Phoenix City Council passes long-awaited short-term rental restrictions

PHOENIX — The City of Phoenix Council has approved new regulations on “short-term rentals,” such as Airbnb. The change effectively moves the city from a list-keeping registration process to one where the city will give out licenses to allow property owners to operate short-term rentals.

The update comes in tandem with the city’s decision to legalize “ADUs” (i.e., guesthouses, casitas, etc.) throughout the majority of Phoenix.

If you’re a property owner in Phoenix currently using a short-term rental to make some extra money, you’ll need to get a license from the city.

The ordinance will be effective and enforceable starting Jan. 15, 2024, and the licensing process opens in late October.

Here are some of the new requirements:

• A license with the Maricopa County Assessor’s Office
• Background checks
• Owner must inform surrounding communities they intend to rent out a STR
• Police may require an in-person emergency contact for an STR.

Concerns raised

However, it’s what the city was not able to do that dominated much of the meeting. Currently, Arizona state law (which overrides city laws) provides a narrow scope of regulations that cities can impose on short-term rentals.

Members of the council, such as Councilwoman Debra Stark, expressed multiple times in previous meetings that she did not want ADUs to be overtaken by short-term rentals.

“A lot of my neighborhoods would say we still need more authority. My biggest concern is we need to work the [state] legislature and get some more teeth in our short-term rentals,” Stark said.

This is something emphasized by Councilman Jim Waring, who questioned Deputy City Manager Alan Stephenson on why the city isn’t taking further steps to regulate STRs.

“We cannot regulate them like other businesses because state law preempts us from that regulation…Saying that it’s a matter of state-wide concern that short-term rentals be permitted in every residential zoning district throughout the state,” Stephenson said.

Waring said in response, “I’d say it’s the legislature’s fault,” and like other members of the council, hopes to see changes in state laws that give cities more tools to regulate STRs.”

Another area of concern is that the city lacks a meaningful way to revoke or suspend the license for someone to operate a STR. City officials say this can happen through one of two ways under this ordinance:

• If an STR owner receives three complaints that make it through the courts in one year.
• If the owner is convicted of a felony crime.

Dep. City Manager Stephenson explains that one complaint can take 4 – 6 months to make it through city courts, which means three valid complaints may not be able to make it through in a year. This has led to some concerns from the community about the enforceability of these new rules.
Looking ahead, the city council asked staff to come up with a way to keep track of all registered and licensed in the city to be able to enforce new rules.

The City of Phoenix currently has about 3,900 STRs registered.