaheim to support his family and has seen houses formerly in terrible condition turned into beautiful homes where guests love to stay, requesting Council not stop vacation rentals. Brian Phelps, STR owner, read a letter written by his neighbor in the Kaleidoscope community which stated they had no issues with the visitors who stayed in their complex as there had been no problems and the visitors were mostly at Disneyland or other venues during their stay. Additionally, it was stated that the association was in better condition because the new owners paid their dues, remodeled and upgraded the condo, and observed increased property values. City Council Minutes of June 29, 2016 Page 18 of 27 Matt Fletcher, Sherwood Village STR owner, submitted letters of support, one of which by Scott Davis he read aloud, referencing no issues, raised property values, reduced load on parking, and no safety concerns with the STRs in the community. Dave Alvarez described his maintenance service job for STRs where he saw properties upgraded and made beautiful with great upkeep, as well as the opportunity to meet many guests from around the world.. Eric Nolan supported STRs as his wife coordinated and supervised cleaning services for STRs which allowed her to be a stay-at-home mom and help lower their debt. Anthony, STR owner, submitted and read positive reviews from his guests and requested Council not ban STRs. A male speaker expressed support for STRs as he and his fiancé had worked for STRs for the past 3-4 years, noting a ban would ruin the dreams of those owning their own businesses, and stating most problems stemmed from poor management. Jenny Ramirez (Translation: Spanish), resident, expressed her need for STRs as she cleaned STRs, claiming she will fail to provide for her family if they are banned. Larry Barnes requested Council ban all STRs, viewing them as not part of a sharing economy but as a business. He continued that licenses were issued for set time-periods and were not granted forever and questioned why STR owners would invest in more than one property if losing money. Julie Brunette explained that she did not like STRs but respected their permits, worked with them, and had no problems, continuing that she would respect any decision the Council made and requested lights for Palm Lane Park. Felix Penalosa (Translation: Spanish) requested vacation rentals be allowed to continue as it was, which was the way families survived and earned a living. Brian Lynch explained he had purchased two houses after learning about STRs, the ordinance in place, and the rules and regulations, thanking the Planning Department for their hard work. He was impressed by the fairness of the approach to try to solve potential issues and felt the new ordinance would solve actual problems while a ban of existing STRs was unnecessary and punitive. Rafael expressed support for vacation rentals as he had seen terrible homes turn into amazing homes and was shocked to hear complaints, indicating he would lose his job and income if banned. Jonathan Licero explained his livelihood was tied to STRs and if banned, he would lose his source of income. He believed STRs were the future of lodging for families. He asked Council to consider the jobs that would be destroyed, how that would affect City Council Minutes of June 29, 2016 Page 19 of 27 Anaheim residents, and question how it was possible that STRs were compatible in other destinations but not Anaheim. Richard Castro, resident and retired union carpenter, was against STRs, as he wanted to be able to talk to his neighbors and have residential areas left alone. Bob Luedtke, resident and Anaheim business owner, serviced STRs and non-STRs through his pool service and repair business and did not see the problems others had mentioned. He supported STRs as they turned the worst houses into the best, created jobs, and increased property values. Arturo Ferreras, represented 1100 signers asking the City to ban STRs as they caused neighborhoods to disappear, affected schools due to lack of children, drove families away through unequal competition for buying homes, and divided the nature of communities. He asked Council to ban STRs. Douglas Pettibone questioned the effects of STRs on neighboring homeowners if they need to disclose the existence of a STR when selling their house, stating there was possible guidance in an appellate court case, Alexander v. McKnight, where a history of nuisance would have to be disclosed or the seller could be subject to liability. Edgar De Jesus, resident, explained STRs allowed him to shift his business within Anaheim and a ban on STRs would ruin his business and cause bankruptcy. A male speaker sympathized with the complex issues but focused on well-managed STRs as being an important distinction to make because they respect the City and its residents and do not cause problems. Jose Moreno, District 3 resident, stated STRs increase neighbors' anxiety about who is moving in next door as it happens every weekend rather than only when a house was sold. He continued that tourism should stay in the Resort District rather than coming into neighborhoods, and while