Regulating short-term rentals of single rooms, apartments and homes on Internet vacation services like Airbnb and VRBO (Vacation Rentals by Owner) is under scrutiny in Fountain Hills, as it is in metropolitan residential neighborhoods and popular tourist destinations across the nation.

It’s difficult to estimate the number of local short-term rentals through online lodging websites, but Airbnb reported at least 5,000 individuals in Arizona hosted more than 130,000 visitors last year.

Airbnb is an online marketplace that enables people to list, find and rent vacation homes for a processing fee.

The property owner and renter pay nominal fees to the vacation rental company to handle the transaction.

There is no one-size fits all in describing the typical Airbnb host. In the Fountain Hills market, out-of-state owners are apt to list their winter homes to make additional income.

In larger cities, senior empty-nesters may rent spare rooms to supplement their Social Security benefits. They welcome guests in much the same manner as operators of a small bed and breakfast hotel.

A third Airbnb host is someone like Realtor Anna Collins-Christie, who leases investment properties and her own home.

“It’s a great experience. It’s easy to use and they collect the payments,” said Collins-Christie. “It’s effortless.”

She admits that the experience is “not for everybody.”

“It’s like running a B&B,” she said. She greets guests with a welcome basket and provides shampoo, lotions and kitchen basics. And, after guests leave, there’s cleaning the unit and preparations for the next guest.

“You need to be prepared to take on the jobs,” she said.

A short-term rental for 20 nights out of a month can double the income that a seasonal monthly rental during January, February and March generates.

“It’s a lot of work but there are financial rewards,” said Collins-Christie.

New law

In May, Gov. Doug Ducey signed legislation that sets regulatory standards, permits tax collection and blocks cities from banning short-term rentals on lodging websites.

Cities, towns and counties can still pass ordinances to protect public safety and enforce zoning ordinances. A town can only enforce existing ordinances related to noise.

At the time Ducey signed the legislation, he said, “We are committed to doing everything we can to support 21st-century companies that employ Arizonans, advance the way we do business and improve the way we live.”

The law undermined ordinances in tourism-driven locales like Scottsdale, Sedona and Jerome that prevented residents from using online booking companies to rent out their properties to visitors for a few days at a time.

With passage of the new law, the Town of Fountain Hills hopes Airbnb and other Internet rental companies will remit rental sales tax in the future, said Town Manager Grady Miller.

The Airbnb website for Fountain Hills in early July listed 54 rentals ranging from a single room in a home for $50 a night to a four-bedroom hilltop home with swimming pool for $500 a night.

“The town does not know the extent of short-term and long-term rentals and the annual loss in revenue, but staff believes it is significant,” said Miller.

The town has contracted an auditing firm to focus on increasing sales tax collection on property rentals, he added.

“We have recently had a significant rental sales tax settlement for back taxes owed. There is another settlement in the pipeline,” he said.

Town Council members and staff believe that rental taxes are significantly higher than what is being remitted.

The Arizona League of Cities and Towns will sponsor a workshop on the topic at its annual conference, Aug. 23-26, so communities can better understand the new law.

Opposition

Mayor Linda Kavanagh and her husband, State Sen. John Kavanagh, voiced their concerns about short-term vacation rentals at a recent Chamber of Commerce meeting.

Mayor Kavanagh said they tried to have the League of Cities and Towns regulate the number of rentals on a residential street. They were not successful.

She said her husband did win a concession that a home could only be used for lodging. His research found that some chefs in other states were renting homes and turning them into weekend restaurants.

Both said they will seek tighter local controls to avoid having hotel-like properties in residential neighborhoods.

In the past, when a few property owners booked their home rentals through Travel Zoo, increased parking and excessive noise were reported, said town manager Miller. No recent problems have been cited.

One property owner who rents out two rooms on Airbnb said she’s sure her neighbors don’t know about her occasional guests.

The American Hotel & Lodging Association has called for stricter regulation of short-term renters that run fulltime commercial operations out of their properties.