Short-Term "Vacation" Rentals – hot legislative topic across the country

The “Vacation Rentals” issue first came onto our local radar in Scottsdale this past February, when a petition was submitted to the Scottsdale City Council, requesting them to amend their current city ordinance regulating short-term rentals and allow for a less than 30-day rental period of residential housing. The current law in the City of Scottsdale states that homes may not be rented for a period of less than 30 days. City staff was requested to look into the matter and return to the Council with their findings.  As local advocates for the real estate industry, the Scottsdale Area Association of REALTORS® (SAAR) was contacted for their input on the issue as well.  Consequently, the matter was referred to our Government Affairs Committee for research and review.

At first glance, after reading through and hearing the petition that was presented, the position to take on the issue seemed to be pretty clean-cut in favor of support. However, after hearing presentations from all sides being impacted – including REALTORS® specializing in vacation rentals, city directors in charge of codes and code enforcement, and the Travel & Tourism Board – it quickly came to everyone’s attention that this case had a lot more facets to it than was originally perceived.

A few of the issues impacting short-term rentals in Scottsdale include:

  • Homeowner Rights to do with their private property as they wish, without over-regulation
    • Rental income, investment property purchases
  • Homeowner Rights to protect from devaluation of property values and perceived negative neighborhood character or livability changes due to:
    • Revolving door of unknown neighbors; having new tenants every week
    • Noise issues from parties held by short-term tenants; enforcement of noise complaints
    • Multiple homes within a neighborhood become “businesses” rather residences
      • Clarification needed on are they businesses? Or Residences?
      • If businesses, does this change zoning classifications?
  • Individual HOA regulations (CC&Rs) and enforcement
  • City Ordinance Enforcement and budgetary needs; violation reporting, processing, assessment, manpower to investigate, Transient Lodging Tax (known as the Bed Tax) and fine collection.
    • Not enough City Staff currently
    • Current system relies on violators to be reported to the city
    • Fines are assessed to the Tenant (out of state visitor), who leave town and never pay
    • If the ordinance is amended to allow for the shorter rental terms; how will the Bed Tax be collected? And how will the city monitor compliance?
  • Economic impact on the tourism, resort, hotel industry (Commercial Real Estate side)
    • Taking away customers that would have stayed at a hotel or resort otherwise
    • Offering services as a business, but not collecting or paying the same taxes as a business
  • AirBnBVRBO and other online vacation rental service providers not operating within compliance of city ordinances, and not informing their clients who are listing properties with them what the compliance requirements are for their city and/or state.

As you can see, this is a multi-faceted and complex issue. As part of our research efforts, SAAR also reached out to other real estate associations on the local, state and national levels.  Based on these discussions, we found Scottsdale to be amongst some of the first cities being impacted with this issue in our state.  The hosting of the Super Bowl, PGA Waste Management Open, and Barret Jackson Car Show events have helped to catapult us into the ‘limelight’ for short-term vacation rental issues. In 2015 alone, we have seen this issue gain more and more traction as it has exponentially escalated and begun impacting other townships and cities across the country.

At the request of the National Association of REALTORS® (NAR), the consultant firm of Robinson & Cole, LLP, prepared a white paper, “Residential Rentals | The Housing Market, Regulations, and Property Rights,” and published the report on October 14, 2015.  This is a 128-page, in-depth look into all aspects of the issues surrounding the ongoing “Vacation Rental” problem.

VIEW THE FULL REPORT

 

In the Greater Metropolitan Phoenix Area, there are currently over 800 listings posted for short-term “vacation” rental use by homeowners; in Scottsdale there are more than 325.  Any time one of the major tourist attraction events occurs, these numbers jump dramatically. Deciding how to regulate vacation rentals when “the cat is already out of the bag” is undoubtedly a complex issue.

In summary, the “Vacation Rental” issue is not one that will be resolved easily, and it is no surprise that it is an ongoing “hot topic” on the local legislative front.

We will continue to keep you informed as things further develop.

 

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