respecting their entrepreneurial spirit of STRs, he requested a ban on STRs in support of the residents. Mike Connelly, STR owner, commented that people may think there were 1000-2000 noise violations based on other comments made but in actuality in 2015 there were 13 total noise violations, according to the City's website. He continued that the STR owners were working on getting major violations down to zero through camera systems and noise monitoring equipment to help mitigate violations but expressed concern with residents reporting every minor and technical violation at STRs to the City even though STR violation only made up 1/10 of 1% of the nearly 12,000 code violations in 2015. He believed the STR ordinance would address these violations. Robert Yaeger, small business owner, provided information about the people he employs to clean his STRs and their ability to create and expand more small businesses while employing more people, emphasizing that STRs not only allow him to supplement City Council Minutes of June 29, 2016 Page 20 of 27 his own income but also support other small businesses through TOT money brought from out of town. Karina Paredes-Arzola, Clergy and Laity United for Economic Justice/CLUE, supported a ban of existing and future STRs as they were detrimental to neighborhoods, undermined the community, and were unjust to hotels and their employees. Marisol Ramirez, OCCORD, acknowledged the solidarity between community and workers, many of whom were residents of Anaheim and some who had to move as they couldn't afford to live in Anaheim any longer. She stated STRs were businesses and didn't belong in the City when so many hard working families struggled, urging the Council to ban STRs to show people mattered over profits. A male speaker could see a problem with STRs but also saw property values going down by not having STRs available and encouraged heavy fines for not abiding by rules and regulations. Nuval Miller, OCCORD and Local 11, referenced the staff report that he said only showed how much TOT came from STRs but did not compare that with hotels or change over time. He continued there were two categories of harm through STRs: 1) over, offensive harm of noise, messes, and strangers talking to children; and 2) insidious, structure harm of a lack of long-term residents who send their children to school and join neighborhood organizations. Doug Hilleboe hoped to turn his Pepperwood condo into a STR and felt problems could be cured with code enforcement and police visits. Linda Lobatos, resident, described being on both sides having owned a cleaning service business to provide for family as well as being a resident, and did not support STRs as they created many problems. Anamaria Reed, resident, offered comments to having issues with all neighbors, not just STRs, and recommended judging each individually instead of as a whole. Art Beas stated Anaheim was a resort area attracting people from all over the world, some of whom have stayed in his home and shared experiences with his family and there have been no issues. He added that if three more hotels were being built, the demand for people staying in Anaheim was high and there was enough room for both, STRs and hotels. With no other public comments, Mayor Tait closed the public comment portion of the meeting. 1. This special meeting is to discuss, consider, direct staff and take possible action M142 on matters regarding short-term rentals as described in the proposed ordinances, including operational and enforcement standards, banning short-term rentals in residential zones, phasing-out/amortizing existing short-term rentals in residential City Council Minutes of June 29, 2016 Page 21 of 27 zones, determining CEQA, as well as concepts related to a pilot program to permit "home sharing" or "hosted" short-term rentals in residential zones, and potentially take any other related action as it pertains to short-term rentals. ORDINANCE NO. 6374 (INTRODUCTION) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ANAHEIM amending Chapter 4.05 (Short-Term Rentals) of Title 4 (Business Regulation) of the Anaheim Municipal Code relating to short-term rentals, and finding and determining that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the State CEQA guidelines, because it will not result in a direct or reasonably foreseeable indirect physical change in the environment and is not a project, as defined in Section 15378 of the CEQA guidelines (banning new short-term rentals and regulating the issuance of and operating conditions applicable to short-term rentals). ORDINANCE NO. 6375 (INTRODUCTION) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ANAHEIM amending Chapter 4.05 (Short-Term Rentals) of Title 4 (Business Regulation) of the Anaheim Municipal Code relating to short-term rentals, providing for amortization of certain pre-existing short-term rental uses and finding and determining that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the State CEQA guidelines, because it will not result in a direct or reasonably foreseeable indirect physical change in the environment and is not a project, as defined in Section 15378 