DANA POINT City Council members, acting to comply with a 4,0000-signature referendum by a residents’ group, rescinded their decision earlier this year to allow short term rentals in all areas of the city.

On Tuesday night, the council agreed to go back to the drawing board to determine how short term rentals can fit into the community, and placed a moratorium on new permits.

The action followed a successful grass roots effort by a group of residents who collected enough signatures on a referendum to overturn the council’s Sept. 6 decision that allowed short term rentals in all of the city’s neighborhoods.

It’s the second major victory by residents who have challenged City Council decisions this year. In June Measure H, an initiative to get voter approval on any development changes in the city’s Lantern District plan, bested a rival, city-approved measure.

Buck Hill, an 18-year resident told the City Council Tuesday that most people he and others approached to sign the petition were not aware short term rentals were allowed. He also said his experience collecting signatures for Measure H earlier this year helped him understand even more how little communication there is between city and residents.

“They had no clue and were totally in the dark,” Hill said. “Most people became upset. We think this will provide an opportunity for the subject to be studied and come up with a better solution.”

Hundreds of residents were outraged in September when the council voted to allow short term rentals – a decision that bucked the trend set in such nearby coastal cities as Laguna Beach and San Clemente.

The signatures for the referendum signatures were sent to the Orange County Registrar of Voters by Oct. 7 and all but 14 were confirmed. The referendum required the City Council to take up the issue again or put the referendum to a vote of the people. The council voted unanimously Tuesday to rescind its earlier decision and to come up with a solution that residents and the California Coastal Commission will approve.

There are 189 regulated short term rentals operating in the city now. They were allowed to operate in 2009 after city officials approved business licenses to oversee the vacation rentals. Those operating now will fall under those same rules.

“For the time being people can operate these rentals at their own risk,” said City Attorney Patrick Munoz. “But they have to understand that at some point the rules may change.”

Councilman Joe Muller reiterated that the Coastal Commission will not allow short term rentals to be banned in the city’s coastal zone and that the city will have to come up with a workable plan.

“We have an opportunity now to step back and understand we have an issue with the current ordinance,” he said. “It started seven years ago. Times have changed and we need to address this change. We need to place a moratorium on this until we have it solved.”

The council in September considered whether a 2013 ordinance that regulated the 189 permitted short term rentals would continue or if the city would have to begin the whole process anew. Before that rentals operated as part of a business license designed specifically for that purpose.

The City Council voted to continue with the 2013 ordinance, which regulated how properties receive permits, where they can be located, and restricts the number of people in a unit. It requires that parking be provided and vehicles cannot exceed more than two per property. Loud parties and special events such as weddings are not permitted.

In approving the ordinance in September, the City Council agreed to modifications by the Coastal Commission that would give them final say over short-term rentals in the coastal zone. Council members Richard Viczorek and Joseph Muller opposed the ordinance, saying it weakened local control.

Residents gathering signatures for the petition said there have been a significant number of complaints about short term rentals throughout the city that were not mentioned in earlier staff reports to the council.

Resident Toni Nelson told the City Council that the Orange County Sheriff’s Department received at least 350 calls between Jan. 1, 2014 and Oct. 5, 2016 regarding issues at permitted short term rentals.

“The bottom line is that the council did not have accurate facts,” she said. “We can do better. The residents of Dana Point want to have a say to what extent short term rentals will be allowed in their neighborhoods.”

Contact the writer: 714-796-2254 or eritchie@scng.com or on Twitter:@lagunaini