A once-controversial short-term rental project near Scottsdale City Hall passed the City Council with little fanfare or opposition just months after the Planning Commission recommended its rejection.
On Feb. 5, the council voted 6-1 to approve a zoning change requested by STR Ventures, removing first-floor residential limits on four properties to just 35 percent of the floor area and putting much of the area technically off-limits to short-term renters.
The properties, just east of city hall, had been used in years past for a mix of residential and commercial uses, according to city staff.
STR Ventures had listed the properties with Good Night Stay, a short-term rental company with listings in Scottsdale, Nashville and Orlando.
Short-term rentals, like those advertised through Airbnb or VRBO, caused a stir in Scottsdale in recent years, with residents complaining of increased partying, trash, drinking and drug use in residential neighborhoods.
Councilwoman Virginia Korte cast the lone no vote, saying, “I just don’t believe we need more short-term rentals.”
Korte said she voted no because the city has no ability to regulate short-term rentals as a result of a 2016 state law supported by Gov. Doug Ducey.
“The State Legislature has taken away the ability of cities to manage and monitor short-term rentals, and the short-term rentals are proliferating across…tourism-based communities,” Korte said. “And I do not believe they are good for our community or neighborhoods.”
Court Rich, a zoning attorney representing the property owner, argued the proposal was a no brainer because it was near many downtown tourist attractions and would not impact Scottsdale’s residential neighborhoods.
Court said the proposal had the support of all owners of neighboring properties, which are predominantly commercial.
Rich said the property owner worked with its only residential neighbor, Steven Voss of the Main Street Place condos, to address his concerns.
Voss spent 10 years and $12 million developing the nearby Main Street Place condo and retail mixed-use development.
Ultimately, STR Ventures agreed to a long list of stipulations in order to address initial community concerns.
Those stipulations include a commitment to utilize noise monitoring technology and keep a management team on-call 24/7 to deal with any complaints. Renters are also prohibited from playing amplified music outdoors after 10 p.m.
Court said the property owner also agreed to a maximum height of 26 feet for the buildings.
The new C-2 zoning granted by the City Council removed the 35 percent restriction and would have also allowed for heights up to 66 feet.
Court said the properties will also include landscaping and screening to limit the impact on neighbors and the property owner used landscaping designs drawn by Voss.
“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 we discussed,” Voss told the Planning Commission meeting last Oct. 16.
The company planned to invest around $1.5 million in home renovations alone for the McKnight property and its three other properties on Main Street, STR Ventures co-founder Jay McKee told the Planning Commission.
Even with those stipulations in place, the Planning Commission had voted 4-3 to recommend a denial of STR Ventures’ application for a property at McKnight Avenue and Main Street and 5-2 to deny applications for the remaining properties it owns in the area.
Some commissioners expressed concern after evidence emerged STR Ventures potentially violated the 35 percent rule since it began operating rentals at the sites.
“I’m having a lot of trouble with this,” Commissioner Christian 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.”
Commissioner Larry Kush said he was not inclined to support the project if this was the case.
“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.
Rich, who said the company would continue offering rentals in the property with or without the zoning approval, stopped short of confirming whether or not the company was in violation of the 35 percent rule at any point.
“Whether or not it’s being strictly enforced right now, I think it’s just undeniable this (proposal) will be better (for the community),” Rich told the Planning Commission.
At the Planning Commission, both Rich and STR Ventures owner Jay McKee argued his company was a good operator.
“STR Ventures always tried to operate compliantly and it was mischaracterized 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.”
Rich made a similar appeal to city council, arguing his client was going about the process in the right way and was likely the only short-term rental owner in the city to actually seek City Council approval.
This appeal, and the stipulations agreed to by STR Ventures, factored into Councilwoman Suzanne Klapp’s decision to vote in favor of the project.
“There is currently short-term rentals at these units, so I believe what we passed today actually protects the neighborhood…if we hadn’t approved it, they would not have gotten those protections,” Klapp said.
Klapp also pointed to the fact no neighbors opposed the project.
“I believed the best course forward was to allow it with the stipulations provided, which seemed to be fine with the neighbors, so if there was ever a case where all the neighbors were approving something I saw no reason to deny it,” Klapp said.