HomeMy WebLinkAbout2007.0313.TCSM.Minutes TOWN OF FOUNTAIN HILLS
LP, VERBATIM MINUTES OF THE SPECIAL SESSION/PUBLIC HEARING
BEFORE THE
FOUNTAIN HILLS TOWN COUNCIL
March 13,2007
AGENDA ITEM#1—CALL TO ORDER AND ROLL CALL
Mayor Nichols called the meeting to order at 5:00 p.m.
Present for roll call were the following members of the Town Council: Mayor Nichols, Councilmember Kehe,
Councilmember Leger, Vice Mayor McMahan, Councilmember Schlum, Councilmember Archambault and
Councilmember Dickey. Town Attorney Andrew McGuire, Town Manager Tim Pickering, Town Prosecutor
Mark Iacovino, James Armstrong and Shelly McTee (Buchalter Nemer, Attorneys for Golf Resort Properties)
and Town Clerk Bev Bender were also present.
AGENDA ITEM #2 — THE COUNCIL WILL TAKE TESTIMONY AND POSSIBLE ACTION
REGARDING THE APPEAL CONCERNING THE DENIAL OF GOLF RESORT PROPERTIES,LLC
BUSINESS LICENSE APPLICATION FOR 16915 E. JACKLIN DRIVE, 10637 N. MUSKRAT LANE
AND 16821 E.LAST TRAIL DRIVE.
Mayor Nichols(MN): Tonight's meeting is to take testimony and possible action regarding the appeal
concerning the denial of Golf Resort Properties, LLC business license applications for
three properties in Town. This appeal is something new for us on the Council so I'm
going to read through the Order of Proceedings, how this meeting will be held,not only
for the Council but also for the public so they understand how we're going to handle
this meeting tonight.
We will take opening statements from both the Appellant and from the counsel for the
Town. After opening statements, the Appellant's case will be presented and they'll be
calling witnesses and testimony shall be taken in the question and answer format. The
Town Attorney may cross examine the applicant's witnesses. The Appellant may
conduct a redirect on those witnesses, on his witnesses and the Appellant may offer
documentary evidence through its witnesses. That would be the case for the Appellant.
The Town will present its case and will call witnesses in support of its position. The
Appellant may cross examine the Town's witnesses. The Town may conduct a redirect
for questioning of the witnesses and the Town may offer documentary evidence through •
its witnesses as well. At that time, presentation of any rebuttal evidence by the
applicant will be allowed.
Following that, public comment will be taken. We will stick to the three-minute limit
on public comment and please, those people from the public making comment, please
try not to be redundant and repeat what others have said. So try to make it pertinent and
new information each time you come up and speak as the public. Members of the
public so commenting will not be subject to questioning by counsel for the Appellant or
Counsel for the Town or from questions from the Council. After that is one, after
public comment is done, we will do closing arguments. The counsel for the Appellant
may make a closing argument or statement to the Council. After that statement is done,
counsel for the Town may make a closing argument or statement to the Council.
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During these closing statements,members of the Council may question the attorneys for
either side during their closing arguments and/or following closing arguments.
However, Council will not answer any questions during this proceeding tonight. At the
end of those closing arguments, Council will discuss and deliberate up here on the
podium the merits of the case and then a decision will be made. I will ask for a motion
to either uphold or overturn the denial and then we will then vote on either upholding
the denial or overturning it. That's the process or proceeding that we are going to
follow for tonight. Have I missed anything Mr.McGuire?
Andrew
McGuire(AM): No.
MN: Okay.
Mark Iacovino (MI) Mayor?
MN: Yes.
MI: If I may, Mr. Armstrong and I discussed a few moments ago the Order of Proceedings
and we would like to offer a stipulation that in a very small way amends what you have
just told us. With regard to the closing arguments, we have agreed if the Council
likewise agrees, that following the Town's closing, that the Appellant would have an
opportunity to make a brief rebuttal closing.
MN: Would that be alright with you?
MI: I have no problem with that.
MN: Okay, very good. Okay, with that, the proceedings are open and if the Appellant would
like to make an opening statement, proceed.
Shelly McTee(SMT): Good evening Mayor and Councilmembers. My name is Shelly McTee with Buchalter
Nemer. For the record our address is 4600 E. Shea, Suite 100 in Phoenix. With me this
evening as co-counsel is James Armstrong and also Randall Steuter from our office as
well as Chris Parcell from Golf Resort Properties.
As the Honorable Mayor has mentioned, this is an appeal of a denial of three business
licenses. We think that the information that we're going to discuss tonight has not
previously been considered when those licenses were denied and therefore we would
like to present several matters for your consideration.
First, the three properties for the record are located at 16915 E. Jacklin Drive, 10637 N.
Muskrat Lane and 16821 E. Last Trail Drive. All of these are in single-family
residential zoning districts within previously subdivided subdivisions. Based on the
location, this as you know is a single-family land use category, which allows one
dwelling unit per lot. On each of these parcels there is only one dwelling unit per lot
and as is going to be shown by the documentation of the Town itself, short-term rentals
are allowed in single-family residential zoning districts. In fact, they are expressly
allowed pursuant to the documentation provided by the Town. These homes are being
... they're like I said, one single-family home on each of these lots and they're being
used for short-term rentals. Real briefly, to give you a little bit of background, the
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owners, through their attorney, approached the Town approximately three years ago to
(kw request if short-term rentals were allowed in single-family homes. They obtained a
zoning verification letter stating that short-term rentals were.in fact allowed. They then
proceeded to, over the past approximately three years, acquire three separate homes and
have been operating short-term rental properties out of these homes.
Last December, not through the Town but actually through a reporter, they learned that
the Town was going to take ... potentially consider ... a text amendment to the Zoning
Ordinance, which would regulate for the first time in the Town of Fountain Hills, short-
term rentals. The owner contacted the Town trying to get more information on this and
what they were told was that they needed a business license in order to operate, excuse
me—to rent out their homes. As we know, they then applied. Just as a side note, they
submitted their application, did not have their State license number, the application was
sent back as being incomplete and then they resubmitted with their State license number
and also have remitted the appropriate taxes to the State, which we assume have now
been remitted also to the Town of Fountain Hills.
The Town's actions are somewhat corollary to this. As I stated, the Town has provided
Golf Resort Properties approximately three years ago with a zoning verification letter
and we have provided you with some documents in a binder and that's set forth at Tab
2. And if I can direct your attention to the first line of the second paragraph, it
specifically states, "It is our interpretation that short-term rentals are appropriate uses in
any residential zoning district providing these uses do not create a nuisance to adjacent
property owners." And as the testimony will show, there have not been any nuisances
that we are aware of that have been reported to the Town and conveyed to us.
The second piece of information is in a memo dated January 3rd of this year, at Tab 8 in
your book, and this is a memo from the Town Manager and Mr. Turner, the Planning
and Zoning Administrator and again, if I can have you focus on the second page, the
first full paragraph, it says, "For the Town (and this is talking about short-term rentals)
for the Town to prohibit this type of use from a zoning perspective, an amendment to
the Zoning Ordinance will be necessary." And it goes on to state that short-term rentals
are not defined and talks about what is allowed relative to rentals. Again, this is
reiterated in a string of emails at Tab 9, dated Wednesday, January the 3rd from Mr.
Turner. There's been a redaction as far as who this was with but it's from the Town
and the last sentence on that first page states, "We have reviewed our regulations with
regard to the proposed use and I have discussed the situation with the Town Attorney.
As it is presently written, the Zoning Ordinance does not distinguish short-term rental
from single-family residential use. Accordingly, we would not be able to cite the owner
of this property for violating the Zoning Ordinance on the basis of short-term rental."
And that is consistent that our client has not been cited for this. Again, I direct your
attention to Tab 7. This is another email in which the third paragraph down, which is
labeled as Item #1 says, "Staff reports upon receipt of the complete application, the
Town will issue a Business License to Golf Zoo and it goes on to state again that the
Town does not have the ability to regulate short-term rentals in single-family zoning
districts or any zoning districts within the Town. That information is reiterated in the
Planning and Zoning Staff Report to the Council on January 18th, which is set forth at
Tab 6 and then at Tab 16 there's minutes from the January 18th hearing, which I believe
most of you were present at in which there was a discussion about whether or not there
should be a Text Amendment, which would define and perhaps regulate short-term
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rentals either in the Town as a whole or within single-family zoning districts and as we
know, that was not passed,directing staff to do that.
By all written accounts, the Town does not regulate. Rather it expressly allows short-
term rentals in single-family zoning districts and the Town's actions, we believe, were
inappropriate when they did deny the submittal of a completed Business License by
Golf Resort Properties. With that, I am going to turn it over to James Armstrong who
will put on our evidence. Thank you.
James Armstrong(JA): We understand that the Town hasn't been through this before and we appreciate that
comment. With that said, we are going to try to adapt this particular forum. For our
question and answer, what I'd to do, if it meets with the Mayor's and the Council's
approval and the attorney representing folks of the Town today, is have the witness
stand right here at the podium so he can look at you directly and he can communicate to
you all directly. And I'd like the permission to sit here at the table and question him as
long as that meets with everyone's satisfaction.
MN: That's fine. Before we do that, shouldn't we have opening comments from Mr.
Iacovino?
MI: I think that would be appropriate.
MI: Thank you. Mayor Nichols, members of the Council, I'm Mark Iacovino. I'm the
Town's Prosecutor here in the Town of Fountain Hills. My partner Susan Kayler and I
have been your Town Prosecutors since the time of incorporation.
MN: Mr. Iacovino, could you use either that mic or that mic? So the people can hear. *or)
MI: I will use this one.
MN: Okay, thank you.
MI: It has been quite a few years since I've had an opportunity to be in front of this Council
and I appreciate being here and you folks sitting tonight as judges to hear this appeal
matter. In those many years since I've been before you, I have certainly gotten a little
bit older and frankly I think my memory is starting to slip. I can't remember when the
last time was that I got my hair cut. But anyway, we're not here to talk about that,
we're here to talk about three pieces of property in residential zones here in the Town of
Fountain Hills. The issue before you, the narrow issue before you, is whether or not
staffs denial of applications for three Business Licenses was appropriate or not based
on its conclusion that the proposed use of these properties, and as you'll hear tonight, in
fact, the use of the properties in fact had already been put to, did not comply with our
Zoning regulations.
Ladies and gentlemen of the Council, this matter is really very simple. There is nothing
complex about this and, in fact, while we are going to be hearing some testimony
tonight, I'm kind of scratching my head trying to figure out what that's going to add to
anything. The important facts that are necessary to decide this matter are not in dispute.
There is no disagreement about the nature of the use proposed for these three properties.
Both sides agree with what the properties are and are proposed to be used for—transient
vacation rentals. These are designed for and have been advertised for nightly rental,up
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to twelve people per house, lots of amenities. In fact, wow, they sound pretty darn neat.
Newly remodeled, we've got pool table, professional poker table, up until recently free
beer 24/7, private concierge, the whole nine yards. The package is offered at rates that
were roughly between I think two and three hundred dollars a night per person,
included greens fees and cart rental and local golf courses. You know,hey, a pretty neat
package. There's not a dispute that that's the use that Appellant is hoping to put these
properties to. There's also no dispute over what our Zoning Ordinance says. Our
Zoning Ordinance says that in single-family residential zones that the allowed use for
all relevant purposes to these proceedings is for one single-family dwelling. Now that's
very important, that language. One single-family dwelling. The code goes on to define
what that means. A dwelling is a structure that is designed exclusively for residential
use. That's the law. We're not here to discuss changing the law. That's not what
we're here to talk about tonight. We're here to talk about whether the existing law, or
rather talk about applying that existing law,to this set of facts. This set of facts that are
not in dispute.
A building designed exclusively for residential purposes necessarily tells us that to have
a residential purpose, ladies and gentlemen, someone has to reside there. I think that's
axiomatic. As I say, I think this is a very simply matter. The Town's position boils
down to this: these uses are not legal under the current law because nobody lives there.
It's just that simple. Nobody lives there. There's no residential purpose at all. It is
devoid of residential purpose; it is purely a commercial purpose in single-family
residential neighborhoods. In a nutshell, that's what we're here to tell you. Now,
responding to a few things that we just heard, Ms. McTee is correct, the ordinance says
one dwelling unit per lot but we have to understand what does that mean, what is a
dwelling unit? In the definition of dwelling unit, not only does it specify that it has to
be for exclusively residential purposes, and I say resident. When somebody is a
resident someplace it's very different than a lodger. Those are fundamentally two
different things. A resident generally has their mail delivered at their residence. A
resident generally has utilities in their own name. A resident, when meeting someone
on the street who says, "Where do you live?" would give them that address. Nobody
lives there. These are not dwellings as they're being used. The definition goes on to
make a clear distinction between dwelling units and on the other hand hotels, motels,
boarding houses, lodging houses, fraternity houses, sorority houses, etc., making clear
that those types of things is not what we're talking about in dwelling. But not including
hotels, motels, lodging houses, etc. etc.
Now you are going to hear evidence tonight and I agree that what they're doing with
these three homes does not fall squarely within the definition of a motel, it does not fall
squarely within the definition of a hotel, it does not fall squarely within the definition of
a bed and breakfast, but that doesn't make the use legal. Clearly, the intent of that
ordinance and the definition of dwelling is to separate out those types of uses as
opposed to residences. We also heard that short-term rentals are expressly allowed.
Frankly, I don't think I agree with that statement; I don't believe short-term rentals are
expressly allowed. I don't see that in our Zoning Ordinance. I think they are getting
that from some other codes, perhaps the Tax Code, which really doesn't have a bearing
on this. The truth of the matter is short-term rentals are not per se prohibited. That's
true. You could come up with a lot of examples where short-term rentals would be in
compliance with our Zoning Ordinance. The question isn't the duration of the rental,
the question is the nature of the use, and those are two different questions.
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We heard about the zoning verification from a few years ago and what they are going
to be talking about is not an official zoning interpretation that's binding upon anybody,
it's a piece of paper that many of us saw for the first time a couple of weeks ago that is
not dated, not signed. It does have Town letterhead. We're not quite sure exactly why
that piece of paper was handed out but that's not the type of thing that anybody could
realistically or reasonably rely upon. Not when we have simple mechanisms available
for true zoning interpretations that could have answered some questions a long time
ago.
We also heard that staff recommended or stated that a Text Amendment was going to
be necessary in order to regulate short-term rentals. Well, you know, sometimes staff
changes their mind about things as they learn more. Sometimes staff is wrong. The
Council felt staff was wrong. On January 18th, the Council concluded that we don't
need a Text Amendment, we can deal with this within the law we currently have. And I
agree, that's absolutely true, clearly and easily. Staff memos, emails, opinions of Town
staff, etc. don't change the law. Only this Council can do that and the law is what it is.
It says in single-family zones you're permitted to have one single-family dwelling and
other uses are prohibited. I will explain more in closing, but ask you to think about this
in the meantime, why it is that that's our law. It's that way for a very good reason.
Reasons that I think you are going to hear loudly from the members of the public who
are here tonight. There's a reason that our ordinance says what it does and clearly the
use that's being presented here doesn't comply with it.
You know, the Appellant has submitted what appear to be hundreds of pages of
documents and I know is prepared to present heaven knows what kind of evidence
tonight or testimony. But there's absolutely nothing that my colleague can say or do
tonight that is going to change the use of those properties as proposed or that is going to
change our Zoning Ordinance. Those things are what they are and those are the things
that you need to be bearing in mind to make a decision and frankly, those are the only
things you need to be aware of in order to make a decision in this case. Thanks.
MN: Thank you. Mr. Armstrong, are you ready to proceed?
JA: Yes I am. Thank you.
Bev Bender(BB): Mayor, we have the hand held that the attorneys could use and face the witnesses.
MN: Alright. Would you like to use the hand held to question or do you want to sit down
and question?
JA: You know if you can hear me well enough here then I'll do it unless you would like me
to ...
BB: What I am concerned with is it's not going to record.
JA: Okay.
BB: And as long as you speak into it.
JA: How's that? One thing I would ask, I spoke to Mark here just a second ago, I think it's ,4400)
important that the witnesses do be sworn this evening because that would be the
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appropriate nature of our proceeding. I'd move the Mayor and the Council to swear the
(to, witness and all the witnesses we're going to hear from this evening.
MI: Mr. Mayor, I don't see any particular reason for that. I know witnesses who testify
before our Board of Adjustment are not sworn. This is not a court of law, this is a
unique proceeding, but that decision is entirely up to you and the Council.
MN: I agree with Mr. Iacovino. I don't think it's necessary to do that because it's not a
formal judicial meeting.
JA: Thank you Mayor. Chris, would you please state your name and your address for the
record?
Christopher
Parcell (CP): Christopher Parcell, 22023 N. 73rd Avenue, Glendale,Arizona 85310.
JA: Chris,how long have you lived here in the Valley?
CP: Almost seven years.
JA: And you know who Golf Resort is?
CP: I do.
JA: And who is that?
Lw CP: Golf Resort is owned by my boss Ed Holofcener and Rick Holofcener.
JA: What does Golf Resort do?
CP: They rent houses.
JA: Okay. Where are those houses located?
CP: Three, all of which are in Fountain Hills.
JA: Chris, have you been to each one of those homes?
CP: I have.
TA: Are you familiar with the Town of Fountain Hills?
CP: Yes sir.
JA: Do you consider those three homes well maintained?
CP: Exceptionally maintained,yes.
JA: The lawns are maintained?
LwCP: Yes.
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JA: Paint is where paint should be?
CP: Yes.
JA: Pools are clean for the homes with pools?
CP: Yes.
JA: Regular maintenance is done to ensure the appearance of the home?
CP: Yes.
JA: And is done correct?
CP: Yes.
JA: The Town of Fountain Hills is a beautiful place, correct?
CP: It is.
JA: Do the homes fit within what you consider to be the geography and the architectural
design components that the Town has worked so hard to implement?
CP: I do.
JA: Now the first couple of homes, they were purchased what, a couple ... almost three j
years ago now?
CP: Correct.
JA: And in that time period, Golf Resort has rented out these homes, correct?
CP: Yes.
JA: And describe if you can the type of folks that Golf Resort rents to.
CP: Typically its groups, anywhere from six to twelve, golfers that are coming in for let's
say a four or five day golf trip. They'll come in and stay at the house, play four or five
rounds of golf.
JA: What else do they do as far as you know when they're here in the Town?
CP: They go out to eat, they go to the restaurants, they do jeep tours and other tourist ...
primarily, golf is the main, is the main activity though.
JA: And some of their activities take place right here in the Town,right?
CP: Yes.
JA: And some of the money they spend they spend right here in the Town,correct? J
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CP: Absolutely.
JA: On local businesses?
CP: Yes.
