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Two Exceptions to Valley Cities Struggling to Regulate Short-Term Rentals

By July 6, 2023No Comments

By Sam Kmack | Arizona Republic

Most East Valley cities are still struggling or haven’t yet begun to regulate their short-term rental industries ahead of an expected influx of travelers for Independence Day, according to compliance data and policy information from seven of the region’s rental hotspots.

Short-term rentals are typically houses that guests rent for less than a month. They’ve long been the bane of some quiet Valley neighborhoods, where people have complained about rowdy guests disrupting nearby homes with loud parties and even criminal activity, such as a shooting that occurred at one of Tempe’s properties in May.

The industry took root in the Valley after Arizona lawmakers gutted local regulations in 2016. It undid long-standing policies in many cities that completely banned short-term rentals, caused the number of East Valley vacation homes to skyrocket, and spurred a fierce effort by cities and towns to regain regulatory control.

Local officials got their wish in September when a new state law allowed cities to implement short-term rental licensing requirements. It made it possible for local leaders to track the rentals, shut down disruptive properties, and force property owners to provide emergency contact information and respond to neighbor complaints immediately.

But most East Valley communities either haven’t taken advantage of their new power or have struggled to wield it, eight months after the law took effect.

Chandler and Gilbert — which have about 1,500 short-term rentals combined — don’t have a rule in effect. Of the five other communities that do have active requirements, only two have gotten a majority of their rental properties to comply. Here’s how their compliance rates stacked up as of June 1:

  • Paradise Valley: Staffers have achieved a near-perfect compliance rate of 97% among the town’s 130 short-term rentals. The town’s rule took effect in mid-November 2022, so it’s been about seven months.
  • Scottsdale: 81% of the city’s roughly 4,100 short-term rentals have been licensed. The permitting rule took effect on Jan. 8, or about six months ago.
  • Tempe: 37% of the estimated 1,400 short-term rentals in Tempe have been licensed. Tempe’s licensing deadline was three months ago.
  • Mesa: Less than a quarter of Mesa’s 1,700 short-term rental properties have been licensed. The city’s permitting rules have been in effect for four months.
  • Queen Creek: Only 8% of the town’s 150 short-term rentals are licensed. But the requirement has only been in place for about one month.

The dramatic disparity can be partially explained by different policy start dates for each community. But even when that’s factored in, the cities and towns with lower compliance rates are still trailing behind those with comparable populations:

  • Paradise Valley had achieved a 30% compliance rate within one month of launching its short-term rental licensing effort. Queen Creek had only achieved an 8% compliance rate after the same amount of time.
  • Scottsdale achieved a 40% compliance just one month after launching its ordinance, which is 27 percentage points higher than Mesa has achieved in four months. Scottsdale also hit the 40% mark in roughly a third of the time it has taken Tempe to achieve a similar rate.

“To actively license (properties), we send mailers and also make phone calls. But what we found is sometimes the (address) information is not accurate, so we’re getting return mail,” said Lisette Camacho, Tempe’s Financial Services director who has headed up the city’s short-term rental efforts.

She added that sometimes “we have the address but we may not have the owner or the emergency contact information, so we’re limited on the information that we have.”

Tempe’s issues identifying properties and contacting owners aren’t unique. Scottsdale and Paradise Valley both struggled on that front, while officials in Mesa said it’s been their biggest barrier to getting compliance.

“That’s certainly an issue that we’ve experienced as well, and precisely why we were not just relying on mailers, but we were doing a lot of different enforcement act efforts to do that,” said Scottsdale Assistant City Manager Brent Stockwell.

The reason why some communities have been able to overcome the problem while others have not is less clear, but interviews with officials across the East Valley suggest that it’s mainly a difference of political will, staffer know-how and a willingness to invest time in the efforts.

Historical differences have shaped current the landscape

Scottsdale and Paradise Valley have long been the most vocal opponents of short-term rentals in the East Valley. Both had banned the industry before 2016, led the charge on getting Arizona lawmakers to allow local licensing again, and implemented the new permitting rules months before any other community nearby.

That dogged resistance to the industry was driven by unique factors in both communities that made short-term rentals a major headache. They are among the wealthiest in Arizona and appeal to guests because they have luxury mansions near nightlife hotspots in Tempe, Scottsdale and Phoenix.

Residents in those communities’ upscale neighborhoods are also quick to take note of rare instances of criminality, which seemed to happen most often at rental properties. Examples of such incidents include vacationers burning down a mansion near the border of Scottsdale and Paradise Valley, as well as a shooting at an Airbnb in Scottsdale last September.

The rentals also proliferated to the point that they make up as much as a third of “vacant” homes in Scottsdale, earning them the ire of city officials who are already contending with the least affordable housing market in the Valley.

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