On June 28, 2023, the Patagonia Town Council passed an ordinance regulating short-term and vacation rentals, requiring any residential properties that are rented on a daily or weekly basis to be licensed. The short-term housing covered by the license is intended for transient tenants, most often tourists, who occupy rental units for less than 31 consecutive days.
The new ordinance requires owners of these rentals to pay a $50 fee to license each short-term rental property they operate. That is in addition to the state Transaction Privilege Tax (TPT) and local business taxes. Hotel rooms are not covered by the ordinance but do collect a 3% bed tax.
Town Manager Ron Robinson reported that “the ordinance was proposed by Council members who were concerned that unregulated growth of short-term housing could turn Patagonia into another Sedona. Currently there are approximately 50 short-term rental properties out of a total of 563 residential properties within the town limits. The Patagonia ordinance was patterned after ones in Bisbee and Oro Valley. No one spoke against the ordinance at the Council meeting.” As far as Robinson is aware, Patagonia is the only local jurisdiction within Santa Cruz County that has regulated short-term rentals.
The state of Arizona has limits on how much local jurisdictions can regulate short term housing. For example, local jurisdictions cannot prohibit Airbnbs, bed and breakfasts or other short-term rentals entirely. All over the country, especially in small rural communities, jurisdictions are exploring different ways to manage the impacts of rapid increases in bed and breakfasts and other short-term rentals on town character and availability of affordable housing. These are important issues for Patagonians (see “Growth in Short-Term Rentals Impacting Patagonia”, from the Dec. 2022 PRT), though it is too soon to gauge the impacts of the new Patagonia ordinance.
The license requires all short-term and vacation rentals to comply with the federal, state, and local laws.
The short-term rental license also requires the owner/applicant to:
1. Provide proof of a valid transaction privilege tax (TPT) license.
2. Provide evidence of liability insurance appropriate to cover the vacation rental in the aggregate of at least $500,000.
3. Provide evidence the vacation rental is registered with the county assessor’s office.
4. If the applicant is an individual, provide proof of lawful residence in the United States
5. Within 24 hours of every booking, a sex offender background check on each guest shall be conducted by the owner or by the online lodging marketplace on which the vacation rental is advertised.
6. Designate a 24/7 emergency contact who is either on-site or can respond to an emergency call within 60 minutes or a non-emergency call within 24 hours.
7. Notify neighbors directly around the short-term rental property that the property is to be used as a short-term rental and provide the name, phone number, email of the owner, designee for the owner, and 24/7 emergency contact.
8. Display the name, phone number, and email address of the owner, designee, and emergency point of contact outside the residence near the front door.
9. Pay an annual licensing fee of $50. This fee may be adjusted by the Town Council at any time.
Short-term or vacation rentals are prohibited from the following uses: any nonresidential use; holding a special event that requires a permit pursuant to town code or state law or rule; operating a retail business, restaurant, event center, banquet hall or similar use; housing sex offenders; operating or maintaining a sober living home; selling liquor, illegal drugs, or pornography; operating a nude or topless dancing venue; obscenity; adult-oriented business.
There are real consequences for not having a current short-term rental license or for violating any of the regulations within the license. A vacation rental owner who fails to apply for a license within thirty (30) days of the notice of violation shall immediately cease operations. In addition to any other penalty pursuant to the Town code, the Town may impose a civil penalty of up to $1,000 per month for failure to obtain and maintain a valid license, and up to $3,500 per violation of conditions of operation for the third and subsequent violations within any one year. Licenses may also be suspended at the discretion of the Licensing Agent (the Town Manager) for violations of licensing regulations. Licensing fees and penalties will be collected by the Patagonia Municipal Court.
To read the entire ordinance, visit the Patagonia Town website and search for Ordinance No. 23-01 of the Mayor and Council of the Town of Patagonia, Arizona.