JA: Now in the time that you've been involved with Golf Resorts and these homes have
been rented out to golfers, are you aware of any HOA violations that have been
assessed against the homes?
CP: No.
JA: Not a single one?
CP: No.
JA: What about any complaints from the Town of Fountain Hills? Have you received a
single complaint in all that time for a single home?
CP: No.
JA: Well, what about neighbors? In the two years that the Muskrat and Last Trail homes
operated, was a complaint from a neighbor ever directed to Golf Resort?
co, CP: No.
JA: Not one?
CP: Not one.
JA: Then the Jacklin Drive home, did any neighbor direct a complaint to Golf Resort? And
by the way, let me stop you here. I've seen some emails to the Town, I'm asking you
has anyone stepped up and made any complaint of any conduct in the Jacklin Drive
home to Golf Resort?
CP: No.
JA: Has the State of Arizona issued any sort of fine, penalty on any of Golf Resort's
activities or the homes?
CP: No.
JA: What about local law enforcement? Have there been any arrests for any conduct here at
these homes?
CP: No.
JA: Any citations issued?
cly CP: No.
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JA: What do the folks that come out typically use the homes for when they're inside the
house?
CP: Well, a variety of things. They can stay inside and watch the TVs, they can shoot pool,
they can go out and sit by the pool, sit in the Jacuzzi, hit a few putts, all those standard
things are things that I'm sure our guys are doing on a daily basis.
JA: Is most of the ... are these golf fans?
CP: Oh yeah.
JA: Okay. So is it fair to say then that most of the time that the folks who visit your homes
is spent out on the golf course?
CP: Yes, during the day absolutely. You know, they'll get up at whatever, 7 or 8, they'll go
out and play 18 or 36 a day, go out and have dinner, come back to the house, hang out
and go to sleep and wake up the next day and do the same thing.
JA: By the way, what about traffic issues? Any sort of traffic citations any of the folks
received?
CP: No.
JA: What about parking concerns? Have any parking concerns been raised from anybody
for the use of these homes?
CP: No.
JA: Now you're familiar with the Golf Resort website, correct?
CP: Yeah, the Golf Zoo website, yes.
JA: The webpage?
CP: Yes.
JA: Now is there any reference to concierge left on that website?
CP: No.
JA: Has it been removed?
CP: It has.
JA: The Golf Resort offer a concierge any more?
CP: No.
JA: Okay. What about this beer issue. Is that on the webpage any more?
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CP: No.
JA: Has it been there in a while?
CP: No.
JA: Free beer offer to folks who rent any of these three homes at this time?
CP: No.
JA: Now what about going forward. Is there any intent for Golf Resort on a going forward
basis to offer concierge services to anyone who visits any one of these homes?
CP: No.
JA: What about the free beer?
CP: No.
JA: So free beer's not going to be offered on a going forward basis at all?
CP: Correct.
JA: Now the services that are necessary to maintain the outstanding appearance of these
homes, now do you all use folks to do the maintenance work?
Le CP: We do, we use outside vendors.
JA: Someone to mow the lawn?
CP: Sure.
JA: Clean the pool?
CP: Yes. Handyman on occasion for things that we can't do.
JA: And did the concierge, did he sometimes do some of those handyman functions?
CP: Yes.
JA: That was part of his job, was just to make sure the house was up to snuff and it was ...
had things needed to stay up to the proper operating/appearance procedures.
CP: Yeah. It was his job to clean it and then if there was any problems or any issues for him
to take care of those issues, yes.
JA: Now let me ask you a couple of the things and I'm just going to ask you a list of things
here and you tell me if any one of these homes ever at any time has offered any of
these. Food service?
LCP: Yes.
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JA: Now but what about retail services there on the properties? They ever do that?
J
CP: No.
JA: Well what about banquet rooms?
CP: No.
JA: What about reception rooms?
CP: No.
JA: Meeting rooms?
CP: No.
JA: Is there bellhop service ever at any time at any of these homes?
CP: No.
JA: Is laundry service provided, meaning someone comes and picks up the laundry, washes
it and returns it to the room?
CP: No.
JA: Is there a restaurant at any of these properties?
CP: No.
JA: What about a bar?
CP: No.
JA: Spa services?
CP: No.
JA: There's not a gift shop at any of them is there?
CP: No.
JA: Okay. Chris, are all of the things that I've described, are all of those the things that you
associate with a normal hotel?
CP: Yes.
JA: Now if I can ... you've got a binder in front of you and I'd like to look at Tab 2. Have
you seen this document before?
CP: I have.
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Loor JA: What is it?
CP: It's a zoning verification.
JA: From who?
CP: The Town of Fountain Hills.
JA: Do you know how Golf Resort came about receiving this particular document?
CP: Yes. This document was emailed to us prior to purchasing the first home.
JA: Do you know ... is this something the Golf Resort requested?
CP: Yeah, I think our attorney at the time requested it and it was emailed to us.
JA: Who was it requested from?
CP: The Town of Fountain Hills.
JA: And then who sent it to you? Your former attorney?
CP: I believe Betty Brannon.
JA: Now you flipped the page when I asked you that question and I'm under Tab 2. There's
a series of letters and numbers at the bottom right hand corner of every page in this
white binder. It is GROO4A, that's the zoning verification, right?
CP: Correct.
JA: Are you now looking at GR0004B?
CP: Yes.
JA: Okay. Do you know what meda-data is?
CP: Kind of, not really.
JA: Okay, but you understand it to be an electronic document, electronic information stored
for certain documents for example, like created by Word or Word Perfect?
CP: Yes.
JA: Okay. And did you have someone pull the meda-data for this zoning verification that
we attached here for you?
CP: Did I?
JA: Did Golf Resort?
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CP: Oh yeah, sure.
JA: Okay. And that's this document,right?
CP: Correct.
JA: And what is this meda-data tell us about the foregoing zoning verification?
CP: That is was ... the author was Betty Brannon and it was ... the company was the Town
of Fountain Hills.
JA: Okay. And if you look down further ... now by the way, you are aware that Betty
Brannon is currently an employee of the Town of Fountain Hills, right?
CP: Yes.
JA: If we go down a little bit further under document statistics, do you see who the last
author there is?
CP: Molly Bosley.
JA: And she's also an employee of the Town of Fountain Hills, isn't she?
CP: Yes.
JA: And do you see the date this document was created?
CP: I do.
JA: And what's the date?
CP: August 26th 2004.
JA: So does this help refresh your recollection that in or about August of 2004 Golf Resort
requested this zoning verification from the Town and received it in or about the same
time period as we have indicated here on the meda-data report?
CP: Yes.
JA: Now looking back to the first page of that zoning verification, I'd like you to look at the
second paragraph,the first sentence.
CP: Okay.
JA: And does it say there ... can you just read that first sentence beginning, "It is our
interpretation ...."
CP: "It is our interpretation that short-term rentals are appropriate uses in any residential
zoning district provided those uses do not create a nuisance to adjacent property
owners."
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JA: So that says, this Town of Fountain Hills document says, short-term rentals are
appropriate uses in any residential zoning district?
CP: Yes.
JA: Are the three homes we are talking about in residential zoning districts?
CP: Yes.
JA: And is Golf Resort in fact using those homes as short-term rentals in those districts?
CP: Yes.
JA: Would you go with me to Tab 3. You seen this document before?
CP: I have.
JA: And what is it?
CP: It's a Fountain Hills Tax Code revision.
JA: Okay. And do you see the reference there to residential rentals there in the middle of
the document behind Tab 3?
CP: Yes.
JA: And is your understanding that this document provides for a mechanism to tax
residential rentals?
CP: Yes.
JA: And do you see there, in the middle of the page, I'm sorry, in the middle of that
paragraph, that it specifically references short-term rentals?
MI: Your Honor, if I may, I'm going to object at this point on two grounds. Number one,
the content of the Tax Code and how it applies to short term and other rentals is not
relevant to the questions before the Council and secondly Your Honor, the documents
that have been submitted to each of you by the Appellant speak for themselves. We
don't need a witness who works for the Appellant to read them all to us this evening.
JA: If I may. Your Honor, due process, which we are involved in right now, requires that
we have an opportunity not just to address the issues that the Town's counsel would
have us address, not limit our inquiry to the matters where Town counsel would have us
limit them. But instead to develop a full record so that all the issues can be addressed.
And having someone who has reviewed a document, express his understanding of that
document, is a time-honored tradition in providing Appellants such as Golf Resort the
process that they are due under both the Constitutions of the State of Arizona and the
United States of America. We therefore suggest what is proper here, to avoid
unnecessary appeals on narrow issues of process, that the full record be developed here
cise tonight so a decision can be made with all information.
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MN: Can you tell me how this is relevant?
JA: It is relevant Your Honor to indicate that the Town of Fountain Hills for years has had a ***1)
provision taxing short-term rentals. In fact, there is an exception described right in here
that this provision was designed to change, to eliminate the taxation exemption for
short-term rentals. Meaning when we dig into the Town's books, and we'll get there
because the Town is a wonderful safe keeper of its documents, we will find the exact
provision we are talking about that exempted short-term rentals from taxation. And this
provision, when it came out from Ms. Ghetti who is still here, well, that is very
important to understand whether this use is in fact appropriate in the residential zoning
district where these three homes are located.
MN: Okay,proceed.
JA: So my question to you Mr. Parcell was there in the middle paragraph under Residential
Rentals, do you see a specific reference to short-term rentals?
CP: Yes.
JA: And do you also see that in that paragraph, in that final sentence, it states that the tax
will apply to all persons who lease or rent one or more properties. And then there is a
parenthesis, apartment units, and what's next?
CP: Houses, condos,etc.
JA: Within Fountain Hills for periods of longer than 30 days. So when you looked at this
document, was it your understanding short-term rentals, houses, are taxable events 1110
within the Town pursuant to its own Tax Code?
CP: Yes.
JA: Then if you'll please look at the document under Tab 4 with me and do you recognize
this document?
CP: Yes.
JA: And is this document like the prior two documents also from the Town of Fountain
Hills?
CP: Yes.
JA: And what is this document?
CP: This document was a response to our Business License application. This was our denial
I believe. Yes.
JA: Now after looking at the two prior documents, were you able to reconcile the denial
with the two previous documents?
MI: Objection your Honor. That question ... not only is this individual not competent to
answer that question, that's a question of fact, or not a question of fact — that's a
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question to be determined by the Council. I'm going to make a continuing objection to
using a witness to read to us all of these exhibits if the exhibits are already part of the
record for you to consider.
MN: I'll uphold that objection.
JA: I'm sorry Your Honor?
MN: I'm upholding that objection.
JA: And the objection is to the reading of the documents,correct?
MN: Right.
JA: Okay. So Chris, were you able to reconcile this denial with the two prior documents?
MI: That's a separate objection Your Honor. It is not up to this witness to reconcile those
documents.
JA: Your Honor, and Mr. Iacovino knows this, and perhaps because his experience is
maybe largely criminal in nature, I don't know, but I will assure the Mayor and this
honorable Council that it is absolutely, positively traditional when trying to understand
documents, their affect on a taxpayer or citizen, to explain their actions and what it is
their intentions were, why they did so and whether they simply don't understand what's
happened here. And if for example the first two documents had never been presented
Lre by the Town, put out there in the public and the first one sent directly to Golf Resort
after a very expressed inquiry of can we do this,then Your Honor, we never would have
— my guess is Golf Resort never would have been here. We never would have bought
the first houses right after this came out. And so it is important to understand from Golf
Resort's perspective why we are here today. Not out of spite or malice but a desire to
be treated the same as everyone else has been treated. To be treated the same as those
who rent short term, on a short-term basis, houses in this community. And we think the
question is proper and we'd certainly like an answer to it.
MN: I don't think it's relevant in this case. We're dealing with this one specific case and not
the other short-term rentals in Town.
JA: Thank you. If you'll look with me then at Tab 25. What are the documents under Tab
25? Have you seen these before?
CP: I have.
JA: And what are they?
CP: These are all printouts of websites of short-term rental houses in Fountain Hills.
JA: Including houses?
CP: Correct.
JA: In residential districts?
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CP: Yes.
JA: Similar to the houses owned by Golf Resort?
CP: Yes.
JA: Offering similar amenities?
CP: Yes.
JA: Different in any way from the Golf Resort homes?
CP: No.
JA: Now on the issue of taxes,has Golf Resort paid its taxes?
CP: Yes.
JA: Back to when?
CP: That I'm not sure of the exact date.
JA: But to the date of when it started doing business?
CP: Correct.
JA: And are there any other outstanding obligations of Golf Resort to any municipality or
government agency here in the State of Arizona?
CP: No.
JA: Thank you. I reserve time for redirect.
MN: Okay. Call the next witness please. Mr. Iacovino.
MI: Thank you Mr. Mayor. I guess we have to share this ... I think we're on, are we on?
Yes. Chris, I'm going to move up here because I have a hard time asking questions
when I'm sitting behind you.
CP: Okay.
MI: But I have just a few questions for you. These properties were advertised on the
Internet by an outfit called Golf Zoo, correct?
CP: Correct.
MI: They were advertised for nightly rental?
CP: Correct.
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MI: They were advertised as part of multi-night packages?
(Ilire CP: Correct.
MI: You indicated to us that the offer of the private concierge has been taken off of the
advertisement presently, is that true?
CP: Those properties have been taken down completely but yes, we took that off first.
MI: Okay.
CP: Yeah.
MI: Pending the outcome of these proceedings you took these properties off the website?
CP: Correct.
MI: Okay. But they were there for a while before, weren't they?
CP: Yes.
MI: Okay. And in fact the other two properties, not the Jacklin Drive property,but the other
two has been being operated by your boss' company for about a year give or take?
CP: Almost three I believe, yes.
,,, MI: Almost three years?
CP: Well I think we bought the first house in the fall of 2004.
MI: Okay. And those were advertised on the Internet,correct?
CP: Correct.
MI: And they were advertised with professional pool table, poker table, pools, TVs, the
infamous kegarator?
CP: Yes.
MI: That's all true?
CP: Yes.
MI: Okay. The house on Jacklin Drive, you guys call that the Clubhouse.
CP: Correct.
MI: What are the names of the other two houses? Do you have names for those?
CP: We do.
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MI: What are they?
CP: One is The Estate and one is The Oasis. „qv)
MI: You said you live in Glendale?
CP: I do.
MI: Where do you live?
CP: Arrowhead.
MI: On what street?
CP: 73rd Avenue.
MI: What's the name of your house?
CP: There is no name for my house.
MI: These homes are being rented at rates between $170 and $290 a night per person,
correct?
CP: That's a fair estimate, yes.
MI: Nobody lives in these houses on an ongoing basis, do they?
CP: No.
MI: Even on a semi-permanent basis?
CP: No.
MI: You talk about the guests who come to stay in these homes, where do these people
come from?
CP: All over.
MI: All over the country? All over North America?
CP: Northeast primarily,but all over the country, yes.
MI: Have you been in contact with any of these people over the years?
CP: Yes.
MI: Now there has not been any occasion has there when one of these guests told you that
they had put in a change of address with the Post Office to have their mail delivered to
them there?
CP: No.
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Loy MI: In fact nobody ever said to you, "I want to get my bills here; I want to get my mail
here?"
CP: No.
MI: Have any of your guests ever said to you that they want to contact APS or Southwest
Gas and put the utilities in their name?
CP: No.
MI: Have any of your guests ever put their kids in our schools?
CP: I don't know.
MI: Have any of your guests ever registered to vote here in Fountain Hills?
CP: I don't know.
MI: The things that I've just mentioned, those are all things that we associate with someone
who resides someplace don't we?
CP: Yes.
MI: I'm curious, when counsel asked you if food service was provided you initially said yes.
Is there some kind of food provided in these homes?
CP: No.
MI: Okay. That confused me a little. You said that these homes do not have bars,correct?
CP: Correct.
MI: Now you mean they don't have bars complete with a bartender and whatnot but they
actually physically have bars in them.
CP: Oh yeah, sure.
MI: In fact,these homes have every imaginable amenity for the vacationer,correct?
CP: Yes.
MI: I mean the whole idea is for your guests to have a good time?
CP: Sure.
MI: Do you place any restrictions at all on whether your paying guests can invite other
people over?
Loy CP: No.
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MI: Counsel questioned you quite a bit about a zoning verification and as long as he did I
am going to ask a few questions about that too. I forget which tab number it is in there,
but if you could take a look at it please. Is that document dated?
CP: No.
MI: Is it signed?
CP: No.
MI: Does it indicate in any way who authored it?
CP: No.
MI: Does it say anything or do you have any information indicating whether or not it was
drafted by someone in response to someone's inquiry or in response to someone's
request?
CP: No.
MI: Have you ever or do you know if your employer has ever sought an official zoning
interpretation?
CP: I don't know, no.
MI: Now you said that your employer does not own other homes in other communities,just „411)
in Fountain Hills?
CP: They do own homes in Myrtle Beach as well.
MI: Okay. Do you know if in Myrtle Beach if they sought official zoning interpretations
from the Zoning Director in that community?
CP: I don't know.
MI: Are you aware that Fountain Hills and most every other community has a process for
such verification?
JA: Objection. The lawyer is testifying as to whatever other communities have. I think that
the Honorable Mayor said it very nicely that certainly none of the other short-term
rentals in the Town of Fountain Hills are at issue. Surely ordinances from communities
across the United States can't be relevant here today the way that Mr. lacovino is
proposing.
MI: Your Honor, I am asking the witness if he is aware of these procedures in other
communities where his employer might own homes.
JA: But that presumes that they exist. That requires testimony as to what those ordinances
may be. We don't have that evidence before us today and certainly Mr. Iacovino is not
qualified to offer that evidence to this Council.
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MN: Proceed Mr. Iacovino please.
MI: Thank you. Chris, to your knowledge, your employer has never sought an official
zoning interpretation from the Town of Fountain Hills?
CP: To my knowledge that is correct.
MI: Your Honor, members of the Council, I have no further questions of this witness.
MN: Redirect?
JA: Chris, let me just pick up on two points that Mr. Iacovino raised. He asked about
restrictions that you might place on your guests,but don't you have a Code of Conduct?
CP: We do.
JA: And doesn't that tell the folks in very brief terms "mind your p's and q's?"
CP: It does.
JA: Respect the home?
CP: Yes.
JA: Respect the community?
LCP: Yes.
JA: Does Golf Resort tolerate any violation of those rules?
CP: No.
JA: Does it refuse to rent to those if it were to happen, my understanding is it hasn't but if it
were to happen, would you refuse to rent to those folks in the future?
CP: Sure.
JA: And as to this zoning verification, whether it's signed or dated or not on the front, does
that fact in any way change in your mind the meda-data that shows who wrote it and
when?
CP: No.
JA: Thank you.
MN: Do you want to call your next witness please?
