TO: Mayor Collins and Town Council Members
FROM: Kevin Burke, Town Manager
DATE: September 22, 2016
DEPARTMENT: Town Manager
Staff Contact Kevin Burke, 480-348-3690
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AGENDA TITLE:
Title
Quality of Life - Short Term Vacation Rentals
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Council Goals or Other Policies / Statutory Requirements:
Quality of Life - Maintain and improve the Paradise Valley quality of life.
RECOMMENDATION:
Receive information regarding actions to manage the negative impacts of short term vacation rentals in Paradise Valley.
SUMMARY STATEMENT:
The rise of short term vacation rentals through online listing agencies such as Airbnb, VRBO, Home Away, and Flip Key are changing land use in traditionally owner occupied neighborhoods of Paradise Valley. The Town Council identified this trend as a concern to the Quality of Life of PV residents. Vice Mayor David Sherf, who brought this issue to the attention of Council, agreed to serve as the Council lead on the topic. Further leadership has been provided by Councilmembers Bien Wilner and Stanton with staff support.
The approach to this issue has evolved over the year as the Town learned more about the practice, the applicability of Town codes, and most importantly the change in the regulatory environment from the State. Senate Bill 1350 effective August 6, 2016, pre-empted Arizona cities and towns from many regulatory actions on this practice. Within this framework, this study session will review the three prong approach that staff is taking to ensure the quality of life is protected in PV.
First, is the issue of “party houses.” With the advent of this practice, the Town saw a greater proliferation of residences being rented for the purpose of hosting an event. That event could be a wedding, a golf outing, a fraternity/sorority party, or a fund raising event hosted by someone other than the owner of the property. Moreover, it could occur far more frequently because the property sees a different renter each week. Due to some heavy lobbying by Paradise Valley staff, SB1350 was amended to allow the regulation of short term rentals for events. Further, with the help of some neighbors who were experiencing a particularly problematic property, staff developed a “Party House Protocol” (attached). This document serves as a guideline for police, code enforcement, and the prosecutor to address short term rental properties hosting events.
Second, short term rentals are a business activity; more specifically, a home occupation under the Town code. As such, they need to be licensed and collecting sales tax. The Town is responsible for business licensing while the State is responsible for issuing sales tax (or Transaction Privilege Tax (TPT)) licenses. The challenge lay in identifying these properties within Paradise Valley such that the Town could inform the owners of these requirements. The Town published an article in its Town Reporter sent to each household alerting property owners of this requirement. The result was two property owners who acquired business licenses. Through attendance at a national conference held in Phoenix, staff identified a firm that provided identification services-Host Compliance. Host Compliance identified 78 unique properties in Paradise Valley listed across multiple web sites. Understanding that each of these properties have multiple rooms, this is the equivalent of another resort in the Town of PV, but one that is not collecting sales tax. A work group has developed a mailing to send to each of these property owners (see attached). In that mailing, is the information regarding licensing, but also a reminder that all vehicles associated with a home occupation, such as a short term rental, must park all vehicles on property. This makes events by renters more difficult. Further, renters must follow the same noise ordinance and trash regulations as all other residential properties in Paradise Valley.
The third approach to mitigating nuisance impacts of short term rentals was to remind owners of some of the challenges of renting. First, the Town views this practice as a contractual relationship between the owner and the renter. Illegal activity on the property will be treated no different than a long term renter. If an arrest of the occupant vacates the premise, no additional notification is made to the owner. Insurance, fire protection and septic capabilities are changes that property owners who rent should be familiar with. These points are included in the mailing.
Again, the purpose of this study session is to provide information to Mayor and Council regarding work done on this topic. Vice Mayor Sherf will lead the presentation.
BUDGETARY IMPACT:
Host Compliance services cost $4,000. Mailings will cost approximately $100. Revenue impacts from greater compliance with collection of sales tax and payment of business licenses is not projected.
ATTACHMENT(S):
Party House Protocol
Letter & Materials to Short Term Rental Property Owners