of the CEQA guidelines. MOTION: other actions as related to short-term rentals, including directing staff to consider concepts related to a pilot program to permit "home sharing" short-term rentals. DISCUSSION: Mayor Pro Tem Kring stated she agreed with many points in the letter submitted by STR owners, particularly in regard to fire safety. She noted there were no requirements for sprinklers in single-family residences and thought the installation of doors in many bedrooms, particularly on the front of houses, would diminish the look of the neighborhood. She requested the major and minor violations be changed due to possible negative actions by non-owners, recommending the STR owner suggestion of eight minors and four majors. She questioned why STR owners and guests could not park on the street in front of the property and expressed concern about removing vested rights in property. Mayor Pro Tem Kring noted that long-term renters often caused more issues than vacationers, referencing her own experience with a neighboring house. While many complaints had been received regarding Sherwood Village, other comments were received with no complaints for that area and she stated that those with no problems many may not come forward. She added that the Pepperwood community denied STRs through their CC&Rs but the Kaleidoscope community expressed positive things about the STRs increasing property values and paying HOA dues every month, requesting an overlay be created to allow STRs within that particular community. City Council Minutes of June 29, 2016 Page 22 of 27 Mayor Tait asked how many STRs were in the City prior to the initial regulations and required permits, with David Belmer, Planning Director responding there were approximately 200 at that time which went up to a high of approximately 400 after regulations were put into effect, and now stood at about 363. Upon adoption of the first ordinance, he explained the community was given a reasonable amount of time to come in and get a permit with numerous operators stating they previously inquired and were told there were no regulations. Council Member Vanderbilt questioned the issue of amortization and why that may differ from the issuance/denial of another type of permit such as a business license. Michael Rubin, outside legal counsel, responded that case law addressed vested rights. He explained that while a business had no right to conduct a business forever, when a permit was required with funds in reliance of the permit and the city allowed a business to be conducted but were now outlawing the business, individuals may have a vested right to operate the business, right to be compensated, or be allowed to continue business for such period of time to recoup their costs, but not the expectation of profits. He added that this only applied to costs that couldn't otherwise be recouped, using an example of adding a new bedroom. He further explained, even if the house could no longer be used as a STR but the bedroom still added value to the single-family residence, then the cost was not lost, similarly for furniture that could be resold or used in a single-family residence. Mr. Rubin continued that if certain costs were unique for use as a STR and couldn't be recouped if used as a single-family residence, those would be the costs eligible for amortization or compensation. Mayor Tait questioned what those types of costs may be with Mr. Rubin explaining there were provisions in the proposed amortization ordinance to detail each type of cost and explain their ability to be recouped or not. By example, he provided super decorations for tourist purposes that would not have value for a non-tourist. Mayor Tait confirmed that if a property was purchased for $500,000, invested $100,000, and made $120,000 profit over the two- year ownership period before being sold, the profit would offset costs with Mr. Rubin concurring. Council Member Murray requested the origins of significant modifications that weren't discussed during the workshop and varied from conditions set for single-family residences. Mr. Belmer explained that implementing expansions for a certain number of square feet, per number of bedrooms seemed counter-intuitive as many STRs were already expanded. Staff chose to recommend the 12 month test period, facing the potential that if it didn't work they would return to Council with additional changes to the ordinance or potential recommendation for amortization. He continued that the major and minor violation categorizations came from the STR operators who agreed through the process that bad operators needed to be weeded out through clearer provisions that could be strictly enforced and that there should be a threshold or number of violations that would serve as ground for revocation proceedings. Mr. Belmer stated the Planning Director did not have the authority to revoke a permit but had the authority to initiate a revocation process, which would go before a hearing officer who would ultimately make the decision. Operators hoped to not see permit revocations for minor issues so the stratification of major/minor issues was created with a rather low