An alliance of short-term rental owners in Anaheim has filed a lawsuit challenging the city’s ban on the home rentals, joining the websites Airbnb and HomeAway in fighting the new law.

The Anaheim Rental Alliance and several other short-term rental owners — including former Councilwoman Gail Eastman and her husband Ron — say the ban, regulations for existing rentals, and fees for violating the ordinance are burdensome and an about-face from a previous policy of welcoming the businesses.

The lawsuit argues that the city actively fostered the issuance of permits for short-term rentals (STRs) for more than a year before “a small but vocal minority” of residents shifted the political winds.

“In its recent rush to appease the opponents to the innovation and change of STRs, the city bypassed, discarded, or simply ignored the procedural and substantive laws designed to protect the rights of STR permit holders,” reads the complaint, which was filed last week.

“Within a mere five days of releasing its first draft of the
Revocation Ordinances, totaling 45 single-spaced pages, the Anaheim City Council moved to adopt them both.”

(Click here to read the full complaint.)

Short-term rentals have become popular in recent years as an alternative to hotel stays, and have exploded in destinations like Anaheim where Disneyland has ensured a steady and year-round influx of vacationers.

Owners say the growing industry has been an economic boon for the city, giving homeowners more economic flexibility and turning vacant or run-down homes into attractive, well-maintained homes.

Residents who pushed for the ban, meanwhile, have long complained that the vacation homes are disruptive, lowering their quality of life and turning residential neighborhoods into an extension of the Anaheim’s resort district.

Rental owners say the ban, and the 18-month period for owners to phase out their businesses, violate their right to be compensated for their investments into their property under a city permit.

“If the City wants to ban STRs, the constitution requires the City to pay just compensation to the STR permit holders who relied on permits from the City in their decisions to invest $250 million in their STR properties,” said Jane Usher, the attorney for the Anaheim Rental Alliance with the firm Musick, Peeler and Garrett.

Short-term rental web platforms Airbnb and HomeAway also filed lawsuits challenging the city’s ban earlier this month. They argue that the city’s regulations — which fine websites for failing to remove listings by owners without a permit — illegally make the websites liable for content created by their users.

City spokesman Mike Lyster said the city does not comment on pending litigation.

“We understand the concerns of the industry, but we believe the actions taken by our City Council to regulate short-term rentals in Anaheim are legally valid,” Lyster wrote in an email.

This post has been updated to include comments from attorneys.

Contact Thy Vo at or follow her on Twitter @thyanhvo. 

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