In a comprehensive report released in May 2025, the Orange County Grand Jury shed light on the escalating impact of short-term rentals (STRs) in the region, particularly in Fullerton. Defined as rentals of homes or apartments for less than 30 days, STRs have ignited intense discussions among residents and city officials, revealing a split in community sentiment.

The Grand Jury report highlights a dichotomy in opinions: while many residents express concerns about STRs threatening their quality of life and straining city resources—especially in terms of code enforcement—data shows no substantial increase in complaints from cities experiencing a surge in STRs. The report points to successful strategies adopted by some municipalities that have managed to address the challenges posed by STRs, offering lessons for others facing similar issues.

One notable finding is the ineffectiveness of outright bans on STRs, described as a frustrating game of “whack-a-mole,” where cities shutting down unpermitted rentals find new ones emerging. The report criticized a prevailing leniency in enforcement across various cities, with many failing to pursue fines or properly collect the Transient Occupancy Tax (TOT), relying instead on the “honor system” for compliance.

Despite fears among critics that STRs diminish affordable housing availability, the Grand Jury found little evidence to substantiate these claims. In contrast, they provided actionable recommendations for city councils and planning departments looking to regulate STRs more effectively, including revising existing ordinances and leveraging third-party digital tools for improved enforcement and tax tracking.

As a prime destination for tourism—with attractions like Disneyland and Knott’s Berry Farm—Orange County’s appeal complicates the STR landscape. Homeowners see STRs as lucrative opportunities, yet tensions with local residents over nuisances and disturbances continue to rise, creating conflicting priorities for city officials.

In response to the Grand Jury’s report, the City of Fullerton moved swiftly, implementing a moratorium on new STR permits in July 2025. This moratorium aims to address community concerns and curb non-compliant rentals, while city leaders advocate for a balanced solution that accommodates both community needs and the entrepreneurial aspirations of homeowners entering the STR market.

In its official response, Fullerton acknowledged the longstanding presence of STRs in Orange County and the urgency of addressing rising complaints related to noise, parking, and neighborhood disruptions. The city’s urgency ordinance, enacted on July 15, 2025, marks a pivotal step in regulating STRs and enhancing community oversight.

City officials are keenly aware that robust code enforcement alone may not be enough to address illegal STR activities. They noted that online booking agencies (OBAs) often exploit gaps in regulation, complicating enforcement efforts due to limited resources.

Looking to other cities for inspiration, Fullerton’s officials have examined Anaheim’s success in mandating OBAs to report TOT directly to the city. While this approach could boost revenue for Fullerton, the challenge remains in balancing regulatory measures with the growing demand for short-term rental opportunities.

As the debate over STRs envelops Fullerton, the path forward remains uncertain. City leaders face the dual challenge of meeting community concerns while navigating the entrepreneurial landscape shaped by the allure of short-term rentals.

The Grand Jury’s investigation revealed a divided community, with many residents voicing concerns over the potential negative impact of STRs on their quality of life and local resources. Issues such as noise disturbances, parking conflicts, and neighborhood disruptions have intensified as STRs have proliferated.

While the report indicated that cities experiencing an influx of STRs don’t necessarily see a corresponding rise in complaints, it pointed to the difficulties municipalities face in regulating unpermitted rentals. The Grand Jury described the attempts to govern STRs as a “frustrating game of whack-a-mole,” where efforts to shut down one rental often result in another taking its place. It also criticized the reluctance of some cities to impose fines or enforce the collection of Transient Occupancy Tax (TOT) from rental owners.

Notably, the Grand Jury found little evidence that STRs diminish the availability of affordable housing, a significant concern for many critics of these rentals. However, the report did emphasize the need for cities to implement best practices in managing STRs, recommending modifications to existing ordinances and the use of third-party tools for improved tracking and enforcement.

As a popular tourist destination, Fullerton, alongside other cities in Orange County, grapples with balancing the lucrative opportunities that STRs present to homeowners against the voices of residents advocating for a more stable community environment.

In light of these challenges, Fullerton’s City Council has launched an urgency ordinance to suspend the issuance of new STR permits and facilitate the phase-out of existing non-compliant rentals. The council has expressed a commitment to fostering a balanced approach that addresses community needs while also supporting local entrepreneurs who engage in the STR market.

To enhance enforcement and improve revenue collection, Fullerton officials are exploring strategies similar to those implemented in Anaheim, which successfully requires online booking agencies to report TOT directly to the city. Discussions are underway regarding updating monitoring systems for STRs by September 30, 2026, although a proposal for random multi-year audits of TOT was tabled due to the ongoing moratorium.

City leaders plan to reassess enforcement and audit measures throughout the moratorium period, with the hope of considering more robust regulations once an updated ordinance is proposed.

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