bar for major violations, set at two as grounds for the Planning Director to initiate proceedings, which City Council Minutes of June 29, 2016 Page 23 of 27 he believed the operators saw as too low for the number of minor violations to equal a major violation, also set at two. He believed operators would prefer number of minor violation that equal a major violation be increased to 3 or 4. The fire provisions came up after the workshop as the Fire & Rescue Department looked more carefully at life and safety. Mr. Belmer continued that the Fire Chief did not see STRs as analogous to a single-family residence where sprinklers were concerned because transient guests changing every three days may not know how to evacuate safely in event of emergency and sprinklers were to protect lives. The fire sprinklers have been allowed to be phased in over 18 months due to the 12 month test period of the ordinance and the potential for amortization. Council Member Murray confirmed that major investments such as new doors and structural changes would not be required during the test phase if the first ordinance was passed and thought the aesthetics for the house and neighborhood may be reduced by certain provisions. Mr. Belmer confirmed that a CUP would be required for a traditional bed and breakfast (B&B) and, while the CUP was considered during the original ordinance for STRs, it was determined to be overly-regulatory and the process could be handled through a regulatory permit instead. Council Member Murray remarked the process seemed counterintuitive with more onerous procedures for owner-occupied vacation rental properties than to purchase individual properties and not have on-site management. Mr. Rubin confirmed that both ordinances under consideration were legally defensible. Mayor Pro Tern Kring saw other problems for owners in the ordinance such as the quiet time hours going too late in the morning, suggesting instead the quiet time be 10pm- 8am, and she also recommended changing the reduced occupancy by 10% rather than by 30%. Mayor Pro Tern Kring stated affordable housing has been an on-going issue since she started on City Council in 1998, many workers live far from their employment, STRs pay property taxes which support local schools, many people in neighborhoods don't know their own neighbors, and the hotel industry in Anaheim was strong with 80- 90% occupancy and new hotels being built, concluding that she would support the ban with the caveat that her suggested changes be incorporated: 10pm-8am quiet hours, reducing occupancy only by 10%, four minor violations and three major violations for revocation proceedings, remove the fire provisions particularly the doors and expensive structural improvements with an 18-month implementation for sprinklers if the Fire Chief was adamant, and to allow parking on the street in front of the house. Mayor Tait stated the existing ordinance for regulation had been vetted, was legally defensible, and he was hesitant to make any changes, noting they could come back and amend at a future date if something doesn't work going forward and moved to introduce the first ordinance with staff's recommended changes and presented, seconded by Council Member Brandman. Mayor Pro Tern Kring questioned how the City would know if the ordinance was not working and why STRs were being treated differently that single-family residences, feeling quiet hours and parking in front of the house made common sense and some tweaking would make the regulations more palatable. Mayor Tait stated the difference City Council Minutes of June 29, 2016 Page 24 of 27 was the STRs were a business in a residential neighborhood which needed strict regulations, where previous regulations had not worked. Mayor Pro Tern Kring moved to amend the previous motion to approve the ordinance with the following changes: 10pm-8am quiet hours, reducing occupancy only by 10%, four minor violations and three major violations for revocation proceedings, remove the fire provisions particularly the doors and expensive structural improvements with an 18- month implementation for sprinklers if the Fire Chief was adamant, and to allow parking on the street in front of the house. Mr. Belmer clarified that staff modified the existing requirement to only apply to one bedroom if there were non-ambulatory occupants and many bedrooms already satisfy the requirement with a sliding glass door. Motion failed for lack of a second. Council Member Vanderbilt questioned why the internet platforms were provided an additional five days to remove listing as that provided operators with five additional days to impact the neighbors. Acting City Attorney Pelletier explained the primary reason for the increase to 10 days was due to the need to mail the notices out-of-state and allow for federal rights afforded to hosting platforms. Mayor Tait reiterated they were not discussing home-sharing, with which he did not have a problem, and believed that would be allowed, but rather addressing full homes rented out on a short term basis with no host on site. MOTION: Mayor Tait moved to introduce ORDINANCE NO. 6374 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ANAHEIM