JA: Your Honor, we did send a list to counsel identifying who at the Town we would like to
call. We indicated Betty Brannon would be someone we'd like to call. Mark doesn't
know if she is here tonight so I ask if we could ...
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MN: She is.
JA: Then we'd like to call her please.
MN: Ms. Brannon.
JA: Ms. Brannon,could you please state your name and address for the record.
Betty Brannon (BBR): Betty Brannon, 14004 N. Sussex Place,Fountain Hills.
JA: And are you an employee of the Town?
BBR: Yes I am.
JA: And in what capacity?
BBR: I am an Executive Assistant for the Director of Public Works.
JA: And how long have you worked at the Town?
BBR: Eleven years.
JA: So you were working at the Town in 2004 then?
BBR: Yes.
JA: As an Executive Assistant? Nair
BBR: Yes.
JA: Who was ... who were you working for ... who was the person at the time that you
were working for?
BBR: I worked for Tom Ward, Director of Public Works.
JA: And was Mr.Ward the Director of Public Works in 2004?
BBR: Yes he was.
JA: Who is Molly Bosley?
BBR: Molly was the Planning and Zoning Administrator for a short time.
JA: For the Town?
BBR: Yes.
JA: And do you believe Molly was the Planning and Zoning Administrator in 2004?
BBR: I believe she was.
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JA: Okay. As an Executive Assistant to the Director of Public Works, what sort of functions
(111W do you perform?
BBR: Gee, you want the whole list?
JA: No,just summarize. We know you work hard and do a lot and we appreciate it I know.
And let me maybe, if it will help you,do you do key stroking?
BBR: Yes.
JA: Typing?
BBR: Yes.
JA: Does the Town use Word or Word Perfect or something different?
BBR: We use Word.
TA: Do you know what meda-data is?
BBR: No.
JA: No, okay. So you're not aware that when you create a document it saves who wrote it
and when?
BBR: No,I mean I wasn't aware that it did that but I'm sure it has that capability, sure.
TA: And so here's my question to you is you've heard what Chris here has testified to
tonight.
BBR: Uh huh.
JA: This document—I'm going to give you a copy of it just so you can see it—now I know
you have a good memory but probably not a perfect one. And that's just like all of us;
it's nothing unique to you. What I've put in front of you is just a two-page deal; it's a
zoning verification from the Town and then a little meda-data printout. And I'm just
going to ask you ... I know you've never seen it since you don't know what it is. I
know you've never seen that second page, have you?
BBR: No I have not.
TA: Okay. So then let me ask you about that first page under Tab 2. Have you seen
anything before, we're talking about this specific one, have you seen anything like this
document? Anything called a zoning verification before?
BBR: You know I don't remember seeing it, it doesn't mean that I haven't, but I don't
remember it.
JA: Have you seen any zoning verification other than just this one? Have you seen any
zoning verification ever in your eleven years at the Town?
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BBR: I don't think so because I don't work in Planning and Zoning.
JA: Now in your capacity as being an Executive Assistant to the Director of Public Works, '4041)
do you sometimes have occasion to offer assistance to others at the Town?
BBR: Sure.
JA: Okay. Would it have been possible that you could have provided services to Ms.
Bosley when she was acting in her ...
BBR: Sure, that is possible, yes.
JA: Would it have been unusual?
BBR: Yes,because she would have had an assistant.
TA: Do the assistants at the Town sometimes cover for each other when they are out, on
vacation or work just gets too busy at a particular desk?
BBR: Sure. Yes we do.
JA: Okay. So let me just ask again now, you're saying you don't recall ever seeing a
zoning verification ever in your time with the Town because it's not your department?
BBR: Yeah, I wouldn't know.
JA: Okay. Now do you know if Ms. Bosley is still with the Town?
BBR: No, she is not.
JA: Do you know when she left?
BBR: I'm not sure.
JA: Do you know where she went?
BBR: I believe she went to work for an engineering company but I don't know. I don't know
that.
TA: Alright. And I want to be clear that what's up here on Page 2 is not something you've
seen before, this zoning verification on short-term rentals?
BBR: I could have seen it but I don't remember seeing it. I don't remember typing it.
JA: Okay. And were you involved at all in pulling together documents to respond to the
Public Record Request that Golf Resort submitted to the Town?
BBR: No, I was not.
JA: Okay. Do you know if the Town has a mechanism to archive all of the materials it
produces? Does it save everything it creates?
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BBR: I believe we would.
JA: Okay. I mean is there something ....
BBR: I mean for a time we would because you know the Arizona State Library says you save
this for so long, you know, but whether something like this would have been saved I
don't know.
JA: And you don't know if the Town has a document retention program or policy?
BBR: We do have, yes.
JA: Okay. And is that something that's published in binders sitting somewhere or on line
that you access,that policy itself?
BBR: We do have it in a binder.
JA: Okay.
BBR: It's also available on the State Library website.
JA: Okay. And is it a big fat binder or just a short binder?
BBR: I don't know. The one I have is just small.
JA: Okay, but you don't know whether that particular policy would have required the
Town, without looking at it and studying it, you wouldn't know if it required the Town
to maintain a record of,for example, what we are looking here at Tab 2?
BBR: No. Because I don't know what the Planning and Zoning requirements are.
JA: And it's not your responsibility in any event to follow through on that policy?
BBR: That's correct.
JA: Is that someone else's job?
BBR: That's someone else's.
JA: Who is that?
BBR: For Planning and Zoning it would be the Planning Assistant.
JA: Okay, so the document retention policy is carried out by the assistants?
BBR: Primarily, yes.
JA: Okay, so for example you do it for Public Works.
cito
BBR: For Public Works.
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JA: You preserve the documents?
BBR: Or we ... or I ... we put them out to be destroyed when it's appropriate.
JA: Nothing further from me.
MN: Mr. Iacovino,do you have any questions?
MI: Thank you Mr. Mayor. No,I have no questions of Ms. Brannon.
MN: Thank you Ms. Brannon.
JA: Thank you. Golf Resort would next call Mr.Turner,Richard Turner.
Richard Turner(RT): Mr.Turner would you please state your name and address for the record.
RT: Richard Turner, 14854 N. Greenhurst, Fountain Hills.
JA: And Mr. Turner, what is ... you work for the Town of Fountain Hills,correct?
RT: Yes.
JA: And what is your title?
RT: Planning and Zoning Administrator.
JA: Now I think that same binder of documents is in front of you and I'd like to start with
Tab 6 if I may. You recognize this document as a document you wrote, is that correct?
RT: Yes.
JA: Now under your research section, the first large paragraph beginning Town of Paradise
Valley, five lines down, you wrote, "Fountain Hills definition of family does include a
group of persons not related by blood or marriage, living together as a single-
housekeeping group." You wrote that, correct?
RT: Yes.
JA: That is a true statement, correct?
RT: Yes.
JA: Then if you'll look down to the City of Scottsdale, the very next paragraph, the last
sentence of this document that you wrote says, "The Fountain Hills Home Occupation
regulations do not address short-term occupancy." Is that what it says?
RT: Yes.
JA: And that is a true statement?
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RT: Yes.
JA: Then on the next page, second paragraph, this indicates that staff, that's the Town staff,
identified 25 condominiums, 10 town homes or duplexes and 12 other single-family
homes available for short-term occupancy within the Town of Fountain Hills. That's
what it says?
RT: That's what it says.
JA: And that's a true statement?
RT: At the time, yes.
JA: Do you have reason to believe that the number of properties has decreased or increased
since you made this statement?
RT: I would hesitate to venture a guess but I doubt if those numbers are still the same.
JA: And why, why do you?
RT: Well, I think that the market is a very .... it changes all the time more or less ...
JA: Can you tell me, I'm sorry, go ahead.
RT: You could have changes to those numbers. Certainly things come on the market, things
that go off, you just don't know.
JA: But certainly at the time you wrote this it was accurate?
RT: At the time the research was conducted, yes.
JA: Can you please tell me what zoning district condominiums are in in the Town of
Fountain Hills?
RT: Condominiums are permitted in the multi-family zoning districts.
JA: Is that residential?
RT: That is residential.
JA: What about townhouses, the 10 townhouses you mentioned, what sort of zoning are
they in?
RT: Well they could be multi-family; they could be in a single-family with a residential unit
plan of development.
JA: But in any event, residential?
RT: Yes. They could also be in commercial if the Town had approved a Special Use Permit
authorizing that development.
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JA: Are you aware of any town homes in the Town of Fountain Hills that are in commercial
zoning?
RT: I believe there is a development where there is a Special Use Permit that does allow
town homes. I don't recall exactly exactly where they are,but yes.
JA: Other than that one?
RT: No.
JA: Does that mean all the other town homes in the Town of Fountain Hills are in
residential zoning?
RT: It would be safe to say that most of the town homes in the Town of Fountain Hills are in
residential zoning.
JA: The vast majority?
RT: Yes.
JA: What about duplexes, are they in residential zoning in the Town of Fountain Hills?
RT: Yes.
JA: And it goes without saying, doesn't it, that the 12 other single-family homes would be
in residentially-zoned districts?
RT: More than likely, yes.
JA: Are you aware of a single-family home in the entire Town of Fountain Hills that is
commercially zoned?
RT: No.
JA: If you'll go with me then to the very next paragraph where it says that staff has also had
preliminary discussions with the Town Attorney on this issue, are you speaking of Mr.
McGuire?
RT: Yes.
JA: You spoke with him and after that you said, "It does not appear the Zoning Ordinance
addresses this use." Is that what this document says?
RT: Yes.
JA: And by Zoning Ordinance you mean the Town's Zoning Ordinance?
RT: Yes.
JA: And by use, you mean short-term rentals in a residential district?
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RT: Yes.
4111w JA: Then you further say, "Although the situation .." and you mean the Golf Resort homes,
correct? "The situation?" Are you talking ...?
RT: That, you know Golf Zoo certainly was the impetus for this whole issue but the focus of
the report is on short-term rentals.
JA: Can you tell me what the ray line says on the first page of this document?
RT: Short-term Rental Housing, Golf Zoo.
TA: And is that what the memo was about?
RT: Yeah, that sentence does refer to Golf Zoo because it does say it has some
characteristics of a hotel.
JA: But then it goes on to say, doesn't it, "It is not a hotel as designed by the Zoning
Ordinance?"
RT: As defined by the Zoning Ordinance, yes.
JA: And that was a true statement when you wrote it. Is that true?
RT: Yes.
,. JA: Let me ask you a little bit about how you prepare one of these memorandums, meaning
how long have you worked for the Town?
RT: Two years and three months.
JA: Do you have prior employment in a similar capacity as to what you're serving the Town
now?
RT: Not as a Planning and Zoning Administrator. I've been a Planning Director, I've been
an Acting Planning Director, I've been an Assistant Director, I've been a Principle
Planner, I've been a Planner II.
TA: How many years of experience in that field?
RT: Since 1976. I think that's thirty ....
JA: That's at least thirty years,right?
RT: Yes.
JA: So, when you prepare a memo like this are you thorough?
RT: I try to do the best job I can with the resources that are available and the time allowed.
JA: And you're careful?
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RT: Yes.
JA: And you try to do everything you can to prepare a correct and accurate memorandum?
RT: Again, given the constraints at the time, yes, I certainly try to be as accurate as I
possibly can be.
JA: And you did all of that? You were thorough and careful in trying to put together the
most accurate memorandum you could when you put together this memorandum?
RT: Again, given the circumstances at the time I did the best I could, yes.
JA: You didn't mean to leave anything out?
RT: No, but everything ... it's very typical in situations like this that they are somewhat
dynamic. You know you have discussions with supervisors and you have discussions
with others on the staff all the way up to the time of the actual hearing, which is what
occurred in this situation.
JA: But you, when you made this memorandum, were trying to do the best job you could
do?
RT: Yes.
JA: Now you talked a little bit about it being dynamic. How well was this memorandum
received?
RT: Well, I for sure you'd have to ask the Town Council that question but in my view I
believe they considered the recommendations but I think what carried the day was the
information provided at the meeting in my oral report to them regarding what Mr.
lacovino had indicated to me two days prior about what he felt he could do in terms of
the Golf Zoo operation, vis a vie the commercial nature of the short-term rental.
JA: What could he do?
RT: Well, he felt that in his experience and with knowledge of our Ordinance and
knowledge of the situation as it existed; he felt that it is something that we could, that
we could, that he could,prosecute.
JA: On what basis?
RT: We didn't go in ... he felt that he was ... and I'm trying to recall exactly because I
don't want to put words in anyone's mouth, but I think it was on the basis that the
characteristics of the short-term rental were of a commercial nature. They were no
longer of a residential nature, no longer a single-family use. It had turned the corner; it
had, it had ... it was now more of a commercial use in a single-family residential zone.
It was not a permitted use in single-family zoning.
JA: Did he cite any law for that or just give you his opinion?
J
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RT: I believe it was ... in the discussion that we were having he didn't cite any law other
(kw than citing the sections out of our own Zoning Ordinance.
JA: Now we have the full Zoning Ordinance with us here tonight.
RT: Yes.
JA: But if we looked at the whole thing, Mr. Turner, isn't it true that no where, not once in
that ordinance, appears any definition of a residential use?
RT: Well, there is a definition of a single-family dwelling, there is a definition of dwelling,
there's a definition of family, so there are a lot of definitions that relate to a single-
family dwelling.
JA: What about one that defines residential use?
RT: Well, I don't know but obviously you've looked and didn't find one, so you know ...
JA: What are your responsibilities in your job?
RT: Well, I prepare staff reports, I manage the employees in Planning and Zoning, I present
reports to the Planning and Zoning Commission and the Town Council, I offer
interpretations of the Zoning Ordinance.
JA: Well then turn with me then to Tab 20 if you will. And you will notice on the bottom
right hand corner there are GR, the letters GR-00. I'd like you to flip a few pages into
that document. By the way, why don't you tell us what this is we're looking at.
RT: Well these are the definitions in the Chapter 1 of the Zoning Ordinance.
JA: And if you could please turn to me to GR-0096. These definitions are arranged in
alphabetical order, aren't they?
RT: Yes.
JA: In between Recreational Vehicle Park and Restaurant, does the word Residential
appear?
RT: No, it does not.
JA: Is there a definition for residential here in alphabetical order?
RT: No, there is not.
JA: Is there a definition for residence?
RT: No.
JA: Is there a definition for residence NTS it's not like NCE?
Loy RT: No, there is not.
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JA: Is there a definition for resident?
*41)
RT: No.
JA: Okay. Is there a definition for residential use?
RT: No.
JA: Now you mentioned a couple of other definitions and I'd like to turn to those so that the
Council has the benefit of understanding all the definitions. I'd like you to turn to ...
we're just going to go in alphabetical order here; I'd like you to turn to GR-0087. Do
you see a definition for a bed and breakfast establishment?
RT: Yes.
JA: And a bed and breakfast establishment? Well, that's where folks rent up to two rooms
in the same dwelling,correct?
RT: Well, if you want the definition, I'd prefer we get it in the record the way it's written in
the Ordinance.
JA: Alright. Do you want to have the honors or ...
RT: "A dwelling in which the occupants of the dwelling provide for compensation the short-
term lodging and meals for guests, occupying not more than two guest rooms located
within the same dwelling."
JA: Is this use proper in residentially-zoned areas?
RT: Subject to the approval of a ... I believe, it's a Temporary Use Permit.
JA: Once that permit's in place is it appropriate to run a bed and breakfast in a residential
area?
RT: Yes, a Temporary Use Permit is good for up to two years.
JA: If Golf Resort applied for a bed and breakfast establishment Temporary Use Permit,
agreed to provide meals to its guests, at least not more than two guest rooms, would that
use be approved under this definition?
RT: Well again, provided they satisfy the requirements of the definition and the criteria for
bed and breakfasts that is contained within the single-family residential zoning
district, yes.
JA: And the criteria are?
RT: You'd have to ... well, this is not your ... I'd have to get my Zoning Ordinance to
locate it.
j
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JA: Well then let me look at the ... it would have to be short-term lodging, correct? Under
Lir this definition. They could only provide short-term lodging?
RT: Yeah, but I think that the bed and breakfast criteria are no more than two bedrooms per
JA: I'm sorry to interrupt; can you tell me where you are?
RT: I'm sorry. I'm in Chapter 10 and I'm looking at Section 10.03B (Bed and Breakfast)
and if you'd like I can read that.
JA: Alright.
RT: "Bed and Breakfast operations may be permitted in these zones by Temporary Use
Permit Only. At a minimum the following standards shall apply: No more than two
bedrooms per residence may be used for the business, no more than two persons per
room, one off-street non-tandem parking space per bedroom."
JA: So if Golf Resort rented out no more than two bedrooms per residence, didn't allow
more than two folks per room, and had off-street parking, non-tandem off-street
parking, one for each room, then these homes, these three homes all in residential
districts could be used as a bed and breakfast?
MI: Your Honor, I'm gonna object at this point on an array of grounds, but again primarily
relevance. There's no contention that these properties are bed and breakfasts. I think
(1160, counsel and I both agree that they are not. So this discussion is really not adding
anything that the Council would need to consider in making its decision tonight.
MN: I agree with that. Continue on Counselor.
JA: I am going to take that as an objection without an opportunity to respond?
MN: Pardon me?
JA: I just want to make sure that I understand the ruling,that is ...
MN: I'm upholding his objection.
JA: We'll object to the lack of response to be provided by the Appellant's counsel. Let's go
back to some of these other definitions. Let's look at GR-0089 and this, at the bottom,
second to last, is the definition of dwelling, correct?
RT: Yes.
JA: And the definition includes a statement that the building be designed exclusively for
residential purposes,correct?
RT: Yes.
RA: Can you please point to me where, in the definition of dwelling, it uses the word "use"
or"use?"
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RT: Those words do not appear.
JA: So the words "use" or "use" nowhere appears in the Town's definition of dwelling,
correct?
RT: Yes.
JA: Now let's turn to the very next page, which is dwelling single family. Can you please
tell me where, in this definition, dwelling single family, the words "use" or "use"
appears?
RT: Those words do not appear.
JA: What about two definitions down, dwelling unit? Can you please tell me where, in this
definition, "use"or"use" appears?
RT: Those words do not appear.
JA: So in the three definitions of dwelling, dwelling single family and dwelling unit, does
any one of those definitions refer to residential use?
RT: Well the word use does not appear in any of those definitions.
JA: Now let's look at family because I do think dwelling single family references that it be
... references one family. Do you see the definition of family?
RT: Yes.
JA: Does it require that the folks be related?
RT: It does not.
JA: By blood?
RT: Does not.
JA: By marriage?
RT: Does not.
JA: But it does say that a family is two or more persons living together as a single
housekeeping group in a dwelling unit?
RT: Yes.
