The Scottsdale City Council this week will consider a local rental company’s request to expand short-term rental uses at its downtown properties months after the proposal failed to gain traction with the city’s Planning Commission.
STR Ventures, a short-term rental operator based in downtown Scottsdale, is seeking to lift existing regulations on properties it owns next to Scottsdale City Hall that limit residential uses on the first floor to 35 percent of the floor area.
The property owner is seeking to change the existing zoning on the properties to Type 2 mixed-use with a downtown overlay, which would, in effect, remove the 35 percent rule and open up the entire first floor for use as a short-term rental.
The two applications concern properties located at First and Main Streets along 75th Street and at McKnight Avenue and Main Street.
The Planning Commission on Oct. 16 voted 5-2 to recommend denial for the McKnight property. The Commission then voted 3-1 on Nov. 13 to recommend denial for the First Street property. Council will consider it Jan. 14.
Short-term rentals, like those rented through online platforms like Airbnb and VRBO, have become a hot-button topic in communities throughout Arizona. In Scottsdale, many residents complaining of increased trash, noise and partying at rentals within residential neighborhoods.
In Sept. 2019, Council passed two ordinances levying stiff fines against renters and property owners who host nuisance parties or unlawful gatherings.
Though the rules apply to all properties - a 2017 state law bars cities from regulating short-term rentals specifically -it was seen as a measure meant to control gatherings at short-term rentals.
At a public hearing on the proposed ordinances earlier that year, resident comments focused solely on the impact of short-term rentals.
Planning Commission members who opposed the STR Venture applications alluded to community-wide discontent with Airbnbs when considering the proposals in 2019.
However, they also specifically criticized STR Ventures and the specific downtown properties, citing evidence that the operator had ignored the 35 percent rule.
When asked about enforcement by Commissioner Christian Serena, Court Rich, an attorney for the applicant, stopped short of admitting STR Ventures ignored the existing zoning rules.
“I don’t know if from time to time the people that are living there are entering more or less than the 35 percent that they are allowed to,” Rich told the commission.
Listings on Airbnb and the applicant’s website for the McKnight property make no mention of the 35 percent restriction or that renters are barred from certain portions of the property.
“I’m having a lot of trouble with this,” Serena said. “The city is bending over backward to make this work for the applicant, and I don’t feel like the applicant has even attempted to try to make it work for a few months.”
Rich said the company had stopped renting the properties while the application is under city consideration.
Both Commissioner Larry Kush and Serena said they were not inclined to amend zoning for an operator they argued had already flouted city regulations.
“If you’re a bad actor, you’re going to get called out for it; you’re not going to get rewarded for it,” Kush said.
However, both Rich and STR Ventures owner Jay McKee argued his company was a good operator.
“STR Ventures has always tried to operate compliantly and it was mischaracterized that there were any issues of compliance,” Rich said. “In fact, they are involved in managing over 80 properties and have never had a code enforcement violation.”
Neighboring property owner Steven Voss, who built Main Street Place, was initially critical of the project, but spoke in favor of it in front of the commission after STR Ventures agreed to concessions, including underground utilities, limiting heights to 26 feet and other beautification and property improvements.
“I do support the case assuming there is a stipulation for 26 feet, a restriction for one unit for this property along with the landscape stipulations that we discussed,” Voss said in October.
McKee said the company planned to invest around $1.5 million to for improvements at the properties.
That won the support of Commissioner Ali Fakih at the October meeting. Fakih was absent from the November meeting.
“I think having this private agreement and beautifying what’s there – I think this is definitely positive…” Fakih said in October.
Ultimately, the city council will have the final say over the request on Jan. 14.
Some on the Council have been critical of short-term rentals in the wake of the public backlash, and the Council unanimously approved the new rules regulating nuisance parties and unlawful gatherings in September.
Prior to passage of the ordinance, Councilwoman Solange Whitehead called the surge of rentals and the state ban on local rule “anti-community.”
Still, at the vote in September, Whitehead said she did not want to ban them altogether.
“I’m definitely not trying to eliminate short-term rentals. I want quality short-term rentals. I am sure we can be pro-business and pro-resident,” Whitehead said.
Mayor Jim Lane has long supported the pretext of the 2017 law, calling the ability of residents to run short term rentals out of their property a constitutional issue.
“Any private property that you own yourself, you have a right to rent it to whoever you want or to lend it to them…on a short term basis or otherwise,” Lane told the Progress in 2019.
Lane did acknowledge a gray area when companies or individuals bought homes in residential neighborhoods specifically to rent them as short-term rentals.