South Tempe Civics blog

Airbnb is coming to your neighborhood

In May, 2016, Governor Ducey signed SB1350 into law. The law prohibits municipalities from discriminating against people who wish to rent their home for short periods of time, as facilitated by services like airbnb.com. There is no requirement that any owner ever be present. It did not take long for abuse to begin.

In March of 2017, a Nevada-based entrepreneur named Juan Pulido bought 8648 S Holbrook Lane in La Colina, then a 5 bedroom, 3,000 square foot home, for $420,000. He converted the home into a 10 room, five bath hotel. He subdivided the public rooms and installed lofts where there were high ceilings. Each bedroom has its own locked door. He paved the entire front yard to provide parking. Between April and September he submitted four separate planning applications to the City of Tempe Community Development Department for such projects as “New bathroom 2nd Floor”, “Bathroom Remodel, install 4 new doors,” “Adding internal 2nd Floor Structure and Bathroom,” and “Add new patio.” Tempe did not object to anything and gave Pulido a clean inspection at the end of the work.

The neighbors objected to Pulido’s plans, to no avail. Here is a link to a City Council meeting on December 7 2017: https://www.youtube.com/watch?v=RX-VXsQ9IsM At the 3:09 point, you can see Kolby Granville speaking for 4 minutes on this subject, saying there may be nothing the city can do about it, because of SB1350. The neighbors across from Pulido sold their homes, for $444,000 in December 2017, and $336,400 in January 2019.

At this writing Pulido has 3 single male tenants, each paying him a rumored $1,200 a month. That’s about a 10% cash yield on his investment. Apparently there is a shortage of housing in Tempe for single males with bad credit. The Tempe City Council welcomed SB1350 in part because they perceive a shortage of accommodation for tourists. Right now the market says the highest and best use of single-family real estate is as short-term rental.

There is a companion to SB1350, HB2333, defeated in the last session, which would permit home-owners to operate businesses from their premises, subject to health and safety regulations. It is intended to help people who run quiet businesses with few customers, but it will be abused as well.

The Tempe City Council is conflicted. All members are elected at large, so none represent South Tempe, even though almost 60% of the voters live south of Southern Avenue. Elections are intentionally off-cycle, in order to reduce turn-out, which helps special interest groups to dominate the voting. In May, at a public meeting to discuss its “Urban Core Masterplan,” Tempe’s Principal Planner, Ambika Adhikari, introduced his remarks by admitting that, so far, mass transit has failed in Tempe. His proposed solution to support mass transit was to encourage increased population density. It is possible to imagine that the Council, which is our sole branch of government, is at best indifferent to low-density housing, and probably hostile.

Neighborhood associations have almost no defense against the combination of profitable short-term rentals and the studied indifference of the city. HOAs have a better chance of protecting neighborhoods, but they are a very flawed mechanism. Most HOAs, though they theoretically have power to disapprove house plans, do nothing, hoping that the City Planning Department will protect them.

There is a desultory effort under way to encourage Tempe to enforce its consanguinity laws, but most possible solutions are long-term, piecemeal, and will require lots of civic involvement. HOAs can, of course, fine the offenders, but resolution of disputes is normally handled through the court system, which is startlingly expensive and delivers justice only randomly. A local inexpensive system of arbitration is needed. Cities are theoretically under the control of the state, but a recent attempt to bring municipal judges under voter retention failed in the legislature, so the judges remain exclusively loyal to the city councils.