JA: By the way, is there a maximum stated in family?
RT: No.
„oil)
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JA: Are you aware of any other definitions that apply to the use of residential homes for
short-term rental purposes Mr. Turner?
RT: No.
JA: Now let's go back to Tab Number 6. And I am looking at the second page, GR-0010
and I'm back in the second paragraph. The reason we got to definitions is because I
was looking at your statement that the Golf Resort homes is not a hotel as designed by
the Zoning Ordinance. That's true,correct?
RT: That's true; it is not a hotel as defined by the Ordinance,right.
JA: It doesn't look like a hotel,right? The Golf Resort homes don't look like a hotel?
RT: Uh huh.
JA: Is that correct?
RT: Yes.
JA: And not one of the homes has the staff that a hotel has on site?
RT: Correct.
JA: Then the next statement is the Zoning Ordinance doesn't distinguish short-term rental
(ho, from single-family use?
RT: True.
JA: Now let's go down a little bit, the third paragraph from the bottom, you talk about the
liquor issue but you're not suggesting the Town of Fountain Hills has jurisdiction over
this beer issue, are you?
RT: That's true.
JA: Now I'm looking at the next paragraph that says, last sentence, "Upon the receipt of a
complete application, the Town will issue a Business License to Golf Zoo." Is that
what it says?
RT: That's what it says.
JA: At the time you wrote this memo, was that a true statement?
RT: At the time the staff report was written I believe that to be a true statement.
JA: Did someone in the Town or who counsels the Town tell you to change your mind from
that that statement?
RT: No. I came to that conclusion independently in the discussion with Mr. McGuire and
learned counsel.
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JA: You are going to offend Mr. McGuire. Now, so on advice of counsel you changed your
mind as to the statement?
RT: No, I didn't do it on advice of counsel; I did it ... I came to my own conclusions as a
result of that discussion.
JA: Did anyone else on the Council ask you to reverse your position?
RT: Certainly not.
JA: Have you ever prepared a zoning verification?
RT: Yes.
JA: Here at the Town?
RT: Yes.
JA: How many?
RT: I don't recall exactly how many.
JA: So few that you can't remember or so many that you can't remember?
RT: Well, you know sometimes you get a request that has to deal with you know "I've got
an RV in my side yard, you know, I'd like to keep it there for a couple of weeks, you
know telling me what I can do and what I can't do" you know. I respond to that.
That's sort of a zoning verification situation. I do a lot of those kinds of things. I get a
request, someone owns a property in C-1 zoning, "Can I do a medical facility in this
zoning district?" I research that and answer that kind of a question. The most recent
one I did has to do with a lot split. I did some research there, tried to explain what the
Ordinance said.
JA: What form do your Zoning verifications take, are they oral?
RT: No, they are in writing.
JA: Are they in the form of a letter or a memorandum?
RT: They are in the form of a letter.
JA: And are they typically directed to a particular person?
RT: Yes.
JA: Were you here in the fall of 2004 working for the Town?
RT: No, I was not.
JA: Who was your predecessor?
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RT: Well, Molly Bosley was certainly there I believe until sometime before 2004 and after
that there was an interim Planning and Zoning Administrator,Mr.John Poole.
JA: Is that Poole with an"e"on the end?
RT: I believe so.
JA: Now if I look at the next page of your memorandum, you discussed the issue of
changing the Ordinance, making it retroactive, correct?
RT: Yes.
JA: And you've explained here that retroactivity would not be applicable,is that right?
RT: In the context of the short-term rental situation that's true.
JA: In fact, didn't you say, and I quote, "A short-term rental, established prior to the
effective date of an ordinance prohibiting such use would become a legal non-
conforming use and as such would be allowed to continue?"
RT: Yes.
JA: And at the time you wrote this memo that was correct?
RT: Yes.
(ay JA: Now you finally, in your recommendation paragraph,you said, "Literature suggests that
short-term rentals have some characteristics of commercial uses." Is that right?
RT: Yes.
JA: So when you wrote this memo, your conclusion was the Town of Fountain Hills didn't
prohibit short-term rentals in residential districts,right?
RT: True.
JA: That in the ordinance, that to change that, an ordinance would have to be amended,
correct?
RT: Yes.
RA: And that in fact you prepared such a draft amendment to the ordinance,is that correct?
RT: Yes.
JA: But you knew at the time you wrote that that short-term rentals had some characteristics
of commercial uses?
RT: Yes.
rr JA: Do you know if your draft ordinance amendment was adopted?
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RT: No, it was not.
JA: And it was the understanding at the time that, as you interpreted the ordinance, there
was no prohibition on Golf Resort's use of these three homes.
RT: As short term rentals. We still had the issue of the commercial aspect of the use.
JA: And what was the commercial aspect of the use?
RT: In our investigation early on and as we continued to get feedback from neighbors, we
got more information and a lot of it we got off of the website, a lot of the terms referred
to earlier this evening, the kegarator, the on-site concierge, a lot of the facilities and
amenities that were going to be available for the guests.
JA: Did you talk to anyone from Golf Resort?
RT: I did not, no.
JA: Did anyone at the Town talk to Golf Resort?
RT: I believe Raymond Reese did but you'd have to ask him to be sure.
JA: Other than Mr. Reese, are you aware of anyone who may have contacted Golf Resort in
the context of your investigation?
RT: There may have been other employees but I am not aware of those. j
JA: If Mr. Reese did speak to Golf Resort, is it the practice of your department to make
notes of such communications.
RT: It depends on the nature of the discussion. It really does depend on what's being
discussed.
JA: So there's no particular policy.
RT: No.
JA: Now let's look at Tab 7. And this is a copy of an email you wrote to the Town
Manager, is that correct?
RT: Yes.
JA: And two pages into this email, GR-0013C, by the way, here at the first prose paragraph,
by the way you clarify that the 10-person limit is not a Zoning Ordinance regulation. Is
that correct?
RT: That's correct.
JA: And then in your answer to number two you say, "This use would not be considered a
home occupation." Is that correct? „to)
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RT: True.
JA: Is that still your belief today by the way?
RT: Yes.
JA: Okay. Let me go back to the commercial nature. You're investigation, what did it
inform you as to the ... what you believe was the commercial use of the property?
RT: Well again, I go back to what was on the website and the way the property was being
marketed. The beer, the on-site concierge, the short-term rental, everything together
seemed to indicate that it was a commercial operation.
JA: Okay, you mentioned three things there. I want to break it down one by one. You said
the free beer,the on-site concierge and the short-term rental itself?
RT: Yes.
JA: Let me ask you first about the on-site concierge. So it was your understanding that the
concierge services being offered were an on-site function?
RT: It was my understanding that the services of a concierge were available and that's not
something that I would ordinarily associate with a regular single-family use.
Lif JA: Now I'm going to ask you again, you said single-family use but does ... is there such a
thing as single-family use defined in the definitions we just went over?
RT: Nothing specific to ... we went through that. Yes,that's true.
JA: Right. So how is someone like Golf Resort supposed to know what a single-family use
is if that's the reason for denying their applications?
RT: Well, ordinarily people ask for ... if there's a question in their mind about whether a
use is permitted or not,they ask for a zoning interpretation.
JA: Or a zoning verification?
RT: Or a zoning verification.
JA: You don't have any basis to dispute that the zoning verification that Mr. Parcell
testified to this evening, you don't have any basis since you weren't here, to dispute his
recollection that Golf Resort requested that through Bob Bales?
RT: I have no reason to challenge his testimony.
JA: Or to challenge his testimony that the Town sent that to his prior attorney Bob Bales?
RT: That's true.
Lie
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JA: So then you mention ... now would it change your mind at all by the way if the
concierge services were not offered?
RT: I would ... in any situation like this you really do have to look at the circumstances as
they exist at the time that you are asked the question so I would be hesitant to answer
that question standing here without taking a complete and comprehensive look at
exactly what your situation is today.
JA: So what about the free beer? Why do you think ... first of all, is that prohibited
anywhere in the ordinances of this Town?
RT: I`ve got to believe it's not permitted somewhere. I don't know if I'm going to be able
to look to and quote you a section, but distribution of free alcohol to me is pretty
outrageous.
JA: Can you give your friends a beer when they come over for a barbeque and watch a
game?
RT: Certainly I can do that.
JA: Okay. Now by the way, at the time you wrote this memo had you gone to the website
to see if the free beer offer was still there.
RT: I do ... and I don't recall exactly when ... but I did know that the kegarator had been
removed from the website but I don't know exactly when that was done. I don't believe
I referred to it in my memo, did I? ,4110)
JA: Well let's see. First of all,let's look at the first page of Tab 7. Can you tell me the date
of this email?
RT: We're on Page 7 here?
JA: It's Tab 7.
RT: January 17t.
JA: Do you remember the date of the hearing?
RT: I think ... is it the 18th?
JA: That's correct. So you wrote this email the day before,correct?
RT: Uh huh, yes.
JA: Then can you please look with me at GR-0013C, actually, let's look at GR-0013D.
And do you see the parenthetical phrase at the end of the trailing paragraph at the top?
RT: Right.
JA: What does it say?
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RT: "The free beer promotion is no longer mentioned on Golf Zoo's website."
JA: So the day before the hearing you knew that correct?
RT: Yes.
JA: Did you share that with the Council?
RT: I did not. I don't believe the issue came up.
JA: Well did you make a statement to the Council at the hearing?
RT: Well I don't ... again, I don't believe that the issue before the Council even though
again the line says comma "Golf Zoo" ... the emphasis of my presentation was on
whether or not it would be appropriate for the Town to initiate a Zoning Ordinance
amendment dealing with short-term rentals.
JA: So you didn't mention anything about the free beer issue being gone?
RT: I did not.
JA: Now the third issue you raised was simply the short-term nature of the rental. Is that
correct?
RT: Yes ... well, what am I referring to now?
JA: Yeah, tonight here you gave me a list of why you thought it was a commercial use.
RT: Oh yes, okay.
JA: You listed three things, on-site private concierge, free beer and simply the short-term
nature.
RT: Yes and that ... but that list is right off the top of my head. I mean if I went into it and
studied it again I might come up with some other things from my research that ... there
are probably more, are more, than just three commercial aspects of this use.
JA: But as you stand here right now, you can't think of any others than those three can you?
RT: Yeah, it's just a little intense situation here.
JA: How many presentations have you made to Council before in your 30-year's
experience?
RT: Oh, I've made quite a few.
JA: Okay. That final use, the short-term nature, why is that ... first of all, is there a
definition of short-term in the ordinance?
RT: No there is not.
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JA: Is there a definition of the long term?
RT: No there is not.
JA: Then why is short term in your mind a commercial use?
RT: Well I didn't say short term was a commercial use. I don't believe that short term in
and of itself is a commercial use. It is one stick in a bundle of straws that, you know, if
you add everything up then you look at the totality of the situation and you make a
determination as to whether or not it is a commercial use or a residential use.
JA: And who makes that determination?
RT: Well ultimately I do in terms of interpreting the Zoning Ordinance.
JA: Now let's look at Tab 8 if we can. This is another memo you wrote, isn't it?
RT: This memo was a joint offering from myself and Kate Zanon.
JA: And Kate Zanon works here at the Town,doesn't she?
RT: Yes she does.
JA: Why was Kate involved at this point?
RT: She was also doing this research. She is here this evening if you want to ask her the ,44)
question.
JA: So you doubled your resources then in preparing this memo?
RT: Yes.
JA: Were there any different conclusions in this memo than the prior memo we had you go
over?
RT: Well, let's see.
JA: Well let me help you a little bit. For example, you explain here that the Fountain Hills
definition of family does include a group of persons not related by blood or marriage
living together. Right?
RT: Right.
JA: That's at the bottom of the first page.
RT: Uh huh.
JA: Then at the top of the second page, GR-0014B, you state under the Scottsdale section,
that "Fountain Hills home occupation regulations do not address short-term
occupancy." Is that right?
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RT: That was our ... yeah ... determination having looked at Scottsdale's regulations.
JA: Right. And this is your and Kate's determination together,right?
RT: Yes.
JA: By the way, the ray line here now, instead of just short-term rentals is Golf Zoo rentals,
right?
RT: Yes it is.
JA: And again here you reference Andrew and that's Mr.McGuire here, is that correct?
RT: Yes.
JA: And you state on the top of the second page, "In discussing this issue with the Town
Attorney it does not appear the Zoning Ordinance addresses this use." Is that correct?
RT: Yes.
JA: And then you expressly state in the very next paragraph, "For the Town to prohibit this
kind of use from a zoning perspective, an amendment to the Zoning Ordinance will be
necessary."
RT: Uh huh.
411Ir JA: Is that correct?
RT: Yes.
JA: And you and Kate wrote that together?
RT: Yes.
JA: And then you and Kate when on to write together the next sentence, which says, "The
ordinance, as it is presently written, does not provide us with the tools we need to
prohibit this type of use." Is that what it says,Mr.Turner?
RT: It says that.
JA: And then later on, three paragraphs down under the definition of single-family
dwelling, it states, "As stated above, the definition of single-family dwelling includes
unrelated people living together so there is no violation." Is that correct?
RT: Yes.
JA: And do you see the next paragraph?
RT: Yes.
LJA: What's the heading there that you and Kate wrote?
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RT: Rental ... are you looking at the next thing down?
vie)
JA: I think it begins rental properties.
RT: Yes, rental properties.
JA: And what does that say?
RT: "The Town of Fountain Hills does allow people to rent their property to another
person/family. There is no regulation defining a minimum rental time period."
JA: So if there is no regulation defining a minimum rental time period, why do you consider
short-term rental to be an indication of commercial use since there is no regulation
defining it?
RT: Well again, it's just one ... you're correct, there's no prohibition against short-term
rental, but it is almost ... again, it's one of several factors that I considered in reaching
the determination that Golf Zoo use is more of a commercial use than a residential use.
JA: Now you say"more of a residential use than?"
RT: More of a commercial use than a residential use.
JA: Now does that mean you think there is some residential use of the properties?
RT: I don't know ... it would be tough for me to say it's 60/40, it's 70/30, it's ... that's very
difficult.
JA: But is it split? You don't even have to give me numbers.
RT: Again, I would hesitate to say. It's ... certainly there is some residential characteristics
because the use is occurring in the same family home.
JA: By the way, is there a definition of commercial use anywhere in the Town ordinance?
RT: You already know the answer to that I assume, or are you asking me that? I can look in
the definitions to see. Well,there's nothing under commercial.
JA: In fact there isn't a definition for commercial use,is there?
RT: I don't see one,no.
JA: Instead there's just zoning,commercial zoning, correct?
RT: Yes.
JA: And there's residential zoning, correct?
RT: Right.
,4410)
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JA: And there's lodging zoning apart from that,correct?
(law
RT: Uh huh. Yes.
JA: Now going back to your memorandum, you and Kate also concluded that the Town
ordinance does not regulate the maximum number of persons per bedroom,correct?
RT: Right.
JA: So by the way, when you were preparing this memorandum with Kate, were you
looking for provisions in the ordinance that would allow the Town to prohibit this
requested use?
RT: We were just looking at all possible ordinances and regulations that would affect in
some way the subject.
JA: Okay. And then in your summary in the final page of your memorandum you and Kate
concluded together, "At this time the only potential violation identified is the maximum
number of occupants per household."
RT: That's what the memo says.
JA: Now let me ask you this. At the time you wrote this memo and the prior memorandum,
you knew that Golf Resort was leasing these properties on a short-term basis, right?
Because you actually reference it short-term rentals in the first memorandum.
RT: Uh huh, right.
JA: Okay. You also know,because we can see it at the top of your memorandum on the last
page above your summary where you say there is no violation you reference the liquor
issue. So at the time you and Kate wrote this memorandum you knew that the Golf
Resort was, at least you thought, giving away free beer, right?
RT: Yes.
JA: Well that's two of the three you've identified here tonight as why you think it's
commercial, meaning you knew at the time you wrote this memo that they were giving
away beer, you knew they were short term. Is it your testimony that the single
additional characteristic that took this from a residential use to a commercial use was
the private concierge?
RT: Well, at what point in time?
JA: Well,you wrote this memo.
RT: Again, if you're asking me how I came to the determination to change my mind, no.
Ask me the question again please.
RA: Okay, again, I just want to recap. You've identified tonight three reasons why you
think this is a commercial use.
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RT: Right and I explained that that might not be all of them but those are the ones that come
to mind.
JA: Right, but that's all we've got tonight, those three, and that's what we're deciding
things on, what we've got here tonight. So the first was the free beer, the second was
the concierge,the third was the short-term basis. Did I get those three right?
RT: Yes.
JA: You knew at the time you and Kate wrote this memorandum about the first and the
third,the free beer and the short-term rental didn't you? Is that correct?
RT: Yes.
JA: So when you wrote this memorandum those two, even in combination, you still
concluded this was not a prohibited use. Isn't that right?
RT: This memo does conclude that.
JA: So my question is if we take that third one, the private concierge, and add it to the ones
you already knew about, is that private concierge in your estimation enough to take this
from a residential to a commercial use?
RT: Probably not, there are probably ... there are other factors again to consider in an
overall evaluation of the use. There's the fact that people ... that these are people that
are vacationing for a very short period of time, they don't live at this location, they're ,4110)
not residing, they're staying. There are a lot of factors to consider.
JA: But the three you considered are the three we talked about right?
RT: Those are the ones I mentioned earlier in my testimony.
JA: And you knew about two of them and you and Kate both said not a prohibited use under
the Town's ordinance,correct?
RT: Early on in this investigation,yes.
JA: What else did you learn after you and Kate wrote this memorandum that changed your
mind?
RT: I think it was ... again, I think it was that discussion prior to the January 18th Town
Council meeting, the discussion I had with the two attorneys of the Town that led me to
conclude that this was more of a commercial use than it was a residential use.
JA: So what additional characteristics did the Town attorneys give you in addition to the
beer you already knew about and the short-term nature you already knew about?
RT: Again, I think it was the whole discussion that took place, the character of the use, the
people that were going to be there, how long they were staying, the purpose of their
stay, the characteristic of you know just the occupancy.
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JA: There's not any prohibitions on any golfers coming into Town in Fountain Hills and
staying in a home, are there?
RT: Certainly not.
JA: By the way, in a subsequent email under Tab 9, or in a prior email, you see the bottom
part of it here. It's from you to the Council. It's January 31d 07. At the top of the
second page, you say, "As it is presently written, the Zoning Ordinance does not
distinguish short-term rental from single-family residential use. Accordingly, we would
not be able to cite the owner of this property for violating the Zoning Ordinance on the
basis of a short-term rental." And then you go on to say that it would have to be
amended to prohibit short-term rental of a residential property. Is it improper then,
having reached that conclusion, to consider as the ordinance is currently written, the
short-term nature of the rental as a basis to deny these applications?
