Unruly parties, housing shortages and police calls. Those are a few of the reasons why city leaders in places such as Scottsdale, Paradise Valley and Sedona are advocating for more control over short-term rentals.
When Gov. Doug Ducey signed a bill in 2016 that stripped municipalities’ power to regulate vacation rentals, the idea was to elevate “the sharing economy” concept in Arizona and make it easier for platforms such as Airbnb and Vrbo to operate.
It wasn’t long before cities started reporting different problems with short-term rentals, so the governor signed another bill in 2019 aimed at mitigating these problems, which required short-term rentals to register with the city or county and provide contact information for a person responsible for handling complaints.
It also allowed municipalities to issue regulations for vacation rentals related to noise, traffic control and public safety.
While the short-term rental industry has contributed to Arizona’s economy, bringing in more than $6 billion to the state last year, according to a study sponsored by Airbnb and the Expedia group, the issues with these properties haven’t gone away.
If anything, state lawmakers have introduced several bills in the past couple of years in failed efforts to change state law and cities worked on ways to get around constraints.
This legislative session alone, lawmakers have introduced 10 bills aimed at vacation rentals, including four that would strike the 2016 legislation and restore cities’ power, although they haven’t received a committee vote yet and are unlikely to pass.
How cities are addressing issues
Scottsdale passed new rules last year that include a $1,000 fine for property owners who don’t respond to emergencies at their short-term rentals if police are called.
Paradise Valley followed suit and adopted the same rule in January, along with other requirements for short-term rental owners such as:
Conduct background checks within 24 hours of booking on all guests staying overnight and make sure they aren’t registered sex offenders.
Share booking information with the city, such as booking dates and listings.
Meet with guests upon arrival and present them a copy of rules and regulations.
But city officials are still calling for more power to be restored to them at the state level so they can issue regulations that are specific to their communities.
In the affluent neighborhoods of the northeast Valley, where mansions sit on large lots, the issues with these rentals center on unruly parties and noise, which often lead to police calls.
In Sedona, although there have been nuisance reports, the main problem is how vacation rentals have impacted housing. Short-term rentals account for more than 13% of the town’s housing stock, which has contributed to housing shortages and workforce issues.
In Sedona, vacation rentals have mainly impacted housing. Those properties account for more than 13% of the town’s housing stock, which has contributed to housing shortage and workforce issues.
A 2021 study on short-term rentals in Arizona prepared by Elliott D. Pollack & Co. described Arizona as a “state with some of the most STR industry-friendly law,” which negatively impacts local governments, the housing market and residential neighborhoods.
Sedona leaders discussed adopting some of the same rules as Scottsdale and Paradise Valley this year but concluded the regulations wouldn’t solve their problems. Instead, the city hired lobbyist Paul Senseman to advocate for legislative change.
Senseman and the town are focused on HB 2711, a bill introduced by Rep. Brenda Barton, R-Payson, which would allow municipalities with fewer than 17,000 people to limit vacation rentals and regulate them in the same way as transient lodging.
“We are incredibly concerned that we’re going to continue to see these increases of short-term rentals. For example, from December to January of this year, we saw a 2.5% increase in short-term rentals, so we are seeing a steady increase,” Sedona Deputy City Manager Joanne Keene said. “So, how far can we go? We don’t want to be a community that’s 15, 20, 50% short-term rentals, and really, the way it’s set up in state statute right now, that could very well happen.”
The Scottsdale City Council has also called on lawmakers to act, asking them to pass bills that allow cities to impose permit requirements and re-establish their ability to manage short-term rentals differently than long-term rentals.
Paradise Valley Mayor Jerry Bien-Wilner told The Arizona Republic that having local control to respond to specific problems is important because each community is different and presents distinct challenges.
“We really want a return to balance, and we’d like to have the same rights for our community that communities across the country have, which is to recognize that short-term rentals exist and they’re not going away,” Bien-Wilner said. “But we also need to protect our citizens and neighborhoods from the adverse impacts of short-term rentals.”
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Lawmakers debate action
It’s unclear how far the bills introduced this session will go, but one proposal has gathered the support of big industry players such as Airbnb and Expedia as well as Arizona cities.
Senate Bill 1168 would allow the Arizona Department of Revenue to suspend a short-term rental owner’s tax license for a rental property — effectively putting it out of business — for a year if the rental has three violations in a 12-month period.
The legislation has passed the Senate and is now awaiting a House vote. Still, a similar bill discussed in the last session failed in a landslide 17-43 vote in the lower chamber.
Other bills being discussed in the House that would expand cities’ power to regulate vacation rentals have passed their committee votes, but a date for a full House vote hasn’t been set.
Tim Scarpino and Barry Goldwater Jr., who represent the Arizona Vacation Rental Association, said they would oppose allowing cities to issue licenses for short-term rentals as proposed by House Bill 2625 — a bill supported by Chandler, Phoenix, Tempe and six other municipalities.
Such measure would give cities “too much of a heavy hand” that could infringe on property rights and people’s ability “to do what they wish with their own private property,” Goldwater said.
Scarpino recognized some short-term rentals create problems in their neighborhoods, but he said that’s a small minority that ends up portraying all vacation rentals negatively.
“The city or the state could allocate more resources, whether it’s for the police officers or for a new type of compliance officer to make sure these homes are staying compliant … We generate enough tax revenue that could be allocated to police the ordinances that are already on the books,” Scarpino said.
Reach the reporter at email@example.com or at 480-267-4703. Follow her on Twitter @renataclo.
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AUTHOR: Renata Cló