Opinion

Dickman: Short-term rental report is powerful warning against current practices

Posted 3/3/21

A nearly 40-page study publicly released on March 1 by well-known and highly respected Arizona economic and real estate analysis firm Elliott Pollack and Co. (“Pollack”) explains that …

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Opinion

Dickman: Short-term rental report is powerful warning against current practices

Posted

A nearly 40-page study publicly released on March 1 by well-known and highly respected Arizona economic and real estate analysis firm Elliott Pollack and Co. (“Pollack”) explains that Arizona’s state laws, which took away traditional local authority and zoning enforcement from local governments, is a recipe for disaster that is hurting our state economically and in a number of other key areas.

In my view, the problem stems from a bill (SB 1350) passed in 2016 that eliminated the ability of cities, towns or counties to regulate short-term rentals. What started was originally billed as “Mom & Pop home sharing” has morphed into an industry dominated by multiple investor-owned properties with no onsite management. Many of these are destroying the peace, safety and tranquility of residential neighborhoods.

Consistent with the Pollack report’s position, police records that I have reviewed show that STRs are 17 times more likely to cause a disturbance call to police than an actual resident. These short-term rentals are horrendous, especially if you happen to live near one, and no one wants to live next to an STR.

The problem is so bad, that in late December, over 33 Arizona mayors representing more than 4.5 million Arizona residents sent a letter to the CEOs of Airbnb and Expedia Group describing the many horrific problems that short term rentals are creating in their respective communities.

These problems cannot be addressed locally since local communities are not permitted to enforce local zoning laws.

Several competing bills are working through the Arizona Legislature to address the widely acknowledged detrimental effects of short-term rentals on Arizona neighborhoods. Local leaders are supporting HB 2481 (sponsored by Rep. John Kavanagh) — although sadly this bill is being actively opposed by the industry. The Kavanaugh bill is the only bill that reinstates some of the proven tools that had been taken away.

The problems with largely unregulated STRs in residential neighborhoods, including shootings and other criminal activities occurring in neighborhoods because of STRs, has been well-documented by the Independent and other media outlets. A video showing some of the issues is available here: www.neighborsnotnightmares.com.

Recently, a number of local residents sought an independent review of this matter, and commissioned the Pollack firm to study it and issue a report. That report has just been published: “The Negative Consequences of Short-Term Rentals — Arizona’s Recipe for Disaster.”

The Pollack report concludes that “direct, intentional consequences …will continue to affect local governments, the housing market, and residential neighborhoods until STR platforms are willing to negotiate in good faith to resolve these issues.” The Pollack report details a number of key findings and conclusions:

•Arizona’s prohibition on regulating of short-term rentals has clearly created a wide range of problems, particularly for communities with tourism economies, and for neighborhoods where residents live.

•The state’s preemption of local zoning usurps citizens’ and local communities’ rights to determine and preserve the character of the community in which they live.

•As a whole, the STR industry represents a failure to engage with regulators and abide by local ordinances and regulations.

•SB 1350 fails to address the proven value of traditional local oversight and enforcement.

•The net economic benefits of STRs that the industry touts are questionable and grossly overstated in STR studies. For example, data support that 98% of STR visitors would still have made a trip even if they couldn’t stay in an Airbnb.

•Airbnb’s NERA study overstates the economic impact of Airbnb by 96% to 98%.

•Short term rentals have reduced the available housing supply often impacting residents who depend on affordable housing.

•Nuisance complaints from residents about STRs, including noise, crime, parking and other disturbances are commonplace.

•STRs are unfairly leveraging an uneven playing field with lower costs compared to traditional hotels.

Many of the costs traditionally associated with building and running a hotel—on-site staff, security personnel, cleaning personnel, ADA facilities, fire safety systems, adequate parking buffering from residential areas, commercial property taxes— are either avoided entirely by non-owner occupied STRs or are externalized onto society at large by expecting neighbors of an STR to call local police forces when experiencing criminal activity noise or partying from an STR.

•There will be substantial job losses in the hotel industry due to STRs, jobs that will not be replaced by STRs.

•State and local jurisdictions may see hotel tax revenues they depend upon decline or be less reliable due to ineffective STR tax collection efforts.

•Property values will likely be negatively affected as STRs invade traditional neighborhoods.

The Town of Paradise Valley was founded in 1961 to create and preserve a low-density, residentially zoned community. Paradise Valley enjoys the highest property values in the state due to its low crime, and is home to many of the state’s executives, entrepreneurs, and notable citizens.

Since its founding by former Supreme Court Justice Sandra Day O’Connor and other prominent citizens, the town has relied on stringent local zoning laws and restricted commercial lodging uses to a handful of high-quality hotels and resorts which are regulated through zoning and other laws.

It now is experiencing unwanted commercial activities, crime and other serious and uncontrolled nuisances directly into residential neighborhoods.

SB1350’s zoning exemption for STRs has opened the door to unwanted commercial activities, crime and other nuisances directly attributable to STRs and changing the fundamental character of the town.

Similarly, Sedona has been significantly impacted by STRs. STRs that have reduced the supply of long-term rental units which has “torn at the fabric of the community.” The high school is down to 50 students — less than half of what is was six years ago. Little league baseball and football programs are no longer organized because young families are leaving the city.

Likewise, the report explains that in Page, STRs are limiting available housing for workers.

The Pollack report concludes that the net economic benefits of STRs are questionable and grossly overstated in STR studies. In fact, the report refutes a variety of the Airbnb and platform studies and details how these reports are misleading and inaccurate.

Each community across Arizona has different characteristics and may react differently to the introduction of STRs into their jurisdiction. The Pollack report reviewed the top 30 markets in the United States nationally.

STRs are explored and compared in New Orleans, San Diego, Nashville, and Austin to Arizona. The report concludes that while issues exist everywhere STRs do business, their impacts are more pronounced in Arizona, where state law disables local communities from using traditional measures such as zoning to prevent and deal with STR adverse consequences.

“These issues include many complex and controversial matters such as local control over land uses, private property rights and citizen expectations for safe, quiet and peaceful neighborhoods, building and safety requirements, tax collection, and equity in the treatment of hotel operators. The issue that stands out the most is each city’s attempt to protect residential neighborhoods from the intrusion on non-owner occupied STRs and multi-unit owners operating as miniature hotel chains.”

Please join local leaders and many other citizens in supporting reform to return Arizona’s laws on STRs back to sanity, as in just about every state in the union.

Let’s all agree to re-empower local communities to address equitably neighborhood problems with STRs. Please contact your state representative and senator and urge support for HB2481.

The Elliott D. Pollack report is available free to the public at the following link:
https://neighborsnotnightmares.com/wp-content/uploads/2021/03/STR-White-Paper-The-Negative-Consequences-of-Short-Term-Rentals-Arizonas-Recipe-for-Disaster.pdf

Editor’s Note: Mr. Dickman is a retired health care CEO and long-time resident of Arizona. He currently resides in Paradise Valley.

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