SB 1350: Scottsdale Santa Fe residents strive to maintain community

Above are Santa Fe residents Jo-Ann DiQuattro, Lindsey Joseph and Mary Ryan who are calling attention to the growing short-term rental marketplace in local neighborhoods. (Independent Newsmedia/Arianna Grainey)

On Saturday, June 23 a collection of Scottsdale residents — folks hailing from every corner of the municipality — came together to share stories and solutions to what many say is an assault on local neighborhoods.

A group of residents came to Kneader’s Cafe in central Scottsdale to discuss the various impacts SB 1350 is having on their neighborhoods as both elected leaders Kathy Littlefield and David Smith listened, attendees say.

SB 1350, which was sponsored by then-Arizona Senate Majority Whip Debbie Lesko (R), went into effect in early 2017 and restricts local cities and towns from being able to regulate the use of vacation rentals or short-term rentals within municipal boundaries.

The city of Scottsdale 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.

The monument of sign of McCormick Ranch, which is one of the largest master-planned communities in Arizona. (Independent Newsmedia/Arianna Grainey)

Municipal leaders say the proposed legislation is meant to help fuel the idea of a “shared economy” championed by Arizona Gov. Doug Ducey — who has recently announced his bid for re-election — but the unintended consequences of allowing residential homes to act as boutique hotels is devastating the tranquility of local neighborhoods, residents say.

Scottsdale is no exception.

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. In November 2016 Scottsdale City Council 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.

Many in attendance of the June 23 community meeting are encouraging their respective HOA entities to consider new regulations — ones to be drafted and embedded within the existing codes, covenants and restrictions of the community — to regulate short-term rentals.

“There were just a lot of different people,” said Scottsdale resident Angela Ashley, who helped to organize the community meeting.

“The issue here is just like sober homes, there are no limitations, say, how many can be on your block. These homes are being advertised on AirBnB saying they can hold 20 people — it just goes and goes from Friday to Sunday every weekend.”

Ms. Ashley, who along with her Scottsdale neighbors pursued formal zoning regulations for local sober-living facilities, says the community meeting only offered more questions than answers.

“Are they paying their taxes? This is a business — they are making money,” she pointed out. “There were a lot of questions, but no answers. A lot of people don’t know this is happening, until they are told about it. That is the bottom line.”

The Santa Fe subdivision within McCormick Ranch is home to more than 100 homes. (Independent Newsmedia/Arianna Grainey)

An assault on quality of life?

Within McCormick Ranch, one of the state’s largest master-planned communities — a place with 45 neighborhoods housing nearly 15,000 people — three residents are fighting to keep portions of their community residential.

McCormick Ranch is at 9248 N. 94th St. in central Scottsdale

“I feel that we have many transient people coming into our community and the environment is changing because of this,” said Santa Fe resident Jo-Ann DiQuattro. “It is becoming less of a friendly neighborhood and more of a resort. These renters are not following rules, and are creating many issues. I moved here because of the community and we are slowly losing our community.”

For Lindsey Joseph, she believes not many are aware of the issue unless a makeshift resort emerges in a single-family residence.

“In our particular neighborhood, we are single-family patio homes,” she said. “We share common walls with each other. We have 125 homes total in our subdivision and just recently 12 of those are now listed as short-term rentals. The biggest problem we are having is we just don’t know who our neighbors are — it just like a hotel nowadays.”

Central Scottsdale is becoming a hot-bed for short-term rentals since the statewide adoption of SB 1350. (File photo)

Ms. Joseph says she lives in Scottsdale for many of the same reason vacationers seek a short-term rental in her neighborhood.

“Not one of us blames the vacationers, because they are here to have a good time, but this is not a hotel,” she said. “A lot of times, you will get three to five people who rent the home at once and that creates a lot more traffic and a lot more issues.”

Ms. Joseph contends short-term rentals ought to have the same regulations and scrutiny of a traditional hotel structure.

“A hotel, they inspect for these things,” she said of health standards and the pursuit of common peace. “We don’t blame them, it is not their fault. They are here to have a good time. It just creates more wear and tear on our equipment and our amenities.”

