Dana Point city staff can now greenlight short-term rental permits without waiting for city council approval, while council members are also pushing forward efforts to crack down on unpermitted rentals.

Short-term rentals – commonly known as Airbnbs – provide Transient Occupancy Tax revenue to cities.

The tax, also known as a bed tax, is charged when visitors spend the night at a hotel or short-term rental. For Dana Point, bed tax is the highest revenue source in the city, generating over $16 million in 2024.

The council approved the short-term rental changes in a 4-1 vote on May 6, with Councilmember Michael Villar voting no.

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Problematic vacation rentals have caused issues in OC cities in the past, often creating an influx of resident complaints about parking, late-night partying and other disruptions.

“The complaints, issues and annoyances arise from issuing 50 short-term rental permits,” Dana Point resident Susan Bernard said at the meeting. “This includes noise, trash (and) late-night activities. 

“(Short-term rentals) have destroyed the fabric of our community,” she said.

The first change will authorize staff to approve certain units without bringing the permits before the council at a public meeting. 

Staff will be able to approve primary, homestay and multi-family homestay vacation rentals, outside the coastal zone, as long as the total falls beneath the city’s maximum cap. These types of rentals host increased stays spanning from a week to 30 days.

“We generally know those (rentals) are lower risk,” Councilmember Jamey Federico said at the meeting.

Federico said he believes fewer complaints are filed against these types of rentals.

However, the council was not unanimously in favor of the motion.

“I strongly believe that we’re getting a little bit ahead of ourselves,” said Councilmember Villar, who dissented. “I like our approach of opening (permits) up really soft and quiet to make sure we’re hitting every step.”

As of July 2024, the city of Dana Point allowed 111 permits inside the coastal zone — 96 of which were active — and 115 outside the coastal zone, 59 of which are active.

During the May 6 meeting, the council also approved 15 new rentals outside the coastal zone that were previously waitlisted.

[Read: Dana Point Delays Handing Out New Short-Term Rental Permits Until Next Year]

The city council’s decision to rethink Dana Point’s short-term rental ordinance comes months after the unsuccessful Measure T on the November 2024 ballot, a citizen-led initiative that would have repealed the existing short-term rental ordinance and replaced it with a new one.

If it had passed, Measure T would have reduced the short-term rental permit cap, required permits to be renewed annually and would have been given out on a priority basis.

“I was disappointed Measure T didn’t win, but it was well worth the fight,” Betty Hill, Dana Point resident and Measure T proponent, said at the May 6 meeting. “Residents finally had the chance — a chance they deserved — to vote on a short-term rental policy.”

The measure failed in November with about 64% of voters – 11,839 voters – casting ballots against the measure.

“The passage of Measure T would have helped sustain Dana Point’s family-oriented neighborhoods and its vibrant residential communities,” Hill said. “It would have served to preserve available housing and hopefully keep costs lower for the 38% of residents who rent homes in Dana Point.” 

[Read: Coastal Orange County Cities Grapple With Vacation Rentals]

The second change the council voted on was to sign a contract with Deckard Technologies to identify unpermitted rentals and other units that aren’t paying bed tax to the city.

Deckard Technologies is a contracting service that focuses on identifying short-term rentals for local governments. The contract will cost the city roughly $11,000 annually. 

Using an AI-powered platform to identify illegal rentals, the third party will use data to locate where the city is losing money on short-term rentals. Deckard uses data and monitoring apps such as Airbnb, Vrbo and other platforms to identify the rentals not paying bed tax. 

Dana Point Principal Planner Jonathan Ciampa spoke in support of the new contract with Deckard Technologies.

“It is a lot easier for us to identify the amount of activity (and) the amount of TOT (bed tax) that should be generated, and then compare that to what we are actually receiving,” he said at the meeting.

Collecting the proper amount of Transient Occupancy Tax – bed tax – is of high concern for the city, yet an imperfect system, city officials said. 

“The issue is (booking sites) collect the TOT for bookings on their platforms, and they basically just give the city a check,” Sea Shelton, director of administration services, said. 

“There is no way for us to tie TOT collection with an actual property,” Shelton said. “So, if people aren’t paying, we won’t be able to identify the people who are not paying.”

Other Orange County cities have grappled with similar neighborhood disturbance issues, resulting in bans and restrictions on short-term rentals.

As early as 2021, Orange County cities like Costa Mesa, Garden Grove and Irvine voted to outright ban vacation rentals within their city. Stanton and Santa Ana followed three years later as a result of prolonged noise complaints, parking issues and with hopes to help aid the California-wide housing crisis.

[Read: Stanton Becomes the Latest Orange County City to Ban Airbnbs]

However, complete bans have not been the only course of action as Newport Beach, Fullerton and Orange increased permit regulations and requirements and lowered rental caps.

[Read: Santa Ana Bans Short Term Rentals]

Moving forward in Dana Point, the city council will receive annual short-term rental reports since permit approvals will no longer appear in front of the council. The first report is set for February 2026.