CITRUS HEIGHTS, CA (MPG) - The Citrus Heights City Council recently held a Study Session to provide direction to staff regarding short-term rental (STR) properties within the city boundaries.

Alison Bermudez of the Planning Department explained that STRs are furnished units, either a room or a dwelling, that are rented out for durations less than 30 days. They are often used as either vacation rentals or as business accommodations for traveling professionals.

Industry wide, there has been a significant increase in these listings since 2011. While AirBnB is probably the most well-known STR platform, there are hundreds of other companies in the rental market offering these listings. Bermudez said that over the past year, STRs have even outperformed traditional hotels in certain markets. But as the number of these rentals increases, so has the number of complaints. Large parties held at STRs can result in noise disturbances, trash accumulation, and parking issues for the locals who reside in the neighborhoods.

Back in 2011, there were just five or six STR listings in Citrus Heights. In 2020, there were almost 60—and that number has grown 24 percent since last year, with 72 available today. “That number is growing and continues to grow,” said Bermudez.  

That increase has brought more calls to the Citrus Heights Police Department (CHPD) to respond to disturbances at parties at STR sites. So far this year, there have been 11 of these calls, and four of those were deemed public safety concerns with known gang members and weapons violations arrests made at these locations. On two occasions when the parties were dispersed, individuals fled from officers, so the CHPD does view this as a growing problem.

Because these rentals offer temporary accommodations much like a hotel or motel, they technically should be paying a 12 percent Transient Occupancy Tax (TOT) to the City. With a median rate of $118 per night and an expected occupancy of 73 nights per year, Bermudez said the annual TOT from 72 STR units could total more than $74,000. She explained, “That is due to us now, we’re just not receiving it.”

The City Council considered several options regarding the STRs in Citrus Heights, ranging from allowing their continued operation without any regulations to a comprehensive regulatory program outlining registration, operation, enforcement, and the collection of TOT.

Drawbacks of implementing a comprehensive program include the cost of buying the location data for all current STRs in the city, as well as the ongoing costs of administering such a program. A one-time payment for the current data could cost at least a couple thousand dollars, and the City wouldn’t be notified if new listings were posted for STR locations in Citrus Heights. Some municipalities use a third-party administrator, which frequently reviews and implements ongoing data as part of the program, but that can cost around $20,000 annually.

Councilmember Bret Daniels said that while he’s heard of parties at STRs becoming major problems in some areas of the country, he doesn’t think 11 disturbance calls this year in Citrus Heights is particularly significant. He said the City can file a nuisance lawsuit if certain STR locations are the site of repeat disturbances: “So there is a remedy for going after a property owner who’s allowing these kinds of things to occur on their property.” He viewed the idea of imposing regulations on STRs as “a solution looking for a problem … but I don’t even see a problem based on the numbers.”

And with the lack of affordable housing in the region, Councilmember Daniels also expressed concern that some people who rent their homes as STRs are doing so to bring in the income needed in order to afford to keep their homes. He worried that imposing additional costs like TOT collection and license/registration fees would push more people out of their homes.

While Councilmember Jeannie Bruins agreed that STRs are used to create supplemental income, she said, “For the most part, it’s a business, and I think at least they should have a business license and at least they should pay a TOT.” She also supported a restriction on the maximum number of guests to cut down on the potential for wild parties disturbing the neighborhoods.

Councilmember Bruins acknowledged that some people would avoid registering or paying the required taxes and fees, but she said, “It’s really an enforcement issue.”  She suggested that the CHPD should continue responding to disturbance calls, which would allow for the identification of property owners out of compliance. Then the City would have a mechanism in place to help the owners get into compliance by applying for the license and paying the tax.

Bruins also agreed with Councilmember Daniels that it’s not necessary to create a solution “to something that may not even be a problem.” She said, “So let’s be moderate, let’s be minimalistic, let’s do something that makes sense for us.” She said at this point it wouldn’t make sense for the City to invest in database purchases or costly third-party administrators.  

Councilmember Tim Schaefer supported the three minimal requirements suggested by Councilmember Bruins. He agreed that those reasonable measures would “give City staff and law enforcement the ability to take action on these properties.”

Staff will move forward based on the