RT: Exclusively, no it's not.
JA: And would the free beer itself be enough to deny the application?
RT: Well again, you have to look at the totality of the situation and frankly I ... it was ...
again, I will admit that I did change my mind on this.
JA: Is there anywhere in the ordinance of the Town of Fountain Hills a statement that puts
property owners on notice that their use in their zoned district will be evaluated under a
totality of the circumstance's analysis?
RT: No, I don't think there is anything like that.
JA: Typically, don't you in your position simply do what you did in the first couple of your
memoranda and that is, go to the ordinance, compare it to the use, and then make a
determination based on the ordinance as it's written?
RT: I think the way that I do interpretations varies depending on what the question is. Some
times it's very simple, other times it's very complex.
JA: Pages ... Tabs 10 and 11 ... You worked with Mr. Reese,correct?
RT: Yes.
JA: These are emails to you about short-term rentals in the Town of Fountain Hills in
residential districts, correct?
RT: Yes.
JA: Do you trust Mr. Reese?
RT: Certainly.
JA: Do you rely on his work?
RT: Yes.
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JA: Do you respect his ability to be accurate?
RT: Yes.
JA: Do you have any basis to question the work that he sent to you here on these two
emails?
RT: Uh, no.
JA: So you have no basis to dispute the number of short-term rental properties currently
available in the Town of Fountain Hills?
RT: Available at the time this memo was written, yes.
JA: Right. In fact in Tab 11 he adds one more single family to the count in Sunridge
Canyon, is that correct?
RT: That's right. Uh huh.
JA: Thank you Mr. Turner.
MN: You have any questions of Mr.Turner?
MI: Your Honor, I do. I notice that we're right about at the two-hour point and I'm
wondering if we might take a brief recess at this point and resume in five or ten
minutes?
MN: At this point we'll call a recess for ten minutes. We will resume back here at 5 after 7.
MI: Thank you.
MN: Mr. Iacovino, are you ready to proceed?
MI: Yes Your Honor, thank you. Mr. Turner, you testified that our Zoning Ordinance does
not specifically define the term residential use, correct?
RT: Yes.
MI: And it's true.
RT: Yes.
MI: Nonetheless, would you know a residential use if you saw one?
RT: Yes.
MI: How about a commercial use? Our code does not define commercial use,correct?
RT: Yes.
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MI: Do you think you would know one if you saw one?
(lbw
RT: Yes.
MI: Do you think we would all pretty much know one if we saw one?
RA: I object. You can't testify as to what the rest of us might think a commercial,
residential use might be.
MI: I'll withdraw the question.
MN: Please. Thank you.
MI: You said that you'd reached a conclusion that what we were dealing with here was
really a commercial use as opposed to a residential use, is that correct?
RT: Yes.
MI: You talked about, and Counsel asked you numerous questions about the factors that you
considered in reaching that conclusion?
RT: Yes.
MI: And you mentioned there were many?
RT: Yes.
MI: Amongst those, would there ... would it possibly factor into your decision the fact that
the Appellant was bringing in something up to$2,200 a night?
RT: That would be a minor consideration actually,but yes.
MI: You were questioned very extensively about a memo that you drafted back in January,
do you recall that?
RT: Yes.
MI: And in fact,there were several excerpts of it that you were asked to read and justify?
RT: Yes.
MI: You told us that at some point over time your position changed on some of those
issues?
RT: Yes.
MI: Have there been occasions when, as you thought about an issue or gathered additional
information,that you actually had changed your position?
RT: Yes,that's true.
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MI: Have there ever been times that you have concluded that a previous position that you
had taken may have been erroneous?
RT: I've made mistakes.
MI: You write a lot of emails,correct?
RT: Yes I do.
MI: You were questioned about some of them tonight. Do your emails carry the force of
law?
RT: I don't believe they do.
MI: Do your letters carry the force of law?
RT: Most letters don't.
MI: You ... I asked you a moment ago that ... you told me that there have been times when
you feel that a position you may have taken in the past was erroneous. With regard to
these conclusions that you drew in the memo that you were questioned about a few
moments ago, when you got in front of the Council on January 18th, this Council didn't
agree with your conclusions,did it?
RT: They did not agree with the recommendations,right.
MI: Their conclusion was that our current ordinance is sufficient to address this type of
issue?
RT: Yes.
MI: Now I want to ask you ... you talked about, we've heard the words tossed around
tonight zoning verification. We've also heard you mention something called a zoning
interpretation. The piece of paper that we've seen tonight that says zoning verification,
prior to this issue coming up a few weeks back, had you ever seen that piece of paper?
RT: Prior to this issue coming up recently no,I had not.
MI: Has it ever been your practice to just put out something that you call a zoning
verification in general terms that's not connected to a specific set of facts?
RT: No.
MI: In fact you wouldn't do that, would you?
RT: No.
MI: Do we have ... Oh, by the way, do we know with certainty who wrote that thing that
was called a zoning verification?
RT: We did some independent checking and I believe it was Molly Bosley.
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L., MI: Believe it was or was not?
RT: I believe it was.
MI: Now tell me, is ... based on your knowledge of the Zoning Code, are short-term rentals
per say prohibited in the Town of Fountain Hills?
RT: No.
MI: In fact, Mr. Turner, in determining whether or not a use complies or violates the Zoning
Ordinance, is the duration of a rental the controlling factor.
RT: No. There's nothing in the ordinance that really speaks to that.
MI: Do we have such a thing in Fountain Hills as an official zoning interpretation?
RT: We do, yes.
MI: And is that unique to Fountain Hills or is that true in other communities?
RT: Well in my experience people in my position that's what they do, they issue zoning
interpretations.
MI: How does that process work?
RT: Well in Fountain Hills, someone submits a request in writing to me and I do the
research, check with ... sometimes check with my peers, sometimes check with legal
counsel, certainly look at our regulations, consult other resources and then draft a
response to that written request.
MI: Now, is a zoning interpretation ... can somebody kind of just write in a question and
say "hey, what about putting a, oh I don't know, put in an above-ground swimming
pool in my front yard?" Is that that the kind of a question that one, you would give an
official zoning interpretation to or do you require more specific information about the
circumstances?
RT: Well, usually you'd require more specific information. You'd need to know about the
pool, where the property is located, and you'd find out what the zoning was but you
need enough basic information in order to write an accurate response.
MI: And why do you need more detailed information?
RT: Well, so that you can give a comprehensive and complete and accurate answer.
MI: Now a zoning interpretation that you might render, an official zoning interpretation, that
is addressing a specific question about a specific use, correct?
RT: Yes.
Lir
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MI: And in fact that interpretation is actually appealable, is it not, by someone who doesn't
like it? ,41110)
RT: Yes.
MI: Appealable by the applicant?
RT: Yes.
MI: Appealable by the public?
RT: True.
MI: Where would they appeal that?
RT: Board of Adjustment.
MI: If they didn't like the result there, where could they appeal that?
RT: Uh,the Court.
MI: So an official zoning interpretation is something different than this zoning verification
thing we have heard about tonight?
RT: Yes.
MI: To your knowledge, has the Appellate ever requested an official zoning interpretation ,vig)
with regard to these uses?
RT: No.
MI: You did some research ... you were asked about some research you did about other
municipalities' regulations concerning this type of transient vacation rental,correct?
RT: Yes.
MI: Would this type ... and based on that research, would this type of transient vacation
rental be allowed in the City of Scottsdale?
RT: I believe I'd have to look at the report to get to all of the conclusions,but I think that we
said no if I recall.
MI: Would not?
RT: Would not.
MI: Would a transient vacation rental such as this be allowed in the Town of Paradise
Valley?
RA: Objection. We're not here today to determine, find out, what the Town of Paradise
Valley might do, what the City of Scottsdale might do. This is irrelevant to what this
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Town did in approving or denying business applications. This is, to borrow Mr.
Iacovino's prior comment,not relevant.
MN: Can you determine relevance in your line of questioning?
MI: Your Honor, it is relevant to the extent that counsel for the Appellant asked about this
very subject on his direct examination, I think thereby fairly opening the door for this
line of questioning.
MN: Objection is over ruled.
MI: Would this type of transient vacation rental be allowed in the Town of Paradise Valley?
RT: No.
MI: I have no further questions for Mr.Turner.
MN: Okay. Redirect?
JA: I want to make sure I heard something clearly and that is when Mr. Iacovino asked you
whether you knew who wrote the zoning verification, I think you said you did some
independent investigation and determined Molly Bosley wrote it?
RT: Yes.
JA: Is that true?
RT: Yes.
JA: What did you do to make ... well, to undertake that independent investigation?
RT: I asked everybody in my department if they knew of that document. I had never seen it
before. No one I'd talked to had seen it. But then my Planning Assistant, in looking
through her old computer files, came upon that document under Molly Bosley's
documents.
JA: Please give me the name of your Planning Assistant.
RT: Janice Baxter.
JA: Is Ms. Baxter here tonight?
RT: I don't believe she is.
JA: How long has Ms. Baxter worked for you?
RT: Since I've been with the Town and she was with the Town before then.
JA: And I want to be clear again, you said Ms. Baxter looked at a computer to find this
document?
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•
RT: Yes.
JA: Ms. Bosley's former computer?
y P
RT: No, I believe that ... Planners save a lot of documents to common files that can be
accessed by others, others in Planning and Zoning.
JA: And Ms. Baxter then brought this to your attention,printed it off of the computer?
RT: She told me where she found it.
JA: What did she tell you?
RT: She told me that she found the document under Molly's files.
JA: Did she bring you a copy?
RT: No, she didn't bring me a copy of it but I had shown her a copy of what I was looking
for.
JA: Did she show you the computer?
RT: It's her computer, yes.
JA: Okay. When did this happen?
RT: It happened within ... probably about a week ago.
JA: One week ago?
RT: Yes.
JA: And did you bring it ... to whose attention did you bring that Mr. Turner?
RT: When I found out I believe I mentioned it to Mr. lacovino and recently and ...
JA: Anybody else?
RT: I'm trying to think. I may have mentioned it to some other people in the office.
JA: Such as?
RT: Well I might have mentioned it to ... I don't know if I mentioned it to Raymond or not,
... I might have mentioned it to ... well, I might have mentioned it to one of the other
Planners, either Bob Rodgers or Gene Slechta, possibly. I can't recall exactly who I
may have mentioned it to but it wasn't anything that was privileged. We were all, you
know, I was trying to find out the source of the document.
JA: It's a ... it's a public record, right? Is that correct?
RT: Yes.
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JA: Okay, so, ...
RT: And no.
JA: How about we ... (laughter)
MI: I would object to that question and ask that the answer be stricken as that calls for a
legal conclusion and I mostly am going to object to this questioning altogether as not
being relevant to the issue that is before this Council. Perhaps it is relevant to some
other lawsuit counsel plans to file but he can conduct his discovery on that lawsuit after
he files it.
JA: Your Honor, this is not discovery. Mr. Iacovino, he's the one ... I don't even think I
mentioned this in my direct. Mr. Iacovino raised the issue he called this thing, this
verification; he elicited the answer that I am now redirecting on. We're entitled to learn
about this in particular because Mr. Iacovino said it is unknown who authored that
document in a paper he filed and represented to us. We are absolutely entitled to learn
about this because it's very disturbing to learn something that came up a week ago
wasn't disclosed. We have a pending Public Records Request that this is relevant to.
So we really ought to learn what more Mr. Turner did when this zoning verification,
confirmed that had been written by the previous Planning and Zoning Administrator
Molly Bosley, what he did thereafter and what affect it had on his analysis.
MN: Move on Mr. Armstrong.
(160, JA: So my question then is when you discovered this a week ago, what affect did it have on
your analysis here in this determination?
RT: Really it didn't have any affect.
JA: And why not?
RT: Because, it wasn't addressed to any particular individual, it ... it ... I didn't know the
circumstances that she was, you know, looking at when it was written, you know,
without the background, you know I just didn't ...
JA: In fact it's true isn't it that to truly understand all of that we'd have to talk to Ms.
Bosley, wouldn't we?
RT: Well,to find out why she wrote it that way you probably would.
TA: And did you or anyone at the Town or on the Town's behalf make any effort to contact
Ms. Bosley.
RT: I did not.
JA: Now Mr. Iacovino asked you a number of questions as to whether particular items have
a force of law. My question to you is when someone in Ms. Bosley's position as
Planning and Zoning Administrator, on the Town of Fountain Hill's letterhead, submits
a document such as this, a zoning verification stating, "It is our interpretation that short-
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term rentals are appropriate uses in any residential zoning district," does that to you,
Mr. Turner, represent the opinion of the Planning and Zoning Division of the Town of ,.4)
Fountain Hills at the time it's written?
RT: At the time it's written, yes.
JA: Thank you. No further questions.
MN: Counselor, your next witness,please. You are excused Mr.Turner.
JA: No further witnesses, we'll rest our case and preserve any evidence for rebuttal.
MN: Okay. Thank you.
MN: Mr. Iacovino, are you ready to present your case?
MI: Yes,thank you Your Honor. Your Honor the Town is going to recall Mr.Turner.
MI: Mr. Turner, I'm gonna ask you just a couple of other questions about this. That zoning
verification thing that we saw, first of all, have you seen anything like that before?
RT: No.
MI: I mean something in that form?
RT: No.
MI: On any other subject at all?
RT: No. In fact, it was very surprising to see that,I didn't even know it existed.
MI: Is that thing an official zoning interpretation?
JA: Mayor, we're going to object to the continued argumentative characterization of this
document as a thing. We have had testimony from a thirty-year Zoning and Planning
Administrator, who says he independently confirmed with Ms. Baxter the [inaudible
word] of this document. It is improper. He can certainly save that for closing and we
ought to be a little more professional before this Council and all these townspeople.
MI: Your Honor, it is a thing, it is an item, it is a tangible object and that is how I am
referring to it because I think what we're hearing is that it doesn't fall into the type of
category that the Zoning Administrator is familiar with.
MN: Move on Mr. Iacovino.
MI: Thank you. The piece of paper that is entitled zoning verification, based on your
knowledge,understanding,practice,etc. is that an official zoning interpretation?
RT: Well it's ... no ... not something that I would issue,no.
MI: Not appealable? „el)
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JA: That's a position of law and Mr. McGuire is probably in a better position to answer that
question.
MI: I have no further questions of Mr.Turner. Richard,he gets to ask you a few more.
RT: Oh, sorry.
JA: Mr. Turner, I know you're tired of me. Let me just ask a couple of final questions and I
know the answers. You don't know Ms. Bosley,do you?
RT: I've met Molly Bosley, I do not know her very well.
JA: Okay. Do you know her well enough to know her practices in acting in her capacity as
Planning and Zoning Administrator?
RT: I don't know how she operated as Planning Administrator, no.
JA: You don't know whether Ms. Bosley, when she was working for the Town of Fountain
Hills as a Planning and Zoning Administrator, you don't know if for a fact this was her
practice; to issue zoning verifications,do you? You don't know one way or the other?
RT: That's true.
JA: You don't know how Ms. Bosley communicated with folks who requested zoning
cor verifications or zoning interpretations or anything about zoning in the Town of Fountain
Hills, do you?
RT: I don't know how she operated the office,no.
JA: So you're not really in a position, since you weren't here when Ms. Bosley was here, to
tell us whether this was her standard practice or whether her practices differed
substantially from your own practices, are you?
RT: Well I think I can say that if that's how she issued zoning interpretations, that's not the
way I would do them.
JA: Okay, but it doesn't mean the way ... it's not the way she did it, right? It could be the
way she did it, is that right?
RT: Well, all we have is one piece of paper.
JA: Could it be something different than a zoning interpretation? Could it be what she
called it, a zoning verification, something different?
RT: I don't know.
JA: Because, because you never talked to Ms. Bosley and didn't have anyone talk to Ms.
Bosley about her practices,right?
RT: True.
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JA: Thank you.
MI: Nothing further Mr. Turner.
MN: Thank you Mr.Turner. Next witness Mr. Iacovino.
MI: Thank you Mayor, the Town calls Julie Ghetti.
MI: Good evening Julie.
Julie Ghetti (JG): Good evening.
MI: Could you please tell us who you are and what you do.
JG: My name is Julie Ghetti. I'm the Finance Director for the Town of Fountain Hills.
MI: In your capacity as the Finance Director, are you involved with the collection of
municipal taxes?
JG: Yes sir, I am.
MI: Now Fountain Hills does tax rentals, don't they?
JG: Yes.
MI: And we tax them in what categories?
JG: We tax residential rentals, commercial rentals and long-term and short-term residential
rentals.
MI: Okay, and at varying rates?
JG: The only difference in rates is for residential rentals of periods of longer than 30 days
are at a different rate.
MI: Okay. Let's talk about those that are residential rentals for period of less than 30 days.
Are those rentals that our Tax Code refers to as short-term?
JG: Yes sir.
MI: Now do you have any idea specifically how many of those there are out there?
JG: No, the Town does not know whether a rental is a short-term rental or a long-term
rental.
MI: The system is not set up that way?
JG: Correct,the State Department of Revenue collects our sales taxes.
j
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MI: If you don't know how many of those are short-erm rentals and how many are long-
term rentals, do you have any way of determine if any of those are transient vacation
rentals such as those being operated by the App llant?
JG: No, we have no way except with an audit.
MI: Now we heard earlier ... were you in the rr om throughout the hearing tonight?
JG: Yes sir.
MI: Did you hear that at least ... that two f these homes owned by the Appellant have been
operated for the last three years?
JG: Yes sir.
MI: Did you hear testimony that the Appellant had paid all their taxes?
JG: Yes sir. -
MI: Is that true?
JG: Urn, I don't know if that's true at this point.
MI: Do you know if they paid their bed tax?
JG: I don't know if it's true at this point.
MI: Do you know if they have a business license?
JG: They did not have a business license.
MI: Did they pay their business license fees for those two properties for three years?
JG: The Appellate paid their business license fee when they came in and applied and it's
since been refunded.
MI: And that was when?
JG: I believe that was in February.
MI: Okay,they applied in January of this year?
JG: I believe so.
MI: So nothing for the prior three years?
JG: Correct. •
MI: I have nothing further.
No MN: Redirect.
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JA: Is it Ms. Ghetti or Ms. Ghett?
JG: Ghetti.
JA: Ghetti. You were here tonight when you heard about the number of short-term rentals
that Mr. Reese found here,in the community of Fountain Hills, weren't you?
JG: Yes sir.
JA: And, 12-single family, 25 condominiums and 10 duplex, right?
JG: Yes sir.
JA: So I know you're good with numbers, I won't ask you to add that up, but it's not a
whole lot is it?
JG: Correct.
