In an effort to make sure renters have clean, well-maintained and structurally sound homes, the Sedona City Council is meeting at 3 p.m., Tuesday, June 11 to consider whether a residential rental maintenance inspection program is needed. But some in the rental business say programs like this are not necessary, not well-implemented and cost too much money.
“Staff will present information to the City Council to seek its thoughts and ideas on the issue,” said City of Sedona Community Development Director Kevin Snyder. “City Council may direct staff to do more research and come back at a later date, may direct staff to not pursue this matter any further, or provide other direction.”
With the recession and loss of homes, more people have become renters. Thus, the growing rental market has motivated cities like Cottonwood to implement their own residential rental inspection program.
Enacted in 2008, the Cottonwood Rental Code provides a system whereby residents may seek redress from the city when they deem a rental property to be in violation of building or maintenance codes. City of Cottonwood General Manager of Development Services Daniel Lueder says the inspection program was originally intended to serve as a conduit for concerned renters to reach the city officials and voice their complaints.
“The program was established to give renters an option for assistance if they felt the conditions of the rental property were unsafe or unsanitary,” said Lueder. “The program is designed to be renter complaint driven, which requires the person renting the residence to file a complaint with the city before the inspection is allowed.”
As the Sedona City Council prepares for its special meeting to discuss this issue, lessons learned by Lueder and the City of Cottonwood may be relevant to the upcoming debate. Despite hopes of leveling the playing field for renters, Lueder says Cottonwood’s Residential Rental Maintenance Inspection Program has languished in the five years since its inception, receiving little to no interest from the area residents it was designed to assist. Lueder attributes the failure of Cottonwood’s rental inspection initiative to gain traction to the current complaint-driven structure used to identify rental properties requiring inspection.
“One of the reasons this program has not been as effective as hoped is because it appears that some renters may be reluctant to take the step of filing a formal complaint,” he said. “The city is currently discussing the rental inspection program at staff level, and it may be brought back to the Cottonwood City Council in the near future to revise the ordinance to better serve those who rent residences in the city.”
As Cottonwood’s elected officials continue to assess the city’s rental inspection program, and their counterparts in Sedona prepare for June’s upcoming discussion session, rental agencies in both cities have expressed doubts about the legitimacy of such efforts.
Greg Luckey, who operates Sedona Rentals and Property Management, says the motivations publically offered by the city do not merit serious consideration of a rental inspection program.
“We are not only bound by the requirements of the Arizona Department of Real Estate, the Arizona Residential Landlord and Tenant Act, but also by the Code of Ethics of the Association of Realtors,” said Luckey. “Given the requirements of the existing laws, rules and regulations that are already on the books, and especially Title 9, which addresses rental inspection programs, it appears that the city’s attempt to implement such a program is not warranted.”
Sedona Rentals and Property Management has been in business since 1986 and currently represents some 240 residential and commercial properties in Sedona and the surrounding area. This includes Cottonwood, where, according to Luckey, the residential inspection program currently supervised by the city is practically nonexistent.
“My office has never been contacted by the City of Cottonwood in regards to any city required inspection,” he said. “The program may be on the books but it does not seem to be an active program.”
Other rental agencies in the area, including JPM Property Management, say they are aware of Cottonwood’s Residential Rental Maintenance Inspection Program but say no actual inspections of their properties have ever been conducted by the city.
Although Cottonwood city officials confirmed that the city’s rental inspection efforts have been lacking since the program’s inception, the associated tax levied on area renters has been collected diligently. Section 8A-440 of the Cottonwood City Tax Code covers taxation on rental occupancy. It states, “The tax rate shall be at an amount of three percent (3%) of the gross rent paid by a tenant, to the extent of his occupancy of real property.” This tax on rental properties in Cottonwood typically is included in a renter’s upfront fee and monthly charges to fund the city’s rental inspection efforts.
While Coconino and Yavapai counties currently do not impose a rental tax on residential units in Sedona, real estate industry representatives say the upcoming City Council meeting to discuss rental inspections represents the first step toward increased taxation. Luckey says his Cottonwood offices must remain in full compliance with Section 8A-440, collecting the three percent tax from renters and routing funds to the city.
“For members on the Council, contemplating the idea of implementing an inspection program is simply a creative way for the city to then impose a residential rental tax on all properties, as does Cottonwood,” he said. “The processing of the taxes that we would be required to collect is cumbersome and time consuming, adding additional costs to my business overhead, and that tax would be collected from the renter in yet another blow to the affordable housing idea.” FBN