Tempe to require short-term rental owners have license, run background checks on bookers

PHOENIX – An East Valley city adopted new regulations for short-term rentals that requires owners get an annual business license and sex-offender background checks on the person booking the property.

The Tempe ordinance will go into effect March 6, shortly after Cactus League spring training begins.

The City Council said at the Jan. 5 meeting that owners will be notified by mail in February.

Homeowners who operate short-term rentals without a license face civil penalties that include a $1,000-per-month fine for ignoring violation notices.

Staff said the recommended actions were the maximum allowed under state law, which went into effect last September.

Chandler, Glendale, Mesa, Paradise Valley and Scottsdale are among the Valley cities with similar regulations.

Feedback at public meetings in November showed a majority of those surveyed supported the license requirement and fee, operator liability insurance and civil penalties for rentals being being unlicensed.

The city considers properties rented for less than 30 days to be short term.

Single-family homes, guest houses, vacation rentals, apartments, condos, rooms for rent and corporate housing fall under the new directives.

• Obtain a business license and pay an annual $250 license fee.
• Provide proof of a valid sales tax license and evidence the rental is registered with the Maricopa County Assessor’s Office.
• Notify all residential properties adjacent to, directly, and diagonally across the property of their emergency contact information. Responses to complaints would be required from the emergency point of contact within 30 minutes for complaints for which public safety personnel are dispatched or 24 hours for non-emergency complaints. 
• Maintain liability insurance of at least $500,000 or provide evidence that each vacation rental or short-term rental transaction will be provided through an online lodging marketplace that provides equal or greater primary liability insurance coverage for the short-term rental.
• Conduct a sex offender background check on the person booking the short-term rental at no cost by using the online national sex offender public website operated by the United States Department of Justice and retain a record either in hard copy or electronic form of the background check for 12 months after the booking date.
• Require the display of the local license number on advertisements.

Council member Doreen Garlid was in favor of the background check.

“This is different from a hotel. A short-term rental could be next door to my house with four kids. You’re inviting strangers into my neighborhood,” Garlid said, adding originally the council originally considered requiring background checks on everyone in the rental party.

The Tempe Tourism Office said at the council meeting nearly 4 million visitors come to the city every year. Data commissioned through a private third-party company showed 1,206 active short-term rental listings as of December 2022.

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