JA: So certainly, if the Town wanted to, it could know whether those handful of properties
were generating tax revenues for the Town simply by, I guess, looking at the
information that Mr. Reese found and calling up and asking if they're paying the taxes,
couldn't it?
JG: If they ... if we knew what they filed ... their tax return,to the Department of Revenue,
if we knew how they were filing, we could check it, yes.
JA: Okay. And there's nothing stopping you from doing that if you wanted to know other
than time and resources and money?
JG: Correct.
JA: Now, you could also check business licenses the Town has issued, correct?
JG: Yes.
JA: To see if the Town issued short-term rental business licenses?
JG: Yes.
JA: And that would be one way to direct your department to see who might ... who is or
who might not be paying taxes?
JG: Correct.
JA: Now, Mr. Iacovino asked you whether you knew that Golf Resort had paid its taxes in
full for the past so many years that it's been here operating and you said you didn't
know and the fact is you don't know because those taxes are paid to the State of
Arizona,right?
JG: Correct.
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JA: And you didn't do that at anyone's direction?
JG: Correct.
JA: You just did it on your own. Someone told you ... how did you know it go denied?
JG: Planning and Zoning processes and approves the Business License applications.
JA: Okay. Now, I want to be clear here. I think I heard you say at the outset that the Town
taxes short-term residentials,is that correct?
JG: That is correct.
JA: And that the Town doesn't know whether it's getting taxes for short-term or long-term
rentals,right?
JG: No, that is not correct. The Town, through the ... the short term rentals, because
they're a different rate come from the Department of Revenue and they tell us how
much revenue is from short-term rentals because it has a 3%bed tax on it.
JA: So is the Town generating tax revenue on short-term rentals?
JG: Yes.
JA: It's receiving those taxes from the State of Arizona? ,
JG: Correct.
JA: Do you know how much in 2006?
JG: Not off of the top of my head.
JA: What did you have to look at to figure this out? To figure out how ... if the Town is
receiving from the State short-term rental tax revenue?
JG: The payment journal from the Arizona Department of Revenue.
JA: Okay, and did anyone ask you to gather that information, gather that payment journal
and share it with anybody for the purpose of this proceeding?
JG: No,that information would not be, could not be shared.
JA: Why could it not be shared?
JG: That's taxpayer information that's protected under the Statute, the Confidentiality
Statute.
JA: What about the dollar signs, the numbers behind them and the row that it might show
up in on the pay journal?
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JG: Again,there are statutes that protect that information from being distributed to anybody.
Nobody has asked for that information.
JA: But you certainly have access to it,correct?
JG: Absolutely.
JA: And obviously, if someone asked that it be provided and you were instructed to do so,
you could make that available to someone, correct?
JG: If it was permitted under the statute, yes.
JA: Do you know how many years the Town of Fountain Hills has generated revenues from
residential rentals?
JG: I believe it's since 1994.
JA: And is there a reason why it's 1994 in your memory?
JG: Looking at the bed tax ordinance, I believe was from 1994.
JA: And what ordinance is that? Not the number, not the number. I'm just saying ... I
mean was this something new in 1994?
JG: Yes.
JA: And were you here in '94.
JG: Yes.
JA: Did you have any hand in passing that ordinance.
JG: No.
JA: Whose decision was it to pass that ordinance?
JG: The decision to recommend it to the Council was the former Town Manager.
JA: Who was that?
JG: His name was Paul Nordin.
JA: And so Mr. Nordin recommended that the Council adopt a tax mechanism to tax short-
term residential rentals in the Town?
JG: Correct.
JA: Do you know what a short-term residential rental is?
JG: Yes.
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JA: What is it?
JG: Less than 30 days.
JA: In the tax ordinance ... do you call it an ordinance or Tax Code,which one?
JG: Tax Code.
JA: Okay. In the Tax Code, other than less than 30 or more than 30, is there any
differentiation on ... or I guess in your requirements that it imposes on renters under 30
days?
JG: I'm not sure I understand your question.
JA: Does the Tax Code prohibit short-term residential rentals?
JG: No.
JA: Does it allow it?
JG: Yes.
JA: Nothing further.
MN: Thank you Ms. Ghetti. Mr. Iacovino?
MI: Thank you. The definition you told us when you were asked do you were asked do you
know what a short-term rental is,the answer was, "Yes, less than 30 days." Where does
that definition come from?
JG: That comes from the ordinance.
MI: So that is from the Tax Code?
JG: Actually, it's the Town ordinance adopting the short fee resident ... the transient
lodging tax.
MI: Okay. And so that is with reference to the taxation, correct?
JG: Correct.
MI: Is that an independent matter from the Zoning Ordinance?
JG: I would assume so.
MI: Okay. And certainly short-term rentals as defined for tax purposes are not, per say,
prohibited in Fountain Hills, are they?
JG: Correct.
car MI: I have nothing further of Ms. Ghetti.
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MN: Thank you. Mr. Iacovino, do you want to call your next witness?
MI: Mr.Mayor, members of the Council, the Town rests.
MN: Okay. At this point ...
JA: No rebuttal here.
MN: Okay. At this time do we have people who want to speak from the public Bev?
BB: Yes Mayor.
MN: How many speakers do you have?
BB: We have forty who have turned in cards that do not wish to speak, but want to let the
Council know that they are opposed to reversing the denial of the Business License.
MN: Thank you.
BB: We have six individuals who wish to speak,John Wyman, followed by Rita Brown.
MN: We have the three-minute limit? Okay. Mr.Wyman?
John Wyman (JW): Mayor, Vice Mayor and Council, I won't ask the forty people to stand since they were
just announced by the Clerk as having turned in their chits, but they're here behind me,
a couple of them will speak. I'm not a lawyer and I don't think anyone of the 40 people ftioi
that are behind me are either but we are concerned. We are asking the Council to ratify
Town management and it's legal counsel's judgment in rejecting Golf Zoo's appeal for
Business Licenses for the Fountain Hills single-family homes promoted as transient,
commercial lodging packages. Aside from staff judgments, which have asserted non-
compliance with community ordinances,there are other considerations. In purchasing a
home in Fountain Hills, most residents have understandably relied on zoning
ordinances, as we understood them, as restricting single-family residences to dwelling
purposes. Not transient lodging in contradiction of the residential character intended.
Section 5 of our Zoning Ordinances in fact states that occupations shall be clearly
incidental and subordinate. Clearly incidental and subordinate for the use of a property
and dwelling unit for dwelling purposes and shall not change the dwelling character
thereof. In purchasing the property located at 16915 Jacklin Drive, it is our
understanding ... we came up with the information that the buyer executed a Certificate
of Property Value in accordance with Arizona statutes,claiming that the home would be
occupied by the owner or a family member. That's a document that the Town has.
What is the purpose of such a declaration if the property is then promoted as
commercial lodging? In the case of the Jacklin property, it is apparent that the resident
was subject ... that the residence was subject to transient, commercial rental use for
approximately two weeks following the January 18th Council meeting, at which time it
was made clear that a Business License would not be granted for such use. The log that
several of the neighbors kept, I kept, I'm adjacent to the property, was presented to the
Zoning and Planning Administrator.
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Many worry that granting a Business License may affect property values and indeed my
wife and I intend to appeal to the County Assessor for a reduction in the assessed value
of our property if a license is granted. We've lived in it for 28 years. I suggest ...
MN: Could you wrap up Mr. Wyman?
JW: Sorry?
MN: Could you wrap up please?
JW: Is that it?
MN: If you have a ...one more second to ....
JW: I'm just about finished.
MN: Okay.
JW: I suggest that the owners in close proximity to Golf Zoo have questions and might be
saying the same thing. One of the faint concerns that we might have on the eve of
asking the electorate to consider a primary property tax to assist in meeting future
community financing requirements, if residential property values are judged to be of so
little concern to government, how are the citizens expected to respond? Thank you
Mayor.
MN: Thank you Mr.Wyman.
BB: Rita Brown followed by Sarabeth Simpson.
RB: Rita Brown, 16738 E. Nicklaus Drive. Good evening Councilmembers. Financial
institutions and mortgage companies convinced our State legislators to pass a law
requiring property buyers to disclose the intended use of the property. Golf Resort
signed such a document declaring their intent to use the property on Jacklin as family
occupied. At the time of escrow, Golf Resort was given a copy of our local ordinances.
They had ten days to cancel their purchase agreement if they didn't plan to observe the
zoning restrictions. For the mortgage company, risks were reduced and for Golf Zoo,
there were no surprises about the zoning. Golf Resort has gone into three established
single-family neighborhood with the intent of zone busting. They blatantly lied. Their
intention was always to bust the zoning. Allowing their boarding houses in single-
family neighborhoods, opens the door to more and more disregard of zoning
regulations. That disregard of the zoning will once again make it difficult to obtain
mortgage money in Fountain Hills. Golf Resort may profit, but the families of this
Town will pay a heavy price. We ask you to say no to the Golf Resort exemption.
Thank you.
MN: Thank you Ms. Brown. (Applause).
MN: Please ... order, order please.
cige BB: Sarabeth Simpson followed by Robert Tripp.
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Sarabeth Simpson (SS): Mr. Mayor and Councilmembers, let me say that I will keep this brief because a lot of
what I would have said has already been stated on January the 18th and also this
evening. I do have a concern and that is that homeowners have an expectation and that
is that the integrity of the area, the neighborhood, be kept in tact for residential purposes
only, not for commercial purposes. I may have misunderstood a question that was
asked tonight by the attorney when it came to whether or not Golf Zoo continued to
advertise on the website. You might find it interesting if you would just get on their
website and look at what they say. They are still advertising the four places here in
Fountain Hills even though the license was denied. I have a real concern about a
company that would do that. Thank you,
MN: Thank you Ms. Simpson. Mr. Tripp?
Robert Tripp (RTripp): Bob Tripp, 16410 East Tombstone. The attorney for the appeal to me was quite
concerned about the fact that someone said something and later said something else. I
took part, about a year ago, when Planning and Zoning voted 7-nothing to allow a
change, to allow someone to come in and do things we thought were detrimental to the
Town. We talked to Town Councilmembers, convinced them, and got a vote of 7-
nothing against letting that change be made. I think the Town Council at that point
understood where the people were coming from. We expect some stability, we expect
things to be maintained, we like to know that what we signed on for is maintained. This
was done again when someone wanted to put in a nursing home in an inappropriate
place. I hope the Town Council realizes how important this is and I'm sure it does and
makes the right decision. Thank you.
MN: Thank you Mr.Tripp.
BB: Mark Goldman followed by Don Nagela and then Lori Nagela.
Mark Goldman (MG): Good evening Councilmembers, Mr. Mayor. My name is Mark Goldman, I reside on
Jacklin Drive in Fountain Hills. I own multiple properties in Fountain Hills including
three homes on Jacklin Drive plus an undeveloped lot on Jacklin Drive. I do not rent
any of these homes and use all three for my personal residences. The total value of my
properties on Jacklin Drive alone conservatively exceeds $5.5 million. When I
purchased my homes on Jacklin Drive, I relied in part on my knowledge that Jacklin
Drive and the surrounding area was zoned for single-family dwellings, and I emphasize
the term single-family. I don't think that anybody logically could conclude under any
stretch of the imagination that the term single family applies to 12 unrelated drunk
individuals residing in a residence together. That's absurd. Therefore, I hope that you
can appreciate my shock and surprise when I saw a website advertising a home on
Jacklin Drive as a lodging rentable on a nightly basis, the ad stating that it sleeps up to
12 people, serving free beer, with an advertised kegarator on tap 24/7 and a poker table.
I don't know whether a kegarator is a defined term but I must imagine that it is a
chilling device with a keg of beer, something one might find in an animal house type
environment, provided for the convenience of beer swilling drunks and other retro-ninja
alcoholics. And, as the website states, the kegarator is on tap 24/7, thus allowing the
transient inhabitants to get drunk all day and all night. It's a splendid vision. They've
stated that it's off the website, the kegarator, that doesn't mean that it won't, doesn't
exist anymore and it's off the premises. Also, as you're aware, they've been doing this
for the past few years and they've advertised free beer and nobody says that they
haven't been distributing alcohol without a license on those premises for the past three
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years. So the idea that this is an innocent corporate entity or innocent individuals is
patently absurd.
Additionally, they make the statement that they bought these residences relying upon
their belief and representations made to them by the Town of Fountain Hills that this
was a lawful use of the property, renting to 12 unrelated individuals in this lodging-type
residence. If they believe that, and that's what they bought the property for, which they
stated, which they testified to, then why did they sign an affidavit of valuation on at
least two of the properties stating it's for residential use? Yeah, maybe they have paid
certain taxes on the property, but that's based upon a representation to the Assessor's
Office and to the State of Arizona saying that the property is to be used by, excuse me,
not residential use, the property is to be occupied by the owners of the property. They
have a choice of checking two boxes, one is to be rented, one is to be occupied by the
owners of the property. On both of them they checked the box saying to be occupied by
the owners of the property.
MN: Thank you Mr. Goldman. (Applause). Hold it,hold it. Who do we have now?
BB: Don and Lori Nagela
Don &Lori
Nagela(DN): Don Nagela and I'll speak for my wife and myself. We've lived at 16851 E.Jacklin for
23 ye with my son...and daughter. I don, 't have a,pad to read off of and I certainly, am
not a lawyer. All I can tell you is that I saw Fountain Hills, moved here when it was
1100 people. Our neighborhood has always been a neighborhood. The fact that, you
know I'ars, m a golfer I can understand you know the fact that these guys wanna you
know, make a buck off of the guys who want to come into Town, have a good time, and
that's not a problem. But to put something like that in a neighborhood where, you
know, for example it was about two months ago when supposedly, because I was at the
first meeting, supposedly there was no license, you know, for these guys to work. The
garage door is open, there's a van in there, there's five, six, seven or eight golf bags.
My brother-in-law, who is a businessman from Chicago, took a tour of the house. It's
set up like a dormitory. There's one room where there's probably six beds lined up so
that everybody can just finish their golf game, come in and crash and drink free beer
and I think it was about the second week of January, I was out, I've got a little dog and I
was out on the back porch, and I'm two doors away up the street, and I heard a lot of
noise and talking and screaming and I thought, actually, it was my next door neighbor
and I wasn't sure, you know, John and Barbara are great people and I'm thinking
they're having a hell of a good time. And the next day I talked to John and he's like oh
no, no, no, those were the people next door. So, I mean that's just one example if, you
know, everybody wants to have a good time but for something like this to take place in
a neighborhood, it's just not the place for it. Fountain Hills has got ... we've got Eagle
Mountain, we've got Sunridge, we've got lots of places for guys to come play golf and
have a good time doing it but, I mean, anybody in this room knows you get ten guys
together, eight guys are gonna be great people, two guys are gonna be idiots. And
you're gonna make the whole group, you know, basically revolve around the same
situation. At 2:30, 3:00 o'clock in the morning, we don't need to hear a bunch of, you
know, guys screaming and yelling and that's just, that's just the bottom line. So that's
all I've got to say.
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MN: Thank you. (Applause.) Hold it please. Okay, at this point in time we have nobody
else who wants to speak from the public, right?
BB: No Mayor.
MN: Okay, I will call for closing arguments with the Appellant going first.
SMT: Mayor Nichols and Councilmembers, we appreciate the time you spent tonight on this
issue. Golf Resort Properties has made a substantial investment in the Town of
Fountain Hills. They did this relying on documentation that was provided to them prior
to them purchasing their first house by the Town of Fountain Hills. Just like,just like
some of these other surrounding property owners have indicated that they relied on the
Zoning Ordinance, so did Golf Resort Properties. We've heard testimony tonight that
short-term rentals are indeed allowed in single-family residential units. There's been
some testimony that there appears that this is a commercial type of use, however,as you
heard in the testimony from Mr. Turner, he said that was based on three items. Mr.
lacovino provided a fourth item. Two of those being the free beer has been taken away,
in fact it was and the Town knew that it had been removed from both the website and
providing it to the potential people in the homes prior to the January 18th hearing. The
other issue is about a concierge service and that was really no more than the property
manager who, yes, he might have taken some, given some suggestions about
restaurants. If that's a huge issue and that's the only outstanding issue that in our
opinion certainly does not turn it into a commercial use but if there's a problem with
that, we would welcome a stipulation that says you cannot provide concierge services.
The third one was about short-term rentals. In the same testimony, Mr. Turner stated
that those were allowed in single-family zoning districts such as these three properties.
And as we know, pursuant to the documentation and regardless of minds changing it is Nod
very clear that the Town does not regulate short-term rentals. Everybody has stated
that.
So, there's not been evidence of nuisances on this, it's ... there's not been any evidence
that we're ... Golf Resort Properties is operating a hotel, a motel, a bed and breakfast,
the various uses that we had. If in fact the Town wants to regulate short-term rentals,
you need to pass a text amendment requiring that. But just to go and point out one
company that has rental properties in this Town when it's prevalent in this Town and
there's no issue saying that it's ... confirming or showing that ... proving that it's a
commercial use is inappropriate. And therefore, we again request that the denial of the
Business License be reversed and the Business License be issued as quickly as possible.
Thank you.
MN: Thank you,Ms. McTee. Mr. Iacovino?
MI: Thank you. Mr. Mayor, members of the Council, I have an opportunity now to speak to
you and I will do so briefly to sum up what's been presented to you tonight and then the
Appellant will have an opportunity to respond to what I have to say. I would ask you
the same thing that I would ask of a jury under similar circumstances. I don't get the
last word, Appellants get the last word. As you are listening to that last word in a few
minutes at least stop and think to yourself what would Mark say about that? And with
that being said,let's look at what we have in front of us tonight.
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We're talking about three specific pieces of property all in single-family residential
zoning. We are not talking about other properties that might exist somewhere around
the Town. It sounds, from what we heard tonight, like there might be some others that
are kind of similar in what they're doing. It also sounds like we can't really specifically
identify those at this point in time, but we don't need to. That's not what's at issue
tonight. What's at issue tonight are these three properties. One of the things, and I
have a phone ringing, excuse me, let me just turn that off, the thing that we need to
focus on here is what is at issue. I ask you all too please do your best to keep your eye
on the ball because there's been considerable effort tonight to get you to look in another
direction. We've been hearing about all sorts of things throughout the course of the
evening that really have nothing to do with your decision. It's as though there is a very
large red herring hanging right here in front of you that's been growing in size all night.
