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ITEM 2
City Council Memorandum Government Relations & Transportation Policy Memo No.
Date:
March 20, 2023
To:
Mayor and Council
Thru:
Joshua H. Wright, City Manager
From:
Ryan Peters, Government Relations and Policy Manager
Subject:
Chapter 22 - Short-Term Rental Ordinance Update
Proposed Motion:
Move City Council tentatively adopt Ordinance No. 5048, amending the Code of the City of Chandler by amending Chapter 22 – Short-Term Rentals, providing for the repeal of conflicting ordinances; providing for severability; and providing for penalties.
Background:
In 2016, then-Governor Ducey signed a bill into law preempting cities and towns from regulating short-term rentals any differently than other similar residential properties. This law made it difficult for local governments to take enforcement actions against nuisance properties where frequent parties were taking place and the violators were different week to week. Recognizing this challenge, Governor Ducey signed House Bill 2672 into law in 2019. The City of Chandler subsequently adopted Ordinance No. 4939 in 2020, which added Chapter 22 to City Code to incorporate the new provisions authorized by state statute. This law and the corresponding code amendment required short-term rental property owners to register with the City, obtain a tax license from the Arizona Department of Revenue, and created a direct link between the property owner and the activities that take place on the property when leased as a short-term rental.
Unfortunately, the law proved difficult to enforce and cumbersome to administer. In 2022, Governor Ducey signed SB 1168 into law, allowing local governments to require short-term rentals to obtain and maintain a local license. The bill also included provisions related to neighborhood notification, maintaining liability insurance, and emergency contact information. Each of these changes to the underlying short-term rental law were intended to provide local governments tools to hold “bad actors” responsible for their actions and those of their tenants. With this new state law in place, Chandler City Code no longer matches what is allowed by statute and needs to be updated.
In fall 2022, the League of Arizona Cities and Towns convened a working group to develop a model ordinance for each city to work from when crafting their respective ordinances. Cities across the state are in various stages of incorporating the model ordinance into their own codes to comply with state law. An internal working group was then established to adapt the model ordinance to update Chandler City Code. The working group included the City Manager’s Office, Law, Management Services, Neighborhood Resources, and Police departments.
The recommended code amendments were presented to the City Council Neighborhoods Subcommittee (Vice Mayor Orlando, Councilmember Harris, and Councilmember Poston) on February 9, 2023. The public was provided the opportunity to review and comment on the proposed ordinance through an online public comment form that was open from January 23 – February 6, 2023. 16 comments were received. Comments have been summarized and can be reviewed in the attached summary.
Discussion:
The proposed code amendment includes the following provisions:
• Requires short-term rentals (STRs) to obtain a license with the City;
• STR applications and renewal applications will be subject to a non-refundable application and annual license fee to be established at a later date by Council resolution;
• Owners/operators operating an STR without a license are subject to civil penalties, including a penalty of up to $1000 per month against the owner/operator or their designee if they fail to apply for a permit within 30 days of receiving a written notice of violation from the City.
• Prohibits STRs from nonresidential use and from being advertised for uses or occupancies that violate City Code or State Statute, and requires a notice to be placed inside an STR outlining prohibited uses;
• An emergency point of contact must be available within 60 minutes of a request by a police officer for emergency responses and within 24 hours for all non-emergency complaints relating to the STR;
• Must provide written neighbor notification to all surrounding residential properties adjacent to the STR before operating;
• The owner/operator or their designee must display the license number issued by the City and the transaction privilege tax number on each advertisement for an STR;
• Must display a name, phone number, and email address for an emergency point of contact in a conspicuous place near the primary entrance of the STR;
• City may initiate an administrative process to suspend an STR license for a period of up to 12 months should three violations occur within a 12-month period;
• Similar to other provisions of City Code, Chapter 22 will be enforced by voluntary compliance, civil citation, injunctive action, and possible restitution;
• Contains a delayed effective date of August 1, 2023, to allow for community notification and for the implementation of City processes and systems necessary to administer the new requirements.
Financial Implications:
This ordinance does not adopt a license fee for short-term rentals. However, Ariz. Rev. Stat. 9-500.39(5)(f) authorizes a $250 fee to cover the costs associated with issuing the license. If the Council adopts such a fee by future resolution, it is estimated that it could generate $25,000 annually to offset the cost of processing and issuing annual licenses.
Attachments
Ordinance 5048
Exhibit A to Ordinance 5048
Public Comment Summary
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