The city of Scottsdale is aligning with new provisions set forth by Senate Bill 1350 allowing short-term rentals within city limits.
SB 1350, sponsored by Arizona Senate Majority Whip Debbie Lesko (R), goes into effect at the end of calendar year 2016 and restricts local cities and towns from being able to regulate or restrict the use of vacation rentals or short-term rentals within municipal boundaries.
Scottsdale City Council Monday, Nov. 15 unanimously approved myriad changes to the existing zoning code to deregulate short-term vacation rentals within city limits.
However, established homeowners associations are immune to the power of SB 1350 as Scottsdale officials say if an HOA does not allow short-term rentals that rule supersedes state law in this matter.
The city of Scottsdale has had regulations prohibiting any rental of a home for fewer than 30 days since the late 1950s, which many say was an effort to protect the tourism industry — specifically hotel room rates and occupancy.
Municipal leaders say the proposed legislation is meant to help fuel the idea of a “shared economy” championed by Arizona Governor Doug Ducey, but the unintended consequences of allowing residential homes to act as boutique hotels could be devastating to local neighborhoods, they contend.
“This essentially prevents the city from prohibiting short-term rentals in residential zoning districts,” said Greg Bloemberg, Scottsdale senior planner, during the Nov. 14 public hearing.
“Building and fire codes are being reviewed as part of this effort but it is not included in this amendment. There is a potential for greater revenue in bed taxes if short-term rentals are reliably identified and properly licensed.”
City officials estimate there are more than 2,000 properties in Scottsdale that could be used for a short term rental under the guise of SB 1350.
“The state will take over administration of transaction privileged tax and collect transient bed taxes. I think the city of Scottsdale actually collects its own taxes but that will be changing. There is a possibility that bed/sales tax could exceed $1 million annually.”
Mr. Bloemberg estimates a third-party service to the tune of $50,000 a year could help monitor the potential vacation homes as they appear on popular travel sites.
An assault on neighborhoods?
Scottsdale resident James Haffernen spoke during the public hearing about experiences he has had with a next door short-term rental.
“I am here to ask you to continue to regulate short-term rentals under the public health and safety exception in state law to protect our neighborhoods,” he told city council explaining a situation he recently endured where next door tenants conducted “amazingly irresponsible actions.”
He says some of the things he was witnessed and endured would not be tolerated at any hotel or resort.
“The experience left me so shaken that I barely got any sleep that night,” he said noting loud behavior and trash and beer bottles strewn in his yard.
“Make no mistake about it this is a highly profitable, purely commercial enterprise being operated in a residential neighborhoods much to the detriment of legitimate residents of the neighborhood.”
Mr. Haffernen fears the issues he has experienced will bleed over into new Scottsdale neighborhoods.
“This is a battle our neighborhood faces with increasing frequency and this problem will undoubtedly spread to other neighborhoods,” he said.
Scottsdale Councilman Guy Phillips agrees.
“I call upon the League of Cities to put pressure back on the Arizona Legislature to repeal this law,” he said following Mr. Hafferen’s comments to council.
“This is a bad law, it is bad for the municipality and it is bad for neighbors. Nothing good is going to come from this, but this is a law and if we don’t follow the law they will withdraw funds, which is another over reach.”
Scottsdale Vice Mayor Kathy Littlefied echoed a similar sentiment.
“It’s not just a nuisance, but it’s dangerous for our neighborhoods,” she said during the public hearing. “I think the city needs to see what we can do to mitigate these dangers to our residents.”
Councilwoman Littlefield contends the issue will nothing but exacerbate as new rules go into effect next year.
“I think this is something we need to look at as a city and for our residents,” she said.
“This is going to get nothing but worse. We need to find a way to track them, know where they are, who they are and make sure that are paying taxes. The dangers of this kind of thing outweighs any kind reimbursement to the city.”
Scottsdale Councilman David Smith asked city staff to look to see if the new law will allow the city to create some kind of licensing requirement for prospective short-tern rental hosts.
“I’d like for you to look at the possibility of requiring a license,” he said at the public hearing. “If we could require such a license, we could also stipulate that if you have three violations with the police department your licenses is revoked — somehow get the penalty back onto the owner rather thane the occupant over the weekend.”
North Valley News Editor Terrance Thornton can be contacted at 623-445-2774 or at firstname.lastname@example.org