Short-term rentals are not illegal. The issue is not the duration of the rental, the issue is
the nature of the occupancy, and those are two different things. Appellant keeps
bringing us back to short-term rentals but short-term rentals are okay. Well, they might
be in the right circumstances and they might not be in other circumstances. That's the
point. I think that's what Mr.Turner was trying to get to when we said we have to look
at all the facts and circumstances of each case. In the paperwork I've submitted to you I
give an example, one of probably many we could think of where a situation of a short-
term rental would be in perfect compliance with the Zoning Ordinance. The key here is
residential use or, to take the language directly from our ordinance, residential
purposes. That's the key here. In order for this use ... in order for a use to be legal, it
must be a residential purpose. Now that term is not specifically defined in our code,but
ladies and gentlemen it doesn't need to be, we all know what it means. We all know
what a residential purpose is and we all know what a commercial purpose is. Perhaps
that's why it's not defined is because it kinda goes along without saying that we know
what that is. A residential purpose means someone resides there and in these cases no
one resides there, no one lives there. Nobody. You can't have an allowed incidental
use if you don't have an allowed primary use. And here there's certainly no residential
purpose at all. These are not people who are coming in and renting these homes who
are having their mail delivered there, who are enrolling their kids in our schools, who
are registering to vote, who are doing all of the many, many things that we consider
when we think of somebody who's a resident. Residential purposes, that's what it's all
about. And it's that way for a reason. The reasons are very clear, you've heard those
reasons from the members of the public who came up and voiced their concerns tonight.
This type of transient vacation lodging in a single-family established neighborhood is
disruptive, it is unsettling, it is destabilizing. That's why we have an ordinance that
says in this type of zone, here's what the allowed uses are, and the uses have to be for a
residential purpose and that's not what's going on here, this is a purely commercial
purpose, and it appears to be a pretty profitable one.
This is an extremely simple matter. I told you at the beginning tonight that there is
nothing the Appellant can say or no document the Appellant can put in front of you that
can change the use that we're talking about in these properties or that can change our
Zoning Ordinance. And in fact, there has been nothing done or said here tonight that
changes either of those things. In a sense, we really didn't need to hear any of this
tonight to make this decision. There is no dispute over the type of use in these
properties. There is no dispute about what our Zoning Ordinance says. The question is
very simple. When the Council collectively applies our Zoning Ordinance to this use, is
it allowed or is it prohibited? That's the question. I think the answer to that is quite
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clear and certainly the neighbors feel that it is too. When this question was first posed,
can you do this type of thing in a single family neighborhood, I think most of us would
have a gut reaction of well no, of course you can't do that. Now some of us might stop
and kind of have a hard time putting a finger on why that is, but our gut tells us you
can't do this in a single-family neighborhood. The reason, though, that you can't is
really very simple. It's because nobody lives there, that's why. Because it's not a
residence,it's a lodging house and you can't do that in a single-family zone.
Mr. Mayor, members of the Council, I truly appreciate your spending a great deal of
time looking at this issue tonight. I want to leave you with one other thought on this
subject. We've heard an awful lot tonight about this zoning verification. We've heard
the Appellant just a moment ago suggest that they innocently relied on this,this piece of
paper, who until a few minutes ago we didn't even know who authored, before they
spent hundreds of thousands of dollars. I don't think so. We heard clearly that we have
a process for obtaining an official zoning interpretation. One that is specific to a
specific set of facts, one that is specific to a specific applicant. One that can be
appealed by somebody who's aggrieved by that decision. Mr. Turner told us one thing
very clearly tonight, no such official interpretation was ever asked for or ever rendered.
You know one has to ask the question, these folks were operating in Town for three
years, why, why did they never ever ask for an official zoning interpretation? Why did
they never before apply for a Business License? Why did they not come to you to talk
about some kind of Special Use Permit? Why? I think the answer is pretty self evident.
Thank you.
SMT: Honorable Mayor and Councilmembers,just a couple of follow-up items on that. Mr.
Iacovino would have you state that we were out here making up all this information. In
fact, I think he referred to some red herrings. But what I think is important in there is a
couple of the comments that he made. One time during his closing argument, he stated
that short-term rentals were allowed, why are we even discussing it? And just right
towards the end he said short-term rentals are not appropriate and not allowed in single-
family residential zoning districts. That is not the case, they are allowed. He said that
there was ... this type of use was disruptive and destabilizing, again, in single-family
residential units. First of all, that's not an issue, but there's been no evidence of that.
You heard that, through Mr. Parcell,that there was no... they have not been cited, there
have been no calls or information from the Town or the police that actions are going on
out there.
A couple of other things in regards to the zoning verification. For some reason, the
Town seems to be saying that isn't us, that wasn't ... that was somebody else three
years ago, it's no longer relevant. Well I'd like you to direct you to Section 108 of the
Zoning Ordinance, which sets forth the Zoning Administrator's duties, and at the
bottom it says, "Subject to general and specific policy laid down by the Planning and
Zoning Commission and the Town Council,interpret the Zoning Ordinance to members
of the public, departments and other branches of government." Nowhere in here does it
say it has to be submitted in a certain format or made by a certain individual in a certain
manner. So there is no reason why Golf Resort Properties did not have the ability to
rely on this document. And you know we even heard that we didn't even know it was
authored until just a few minutes ago when, in fact, we received a document from Mr.
Iacovino clearly stating that they didn't know who authored it, yet Mr. Turner testified
that he told Mr. Iacovino approximately a week ago that they had found out who had
authored that document. So it's just interesting that the Town is trying to say that
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wasn't us, you can't rely on it, we don't like the way it was written so it's not
(by appropriate.
The facts before you are clear. We've had testimony from Mr. Turner, whose been in
this business for over 30 years, he's very well respected in the Maricopa County area,
and yes, he can change his mind. We completely understand that, but when you have
all the documents in place stating one thing and then for an abrupt about face after a
Council hearing when it specifically looks like you're going after one individual, there
is some suspicion in that. On top of the testimony, you have the documents and then
most importantly, you have the Zoning Ordinance. It doesn't talk about the nature of
occupancy, it doesn't define what resides means. Resides might mean two or three
nights, it might mean you have to be there five years. Mr. Iacovino would have you
think that you have to be a voter, you have to get your mail there. That doesn't mean
you don't reside in a place because we don't know what that definition is.
In closing, the ... we feel like again, based on the facts that are in before the Council
tonight, both the testimony, the documentation and most specifically the Zoning
Ordinance and the zoning verification letter, that short-term rentals are okay. We've
heard testimony to that. The Business License should be approved and if there's an
issue with the operations of that short-term rental, then those ... you have procedures
set in place through your code that they can enforce those, but there's been no evidence
that we can see that this really is a commercial use like the Town is trying to hang their
hat on and therefore, we respectfully again request that the appeal be granted and the
Business License be issued for those three properties. Thank you again for your time.
MN: Thank you Ms. McTee. At this time I'll open up the floor to the Council if Council has
any questions that they want to ask to the Appellant or to Mr. Iacovino. Councilman
Kehe?
Councilmember
Kehe(CK): I'll refer this question to counsel for the Appellant. We just heard in your summation
stating that Mr. Iacovino said that first that short-term rentals were okay and then
concluded that they were not okay. I didn't hear him say'that. What I did hear him say
was that this operation served no residential purpose. I'm wondering if you'd like to
comment on that?
SMT: Mayor, Councilmember Kehe, again there is no definition for residency in here, in the
single-family zoning districts which these are in it says there's a dwelling unit, which is
allowed to be constructed on there for residency purposes but there's nothing that says
that having one, staying there one or two nights versus staying there, you know, moving
in there permanently, it doesn't talk about temporary versus permanent residency.
CK: How would you ...I'm sorry ...
SMT: Oh that's okay.
CK: One of the statements made in response to a query by your co-attorney was an answer
to Mr. Turner that at some point in his view this situation turned the corner and became
commercial rather than residential. How would you respond to that?
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SMT: I think that's a very good question. He did, I did hear Mr. Turner state that but what I
thought was interesting was he said on January the third in a memo that he felt like, I
mean he knew about the keg that was advertised, he knew about the concierge and he
knew that it was a short-term rental. He didn't ever mention anything about a
commercial nature in that memo or in the subsequent memo or in the report to the Town
Council for the January 18th hearing. So, what we find interesting is first of all, two of
those are no longer in place but even if they were, why did all of a sudden those become
characterized as commercial in nature when he knew what they were earlier in the
month? And you know it appeared, and I don't have perfect memory,but it appeared to
me that part of his conclusion was that he talked to some people, yet he never contacted
the owner to get more information on that.
CK: Finally, how would you interpret Golf Resorts? Are they a commercial entity?
SMT: They're an LLC ... if that makes them commercial ...
CK: Do they operate for profit?
SMT: Yes they do.
CK: Thank you.
MN: Councilmember do you have a question,Councilmember Leger?
Councilmember
Leger(CL): I have a few questions and I respectively ask both counsels to respond to this starting
with the Appellant please. We've heard a lot tonight about short-term rentals and I'm
trying to stay off of that focus and I'm looking specifically here at the denial letter that
the property owner received and it talks specifically, "Staff has determined that the
proposed use of the properties for short term transient occupancy of a commercial
nature is not an allowed use in the existing family zoning areas." We're kind of
hanging our hat once again on the argument I've heard this evening from the Appellant
with respect to short-term rentals. How do you distinguish a short-term rental use from
a short ... excuse me, a short-term residential use from a short-term commercial use?
How would you distinguish that? You've tried to distinguish it simply by saying that
the concierge is gone,the kegs are gone, you had your litmus test for all of that. Is there
anything else that you can possibly ... I'm trying to really distinguish between
residential use and commercial use, that's what I'm getting at, and I want to hear your
definition and I want you to compare the two.
JA: Thank you Councilman. What troubles me just a little bit about the question is that's
not something that you as a Councilmember or the Council as a whole should have to
wrestle with. This Town does not regulate residential use, it doesn't regulation
commercial use, what it does is create a variety of zones where certain activities can
take place. So, for example, in the commercial district, we're told what we can do in a
commercial district, we're told what you can build in a residential district and that kind
of building was built for each one of these homes. There is no definition of short-term
use, no definition of residential use. Mr. Turner made that clear when we went through
every single possible definition that could possibly define a residential use or
commercial use. That doesn't appear anywhere. So while I understand, and I think it's
a testimony to Mr. lacovino's persuasive skills, while I understand you may want an ftif
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answer to that, that's what got us to this point anyway. Someone decided to apply a
definition that doesn't apply, a definition this Town has never applied or enforced
before. Instead, what the Town has done is accepted applications in, made a
determination that it's a residence, it's not prohibited, just as Mr. Turner declared, so
you know, I don't want you to think we're avoiding the question, there is no answer in
the ordinance and we're stuck with the ordinance as it's written. And, as Mr. Turner
and Kate along with him concluded, if we want to change it, we'd better get out our
drafting pen and we better put it in there because it's not there right now and that's why
the Business Licenses should have been granted in the first place and they ought to be
granted now.
CL: You've stated that I'm kind of off-task right now by going to definitions. I'm staying
focused on why, why this Business License was rejected and it says clearly here
because of commercial nature. That's why I'm drilling down on this question and I
need to understand what distinguishes those and also there is judgment. Councils make
judgment, lawyers make judgment, we will make a judgment this evening and this is a
critical question that's been presented by both cases, so I'm giving you the benefit of
the doubt of distinguishing between residential use and commercial use. And if that's
not relevant,then please tell me it's not relevant and I'll move on and ask the opinion of
the Town's counsel.
JA: The criteria applied by Mr. Turner — the beer, the short-tern nature, the concierge —
those are the only three he could come up with. So that must be his definition of
commercial use in a residential district. We don't have any others. But yet he
concluded that two of them, the free beer and the short-term nature, are not inherently
commercial so I ask you to defer to him. Those aren't commercial considerations,those
are not commercial uses. That leaves us with the concierge and again, as Ms. McTee
stated, property manager, change a light bulb, do something, well that's not
commercial. The reason it's not commercial? We all do those things to our homes, we
all maintain our homes, that doesn't make us a commercial use in a residential district.
Instead, we're doing ... we're renting the homes out as we are entitled to, but we are
being good neighbors by mowing the lawn, cleaning the pool, painting the exterior and
doing repairs. That's not commercial.
CL: Let me ask you a question for a point of clarification for my own perspective, because
this is what I am wrestling with, that's why I'm asking the questions. When you
describe being good neighbors in renting a property as an investment in a residential
area, we do have folks that do that short-term rental. Now they typically, when a home
isn't rented, you pay X amount of dollars to rent the home, that's ... is that a fair
statement?
JA: Certainly,it's what we do.
CL: Okay. When you roll in to the price of that rental a commercial service, such as your
rates include golf fees,etc. then,from my perspective,it starts crossing the line.
JA: We don't.
CL: Very good.
L
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JA: We don't do that and the reason I can tell you we don't do that is because Golf Zoo,
who is not the applicant, Golf Zoo is not before you here tonight. Golf Resort is the
owner of the residences, they charge a fee for the rental. Golf Zoo does the green fees,
does whatever else is requested by the guests. So Golf Zoo, all it does is arrange things.
Golf Resort rents the home, charges nothing for any of the so called commercial uses.
They don't charge more because it's a short-term rental, they don't charge anything for
the beer, which is not even offered any more, we don't charge anything for the property
manager, whether he fixes a light bulb or whether he makes some sort of restaurant
recommendation from time to time.
CL: Is the golf fee rolled into the rental fee?
JA: No and I'm not ... I'm not at all trying to be cute. I'm 100% telling you that fee is a
rental fee, a stand-alone fee, there may be one check or credit card debit that goes to
Golf Zoo but Golf Resort gets zero dollars, not one penny for anything other than the
rental of the home, another reason why it's not a commercial use. It's no different than
if some of us stay here for the winter and go away for the summer and rent it out and we
don't charge anything other than that monthly rental and I know that happens here.
CL: Thank you.
MN: Councilmember Archambault,do you have a question?
Councilmember
Archambault(CA): Yes, thank you Mayor. This is for you James.
CL: I would like to have Mark respond to my questions.
MN: Oh sure, okay. Sorry about that.
MI: Mr. Mayor, Councilmen, I'm having some trouble with this because they most certainly
do advertise a price that includes green fees and a cart, absolutely. I'm looking for the
piece of paper, I believe it's attached to the memorandum that I've supplied to you. It's
perhaps the second to the last page or the last page. Yes, they most clearly do include
golf fees and cart fees as well as the amenities, they're being paid for. However, to
answer you specific question, counsel for Appellant indicated that he wasn't trying to
avoid your question but we just have to go with what Mr. Turner said. I would
respectively submit that he was absolutely trying to avoid your question because it is an
essential, critical question to this inquiry. If a word is not defined in our code or a
phrase such as commercial purpose or use or residential purpose or use, if a word or
phrase is not defined in our code, that doesn't mean that we don't know what it means.
It's something that we see in the law all the time. You come across it in case law
countless times. If the specific term or phrase is not defined, it is to be given its
common, ordinary, understood meaning. That's the law. That's what we're dealing
with here. No, our code ... if our code defined every word you used it would be as
thick as Webster's dictionary. Of course it's not going to define all of those words. But
you're correct, the real distinction here, again, is not the duration of the rental, it's the
character of the use. Is the use residential or as in this case is the use commercial?
Residential I think more than implies a resident, someone who lives there. That is
absent here. There's no one who lives there, no one who resides there. We have
wrestled often with the term domicile, a term I'm sure you are all familiar with, which Nalif
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is similar. A person's domicile is where they live. And the law tells us that a person's
domicile, where a person's domicile is, is the question of intent, and it's true. What you
think of in your own mind as home, that's your domicile. We can apply the same kind
of reasoning to a term like resident, where do you live, where do you reside? And I
assure you that if you ask the guests of Golf Properties where they reside, they are not
going to tell you they reside in Fountain Hills, because they don't. The key distinction
is the nature of the use. This is not a residential use or a residential purpose as required
by our code. It is a purely commercial purpose, a business organization, an LLC,
operating for profit, renting out homes at $2200 a night. If that's not a commercial
venture, I don't know what one is.
CL: Thank you. And just for clarification, part of my question was predicated on a
document that I received and reviewed that in fact stated from the website that golf fees,
carts, etc. were part of the rental and that's the point of my clarification. Thank you
Mayor.
MN: Councilmember Archambault?
CA: Yes, thank you Mayor. This question is for the Appellant. And it's ... we've heard a
lot of discussion about ... and in fact Mr. Turner relies much of his testimony on
detailed information, how vital it is for him in making a determination. The question
was do we know on this letter that we found out was provided by Molly Bosley what
the question was that was provided to her to require her to respond to? Because if we
look at Mr. Turner's written response and he's always stating the question and then
(kw responding to the question, so I'm wondering if we know or if counsel knows what the
question was that was asked of Ms. Bosley at the time that she wrote this memo?
SMT: We don't know for sure if there was something sent formally or if there was a phone
call requesting whether or not short-term rentals were allowed in single family. So we
don't know what the document was that precipitated, or if there was a document or
simply a phone call.
CA: The reason I ask that question is because in here she talks about zoning verifications, in
fact it's titled zoning verification, it talks about short-term rentals. And down in the
second paragraph, the last sentence, it says, "If short-term rentals of the property begin
to furnish services customarily associated with a hotel or motel, then the applicable
Zoning Ordinances would apply." And then down in the next paragraph, it also gives
you a website, it says, "For complete information on the Town's Zoning Ordinances
please refer to the website." So it doesn't sound like she gave you a complete answer
here because I don't know that she had a complete question. The other thing that I find
a little puzzling is that we don't have a copy of the applications here for a Business
License.
SMT: I apologize for that. I think ... hold on one second ...
CA: Is that in this book James?
SMT: They're at Tab 1.
Noe CA: Tab 1, thank you.
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SMT: I do think and I don't think they're enclosed, here, I don't know if the City kept a copy
of them, but there was also a sheet, just a real short paragraph narrative that was
included with the applications to explain what was occurring.
CA: I'm curious as to the statement, James, that you made that said that Golf Resort strictly
does the rental and that Golf Zoo handles all the green fees and everything else and
when we look at the website and the pictures on the website, it shows it as a package.
So how do you distinguish between what's a rental and what's the green fees?
JA: I think that's a good question so to answer it, on the break Councilman Leger had a
similar question. I went through the materials at least that we've been provided under
our agreement to obtain documents in advance. Mr. Iacovino provided me, he
numbered it Exhibit F, the last couple of pages of his documents in his brief and of
course I know you all can't see it that well but I will tell you it says Golf Zoo. This is
not the Golf Resort website, so I'm concerned that documents that Councilman Leger
relied upon and that now Councilman Archambault, you are referring to, refer to the
Golf Zoo website and it's not at all unusual, for example, if anyone's ever been to
Expedia to make a trip, you can actually get a hotel, car and air. You can go to the
Hilton website and get a hotel and a car and air. And you can go to Southwest Airlines
and you can get the same three things. Folks, I'm certain Southwest Airlines isn't
sharing its airline fee, Hertz is getting its fee and Embassy Suites is getting its fee,
separate and apart. It's not something that's unusual or untested in the marketplace. In
fact, it's quite common and everyone gets busier and we want to have a one-stop
shopping. But it doesn't mean we're sharing, we're not. Golf Zoo gets its fees and that
comes off to them and that's in their books. The rental fees are strictly Golf Resort's
and the documents you have, again, they are Golf Zoo webpage documents and the fees
are broken out after the money comes in.
