As background, Article 6 of the City's Land Development Code states that "Rentals of single-family dwellings for periods less than 30 consecutive days is prohibited."  Before the new amendment, the penalty for a first time violation was $250, and $500 for a second violation within a 12 month period.

In July 2007 the City Council met to discuss a crackdown on short term rentals due to an increasing level of citizen complaints about noise, traffic and litter in their neighborhoods.  Although the ordinance has been on the books since 1995, it appears that the internet has created a widespread increase in short-term rentals by making it easier for homeowners and property management companies to find renters over the web.

The City Attorney, Mike Goimarac, has said that prosecuting short-term rental violations is difficult because the City doesn't always know if an owner is renting or allowing friends and family to stay.  Also, the previous penalty wasn't sufficiently punitive.  To be effective, the City would need to pursue a criminal misdemeanor which would be a penalty of up to $2,500 and possible time in jail.  To be even more effective, the ordinance would need to target those who advertise short-terms rentals.

Perhaps due to the difficulty in enforcement, or maybe the chance to collect bed tax on short-term rentals, at a work session in September 2007 the Council changed course to discuss language for an amended ordinance permitting short term rentals less than 30 days, but not less than 7 days, with a city permit.

The roller coaster ride continued when Sedona residents packed the Council Chambers to voice their concern over short-term rentals less than 30 days.  Many said short-term rentals destroy the community fabric of a neighborhood and lead to increased litter, traffic, and noise.  Many noted that the City's own mission statement is to be a small town community.  Short-term rentals would be contrary to this goal.

To be fair, the other side wasn't well represented, as you might expect given the existing ordinance; however, some property owners feel that the ban interferes with their property rights, and prevents them for generating rental income.  They also noted that only those residents having problems with short-term renters were likely in attendance.

Since that time, City staff has made a concerted effort to search out and notify suspected violators of the City’s ban on rentals of single family structures for less than 30 days in residential districts. The City Attorney’s office has hired a part-time paralegal to assist the Code Enforcement Office by searching for internet web sites that appear to advertise short-term residential rentals within the Sedona City limits; and hundreds of e-mails have been sent to homeowners and listing agents notifying them of the City’s prohibition of such rentals and asking that such rentals for less than 30 consecutive days, cease and desist.

At the January 22nd City Council meeting, City staff proposed to ban the advertisement of short term rentals less than 30 days and make such a violation a class 1 misdemeanor "for any person, enterprise, managing agency or rental agent to advertise, solicit or facilitate the rental for less than 30 consecutive days of a short-term vacation unit located within residential districts where such short-term rentals are prohibited by the Sedona Land Development Code."  The penalty will now be a fine not to exceed $2,500 or 6 months in jail. 

The ordinance will also now define "advertising" as "any written or oral publication, dissemination, solicitation or circulation which is intended to directly or indirectly induce any person to enter into an agreement for the rental of a single family dwelling...This definition includes but is not limited to mailings, print advertisements, internet listings, e-mail publications or other oral, printed or electronic means."

The ordinance will also tighten up the definition of "rental" to include payment with property or services of any kind (e.g., rental swaps).

The new amended ordinance could pose some risk to the City.  Late last year, the City  was presented with a legal memorandum by attorney Richard Rumrell, arguing that the existing ban on short-term rentals was unconstitutional and that the proposed enforcement ordinance was likewise legally unsupportable. Staff was directed to obtain an outside legal review of the issue, and Mr. Paul Eckstein of the law firm of Perkins Coie, Brown and Bain was retained for this purpose.

The City Staff noted that the enactment of the ordinance and enforcement of it could entail increased staff time, and could result in protracted litigation that could be costly.

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