Anaheim Neighborhood Has Become a Cautionary Tale of Sharing Economy

Photo by Adam Elmahrek/Voice of OC

A group of residents at Sherwood Village, a neighborhood of town homes in Anaheim, has formed a coalition to campaign for banning short-term rentals at Sherwood and citywide.

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Just two years ago Anaheim’s Sherwood Village was a sleepy community of town homes near Disneyland — a typical Orange County suburb where neighbors for the most part knew each other and the streets were pretty much quiet by sundown.

But then, thanks in largely to what economists call the emergent “sharing economy,” everything began to change. Investors started buying up properties with all-cash offers thousands of dollars above market value and turned them into short-term rentals, listing them for rent to Disney visitors and conventioneers on websites like VRBO and Airbnb.

All of a sudden, neighbors in Sherwood Village were turning over by the week and the quiet streets weren’t so quiet anymore. Now, during the summer and big convention weeks, residents say late-night parties are commonplace and the community pool is taken over by strangers.

As a result, this formally anonymous suburb has become a flashpoint in an ongoing battle over short-term rentals that is being waged in destination cities nationwide.

“We’re losing the sense of community,” said Martin Lopez, a Sherwood resident who is also an organizer with Unite Here Local 11, a hotel workers union. “It’s vanishing.”

Lopez and other residents who feel blindsided by the transformation of their neighborhood into a mini-hotel district, have banded together and embarked on a campaign to ban short-term rentals in Sherwood and citywide.

The short-term rental owners responded by initiating a recall of homeowners’ association board members. Residents succeeded in voting down the recall, but the situation has only gotten uglier.

In recent months, Short-term rental owners passed out flyers insinuating that their opponents have slashed tires, stolen holiday decorations and even issued death threats. Residents, meanwhile, say workers hired by short-term rental owners have trespassed in the neighborhood and staked out a resident’s home in the middle of the night.

Short-term rental owners say opponents exaggerate the impacts, that the vast majority of their renters are families visiting Disneyland who just want a quiet place during their vacation. On any given day, the neighborhood is as peaceful as ever, they argue. They also claim that short-term rentals have helped property values at Sherwood skyrocket.

“What gets said has been pretty sensationalized,” said Andy Emory, a short-term rental owner at Sherwood who said he owns 10 of them in the neighborhood. “I keep having to remind myself that we’re talking about families coming to Disneyland, renting homes. Based on the level of criticism we’re receiving you’d think we’re dealing drugs and running meth labs.”

Sherwood residents say they are not exaggerating, and feel like their neighborhood transformed overnight.

A Disney-Fueled Explosion

The issue first came before the Anaheim City Council in 2014. Then, the council passed an ordinance in 2014 regulating the businesses. Guests were required to obey noise restrictions, stay at least three nights and no more than three people per bedroom.

But residents say the ordinance didn’t go far enough and signaled to aspiring short-term rental owners that Anaheim had given the green light on the businesses.

Within about a year after the ordinance passed, the number of permitted short-term rentals in the city doubled from 200 to 400, according to city records. Opponents say the number is actually much higher.

The neighborhoods closest to Disneyland and the city’s convention center, including Sherwood, were impacted the most. Although it isn’t reflected in the city’s short-term rentals map, many say about 80 percent of the homes in Kaleidoscope, a neighborhood of condos across from Disneyland, are short-term rentals.

Before the ordinance, residents say there weren’t more than a dozen short-term rentals Sherwood. Then after it passed, residents estimate that 57 of the 221 homes in the neighborhood – just over 25 percent of the total – have been converted into short-term rentals.

In response to the backlash, city leaders began crafting a new short-term rentals law and imposed a moratorium on the current ordinance, meaning officials won’t accept new applications for the businesses.

Joan Miller, a Sherwood resident who lives alone with her Chihuahua, said she started carrying pepper-spray once the short-term rentals arrived in big numbers and she began seeing strangers wandering through the neighborhood on a regular basis.

“Safety is an issue for me,” Miller said.

The issue bubbled up at the HOA level and residents voted on a proposal that would change the covenants, conditions and restrictions (CC&Rs) of the neighborhood to include a ban on short-term rentals.

In November of 2014, residents voted 84-72 against the ban. Residents in favor of the ban said they were having trouble getting their HOA board to act – past board members even wound up selling their homes to short-term rentals, according to some – but they finally elected board members recently who were more willing to confront the issue.

In October, the HOA board voted to limit the rental period to at least 30 days, a rule that effectively prohibited short-term rentals. Emory and other short-term rental owners sued over the rule, arguing that it was passed illegally because that type of change can only be done by a vote on the CC&Rs.

The owners also launched a recall of the HOA board. The recall failed in a 126-64 vote on Feb. 8.

The recall vote came days after Superior Court Judge Andrew C Banks opined in a hearing on the lawsuit that the HOA board approved rule change wouldn’t affect short-term rentals because the guests were the “lodgers” of a business and not “tenants.”

Resident opponents are hopeful that the judge’s logic means the CC&Rs already ban short-term rentals because business operations that have more than an incidental impact are already against the rules. But Emory said the judge has indicated that the case isn’t “clear-cut” and that he suggested the two sides to come to a compromise.

In the meantime, Emory’s side has offered to pay additional HOA fees that escalate annually — until the third year, when it will be capped at $100 – to pay what opponents argue are impacts of short-term rentals, including the neighborhood’s water bill. The proposal would also cap short-term rentals at the current level, but also “limit new [short-term rental] creation to current owners.”

