Long after short-term rentals have taken over 15% of the city of Sedona’s housing inventory, the Sedona City Council has unanimously moved to incentivize property owners to convert them to long-term rentals.
At the meeting on Tuesday, Aug. 9, City Council approved moving forward with the $240,000 Rent Local pilot program, which will incentivize short-term rental owners to enter long-term leases with local workers.
“Sedona’s housing crisis presents ongoing challenges for residents and businesses. We’ve been working on a multi-pronged approach to address housing, from examining zoning and building codes to working with housing developers,” city of Sedona Housing Manager Shannon Boone said. “One of those is an incentive program to get back some of our housing from the short-term rental market. Similar programs have been successful in other destination cities.”
Homeowners of a registered short-term rental may opt to provide a minimum of a one-year lease to a verified local worker in exchange for a cash incentive. The homeowner can also opt to rent to a business, which is allowed to sublet, for a two-year lease.
Although the pilot program only guarantees these funds for one year or until the $240,000 budget is spent, this program requires the homeowner to refrain from renting short-term for three years minimum.
“If it works in other places, maybe it will work here,” Councilwoman Jessica Williamson said.
With the average cost of a home rising to $850,000 in Sedona, the city’s apartment housing only covers 4% of the overall housing market, or under 300 units.
For this reason, the city hopes this program will incentivize homeowners into supporting the city’s workforce by closing the gap between short-term rental earnings and long-term rental earnings.
Among the requirements for homeowners is a maximum of $2,200 in rent per month. For the qualified renters, one of the residents must work a minimum of 30 hours per week for 30 days before the lease begins. In addition, the homeowner and renter cannot be related by blood nor marriage.
“It’s a good idea that [the city] does something to help the people find housing,” Sedona resident and former real estate agent Joetta Winter said. “I don’t know if this is going to be beneficial, giving people money to do that, but I guess if it’s a pilot program, it might be interesting to see how it plays out. It’s something, obviously, you’re going to have to monitor.”
The city will review the pilot program at the end of its first year to determine its success and potential changes before continuing it.
For this pilot year, the 12 participants of the city’s Citizen Work Group on Housing set the incentivized prices for each type of rental.
For a full property rental with a private entry, a private bath, a private kitchen and an available outdoor space, homeowners will receive $6,000 for a studio, $7,000 for a one-bedroom, $8,500 for a two-bedroom and $10,000 for a three bedroom.
For rooms rented in a home with shared spaces and no outdoor space, homeowners will receive $3,000 for one bedroom, $4,000 for two bedrooms and $5,000 for three bedrooms.
Homeowners will receive half of the payment when a renter begins their lease of the space and the second half of the payment when the lease is completed. Homeowner applicants for the program open on Thursday, Sept. 1.
