Here are 2 ways Sedona is trying to stop more short-term rentals
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Sedona officials have started a new program aimed at reducing the number of short-term rentals in the community.
Prices have risen in the city over the past several years, leaving many residents unable to afford a place to live. Sedona is often held up as a poster child for some of the problems that can arise when too many of a community’s homes are used as short-term rentals.
Homeowners there can now prevent their houses from being rented out for short periods of time — even after they’ve sold them. That’s because the city will help them put in a deed restriction, stipulating the property cannot become a short-term rental for a number of years.
Shannon Boone is the housing manager for the cities of Sedona and Cottonwood, and says short-term rentals have led to an increase in property values and rents across the community. But, she says if enough residents put in the deed restrictions, it could create a kind of separate real estate market, where home values aren’t affected by their potential rental values.
The Show spoke with her more about this new effort, starting with how the program works.
Interview highlights: 'Imagine losing 16% of the housing in the town without losing 16% of the residents'
SHANNON BOONE: So residents who are interested in ensuring their property doesn't become a short-term rental, can through the help of the city file a deed restriction on the property that would go with the property as opposed to with the owner. So if that owner moves on, the deed restriction stays with the property and that would prevent it from being a short-term rental. So rent it for less than prevent it from being rented for less than 30 days at a time.
MARK BRODIE: And for how long would that remain in effect?
BOONE: So it's a 45-year deed restriction, I believe, but it renews with any sale of the property or transfer of the deed.
BRODIE: Are you finding that there are people who are taking you up on this?
BOONE: So we have nine that are recorded so far and for others in progress, you know, a lot of times residents ask us, why isn't the city doing anything about short-term rentals? And we explain to them that we're prohibited by state law from regulating them, but that they have an opportunity to do something with their property. So right now it's, it's a lot of public education getting the word out. We have some neighborhood groups who have asked, could you just come out and present to our whole neighborhood? So we don't have to all do this one at a time. Because it is a lot of information, and we require that folks come in and sit down with the housing coordinator to have a conversation about some of the potential impacts of filing the deed restriction.
BRODIE: What was the thought process behind starting this effort? I mean, you mentioned that, you know, the city is in many ways precluded from doing a lot of things with relation to short-term rental. So I guess how did you come to the conclusion that this was something that you could do and that it was worth doing?
BOONE: So as I said, we knew residents really wanted us to do something about the proliferation of short-term rentals, 16% of our housing units in Sedona now we know are short-term rentals, which is causing a lot of challenges aside from over tourism and traffic and trash and things like that. But just a shortage of housing overall. So if you could imagine losing 16% of the housing in the town without losing 16% of the residents, we knew there was something that we had to do and just trying to look at some other programs. We looked at other programs in Colorado where they were purchasing deed restrictions, and I did propose a similar program to counsel, but the cost to purchase those deed restrictions was costing them on average $80,000 per unit. So it would have been a very costly program to get the number of units that we needed back in the market.
BRODIE: Do you have an estimate as to how many people you think will ultimately do this or how many would need to do it to make a real difference in, in Sedona?
BOONE: We really don't.
BRODIE: You're just hoping for as many as, as many as, as feel like they want to.
BOONE: Yeah, we just wanted to make this an opportunity for citizens to do something because right now our answer to the, well, previously, prior to this program, our answer to them was there's really not anything we can do about it. And, and some people do want to have some control over the future of the city. They're concerned about the direction the city is going and they feel like, you know, they can't comfortably sell their house without fearing that it too would become a short-term rental and be detrimental to their neighbors or their neighborhood or community.
BRODIE: Have you heard anything? Are you expecting any kind of legal challenge to this? Somebody saying, look, I'd like to buy this house, but once I own it, I'd like to be able to do with it what I want?
BOONE: As far as like, challenges to individual deed restrictions, I imagine that some folks might try to raise a challenge, but currently it's our intent to defend those.
BRODIE: And I know that the city and you alluded to this earlier, that the city has also been incentivizing homeowners, that if they're going to rent out their homes, to make them more longer-term rentals and try to keep it sort of within the community, let you know, folks who live in Sedona, rent them out. I'm curious how that program is going.
BOONE: Yeah. So that program is called Rent Local. We started it a little over a year ago. It hasn't been as popular as we would like. And a lot of the feedback that we got was that the incentives weren't high enough. People were simply making too much doing short-term rental for that to be the deciding factor. And then the other sort of more surprising response was folks who said, I know how to do Airbnb, it's easy to do it online, I have no idea how to rent to a local or how to be a landlord. So we are looking at that program right now working on some revisions where we would work through a property manager.
BRODIE: Is this the kind of situation where, you know, we talked about how cities in Arizona are not really allowed in large part to regulate the the short-term rental market. Is this the kind of thing where like you would like to not have to do these kinds of programs, be it the deed restrictions or trying to incentivize homeowners, you could just put in the restrictions that the city council feels are appropriate?
BOONE: Yes. And we've been advocating for years at the state legislature to get some kind of local control. You know, if that was simply a cap where we could say that there wouldn't be more short-term rentals. At least we have some security.
BRODIE: Do you have any measure of optimism that in 2024, lawmakers will vote to give cities some of their power back?
BOONE: Every year, I feel optimistic, because I think that they could look at the problem in Sedona and see how the, how short-term rentals are affecting our community and simply change the law so that it doesn't have those negative impacts.
BRODIE: Well, and it seems as though the things that you are able to do and trying to do, as you say, they're not, they're not super popular, they're not terribly successful, at least at this point.
BOONE: Right. It's challenging, I think to get people to understand programs like this that aren't traditional, that really shouldn't be needed that they didn't need before. So just getting the word out and building the sort of inventory of properties that are only for locals is gonna take some time.
