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Wed, Aug. 21

Vacation rentals in residential areas flout zoning laws - but benefit city

PRESCOTT - Every weekend for the past several months, Paul Nebel says he has had to deal with new neighbors.

After the house next door to him changed hands this past summer, Nebel says it has hosted a string of temporary vacationers - many of them bringing multiple vehicles, kids on scooters, and loud pick-up trucks.

The Hidden Valley Ranch home happens to be one of dozens of homes in Prescott listed on websites for private vacation rentals.

With the vacationers, Nebel said, comes disruption to the previously quiet neighborhood.

"It's certainly a change in the ambience of the neighborhood," he said. "In the summer, it could get kind of noisy."

Nebel's neighborhood is far from unique in Prescott and the surrounding area. Popular vacation websites Airbnb and VRBO (Vacation Rentals by Owner) list about 170 Prescott-area rentals between the two.

The City of Prescott's sales tax division estimates that about 80 vacation homes in Prescott currently have sales tax licenses, and pay the city's 2 percent sales tax and 3 percent bed tax on their rentals.

That is despite the fact that the city's zoning code does not allow for such uses in residential areas. A recent city memo notes that vacation and short-term rentals are "currently prohibited in all single-family and multi-family zoning districts."

While some of the listed vacation rentals undoubtedly are located in commercial zones and are legal, Prescott Planning Manager George Worley allows that others are operating outside the city code.

The city memo stated: "There are more than 100 vacation rentals advertised in Prescott, many, perhaps most, are operating in violation of zoning in residential districts."

The city has largely allowed the rentals to continue operating - albeit with a requirement for licensing for sales tax.

Budget and Finance Director Mark Woodfill said his department regularly receives tips from neighbors about the existence of vacation rentals, and follows up with the owners.

The city has a 2 percent sales tax on rentals, and if the duration is for less than 30 days, Woodfill said, the rentals are subject to the city's bed tax - "the same as a hotel room."

Worley acknowledges that the current arrangement could be sending a "mixed message," and he noted that the city is in the early stages of consideration of a code change relating to the vacation rentals.

In late November, the Prescott Unified Development Code Committee's (UDC) agenda included an item on amending the Land Development Code to permit vacation/short-term rentals in single-family zoning districts.

The accompanying memo included a number of options for how the city could handle the situation.

For example, it pointed out that other tourism destination communities have successful programs that allow vacation rentals through either an administrative permitting process or a conditional-use-permit process.

The memo listed four options for Prescott - ranging from leaving the situation as it is to permitting a finite number of vacation rentals.

Worley said the UDC members asked city staff to come back at a future meeting with a recommendation for how to proceed. He estimated the discussion would take place sometime in the first quarter of 2015.

If changes are in the works, Worley said, the city would conduct a "very public process" on how to proceed. A code change would require consideration by the Planning and Zoning Commission and approval by the City Council.

Local resident Alan Dubiel, one of Nebel's neighbors, voiced concerns that opening Prescott's residential neighborhoods up to vacation rentals would leave some neighborhoods unprotected.

He pointed out that his Hidden Valley Ranch neighborhood has homeowners-association restrictions that prohibit the short-term rentals, and the HOA is currently dealing with the existing situation.

While many of Prescott's large subdivisions have similar restrictions, Dubiel said a change in the city code could leave homes in some of the older neighborhoods to deal with the vacation rentals on their own.

Nebel also worries about the impact that the vacation rentals could have on neighborhoods. "If this becomes a prevalent thing, it will really impact the peace and quiet of a neighborhood," he said.

Follow Cindy Barks on Twitter @Cindy_Barks

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