Ms. Joseph says she and her fellow neighbors are pursing an amendment to the established CC&Rs of both the Santa Fe I and II subdivisions.

“In order for a community to be able to trump what the Legislature has done is to have it stated in your governing documents that you do require a 30-day or more rental period,” she explained.

“The downside is we need 75 percent of our homeowners to agree.”

She points out the short-term rental owners are also McCormick Ranch homeowners, but Ms. Joseph contends it’s more of a commercial enterprise than a residence.

Mary Ryan agrees the frequency of short-term rentals is closer to a business model than an attempt at securing passive income.

“They came in, these investors, and their sole purpose is to run an AirBnB,” the Santa Fe resident said. “They are flying their drones over the neighborhoods and lying to neighbors who live here. They have really pitted neighbors against neighbors. I bought in here because it was small, safe and a quiet neighborhood.”

Ms. Ryan also speculates quality of life impacts may not be the only change local residents will experience.

“Our HOA fees might go up because we have a severe impact on the wear-and-tear of our equipment,” she said.

“Really, though it is about our neighborhood. I don’t even know where I am living anymore. They don’t follow our rules and their sole purpose is to make money. My husband and I will be leaving Scottsdale unless Scottsdale protects their neighborhoods.”

Scottsdale Councilwoman Kathy Littlefield says there is not much City Hall can do about the proliferation of short-term rentals within Scottsdale city limits. (Independent Newsmedia/Arianna Grainey)

‘Our hands are tied’

Ms. Littlefield says the stories she heard on June 24 are echoed not just in Scottsdale, but everywhere.

“As I listened to people, the comments that they were making are everywhere,” she explained. “The HOAs are hesitant to step in or do anything because they don’t think they have jurisdiction.”

Ms. Littlefield also points out state law supersedes municipal regulation.

“Our hands are tied a little bit because we have to abide by state law,” she said pointing out a registry of sorts could emerge at City Hall, 3939 N. Drinkwater Blvd. “At the very least, we have to at least got to find out where these places are. It is going to be very tricky and very different for the residents to find a solution they will be happy with.”

Ms. Littlefield says the idea a vacation rental is one for a full-time resident on reprieve is not the case since adoption of SB 1350.

“These things are no longer a little old lady who is renting out a guest room to supplement income, or people going off on vacations — these are commercial ventures,” she said.

David Smith

“They buy these homes for commercial reasons and they are expanding faster than I ever thought they could. It’s like our residential areas are no longer residential, they are now a commercial and residential mix. People who bought in residential zoning are finding that the protections that were there have been eroded away.”

Mr. Smith says the effects of SB 1350 may have been unintentional but they have emerged.

“In theory, the legislative intent was to insure uniformity of treatment and efficiency of tax collections,” he explained. “While it may have done that, the social and economic effects are especially profound on a community like Scottsdale.”

Mr. Smith outlines two reasons the legislation has created such a dramatic effect:

•First, homeowners in our community generally enjoy what we call a “Scottsdale premium,” meaning their home values reflect our cachet of lifestyle, demographics, culture and amenities. To the extent neighborhoods convert to short-term rental properties, many of these community values erode. Neighborhoods lose their cohesive identity. Long-term property value premiums will evaporate. Even when tenant problems arise, cities do not have the resources to regulate such a fragmented industry, except on an exception basis.

• Second, as a community whose major industry is tourism, we have to be concerned when these new “tourism properties” are given an unfair advantage versus our traditional hotel and resort tourism properties. If differences in health and safety codes, differences in enforcement, differences in licensing, etc. are allowed to create a double-standard, short-term rental properties will enjoy an unfair competitive advantage.

Mr. Smith says unless a legislative solution is found at the state level, Scottsdale residents ought to look to local control through their HOA entities.

“The only advice I can give to affected homeowners — assuming they cannot affiliate in an HOA and impose their own regulations — is to be relentless in reporting infractions,” he said. “And, unite with other affected individuals (and even hotels) to strengthen their voice of demand for change.”

Northeast Valley Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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