amending Chapter 4.05 (Short-Term Rentals) of Title 4 (Business Regulation) of the Anaheim Municipal Code relating to short-term rentals, and finding and determining that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the State CEQA guidelines, because it will not result in a direct or reasonably foreseeable indirect physical change in the environment and is not a project, as defined in Section 15378 of the CEQA guidelines (banning new short-term rentals and regulating the issuance of and operating conditions applicable to short-term rentals), as revised by staff, seconded by Council Member Brandman. AMENDED MOTION: Mayor Pro Tern Kring moved to amend the ordinance as follows: revise hours of outdoor activity to 10 P.M. to 8 A.M., revise occupancy to be less by 10%, allow occupants of STRs to park in front of the property, and revise the Planning Director's authority to impose suspension and/or revocation proceedings of permit to 3 major and 4 minor violations. Motion failed for lack of a second. ROLL CALL VOTE: AYES — 5: (Mayor Tait and Council Members: Brandman, Kring, Murray, and Vanderbilt). NOES — 0. Ordinance introduced. Mayor Tait explained that as the regulations were implemented if items were not workable or staff determined items did not make sense operationally, Council could amend the ordinance at a later date. City Council Minutes of June 29, 2016 Page 25 of 27 DISCUSSION: Mayor Tait indicated the second ordinance was prepared at his request and provided for a ban of all STRs with an amortization period to allow current STR owners to recoup costs, but did not apply to home sharing. He continued that while there were some well-run STRs, by its very nature a STR in a neighborhood was disruptive and violated the zoning and very purpose of a residential neighborhood. He explained there was a difference between a house and a home, whether owned or rented, with STRs no longer being a home; emphasizing that homes created the fabric of a neighborhood and brought social capital, social infrastructure, and social muscle to a community and a city. Having recently returned from the U.S. Conference of Mayors, he noted the STR issue was prevalent throughout the country but noted the difference between Anaheim, where over 20 million visitors come every day of the year, and other cities with seasonal visitation due to spring training, football games, and coastal and ski seasons. Mayor Tait expressed his belief that the STR industry has ramped up quickly and caught the City off-guard as well as sites like Airbnb known as disruptive technologies that changed the playing field. Mayor Tait added, while the City tried to regulate STRs, the good intentions did not work and the nature of neighborhoods changed. He spoke of having empathy for the many speakers who own a STR or work in the industry which was why he agreed to an amortization period but recommended a change from the staff-recommended three years to 18 months due to rising profits and a strong real estate market, coupled with the hardship provisions that would be looked at on an individual basis. He noted that the sharing economy was exciting and offered people an opportunity to earn extra income but that STRs were not truly part of the sharing economy and more like motels in residential neighborhoods. Speaking to a partial ban of only future STRs, Mayor Tait indicated the situation could be worse because the approximately 365 existing STRs could continue operating and, with a limited supply, their value would increase while decreasing the values of surrounding properties that would have to disclose their proximity to a STR whenever the property was sold. MOTION: Mayor Tait moved to introduce ORDINANCE NO. 6375 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ANAHEIM amending Chapter 4.05 (Short- Term Rentals) of Title 4 (Business Regulation) of the Anaheim Municipal Code relating to short-term rentals, providing for amortization of certain pre-existing short-term rental uses and finding and determining that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the State CEQA guidelines, because it will not result in a direct or reasonably foreseeable indirect physical change in the environment and is not a project, as defined in Section 15378 of the CEQA guidelines, with an amendment revising the amortization period to 18 months, seconded by Council Member Vanderbilt. DISCUSSION: Council Member Murray discussed the worldwide proliferation of online platforms that created this new economy and how Anaheim had attempted to work with both owners and residents to create a process that protected neighborhoods while allowing this marketplace to operate and coexist. She referenced her strong support for private property rights and advocacy for economic development to support city services. She mentioned the different regulations for owner-occupied and non-owner-occupied City Council Minutes of June 29, 2016 Page 26 of 27 STRs, how the Conditional Use Permit (CUP) process existed due to zoning and general plan laws to protect residential communities and neighborhoods as well as commercial and business districts, and