Santa Ana short-term rental ban ruled illegal

An Orange County judge on Monday ordered the city of Santa Ana to set aside its ordinance banning short-term rentals, ruling it was approved in violation of the California Environmental Quality Act (CEQA).

The city now will have to perform an environmental analysis in accordance with CEQA if it wants to re-enact the ban.

The ruling is a victory for the Santa Ana Short-Term Rental Alliance (SASTRA), which challenged the measure that eliminated home-sharing and vacation rentals under 30 days.

Frank P. Angel of Angel Law in Santa Monica, who represents SASTRA, said the ban was effectively excluding 5,000-plus renters from flexible housing options since there were more than 1,000 short-term rental listings before the ban was enacted in April 2024.

"For many years preceding this blanket ban, STRs provided a critical resource to many city residents and local businesses, as well as vacation, business and other nonrecreational visitors, including families displaced because of damage to their homes or needing to relocate to Orange County," he wrote in an email to the Daily Journal.

Best Best & Krieger partner Amy Hoyt, who is helping represent the city of Santa Ana, declined to comment until the firm's attorneys are able to discuss the case with city council at its next meeting, which is scheduled for May 5.

SASTRA claimed the elimination of short-term units would alter traffic patterns, increase vehicle emissions, and shift lodging demand to other areas, resulting in "significant environmental impacts," thus requiring a CEQA review.

"CEQA serves to hold public officials accountable for the adverse effects their decisions inflict not only upon the environment but also on human beings," said Angel Law associate Cassandra Vo, who argued SASTRA's case with Angel.

The city argued the reviews needed for the ordinance were covered under a program environmental impact report (PEIR) it had prepared for its 2022 General Plan Update.

Orange County Superior Court Judge Melissa R. McCormick disagreed, stating, among other reasons, that the PEIR did not analyze or disclose impacts related to short-term rentals.

The city also claimed the ordinance was exempt from CEQA review under a Class 1 (existing facilities) exemption. But the court found the ban applies to future housing, not just existing facilities, disqualifying it from the exemption.

The city "does not dispute -- and indeed conceded at the hearing -- that the STR ordinance is not limited to existing structures," McCormick wrote in her 12-page statement of decision. "Because the STR ordinance is not limited to existing structures, the STR ordinance does not fall within the scope of the categorical exemption for existing facilities. Therefore, the City proceeded in a manner contrary to law when it concluded that the Class 1 exemption applies to the ordinance."

Angel said the city's STR ban was a drastic one, with no limitations or exceptions, not even for legal nonconforming STR uses preexisting the ban.

"There are reasonable regulatory or enforcement alternatives to what was a truly radical, economically painful, and unnecessary policy shift in 2024," he said.

The court set a status conference for August 20 to discuss SASTRA's three other causes of action, which were separated from the CEQA claims. The three nonconforming use claims may not need to be litigated depending on how Santa Ana City Council proceeds following this week's decision.