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Regulating Small Town Short-Term Rentals: A Case Study in the Ojai Valley by Joshua M. Zaucha

Regulating Small Town Short-Term Rentals: A Case Study in the Ojai Valley

by Joshua M. Zaucha

There is something magical about the Ojai Valley. The memories of my boyhood there are impressed with the smell of orange blossoms and eucalyptus leaves, which seem to perfume the air in alternating seasons. It is perhaps the place most near my heart in all the world, and I return as frequently as I can.

And many others seem to think so too. Many, many others....

Much to the dismay of some long-time residents, Ojai’s allure as a tourist destination is substantial. Less than 100 miles from Los Angeles, the Ojai Valley has become a frequent getaway for young Angelenos, thanks in part to editorial attention drawn by the valley, most recently published by the New York Times. The product of that attention has been increased revenues to hoteliers and augmented demand for lodging and accommodations generally.

The stage was then set for the issue that small-town local governments around the country have been forced to grapple with over the last five years: do we welcome a $74 billion+ industry into our community, and run the risk of allowing housing scarcity, increased home values, and dissatisfied local constituents?

The city of Ojai determined in 2016, as the short-term rental (STR) issue grew out of its infancy, that that risk was not worth the taking. A January 2016 city ordinance (resolution num. 16-07) confirmed an “existing ban on transient rentals in all zones.”

Interestingly, the city ban relies on existing municipal code as authority to restrict short-term rental operation across all zone types. Because the municipal code does not expressly authorize STR operation as a use-type permissible under the local zoning rules, the city has implied authority to lawfully prohibit STRs for violation of the existing code.

An important wrinkle in the Ojai Valley STR regulatory landscape was addressed in 2018: the local STR ban enabled by the Ojai Municipal Code and subsequent ordinance is limited by the jurisdiction of the body issuing those regulations. As such, short-term rental operation in local unincorporated areas was not barred by city ordinance.

But in June 2018, the Ventura County Board of Supervisors voted 3-2 to pass restrictions banning the operation of STRs in the Ojai Valley’s unincorporated neighborhoods, with exemptions for historical homes and owner-occupied home sharing.

This county-level regulation served to fill the regulatory gaps between the limited jurisdiction of the City Council and potential STR loopholes detracting from the intent of the Council to limit negative outcomes associated with STR operation in the area generally.

Local representative Steve Bennett, whose constituents reside in the unincorporated areas in question, was instrumental in the passage of the regulation. Bennett highlighted the difficulty of citizens in unincorporated areas to “effect change against organized people who profit from it,” and was pictured with a broad smile upon the passage of the regulation.

The question remains, why does this matter to someone other than a frustrated, quasi-local like me whose favorite sub sandwich shop fell to a trendy spot geared towards tourists?

Ojai’s STR story, beginning in 2016, is akin to many stories around the country that are just beginning. The pressure of revenue growth and tax collection from STRs is pressing in on small vacation villages from Idaho to Maine.

I think two legally practical insights might be gleaned by local regulators from Ojai’s story:

First, the legal authority to pass ordinances restricting STR operation across all zones may well be lying latent in the municipal code. The immense tumult of passing a prohibitive ordinance by a direct vote may be unavoidable per certain local regulations. But it cannot be said that it is always required, as it was not required by the Ojai Municipal Code. Therefore, I am interested to explore localities who may imply authority to take ownership of the STR regulation in this way.

Second, the regulation effort may be necessarily multi-lateral. The Ojai Valley has comprehensive STR regulation only because the City and County governments came to general consensus on the topic of STRs. I believe that many regulating municipalities will similarly encounter jurisdictional challenges presented by unincorporated areas. I suggest that they seek consensus in this way to ensure the integrity of municipal regulations is retained.

In conclusion, I recognize that the issue of tourists flocking to the cradle of my youth is a complicated one. I cannot help but roll my eyes when I see the next player in a revolving door of pricey commercial tenants or glossy news runs urging more insufferable twenty-somethings from LA to come appropriate my favorite burrito shop as their own.

To address my own hypocrisy, I was not born in Ojai, I live in LA now, and I am promptly getting in my car and driving to Ojai after this writing. But the many years I spent there (and the change in the town that I have lived through) cause this to be a matter of the heart for me.

I will not obfuscate my hope for an Ojai that is affordable to families like mine. I believe that the regulations in place here are a step to that end. I hope that the City Council, County regulators, and other stakeholders also take this hope seriously. It may be that the spirit of the town I hold so dear depends on it.