The city of Sedona is launching a program where the city will pay short-term rental property owners from a fund of up to $240,000 to “convert” short-term rentals to long-term rentals for residents, and giving those owners incentives to keep the rentals on the market for at least two years.

If it sounds like a bribe or a ransom payment, well, it is.

This type of structure is ripe for abuse but also incen­tivizes the wrong type of property owner — those who converted their homes into short-term rentals after the passage of Senate Bill 1350 in 2016 and those outsiders who bought properties in Sedona explicitly to make gobs of money by stripping our neighborhoods of long-term rentals, evicting residents, converting properties in residential neighborhoods into hotel-like cash cows from which they profited month after month, year after year.

Now with the market beginning to drop, and short-term rental prices seemingly on the verge of collapse — with some rentals charging half what they did three years ago despite the cost of inflation — the city of Sedona is incentivizing these owners to convert their properties back into long-term rentals, which many might do anyway based solely on the flailing market.

After profiting during the tourism boom from 2018 to 2021, they are double-dipping and now profiting off taxpayer dollars.

Meanwhile those community-minded property owners who eschewed the profit margin of short-term rentals and decided they would rather have long-term tenants — retail and service workers, seniors and working families — and wanted to them offer lower rents are left out in the cold. Now they’re looking at their profit-driven neighbors, wondering if they did the right thing in the first place compared to the out-of-town short-term rental investors swimming in cash.

Now they have no incentive to maintain long-term rentals should the economy recover and short-term rentals again become so immensely profitable: Make money in the churn and wait for the next city of $EDONA bailout. These homeowners may be the next group to convert their properties into short-term rentals and narrow the market even further because, why not? That’s where the money is.

It would make far more sense for the city to reward homeowners who might be considering turning their long-term rentals into short-term rentals with a similar program so they are incentivized, rather than the reverse — i.e., the property owners moved to town in the last few years explicitly to turn their new properties into short-term rentals, denuding residential neighbor­hoods of homes in place of de facto hotels.

Better yet, it would make sense for the city to offer rent subsidies directly to renters themselves so workers, seniors and working families in our community can find places to live on their own and reward good landlords directly for offering long-term rentals rather than hoping a one-year bribe or out-of-town corporate investors pays off in the long run.

And if renters choose to reward the owner of a former short-term rental with their subsidy, well, huzzah.

It’s insane to the city to cast renters into a laissez-faire housing market while offering a safety net to the petite bourgeoisie profit-mongers — feeding the wolves while the sheep starve. But this council doesn’t think about solutions to systemic problems, just about the symptoms, then throws cash at problems but leaving the crumbling skeletons to rot beneath.

Let’s be clear — short-term rentals are not housing options, they are risky hotel investments and should face the same reward-loss calculation as any invest­ment. They should not be “all reward.” If these risky investment properties are no longer profitable, can’t pay off loans and go into foreclosure, that’s the market speaking. The city should instead consider purchasing them and turning these ex-short-term rentals into long term-rentals managed by a public-private partner­ships or nonprofit trusts explicitly for the purposes of clawing back our long-term rental housing.

The other downside is that this plan is being imple­mented just as the market is trending south, as we enter a recession topped off with heavy inflation. That means the results of this plan in the next year will thus be disproportionate and appear far more successful than it really would be if the housing market was stable and prices static.

We sincerely hope City Council — including its three newest members — come up with better options. The city has so much money right now, while families are hurting, that it is ridiculous to reward those who caused so much of the struggle.

Christopher Fox Graham

Managing Editor