The debate around short-term rental (STR) properties in Arizona has become polarized – a zero sum game. If a local leader calls for regulation, industry advocates will falsely claim that sensible legislation will doom the industry.
It doesn’t have to be that way. There are many examples of finding balance – where short-term rentals are popular, profitable and thoughtfully regulated – and where common sense replaces vitriolic discussions and partisan attacks.
Balance does exist.
I have a unique perspective on this issue. I used to be the city manager of Sedona – a city that’s had its fair share of challenges with STRs – and am now the city manager for Palm Springs, California, a city that has created a productive and balanced relationship with STRs. I also own a property where I host short-term renters.
Palm Springs took action to reform the STR industry for the same reasons people in Arizona are asking for change. There were excessive parties and the ensuing noise complaints, parking issues, and safety concerns – the whole gamut of issues that plague an unregulated industry.
And so, our City Council, working with staff, decided to treat STRs like the alternative use that they are. These are not residential properties. People are renting these houses for vacations – and so they act like they’re on vacation, not like your typical neighbor.
The approach Palm Springs took has resulted in a significant reduction in problem properties, fewer complaints from neighbors, continued profitability for hosts, and continued demand by visitors. It’s a win all around.
These are local solutions to local problems, and that’s key. No two communities are the same – each has a unique character and unique challenges to overcome. Here is what worked for us:
An owner is limited to holding one STR permit. There are also limits on the number of rentals per year and the number of occupants per property. All STRs must register and be granted a certificate – and all property advertising has to include the registration number. This allows us to ensure compliance and, if an owner has repeated issues, allows us to revoke the certificate, suspending or delisting the property.
We also require that STRs contribute to our tourism industry by collecting our Transient Occupancy Tax. This funds marketing activities that draw more people to our city, which benefits our hosts and other local businesses.
Hosts, or their designated agent, must also meet with each renter and give them a copy of our “Good Neighbor” brochure that outlines other rules we have in place regarding commonsense things, like parking regulations and noise violations. All STR hosts pay annual permit fees to cover the cost of enforcement. Progressive fines and suspensions help to ensure that bad actors are held accountable and enable good actors to thrive.
We have very high compliance from our hosts and have significantly reduced the burden on our police in terms of responding to complaints. Since 2018 when Palm Springs voters agreed to continue allowing STRs under reasonable regulation, permitted properties have increased almost 12% while total citations have declined more than 40%. The industry now has a self-interest in policing themselves, and they are onboard and active participants in helping us achieve a productive working relationship and balance in our community.
Scenarios where everyone wins are possible. Hopefully, Arizona can find a path forward to a balance where cities, towns, neighbors, hosts and the STR industry wins.
Justin Clifton is city manager of Palm Springs, California, and former city manager or Sedona.