The Stillwater City Council heard its first appeal Monday from the owners of a house in Crestwood Estates who were denied a permit to use their property as a short-term rental.
The hearing raised issues of how much freedom homeowners have to do as they please with their property, and how much control homeowners' associations can exercise. The growth of the short-term rental market is presenting challenges for property owners and neighbors, sometimes leading to battle lines being drawn and a question of legal jurisdiction.
The council ultimately granted the permit Monday after hearing from the property owner and from a representative of the Crestwood Homeowners Association who objected to having a short-term rental in the neighborhood.
Angela Weiser of AMW Properties LLC, said she and her husband Mark bought the house at 2117 E. Crestwood Drive on Aug. 1 as an investment property, with the intention of using it for a short-term rental. They had already converted another long-term rental property they owned in another neighborhood to a short-term rental after having bad experiences as landlords.
It’s something more property owners and investors are doing as short-term and vacation rentals become more popular with travelers. But the people living near these investment properties are often not happy about it.
The new home’s location in a small neighborhood off Jardot Road seemed likely to appeal to renters wanting to stay more than 1-2 nights but less than a month, she said.
Weiser outlined the extensive efforts they went through to address drainage problems that existed when they bought the home.
She said that one neighbor had told the Planning Commission that using the house as a short-term rental violates Crestwood home owners association by-laws and covenants but the commissioners cited drainage as their reason for denying the application. Those drainage issues have now been corrected.
“It has taken more time and money than we ever anticipated,” she said.
Weiser said the Crestwood neighborhood is about half rental units and the number has grown in recent years. She referred to a letter of support from another Crestwood homeowner who had also operated a short-term rental through Airbnb and said she and her husband believe the use is permitted under the HOA covenants and by-laws.
There are higher expectations for short-term rentals and that ultimately improves a neighborhood and has less impact on the community than long-term rentals allowed as a use by right, she said.
The Weisers’ ultimate plan is to rent the home out for periods longer than 30 days but less than six months. They would like the short-term permit for now and for periods between longer-term rentals.
Crestwood HOA president Randi Helton attended the meeting Monday to express her objections to the Weisers’ enterprise.
Helton cited parking issues as a major concern for the Crestwood neighborhood, which has houses packed in along narrow residential streets. Parking is an ongoing issue, especially with such a high percentage of renters, she said. The community has parking rules that help but it takes time at the beginning of each school year to get everyone to follow them. Having short-term renters will only create more problems, she said.
She also cited concerns about a lack of communication with other property owners and the fact that the Weisers’ renters check themselves in, which she says means they don’t actually know if the renters are complying with their rules about parking and the number of occupants allowed.
She complained neighbors weren’t notified promptly about the appeal and said she only learned after making repeated inquiries to the City about it.
Helton said the by-laws and covenants adopted by the Crestwood HOA forbid operating a commercial enterprise in your house. She classifies short-term rentals as commercial activity.
Another owner who previously operated an Airbnb in Crestwood was asked to leave the HOA board for violating that rule, she said.
The Crestwood HOA is not the first to object to short-term rentals operating in their neighborhood. It’s a national trend as investors move into more communities and even into high-end neighborhoods.
Arizona became ground zero for those battles when a state law was passed in 2016 that prevents cities from regulating short-term and vacation rentals aside from enforcing nuisance ordinances.
Tourist destinations like Sedona are struggling with rising property prices and housing shortages as investors buy up available stock and developers begin building homes to use as short-term rentals. The Arizona Republic reported that in January, 20% of Sedona’s total housing inventory was listed as vacation rentals, according to the Sedona City Manager.
Stillwater’s City Council sidestepped the HOA question in deciding its first appeal. Mayor Will Joyce told Helton that neighborhood covenants are an agreement between the HOA and the homeowner, and should not be decided by the City Council.
Those issues are civil matters that would have to be decided in court, he said.
“Our HOA, if you approve this, is worthless,” Helton said.
But that may not be true.
The HOA for Camelback Country Estates, a neighborhood of million dollar homes in Paradise Valley, Arizona filed suit against a neighbor who violated covenants that forbid rentals of less than 30 days. The parties reached a settlement agreement and the owner stopped operating the short-term rental, AZ Central reported.
While violating HOA rules is not the same as breaking the law, HOAs have the ability to assess fines, file liens for unpaid bills and even foreclose on those liens, according a blog series dealing with HOAs by Florida-based law firm Dean Mead.
“In the end, the property owners who live in a HOA should be careful to follow all of the rules set forth by the governing documents and the HOA …,” attorneys Peter M. Dunbar and Brian M. Stephens wrote. “If you don’t like the rules, don’t ignore them. There are ways to have the rules changed. Simply ignoring the rules can prove costly.”