At least 200 homes in the Anthem-New River area and more than 7,200 homes Phoenix-wide could be affected by new short-term rental rules that the Phoenix City Council will consider later this month.
Last week, city administration released its proposed new rules and asked the council to schedule a hearing on them for Sept. 20.
While a council subcommittee initially approved some new regulations for landlords last June, it also directed staff to consider requiring landlords to conduct background checks on their clients.
The new regulations come as municipalities across Arizona prepare to do battle with the state Legislature next year for more control over short-term rentals.
Whereas the legislature then the government. Doug Ducey stripped municipalities of any control over short-term rentals, leading to increased complaints about rowdy and sometimes violent behavior by renters, convincing lawmakers to return some control to cities and towns.
Last year, the Legislature allowed them to go through the permitting process and impose fines of up to $1,000 a month for failure to register.
The 2022 law also allowed municipalities to impose some fees for administrative costs and enact some other regulations.
What the Phoenix administration calls a “very limited permitting/licensing process” is largely intended to help municipalities “collect better data regarding short-term rentals with minimal modifications to the ability to regulate these types of uses,” the council report said.
The proposed regulations would require the owner to pay a $250 application fee for a one-year permit, obtain liability insurance of at least $500,000, and obtain a transaction franchise tax license from the city.
Failure to obtain a permit will result in a sliding series of fines that can reach $3,500.
Owners would also have to notify their neighbors of their intention to operate a property as a short-term rental and provide the city with emergency contact information for someone who can be on scene within 30 minutes of a call from fire, police or code enforcement personnel.
The regulations also tighten criminal background check procedures.
On the one hand, owners must prove that they are not registered sex offenders and have no convictions within the past five years for any felony involving death, injury, or use of a deadly weapon.
But landlords will also be required to conduct a sex offender background check on tenants.
The proposed background check is considerably less comprehensive than what Council Members Debra Stark and Laura Pastor told staff they wanted to see.
During a June 21 hearing on the department’s initial proposed regulations, Pastor said a short-term rental in her neighborhood hosted a party where a teenager was shot and the location was never listed for short-term rentals.
“There are a lot of incidents that happen within these troubled neighborhoods — and they’re not even troubled neighborhoods, just within the neighborhoods, the wealthy neighborhoods, the historic neighborhoods, and every other neighborhood,” she said, adding:
“We have to deal with them and be proactive in protecting our city,” she added.
City staff responded that it would be necessary to hire additional staff to verify basic information.
The proposed rules would also prohibit rental properties for parties where admission is charged, alcohol is served and no guests stay the night.
Scottsdale is home to so many short-term rentals that have generated neighborhood complaints that it has created a five-member police department task force dedicated exclusively to monitoring those properties and answering calls about them.
Scottsdale Mayor David Ortega is also asking the Arizona League of Cities and Towns to lobby the Legislature for more local control of short-term rentals.
He wants to set a cap on the total number of short-term rentals that can exist in a municipality, density limits in specific areas, and a minimum distance between those properties.
“Each proposal is designed to restore the quality of life Scottsdale neighborhoods enjoyed before the Legislature preempted the city’s previous ban on short-term rentals,” Ortega said.
“Scottsdale neighborhoods have been destroyed by short-term rentals, which are businesses in residential areas. Our residents demand peace and quiet, away from late-night disturbances and party harassment. “We want our neighborhoods back.”
The new Phoenix rules are being proposed at a time when the metro’s leading housing market analyst says some parts of the Valley have become so saturated with short-term rentals that owners are turning to traditional long-term rentals instead.
Although city staff told a council subcommittee in June that Phoenix is home to 3,000 short-term rentals, airdna.com — which tracks Airbnb and Vrbo properties for the industry — lists more than double that number in the city.
Cromford’s report last month said: “The short-term rental market appears to have peaked in a number of locations that are in oversupply. This is leading to ridiculous prophecies by a few deranged property experts that a massive flood of former short-term rental homes will Hits the market in the near future.
“So many owners have joined the Airbnb pool that there are sometimes far more short-term rental properties than there are people wanting to rent them. This means lower occupancy and price competition, which makes short-term rental ownership much less attractive.” than it was two years ago.
“Over the past two years, average occupancy has dropped from 60% to 56%. … Some owners are considering switching to long-term rentals instead. The theoretical advantages are increased occupancy and peace of mind, but the main disadvantage is the relatively low overall income compared to expectations.” Original owner.
In August, the average occupancy at short-term rentals in Phoenix was 53% and the average daily rate was $192, AirDNA said. Both are below the 2023 high, set in February, when occupancy averaged 83% and the average daily rate hit $285, according to airDNA.com.
Some affordable housing advocates have blamed the proliferation of short-term rentals for exacerbating the Valley’s severe affordable housing shortage, citing a low inventory of homes for sale.
Business communities in some Arizona vacation hot spots — particularly Sedona — have complained that employees can’t find affordable apartments or homes near their jobs because there are too many short-term rentals.
In the report to the City Council, Deputy City Manager Alan Stevenson said the city would be required under the proposed regulations to act on a short-term rental owner permit application within seven days, regardless of the outcome.
This permit can be revoked for one year if the owner is found guilty of three minor provisions or one major provision of the regulations governing its use.
The proposed measure states that a “verified violation” includes only actions prohibited by “any applicable law or ordinance relating to the use of the property for short-term rental purposes.”
As for notifying neighbors that the property will be used for short-term rentals, the proposed regulation defines “neighbors” in an apartment building as all units on the same floor as the unit to be rented.
For homes, notice must only be given to homeowners located adjacent to the rental property and “diagonally across the street.”
The regulations also prohibit a long list of activities, such as manufacturing, that are prohibited in areas with residential areas. All applications for a short-term rental permit must also provide “proof of legal presence in the United States.”
