A table from a draft version of an Analysis of Housing Availability and Affordability in Arizona prepared for the Arizona State Legislature last year shows the growth of short-term rentals in Arizona over in the past three years.

Feb. 1 was the deadline for all short-term rentals in Mesa to obtain a license from the city or face fines under the terms of an ordinance adopted last year.

As of last week, the city has issued 237 short-term rental licenses with another 74 pending.

That translates to just 15% of short-term rentals that have registered based on the low end of city staff’s estimate of 2,000 to 3,000 short-term rentals in the city.

In December, industry data service AirDNA reported 1,692 short-term rentals in Mesa, a 69% increase since 2019.

Mesa Licensing and Revenue Administrator Tim Meyer said the city has hired two additional staff to administer the short-term rental license and other programs like the general business license, with plans to hire two more by April.

Meyers said that so far staff’s focus has been on educating short-term rental owners. 

“We’ve found that the STR (short-term rental) people have been really cooperative with us,” he said. “Most of them that we contact have been really, I think, sincere, just (saying) ‘I didn’t know … I thought this is all I had to do.’”

“There’s been great compliance once we’ve asked them once to do what they need to do,” Meyer said.

Those tasks include notifying neighbors within 200 feet of a short-term rental’s property line that the home is being used as a short-term rental, or if in multifamily housing, all residents on the same floor.

Susan Edwards, president of Arizona Neighborhood Alliance, a group that advocates for greater regulation of short-term rentals, took a dimmer view of rental owners’ slow start in municipalities that have instituted licensing programs after a change in state law last year.

“There’s so many scofflaws you can’t keep track of them,” Edwards said. 

Edwards said cities and counties in Arizona have a difficult time identifying the short-term rentals in their jurisdictions because of language in the 2016 state law, SB 1350, that originally prohibited communities from banning short-term rentals.

The law states that online lodging marketplaces like Airbnb and VRBO must collect and remit taxes to jurisdictions, but they “shall not be required to list or identify any individual online lodging operator on any return.”

Communities like Mesa receive taxes from short-term rentals on the marketplaces in a lump sum without information on which properties generated the revenue.

Smith is pushing for a change to the prohibition on collecting property addresses along with taxes at the state Legislature. She said a bill to change the language was introduced but hasn’t gotten a hearing.

Though the city does not receive data from rental platforms, Meyers said that the licensing office is proactively seeking out unlicensed short-term rentals in Mesa.

Staff are “doing their research with VRBO and Airbnb, and then just checking things like Craigslist, Facebook, all that kind of stuff, and trying to find people that are renting and then just contacting them and educating them,” Meyer said.

They are also getting tips from the community.

“There’s been quite a few different neighbors that have said, ‘I know this person’s doing this, can we check on it?’ So we’ve been having some help in the neighborhoods as well,” Meyer continued.

The city can fine short-rental owners for each month they fail to register, starting with $250 the first month and escalating each month up to $900 per month after four months.

Meyer said the city has not begun issuing fines to noncompliant short-term rental owners, but that could change.

“We’re keeping management up-to-date pretty much on a weekly basis, and at some point in time, the upper management will decide when we’re going to get started imposing the penalties,” he said.

“Obviously, there are some people that would like to see a start to imposing those things (fines), but right now, we’re just not in the mode to do that,” Meyer added. “We really want to just get them educated.”

The state law granting cities the ability to license short-term rentals gives Mesa more leverage to enforce rules designed to limit nuisances or dangerous activity from short-term rentals in residential areas.

But under the law, Mesa can only deny a short-term rental license for narrow reasons: Failure to provide application information, having a suspended license for the property, providing false information, or if the owner or designee is a convicted sex offender or convicted of certain felonies in the last five years.

If a licensee racks up three violations within a 12-month period, the city can suspend the license for 12 months.

The city can issue a suspension immediately for certain serious offenses committed by the owner, including: a felony offense at or in the vicinity of the rental, serious physical injury or wrongful death at or related to the rental and knowingly renting the unit in violation of the prohibited uses.

Meyer said his office hasn’t issued licensed short-term rentals any fines for violating city code yet, and complaints about noise and other nuisances have been minimal.

“Most of it’s just been the parking (on the street) and that kind of stuff,” Meyer said. “But if they’re licensed, that’s something that they’re going to be able to do so long as they’re not blocking people’s driveways or doing ridiculous things that they shouldn’t be doing.”

Meyer believes the new license program will be a win-win for residents and short-term rental owners.

“I think the ordinance is really great for the neighbors, and I think it helps promote good short-term rental people, too,” he said. “We’ll see how it goes in another year or two and how everybody feels about it after that.”

Scottsdale has encountered a similarly slow response among more than 6,000 short-term rental owners for its registering program but has issued warnings and fines of hundreds of dollars to those who haven’t complied.

In addition, it is building a special four-office police squad that will be devoted exclusively to answering complaints about rowdy behavior and other violations at the homes themselves.

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