the significant housing shortage by over 60,000 units across Orange County that would expand as population grew and more housing units entered the STR marketplace, thereby reducing available housing for the workforce and families in the community. She expressed her belief that housing stock should be retained as housing and residential stock, which had slipped in this marketplace. Council Member Murray expressed her interest in supporting the ban but was concerned regarding the permit process that people had used to invest in good faith and through which the many have operated in good faith and provided a significant investment into the community, noting a governmental responsibility through takings and commerce clauses to make people whole if property was being taken. She disagreed with reducing the amortization period further due to potentially significant takings of private investments but was considering a full ban as part of the Council's primary responsibility to govern on behalf of the people living in the community. Mayor Pro Tern Kring stated she was a big believer in property rights, referencing 240 years of U.S. history and noting the security felt in knowing the difficulty involved with government taking away such property rights, noting such rights also applied to STRs. She expressed that STRs may not receive justice in 18-36 months when it was estimated to take over 10 years for 80-85% of STRs to be made whole by approximately $60 million, noting that each STR would need to be individually evaluated to determine the total costs for amortization. Mayor Pro Tern Kring disagreed with a fee imposed to obtain due process for a hardship extension and stated she could not support amortization. Referencing polls taken of approximately 450 people, STRs were not on their radar, explaining that this seemed be a small group of people affected and expressed concern about the actions being taken at the meeting applying to not only owners/operators but those that have worked hard to make a successful product, expecting future lawsuits, and restating her non-support for amortization. MOTION: Mayor Tait moved to introduce ORDINANCE NO. 6375 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ANAHEIM amending Chapter 4.05 (Short- Term Rentals) of Title 4 (Business Regulation) of the Anaheim Municipal Code relating to short-term rentals, providing for amortization of certain pre-existing short-term rental uses and finding and determining that this ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the State CEQA guidelines, because it will not result in a direct or reasonably foreseeable indirect physical change in the environment and is not a project, as defined in Section 15378 of the CEQA guidelines, with an amendment revising the amortization period to 18 months, seconded by Council Member Vanderbilt. ROLL CALL VOTE: 3-2 (AYES: Mayor Tait and Council Members Brandman and Vanderbilt; NOES: Mayor Pro Tern Kring and Council Member Murray). Ordinance introduced. Ms. Usher, attorney for the STR owners, requested a point of order or procedural question related to the Charter requiring four affirmative votes to adopt an ordinance. City Council Minutes of June 29, 2016 Page 27 of 27 Upon direction from Mayor Tait, Acting City Attorney Kristen Pelletier explained a point of order is only afforded to council members. She continued that charter amendments through Measure M were rolled out in contemplation of having a seven-member City Council and Measure M, in its prefatory section which is in Charter Section 500, noted that certain changes would be made commencing with the General Municipal Election held in November 2016. Ms. Pelletier confirmed that Charter Section 511, as referenced by Ms. Usher, does say four affirmative votes in the currently published version of the Charter but it was very clear that the change was intended to go into effect only when there were seven members of the Council and that she had previously communicated this to Council. Mayor Tait questioned whether the Council had legal authority to introduce an ordinance with three votes with Ms. Pelletier indicating that the intent of the entirety of Measure M was clear, acknowledging, however, there could be a challenge. She noted this issue had been studied carefully, outside counsel had been retained, and upon review of the entire measure it was very clear that what went before the voters was intended for the instance of a seven-member Council, not to require a super-majority with a five-member Council. Mayor Tait announced the next phase of this topic would focus on home-sharing, hosted STRs which the Council would consider in August with the second readings of the introduced ordinances occurring at the July 12, 2016 meeting, confirmed by City Manager Emery. COUNCIL COMMUNICATIONS: Mayor Pro Tern Lucille Kring expressed her condolences for the Long Beach Police dog killed in the line of duty and wished everyone a happy Fourth of July. ADJOURNMENT: With no further business before the City Council, Mayor Tait adjourned the June 29, 2016 special meeting at 10:35 P.M. Respectfully submitted, \k, Linda N. Andal, CMC City Clerk