CA: So is the fee being paid to two separate entities, one to Golf Resort and one to Golf
Zoo?
JA: The only money that Golf Resort gets is the money for the rental. There's no sharing.
The Golf Resort doesn't share in whatever fees that are generated by Golf Zoo's
services and Golf Zoo doesn't share in the rentals, vice versa.There's no sharing of fees
at all.
CA: Is Golf Resort an ... Golf Resort is an LLC,right?
JA: Yes, it's an entity. It's a person in the eyes of the law.
CA: Correct. I know what an LLC is
JA: Right.
CA: Is Golf Zoo a subsidiary of Golf Resort?
JA: They are separate entities.
CA: Are they owned by the same ... Do they share any partners?
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JA: They share a common ownership,but again, in the eyes of the law ...
CA: I understand ...
JA: Yeah,but in the eyes of the law it ...
MN: Please proceed.
JA: Thank you Mayor. In the eyes of the law, as we all know, they are persons. They are
persons in the eyes of the law.
CA: I understand that this recognizes them as separate entities but what my question was,
and the reason I asked that question is because I have several different companies of
which I am a partner of so, you know, I'm tied to several different companies and that's
why I wanted to see what the relationship was there.
JA: Okay. But, of course, just as with your companies I'm certain, you pay your own
separate taxes, you keep your own separate books, you don't co-mingle funds and
you're not the same person and if you've had bad luck getting into trouble with
company A, you wouldn't have to have company B answer for it because that is how
different the law views it. And it's not a cutism, it's a realism. That's why you have
separate ones, otherwise you have it under one single LLC.
CA: That's true,but what we're seeing here and what you kind of demonstrated to me is that
we have a marriage of the two in one particular house rental in that one provides the
golf green fees and the other one provides the place of residency, or a place of service.
JA: But Golf Zoo doesn't do those activities. It's a separate ... you go to the website, you
pay those fees out there. They don't need a license to be here because their services are
provided, as you heard, mostly to folks in the northeast who want to come and enjoy a
beautiful town and beautiful weather, very nice accommodations. And so they can
offer that service. The only one who needs any kind of license at all to the extent they
need one is Golf Resort because we have the properties located here.
CA: But we could do the same thing at, say,Eagle's Nest Country Club. We could go rent a
room there, golf there, and it's a hotel. I'm trying to see distinguish the differences
between the two.
TA: Well, our ordinance helps us to make those distinguishing characteristics because it
helps us with definitions of hotel and motel and boarding house and bed and breakfast.
And they all have unique characteristics that come with them and certainly the State of
Arizona, who issued a tax interpretation just earlier this year, helps us to understand
what a hotel is and it provides that plethora of services that when you go and you stay in
a hotel you expect to get. Here, you get a house, a very nice house, a clean house, but
you don't get meeting rooms or banquets, you don't get room service. And we attached
these materials in what we provided to you that shows a hotel is so different than what
you get here.
CA: But in my observation, you seem to be clearly getting close to crossing the line here and
my question is kinda ... you know, I'm looking at your application here and it says
vacation rentals but vacation rentals doesn't say short-term rentals, I mean vacation
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rentals to me could be a week, it could be a month. You know, so ... and certainly we
have houses around here that are up for vacation rentals and they usually list them with
a real estate agent that specializes in short-term or vacation rentals, you know one
month, two months or less than thirty days and the Town ordinance does clearly dictate
which is long-term rentals and which is short-term rentals. Anything under thirty days
is considered short-term rentals and that's how we figure the Tax Code is applied. But
you're crossing a gray area here and I'm trying to distinguish in my own mind what's
the difference between me going to a hotel in say South Carolina,Charleston we'll pick,
and going and buying a whole package, you know, from a hotel, like you said...the
airlines, you know ... the hotel and the green fees and all that stuff. That's what I
would expect a hotel or a commercial enterprise to do. Now whether they do it in a
residential business or they do it in a hotel or a motel,I am trying to figure out what the
difference is because we've already determined that you've got the two entities that are
shared by the same partners and they are providing those types of services. In fact,
prior to January you had a concierge and a concierge is usually associated with a hotel.
JA: But if we look beyond that, when you go to your hotel in Charleston, you are gonna
surely expect a lot more than what these folks are giving you. Here we are giving you a
beautiful home in a beautiful neighborhood. It has great access to tremendous
amenities both locally and throughout the Valley. So we don't provide ... So we
provide the beautiful home and we don't provide the services that you would expect at
your Charleston hotel. We don't come down and turn down your sheets, we do not
clean your room everyday, we do not provide you room service, you can't have a
meeting downstairs in one of our rooms, you can't have a banquet facility. There's no
restaurant on site, you certainly can't go get a massage or a haircut. We do not have a
gift shop or a shoe shine. Those are hotel services and that's what the State of Arizona
thinks they are and that's what court opinions think they are and we've cited those and
we've tried to explain that this is a real live difference. In fact, the Town knows how
different it is because it actually defines separately hotels from motels. So if you went
to Charleston and you told me that you were going to stay at a motel in Charleston, you
would get a very different level of services and bundle of services. We, Golf Resort,
provides none of those services and, in fact, Golf Zoo doesn't always have to use Golf
Resort Properties. What Golf Zoo does is they use other properties here in the Town of
Fountain Hills, whether they are hotels ... I don't think they use motels ... but they use
hotels. They even use some of these other short-term rentals that we know exist that are
commonplace here in the Town to put their folks. In fact, that's where they are putting
their folks right now, because we honored what this Council did last time and so you
know what we're doing? We're using the homes owned by your other residents to put
our folks in and we are using other hotels in this community because those businesses
exist and they are here to provide a service but a very different service between a hotel
and residential.
CA: One more question James. You mentioned a motel. Now, I wouldn't go to a motel and
expect not to have a kitchen there where I could go to dine and that kind of stuff. Some
motels might have them, but you would expect to find a list of available services that
the area has like a restaurant that maybe you could go to and stuff like that. Do you
provide that to your guests?
JA: Do we provide a list? No, we don't provide a list. We provide a Rules of Conduct,
how to conduct themselves appropriately in this neighborhood, respect the home,
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respect the neighborhood. We don't give them a "to do, go do," those little magazines
you get at a hotel or bedside. We're not in that business.
CA: I don't want to take up too much more time, I know that other Councilmembers want to
ask questions, so I'll let them go.
JA: Thank you.
MN: Councilmember Dickey?
Councilmember
Dickey (CD): Thank you Mayor. I really have a statement, I don't really have a question. I wanted to
go on to some of the stuff that Mike was saying about the zoning verification. Working
in the State government, I'm always concerned with process and so I wanted to take a
look at this and I don't really see anything in that document that would lead the person
or whoever received it to believe that it was a legal document. There are no dates on it.
there's no question it's a very narrow answer or a very narrow interpretation of the
definition of short-term rentals and hotels and how that applies to the Zoning
Ordinance. So you don't know what the question is, there's no specific memo to/from
or dates so to hang, as the phrase has gone and was often said here, to hang your hat on
that as a legal document, I don't really understand that. On the same token, being
concerned with process I'm concerned that this organization hasn't requested a
Business License before now. And last, I would say that the fact that they
misrepresented when they were applying for loans or whatever to purchase the property
their intent, which indicates to me their belief that it is a commercial endeavor.
Ler" (Applause)
MN: Please .Councilmember Schlum?
CS: Thank you Mayor. I have a question. I don't think this came up yet for the Appellant.
I'm wondering ... when you're renting, looking at the printout, could you tell me do
you rent out to more than one party per evening? It looks like it represents separate
bathrooms and that sort of thing. Does it represent ... obviously, a big group could
come and take it wholly but do they have ... could my family get it and then another
family from another part of the Town take it and a group from somewhere else?
SMT: Just to confirm the question, you're saying would they have multiple groups in that one
house the same night?
CS: Yes.
SMT: No. It's a group. It could be one individual, it could be up to twelve, but it's a group
that does it, it's not ... I wouldn't rent it out and then you would rent it out, and we
didn't know each other, we're not part of the same group. So it's rented by a group,
whatever that number is.
MN: I have a question for the Appellant. Why did your client fill out the Certificate of
Property Value that it would be occupied by the owner or family member?
Loy SMT: I cannot answer that and he,unfortunately, is not here to answer that, the one who filled
that out.
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MN: I mean that ... that could really be an issue for them with the State because they have ,4140)
different tax rates based upon whether you're a residential or whether you're doing it as
a rental. I mean no matter what you say, this is a rental property and they
misrepresented what they are doing with this property on that form.
SMT: They have paid taxes based on their rental tax rate, we confirmed
MN: I'm talking about the property tax.
SMT: Oh, okay. I'm sorry. I will certainly ask him, the owner, about that. I don't think that
goes to whether or not this is an allowed use but it does definitely need to be something
that needs to be cleaned up with the State.
MN: Do you have another question Councilmember Schlum?
CS: Yes, thank you. Mr. Iacovino, in your conclusion, you stated that the use of the
property as transient vacation lodging is not residential in nature. That appears to be
pretty accurate. I'm wondering ... and how I'm trying to arrive at this commercial use
or commercial ... I want to say I almost feel that I can't say use anymore, but I'm
looking at the intensity of the use. That's something that kind of helps me to determine
what's commercial. I've got a little ... I've got something here and I'm wondering if
you could comment on whether you feel I'm going down the right path to determine
intensity of use. I'm looking at the number of individual renters of the property at any
one time, the amount of turnover, the churn that a property might have ... this appears
to be available on a 24-hour basis, you know, 24 hours in ... next group comes in. And
then the expected use at the property level, mentioning all of the amenities, outdoor
activities with the golf, and the pool and the spa and such. It seems to get down to that
and also multiplied by the nature of the occupancy, which I guess goes to the last one.
Is that a way to further consider this as a commercial use or not? And can you speak to
whether lodging could be considered a commercial use?
MI: Thank you Mr. Mayor and Councilman Schlum. Yes. Those are all legitimate factors to consider in reaching a conclusion as to whether this is a commercial activity or a
residential activity. Now, again, all of those things are important considerations. The
profit being derived is another consideration. When you talk about lodging,is lodging a
commercial enterprise? Well, I'm here to tell you that for nine years when I was in
college and beyond, I worked in the lodging industry in the City of Scottsdale and in
Paradise Valley, I worked at several of the resorts in town. And I've got news for ya,
those were commercial operations. Any Holiday Inn, any Best Western, any Hilton,
any Four Seasons ... they are operating a business and their business is lodging and
hospitality. The same business that Golf Properties is operating in here, in Fountain
Hills. I see no distinction just by the nature of the façade or edifice of the building that
they are doing it from doesn't change the nature of what they are doing. Because when
you look at those underlying factors, many of which you just enumerated, they all point
towards this being a commercial enterprise, certainly not a residential enterprise. It's
certainly not someplace where people live and that they call home. That's a residential
purpose. This is a lodging house,this is a business.
MN: I have a question for the Appellant. You're saying that Golf Resort is separate from ,44:1)
Golf Zoo, is that correct?
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Loy. JA: Yes Mayor,they are two separate entities.
MN: Now I take a group into one of your facilities and my group ... I will pay a fee, I will
actually write a check to Golf Resorts for the lodging?
JA: To Golf Zoo because sometimes hotels are used, Golf Resort ... the fees are divvied up
like the Southwest Airlines scenario.
MN: Who am I paying...Who do I write the check to?
JA: Golf Zoo.
MN: Golf Zoo. And that check that I write to Golf Zoo, does that include the golfing that
I've done as well as the residence?
JA: Whether you use these houses or whether you use a hotel, it's a one check or one credit
card typically to Golf Zoo.
MN: Then why didn't Golf Zoo apply for a Business License?
JA: Because Golf Zoo isn't doing business in the Town of Fountain Hills. Golf Zoo ...
MN: I mean why ... If I'm writing a check to Golf Zoo to rent this property, they are doing
business in this Town. Do you claim they are not doing business in this Town?
lirof JA: We have to respectfully disagree.
MN: I guess I don't understand your logic.
JA: Southwest Airlines isn't doing business in the State of ... the Town of Fountain Hills
when someone goes on line and buys an airline and a car and hotel in Charleston, South
Carolina.
MN: At this time, does the Council have any more questions?
CL: In my previous questioning, when you used examples and you just used another
example of Southwest and all these examples you've used are commercial uses. They
are commercial enterprises. Every example that you used, you described, is a
commercial enterprise, regardless of the logistics and the technology, in terms of what
is paid and what portion of what is paid, everything I am hearing you describe is ... are
commercial enterprises, which leads me to believe that not the other short-term rental
homes that you've pushed folk to, but this particular ... these particular properties in
question are in fact a commercial enterprise.
JA: The Zoning Ordinance does not regulate enterprises, that's the business of the State of
Arizona. The ordinance does. It says this is ... and they have the definitions that have
been in place for years ... commercial, lodging, residential. The folks you mentioned
we don't know because we don't have the records from the Town but I am comfortable
car there's certainly one or more owners of properties here in the Town of Fountain Hills
who rent those properties on a short-term basis,just like Golf Zoo,provide at least what
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Golf Zoo provides if not more, and they are owned in LLCs and maybe those folks are
commercial enterprises, but the Zoning Ordinance, the one that was used to deny the
license, does not regulate enterprises. It doesn't even regulate the use. It says this is a
dwelling unit, where a family of unrelated folks can reside. Reside, if you look in the
dictionary, it doesn't mean live forever, it doesn't mean domicile. It means are you
there that night? And if you are in town in Charleston, you reside there that night.
There's no intent, there's no definition; that is a selective reading of the word reside.
And so when you go to Charleston you reside there for the night and if you're traveling
down to Punta Gorda then you reside there for another night and then you come back
home and you reside there. Domicile, what Mr. Iacovino is trying to explain to you
means reside? Is absolutely positively not the definition, it's not even appeared
anywhere in the Zoning Ordinance. And that is the only ordinance that the Council is
here to interpret.
MN: At this point I am going to close off the questions from the Council to both parties and
we are going to go into our deliberation mode. Do we have anything we want to
deliberate? Councilman Kehe?
CK: From my perspective, this is purely a question ... these homes are all in residential
districts and it's clearly the only question is, is it residential use or commercial use? I
think that's what we have to focus on. Not the other side issues, but is it residential or
commercial?
MN: Councilmember Schlum?
Councilmember
Schlum(CS): Mayor, thank you. Right along those lines, part of the definitions that were provided in
Section 1.12 talks about use prohibited. And it says, "Not any use not specifically
permitted or permitted by a Special Use Permit is prohibited." I'm not comfortable that
this use, as we now understand it quite well, is not specifically permitted.
MN: I don't think I understand ...
CS: I'm trying to ... it seems like we're using definitions a lot and I've found one that
seems to apply because we all know what a residential neighborhood is. There aren't
many people that would be ... want to live next to somewhere you're going to have a
new neighbor every day, and not aware of their background or any of those other items.
But to get back to definitions, because that's common sense, that's some of those things
that aren't defined apparently. There is something defined and it's called use
prohibited.
MN: So you are saying ....
CS: And it says, "Any use not specifically permitted or permitted by Special Use Permit is
prohibited."
MN: So you are saying that this is prohibited?
CS: I'm stating I don't see it specifically permitted, this type of use, so therefore it's
prohibited.
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MN: My feeling on this is that we've done a lot of discussion tonight, we've heard a lot of
testimony and no matter how you cut it, this is a commercial use. Now, whether it's
Golf Resort or Golf Zoo, it's a commercial use and it's in a residential neighborhood
and this is not the type of thing that we, in the Town of Fountain Hills, want to condone
and go with as far as, you know, maintaining the character of our Town to have these
types of facilities in the Town. And I agree that this, this ... if it smells like a dog, and
tastes like a dog, it's a dog, okay? This is a ...(applause)...
MN: Sorry, please. You know this is more like a boarding house and a lodging house and a
hotel or motel than it is a single-family dwelling. People are not residing there on a
full-time basis or even on a part-time basis. So that's my feeling, that's what I ...
comments from the Council?
Councilmember
McMahan(VMM): I agree Mayor. I believe that the Golf Resort's activities approach to closely to those of
commercial lodging and I don't think you need a rocket scientist to define the term.
Rather than residential short-term rentals for non-business purposes, their methods and
the substance of their advertising, their procedures and fees, the very business itself, is
commercial lodging as I see it.
MN: Thank you Vice Mayor. Any other comments?
CA: Thank you Mayor. I found it strange that they had names on the houses,that they were
promoting them prior to 2007 with concierge and other beverages and it was concerning
to me that they bought the property and put it under the pretext that they were going to
be living there because that has different tax ramifications when you go to sell the
property. You pay either capital gains tax or you go two years and you get a certain
amount of dollars that you don't pay any taxes on at all. So,to me, it looks like this has
been a commercial entity with the websites, even though it says Golf Zoo looks like a
commercial entity. It's what I would expect to see if I was looking for a hotel that
offered packages. So, thank you Mayor.
MN: With that I'll entertain a motion if anyone wants to make a motion. Councilman
Archambault?
CA: Yeah, thank you Mayor. I'd like to make a motion that we uphold the denial of the
Business License.
MN: Have a second on that?
VMM: I'll second it.
MN: Any further discussion on the motion? If there's no further discussion, I'll call the
question. All in favor of the motion say aye.
Councilmember
Dickey (CD) Aye.
MN: Aye.
LCL: Aye.
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CS: Aye.
CK: Aye.
VMM: Aye.
CA: Aye.
BB: Mayor, 7-0.
MN: The decision of this Council is that the denial of the Business License is upheld.
(Applause.)
MN: Can I have a motion to adjourn?
CS: So moved.
VMM: Second.
MN: All in favor, aye?
CK: Aye.
CS: Aye.
CL: Aye.
CD: Aye.
CA: Aye.
VMM: Aye.
MN: Aye.
(The motion carried unanimously. The meeting adjourned at 8:55 p.m.)
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TOWN OF FOUN AIN HILLS
/
elk
By ' l`W
M yor Wa y ich.
PREPARED BY: Linda Crocker,Transcriptionist
ATTEST
Bevelyn J. n r,Town Clerk
CERTIFICATION
I hereby certify that the foregoing minutes are a true and correct copy verbatim of the minutes to the best of my
ability of the Special Session/Public Hearing before the Town Council of Fountain Hills on the 13th day of
March 2007. I further certify that the meeting was duly called and that a quorum was present.
DATED this 5th day of April 2007.
Bevelyn J en ,Town Clerk
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