A month ago, Jeff Brumbaugh received something that came as quite a shock — an eviction notice taped to his door.

For the last year and a half, Brumbaugh and his wife have been living at the Royal Crest Apartments, a 16-unit complex [both one and two-bedroom units] on Sombart Lane off State Route 179. Compared to many who have been renting there for 10 years or more, the Brumbaughs were relative newcomers.

“In July we all had a letter taped to our front doors announcing that the complex had been sold,” he said. “We were the only ones who still had a lease contract — everyone else was already month to month. Then, on Aug. 29, we all got another letter stating that we had to be out by Oct. 31 because they were turning the complex into daily and weekly rentals.”

Brumbaugh, a retired attorney, said he did his homework after receiving the notice. He did say that by law the owners, who are based in Scottsdale, were only required to give 30-day notice. But even with an extra month, he said that hasn’t reduced the stress of finding a new place to live.

“We’ve been talking to everyone we know as to what may be available,” he said. “We haven’t found anything yet. Some of our neighbors are having to move to Cottonwood and Camp Verde but we want to stay here. Based on what’s available, we’re going to have to pay at least twice as much as what we’re paying now.

“For people making $12 to $16 an hour it’s already nearly impossible to afford to live here. But it’s going to get even worse as more long-term rentals are turned into short-term rentals. You’re just going to see long-term rental prices continue to increase.”

More Questions than Answers

As of Jan. 1 it will be legal for Sedona residents to rent their homes on a short-term basis as a result of Senate Bill 1350, which passed in May. But city officials are concerned about unintended consequences, especially when it comes to something already lacking in town — affordable housing. They feel there is a likelihood that there may be a flood of single-family homes converted to short-term rentals as well as larger complexes like Royal Crest that take the same route.

“The multi-family dwellings are clearly not identified as a short-term vacation rental under the new law,” City Attorney Robert Pickels said. “But the activity would fall under the definition of transient lodging. That puts it in the posture of whether or not transient lodging is an allowable use in whatever zoning district the property falls in.”

The new law describes a short-term rental as “any individually or collectively-owned single-family or one-to-four-family house or dwelling unit or any unit or group of units in a condominium, cooperative or timeshare, that is also a transient public lodging establishment or owner-occupied residential home offered for transient use if the accommodations are not classified for property taxation under section 42-12001. Vacation rental and short-term rental do not include a unit that is used for any nonresidential use, including retail, restaurant, banquet space, event center or another similar use.”

In the case of Royal Crest Apartments, the building is zoned commercial but since it was built prior to the city’s incorporation nearly 30 years ago, it was grandfathered in and did not have to be rezoned as residential. But Community Development Director Audree Juhlin said technically the owners can continue to operate as an apartment but a change in use to something other than what’s allowed by the commercial zoning would have to be rezoned.

“Lodging is not allowed in a commercial zoning district other than a bed and breakfast and that’s six or less units,” she said. “To turn that into 16 units of lodging would require a zone change to the lodging zoning district.”

Pickels agreed and added, “What we don’t know is whether or not the fact that the multi-family dwellings were not identified in the definition of the law [SB 1350] was intentional or not. I believe the majority of the Democratic legislators who voted for this, had they known that people would likely be displaced from their homes as a result, would not have voted for it.”

Juhlin said no one can predict the future but based on phone calls and inquiries from property owners of other apartment complexes, primarily in Uptown, she said it’s likely others will soon be converted from long-term to short-term rentals.

Other Concerns

Juhlin said she sees the problem as twofold. She said the city already has an issue with providing enough affordable housing for the area’s workforce and this will add to the problem. Second is safety. The city won’t have the ability to apply building safety regulations that would similarly be applied to lodging units such as exits, fire safety and ADA regulations.

“To me, that’s problematic,” she said.

But as Pickels pointed out, “As the law reads, you can’t apply any regulations to a short-term rental property that you don’t otherwise apply, generally, to all properties within a residentially-zoned area. You can’t treat them like a hotel just because they are operating that way.”

Juhlin said her office has received numerous calls from residents who are asking if this is legal after receiving an eviction notice. Assistant Community Development Director Warren Campbell said he has received calls on the other side of the issue. Those have come from housing appraisers who have been asking how a property can be operated under the new law. He said there are those who are looking specifically for homes that can be used as short-term rentals.

Councilman Scott Jablow is also concerned about the potential loss of even more affordable housing to the new law. He said there is already a shallow pool of potential employees to pull from and that less housing will only exacerbate the problem.

“I understand there are upwards of 400 open jobs in Sedona and the Verde Valley,” he said. “What we have is what we have in terms of available workforce to bring in to fill these jobs. And if they move here, there’s no place to put them. I look at it from an economic standpoint and how our shop owners are going to be able to keep staff when there’s no one else to pull from.”
Like the city officials, Sedona Chamber of Commerce President and CEO Jennifer Wesselhoff said her concern is not only affordable housing but potential impacts on visitor capacity as well.

“Affordable housing is already in limited supply and I believe this new law virtually eliminates Sedona’s chance to mitigate this issue,” she said. “Also, with this new legislation, the city of Sedona virtually loses its ability to manage visitor capacity and makes it even harder to balance tourism and quality of life for our residents.  

“This new law will no longer allow the city to control lodging to commercial zones and limit the amount of tourism units in the city. This is already an important issue for Sedona and something that we balance with our approach to sustainable tourism.”

Seeing It from the Other Side

Recently, Pickels attended a forum in Phoenix hosted by the property owner/management side of this issue and said he left there feeling encouraged.

“They did a really good job of outlining what their perspective is,” he said. “There is a real concern on the management side to have a positive impact on communities with this activity. They want to maintain properties well. The want to make this activity competitive in keeping with the intent of the legislation. And, they’re very cognizant of the way that the experience is portrayed afterwards in terms of rating systems and comments.”