City News

Short-term vacation rentals. It’s one of those topics that many Sedona residents have a strong opinion of one way or the other.

Prior to Jan. 1, Sedona was one of a handful of cities in Arizona where this practice was banned — even though it’s been going on here for years. But ever since Gov. Doug Ducey signed Senate Bill 1350 into law, it’s been legal in Sedona, aside from those neighborhoods where homeowners associations have made them illegal.

The Sedona City Council was updated on specific aspects of the law such as neighborhood impacts, taxes and businesses licenses. The impact short-term rentals have had on affordable workforce housing was briefly touched upon.

“One of the challenges we’re going to have for purposes of our discussion today is the lack of significant data to support any conclusions regarding any of the impacts that we’ve been talking about at the staff level,” City Attorney Robert Pickels said.

Prior to SB 1350, the city of Sedona Land Development Code prohibited the rental of any single-family dwelling in residential areas for less than 30 days, a staff report says. The purpose of the prohibition was to safeguard the peace, safety and general welfare of the residents of Sedona and their visitors and guests by eliminating noise, vandalism, overcrowding, neighborhood uncertainty, high occupant turnover and diminution of neighborhood character.

In addition, any other secondary effects that are perceived to be associated with the short-term rental of single-family dwellings.

City Attorney Robert Pickels shared the following facts with council when it comes to the new law:

SB 1350 invalidated Sedona’s ordinance prohibiting short-term rentals.

Any new regulations must demonstrate a health, safety and welfare issue and must be consistent with regulations applied to other housing types.

SB 1350 authorizes the city to require an emergency contact for a rental property, which could prove a valuable mechanism to track short-term rental activity.

The city currently requires a business license as a means to collect emergency contact information. However, the Goldwater Institute, a conservative libertarian public policy think tank, appears ready to challenge this practice, claiming that it is a regulation not applied to other housing types.

It still remains unclear if rental activity will proliferate or whether the activity will cause negative impacts greater than those experienced with other residential uses.

SB 1350 provides for collection of sales tax.

It is still unclear how the state will enforce sales tax collection.

“The tenor is that we’re still looking for a way to fight this [SB 1350] and I hope that’s not the case,” Councilman Jon Thompson said. “I don’t think it was a good thing that it happened — I think it was a mistake. But now that we have this law, and we’ve had months to look at it, it doesn’t appear things have completely blown up. We don’t have hotels going out of business because people are staying in private residences. It sounds like we’re have a vendetta to try and go out and stop it.”

To that, Pickels said, “That is absolutely not our intention.”

Thompson said he didn’t feel that was the case but wanted to clarify that fact. And, he said it’s important to be aware of the concerns staff and some residents have in terms of this new law.

In September, the Sedona Community Development Department sent an informational letter to 6,564 residential properties within the city limits regarding vacation rentals and what the current rules and regulations are pertaining to takes and licensing.

As a result, the city received several hundred calls pertaining to licensing, transaction privilege tax, sales tax and the need for businesses licenses.

Since the first of the year, the city has issued 146 business licenses for short-term rentals. However, according to Harmari, a company that specializes in identifying and monitoring vacation rental properties, as of Oct. 10 Sedona had approximately 900 listings for properties advertised on AirBnB, VRBO, Flipkey and Craigslist.

Based on the 900 estimated listings, that would mean 14 percent of residences within Sedona are short-term rentals. However, staff pointed out that it’s difficult to get a specific number since on those websites, the Village of Oak Creek and Oak Creek Canyon are listed under “Sedona,” despite not being in the city. And, many renters advertise on multiple websites, while others rent through third-party agencies or simply advertise on their own.

All but one of those who spoke at the council meeting were those who own short-term rentals. Some said they have been doing it here for years but Councilman Scott Jablow pointed out that they were doing so illegally until this year per city code. They said they have had little to no trouble on terms of neighbors complaining or police-related calls.

One woman said she feels short-term rentals benefit other businesses since they provide their guests with brochures for local tours, while another said she has helped the local economy through improvements to her rental home and paying for cleaning services.

Steve Segner, president of the Sedona Lodging Council, sees things differently. He feels there needs to be a more even playing field between hotels and short-term rentals when it comes to zoning, audits, inspections and taxes.

“Why should hotels be put to a different standard than the people who have rooms already?” he asked. “It’s unfair.”
He added, “If I am collecting sales tax and I’m doing everything the state asks, I want everybody else to do the exact same thing.”


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