Fountain Hills is among numerous communities in the state that are stepping up to review and/or amend their regulations for short-term rental of properties in their communities.

The Fountain Hills Town Council approved amendments to its Zoning Ordinance at a meeting on Nov. 15.

The short-term rental of homes and other properties mostly via internet booking became a source of concern in many communities, as they were often used for parties that caused a disturbance. The neighbors turned to local authorities for help, but in 2016 any efforts by local government came to a stop when the State Legislature enacted a statute that preempted local governments from regulating the rentals except in narrow circumstances.

The complaints then reached legislators and in the last session there was an effort that included State Representative John Kavanagh, a Fountain Hills resident, to roll back the restrictions on local control. That has opened the door for councils to take a second look at what can be done.

With the new law restoring some of the local authority, Town staff went to work on drafting new regulations. Town Attorney Aaron Arnson was part of a work group of municipal attorneys that worked on a model ordinance for communities to adopt.

As a result, the Arizona City Attorney Association, in coordination with the League of Arizona Cities and Towns, formed the workgroup that produced two versions of a model ordinance – one for registration only and another for registering and permitting.

Development Services Director John Wesley said based on the number of complaints that the Town has received related to short-term rentals, staff prepared a version that establishes both a registration database and a permitting process.

In general, the sections of the ordinance address purpose, definitions, permit requirements, emergency contact information, prohibited uses, neighborhood notification prior to rental of a unit/home, advertising requirements, posting on the property, insurance, background checks, permit suspension, enhanced penalties, appeal process, judicial relief and severability.

The Fountain Hills version varies only slightly from the model version prepared by the attorneys. At the urging of Town Prosecutor Mark Iacovino, the definition of “non-residential use” was modified to specifically include unruly gatherings and any uses unrelated to lodging or that are that are not customarily incidental to lodging.

Arnson said the definition was expanded to improve clarity for business owners operating under the new ordinance to facilitate enforcement functions.

The Fountain Hills version also includes a provision to allow the Town to inspect properties to ensure compliance with the ordinance or with any provision of Town building, fire or zoning codes.

Suzanne Brown with the Scottdale Association of Realtors addressed the council and questioned whether the inspection provision is a violation of Constitutional Fourth Amendment rights, related to illegal search.

Arnson would not go into detail with the council in public, but said he is satisfied the requirement serves a purpose that would make it legal.

Mayor Ginny Dickey also said that the ordinance the council was considering passed a review by the Arizona Attorney General’s Office as state statute.

Staff declined to address parking as part of the ordinance, stating that existing regulations would be adequate to address any parking concerns that may arise.

The ordinance incorporates an effective date of Feb. 1, 2023. Prior to that the Town will post a proposed fee schedule and bring the fee schedule to the council for a public hearing and consideration on Jan. 17, 2023.

The Town is engaging a third-party provider for the administration of permitting and fee collection process.