City of Cottonwood to begin regulating short-term rentals

COTTONWOOD — Long-time residents have watched homes in historic neighborhoods get converted into vacation-home rentals, so now the City is preparing to regulate them - just like Jerome, Sedona and Clarkdale already have.

It’s unclear how many vacation-home rentals there are in Cottonwood right now, until they are required to have permits, but an informal scan of the Airbnb website shows more than 90 listings.

“We have not ever counted because, until recently, we weren’t allowed to do anything or take any measures to allow for tracking the vacation rentals,” said Kirsten Lennon, Cottonwood Financial Services director on Feb. 20.

“The primary purpose of implementing this type of registration requirement is to allow the City to track and monitor short-term/vacation rentals,” she pointed out.

The council is creating an ordinance that parallels the city’s current business- registration process, Lennon said.

“The ordinance would also allow the City to collect specific information from homeowners, require notification to the neighbors of the home’s status as a short-term rental, and postings of the TPT and the homeowner’s information inside the rental,” she stated in her report to the city council.

In 2016, the Arizona Legislature passed legislation that prohibited local municipalities from regulating short-term rentals. In 2022, the Legislature again addressed this issue and enacted SB1168, allowing cities to keep track of and regulate vacation rentals.

The Town of Jerome jumped on the opportunity provided by SB1168 and approved an ordinance requiring vacation-home permits on Sept. 21.

Sedona has an estimated 1,105 short-term rentals within the city limits, according to Short-Term Rental Specialist Teresah Arthur, adding that is 16.3 percent of Sedona’s total residential housing inventory.

Short-term rentals currently operating in Sedona had until Feb. 15 to get a permit in order to operate.

“Unlike Sedona, we did not have the funds budgeted to hire a firm to count them,” Lennon said.

“We are thankful that we will be able to track them with the new registration,” Lennon added.

Clarkdale Town Manager Susan Guthrie said the town does not have an official count of vacation homes in Clarkdale, but some people have suggested there are more than 80 vacation homes in town. The town won’t know until they are licensed.

Clarkdale passed a vacation-home-rental law several months ago that requires a permit or license, and mirrors the model ordinance that other towns are putting in place, with minor differences.

“Every city is looking at it and determining what pieces they want to keep and what they want to take out.” The town is just now rolling out the registration system, Guthrie pointed out.

Cottonwood’s new vacation-home ordinance recommendation was heard on the first reading on Feb. 21 by the council. It will require a second reading at another meeting before being enacted.