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6:15 PM Mon, Sept. 24th

Vacation rental changes: Along with permission to rent comes license and tax requirements

Metro Creative/Daily Courier photo illustration

Metro Creative/Daily Courier photo illustration

PRESCOTT – With the state’s new law on vacation rentals set to go into effect Jan. 1, the City of Prescott is poised to consider changes next month on its code regarding the rentals.

Prescott City Attorney Jon Paladini told the Planning and Zoning Commission Thursday, Sept. 29, that the vacation rental issue would be on the Prescott City Council’s study session agenda on Oct. 11, and likely would go to the commission later in October.

During the Arizona Legislature’s 2016 session, a bill was approved prohibiting cities from banning short-term rentals, such as those offered by Airbnb, VRBO, and Homeaway. Arizona Gov. Doug Ducey signed the bill into law in May 2016.

Paladini said the new state law is scheduled to go into effect Jan. 1, 2017. To prepare, he said he plans to present the City Council with proposed changes to the city code, which currently does not allow for the short-term rentals in residential zoning districts.

The proposed changes will comply with the new state law, Paladini said, adding, “For all intents and purposes, it’s going to be housekeeping; we really don’t have a choice.”

After the meeting, he said the proposed city code likely would focus on regulating short-term rentals’ impacts on the neighborhoods.

City Planning Manager George Worley said the city’s enforcement of its current ban on short-term rentals in residential zones has long been complaint-based. He added that the city has received relatively few complaints.

A city business license program is scheduled to go into effect on Jan. 1, and Paladini said short-term rentals will be required to have a business license, as well as pay sales tax and bed tax.

Prescott City Manager Craig McConnell’s Sept. 23 briefing to the City Council noted that a vendor – iCompass – has approached the city about tracking services for the vacation rentals.

“A complimentary preliminary analysis by iCompass identified 165 short-term rentals in Prescott,” McConnell’s briefing stated.

In response to a question from Planning and Zoning Commissioner George Sheats about whether homeowners’ associations (HOAs) are exempt from the new state law, Paladini said the law applies only to cities – “as a function of zoning.”

He added that subdivisions’ CC&Rs (covenants, conditions, and restrictions) often prohibit commercial uses, such as short-term rentals, within their neighborhoods.

Enforcement of the CC&Rs is up to the homeowners’ associations, and is not done by the city.