Scottsdale lands millions from short-term rentals, seeks changes

By Melissa Rosequist
Twitter: @mrosequist_

Scottsdale City Council has reportedly sent a unified letter to the Arizona House of Representatives leader seeking changes to short-term rentals, as the municipality strengthens its regulations on the 4,000 vacation homes in city bounds.

The move comes as new reporting done by Scottsdale illustrates short-term rentals are bringing in hundreds of thousands of dollars in tax money per month for the city — recording a high of $1.2 million in tax revenues last March.

A Nov. 9 letter addressed to House Speaker Rusty Bowers asks for “reasonable and meaningful changes in state law” that would allow Scottsdale and other municipalities to protect neighborhoods.

The letter comes after Scottsdale formed a short-term rental working group last spring. The group, which included Councilors Linda Milhaven and Betty Janik, residents and hotel and tourism representatives, identified a number of ongoing efforts to better regulate short-term rentals in Scottsdale.

Additionally, the city produce a quarterly report on short-term rentals. The first iteration of which gives the public a peak behind how many short-term rentals are in Scottsdale neighborhoods and how popular they are.

Scottsdale is following in the steps of the Town of Paradise Valley, which has been steadfastly attempting to do everything in its power to minimize impacts from irresponsible short-term rental properties. Scottsdale and Paradise Valley officials have been open about the fact that municipalities are working together on this issue.

“Residents have consistently and repeatedly asked the city for help in mitigating the adverse impacts of short-term rentals, resulting in more than 1,800 calls for service to the Scottsdale Police Department,” Scottsdale City Council’s letter to Bowers states.

“The destructive experiences in our neighborhoods are shared by many across the state of Arizona and the effects have been so detrimental that some homeowners have moved out of their homes.”

In total, officials say 4,000 homes are identified as short-term rentals in Scottsdale.

Further, a city report shows of calls for service, there have been 167 notices of violation issued.

Scottsdale says its group was formed to work within the current law to improve monitoring and enforcement of regulations, “with the goal being to ensure that Scottsdale is doing everything it can” to manage impacts from the vacation homes.

The city outlines five statutory changes for Bowers to consider, which Scottsdale officials believe would have the biggest positive impact:

• Allow cities the ability to impose reasonable licensing or permitting requirements;
• Reestablish ability of cities to manage short-term rentals differently than long-term rentals;
• Create a mechanism that caps the total percentage of short-term rentals allowed and establishes method to provide better separation between rentals;
• Require platforms to provide a disclosure of state laws and local ordinances, and require acknowledgment by owners, hosts and renters;
• Require short-term rentals to follow public health and safety laws that apply to hotels.

A look behind STR data

Scottsdale City Council heard a Nov. 9 presentation on the short-term rental working group and efforts going forward. Part of those efforts is a quarterly report — the one available was created on Nov. 8.

The report shows nine initiatives were identified and adopted by council in July. Many initiatives are considered ongoing, such as “improve enforcement against properties who regularly violate the ordinance.”

According to the report, the city’s business services department is following up with STR properties seeking compliance on recording complaint and emergency contact information, and paying all applicable taxes. Further, under the guise of tracking short-term rental related calls, the police department will adopt a new records management system in the next 12-18 months, the report states.

One goal both Scottsdale and Paradise Valley have identified is having publicly listed contact information for short-term rental properties. In Scottsdale, this is available online on the city’s website.

The site includes a city map with all identified short-term rental properties. A user can click on any property and see address, phone number, property management contact, etc.

The city says 700 properties submitted complaint and emergency contact information in 2021.

Additionally, the city has contracted for the use of “Rentalscape” technology solution, which identifies short-term rental properties, maps and monitors their activity on a regular basis, along with keeping the city informed, the report states.

The Nov. 8 report includes a number of graphs and data related to short-term rental.

One graph shows that nuisance party police service fees assessed related to nuisance parties, including short-term rental properties, can exceed $10,000 per month.

In April 2021, the police department assessed $13,750 for nuisance parties.

The most recent data available, September, shows $2,575 assessed.

Another graph shows short-term rental code enforcement complaints, which garnered a high of 175 during June. According to the report, complaints are related to vacation or short-term rentals for failing to comply with applicable laws, or using the property for a “non-commercial” use.

Police calls for service on short-term rentals measures calls to locations verified to be operating as STRs. Between November 2019 through September 2021, there’s been no fewer than 38 calls for service to STRs per month.

A high of 112 calls were reported in both March and April of this year.

On the revenue end, March 2021 peaked at $1,229,058 for the city of Scottsdale. The graph, according to the city, captures tax revenues collected from short-term rental properties in Scottsdale including sales tax and occupancy tax.

The city’s report illustrates from January 2018 through September 2021, Scottsdale received at least $157,706 per month from short-term rentals.

Since the peak revenue in March, the tax remits have hovered between $700,000-$969,000, per month.