Resident opponents claim the clause is just a trick to allow the current short-term rental owners at Sherwood to gain a monopoly by prohibiting new investors from creating short-term rentals at Sherwood but allowing the current owners to keep buying up homes in the neighborhood.

Threats and Intimidation

Scott Davis, a Sherwood resident in favor of short-term rentals who Emory pays for help with the businesses, said he left his truck in front of his home last week. When he tried to open the door, he noticed the handle had been drenched in oil.

“I’ve been screamed at and yelled at by many different people because of my views. It was almost to the point where we almost moved out. We couldn’t take it any more,” Davis said, referring to himself and his family.

Emory said an opponent made a “throat-cutting gesture” at a short-term rental owner. And although he stops short of accusing opponents of the vandalism and theft alleged in campaign materials, he says “anything is possible.”

Meanwhile, opponents said Emory has hired workers to trespass in the neighborhood and take down campaign materials posted on the doors of homes. They also point to a letter from Emory that claims short-term rental owners, faced with the prospect of their high-yield investments floundering, will be “forced” to consider alternatives like conversions to section 8 housing and sober living homes.

“We know of no owners who WANT to do this, but many will do it if they are forced,” the letter reads.

Resident Luisa Lam, a short-term rental opponent, said she’s become so fearful of the short-term rental owners’ tactics that she installed a security camera outside her home. One night, it caught two young men, which Lam believes were hired by short-term rental owners, approaching her home.

“I couldn’t sleep at night. Now I’m afraid someone’s going to come vandalize my house, or something major,” Lam said.

Emory said opponents had posted campaign materials in common areas and in violation of neighborhood rules. It had come to a point where the amount of material was piling up and trashing the area, he said.

He denied that any of his workers had engaged in tactics alleged by opponents.

“In my opinion, I helped in picking up the trash,” Emory said.

A Community Lost?

Lopez argues that short-term rentals are erasing the sense of community at Sherwood. Yet at the same time, he acknowledges that he and some of his neighbors are closer than they’ve ever been before. They’ve spent a great deal of time campaigning together, knocking on doors and talking to residents about the issue.

Emory said he understands the neighbors’ concerns on this point, but insists that he purchased most of his properties at Sherwood from single residents with little connection to the neighborhood community. In one instance, he claims he bought a home that was being used as a marijuana grow-house.

Today, he said, “it’s full of families instead of a drug house. People don’t like to mention those stories.”

Emory also said short-term rentals give residents an opportunity to meet people from all over the world, having turned Sherwood Village into a global village.

Davis said he’s met over 100 families this way and has had positive experiences with all of them. The allegations that short-term rentals have brought in late night parties during events like the National Association of Music Merchants convention last month he claims are “100 percent false.”

“Most of the people that come in are families coming in going to the parks, they’re also business people coming to go the convention center,” Davis said. “For the most part, they’ve all been respectable.”

The benefit most touted by short-term rental owners is the spike in property values. Emory estimates that the businesses have added a $90 per sq. ft. premium on the value of Sherwood properties.

Lam disagrees. She argues that potential residents are going to be hesitant to purchase properties that are in neighborhoods rife with short-term rentals. She also points to articles like this one in Realtor Mag that says short-term rentals threaten residential zoning, potentially driving down property values.

Regardless of who is to be believed, sleepy is no longer a term that can be used to describe Sherwood Village.

“It’s become neighbor against neighbor,” Lam said.

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: @adamelmahrek

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  • dc matthews

    why are they allowing biz in residential and when OC is short on moderate income housing and a national embarrassment on affordable and veterans housing?

    1,388 Veterans are homeless in Orange County.
    Orange County has the 6th largest veteran population in the United States.
    4,500 Veterans are on waiting lists for affordable housing in Orange County.
    In Orange County 6,048 Veterans are unemployed at any one time.

    • LFOldTimer

      But no doubt at the Anaheim council meetings (like other council meetings throughout OC and the county supevisor meetings) all pols will stand, place their hands over their hearts and recite the Pledge of Allegiance – then go into gushing declarations of how grateful their are to our vets for their service. 😉

  • Charlotte Seidnematollah

    I am here to tell you these STR owners will say and do anything to get what they want. I have a ten bedroom Str Home behind my house and it is a nightmare that has destroyed the quality of my life. Believe me you do not want one of these vacation homes next to you. Imagine having a motel in your back yard all the time with a constant turnover every few days of many screaming vacationers. It is a nightmare that belongs in a motel not in your backyard or in your neighborhood. Keep your chin up Sherwood Village. Maybe our Anaheim City council will do the right thing and ban these nightmare STR’S.

  • David Zenger

    What a mess.

    These things need to be banned in Anaheim. Immediately.

  • Paul Lucas

    STRs are causing havoc everywhere.

  • LFOldTimer

    I feel for these people. Big money interests are moving in and ruining the traditional makeup of their neighborhoods which disturb their quality of life. This should be addressed by the Anaheim Council which should impose safeguards to protect their neighborhoods.
    I understand that some beach/resort communities (eg. Laguna Beach) experienced some similar problems with property owners doing weekly or monthly rentals for out-of-town tourists – that brought loud parties, parking problems, disturbances etc..with them. If I recall correctly the LB City Council stepped in and placed strong restrictions on the short-term rentals.
    If LB could do it – so can Anaheim.
    Good luck to the resident homeowners in Anaheim. You look like a very respectable group of citizens who deserve the respect of your City leaders.