Cave Creek approves short-term rental ordinance, fire station renovation contract, water interconnect agreement
CAVE CREEK, ARIZONA — July 19, 2023

Cave Creek approves short-term rental ordinance, fire station renovation contract, water interconnect agreement

Cave Creek Town Council approved contentious short-term rental regulations, water system interconnect project with Phoenix, fire station renovation, and traffic calming studies while debating proper balance between development control, pedestrian safety, and community character preservation.

Cave Creek Approves Contentious Short-Term Rental Regulations and Water Drought Management Code While Managing Traffic Safety and Fire Station Modernization

The Cave Creek Town Council voted 7-0 on July 17, 2023, to approve both a short-term rental public health resolution and ordinance, despite significant public opposition from property owners who called the regulations punitive and ineffective. The same meeting saw unanimous approval of two major infrastructure contracts—a $36,250 fire station pre-construction services agreement with FCI Constructors and a water system interconnect pre-construction contract with MGC Contractors—alongside heated discussion of traffic-calming measures that pit pedestrian safety against the town's small-town character.

Short-Term Rental Ordinance: The Centerpiece Controversy

The short-term rental debate consumed the largest share of council discussion time and drew six public speakers, split sharply between those demanding protection from "party houses" and property owners warning that the new regulations would devastate the local rental market.

Opposition

Six speakers testified against the ordinance. Mike Haddock, identified in council discussion as a local STR operator and spokesperson, delivered the most detailed critique:

"Although a majority may be in 10 and passing this STR proposal with time and effort invested let's review what we expect this STR to accomplish for Cave Creek... this proposal does inflict overwhelming and undeserved punishment on the 40 local mom and pop operators who cause no problems. This is all to apply pressure and knock out two or three nuisance party houses." — Mike Haddock, STR operator

Haddock warned that implementation would "lose many STRs" to long-term conversion or go underground, called the ordinance "revenue negative" (licensing fees under $10,000 annually while administrative costs would be far higher), and advocated instead for a strengthened nuisance ordinance targeting only problem properties. He requested council verify the actual number of STR listings, finding approximately 200 total rentals with fewer than 40 confirmed as short-term on available platforms.

Laura G., a resident also opposing the ordinance, itemized legal and structural concerns:

"The text and this proposal remains a muddled mess—a conflicting, unworkable language. The latest definitions are vague. We still are not clear on what an STR is and what an STR is not... this subject [rental ordinance] is a rental ordinance, it's a health and safety ordinance, sadly what it is not is a sensible, workable ordinance." — Laura G., resident

She cited state law (ARS 9-500-39 B1) requiring demonstrated need—not mere desire—for regulation, and questioned whether the ordinance violates the single-subject rule (ARS zero 30.59). G. also argued the ordinance would suppress affordable rental inventory and paradoxically encourage larger luxury home rentals—the very party houses the regulation aimed to curb.

On behalf of Janet Moore (unable to attend), Haddock also raised the absence of false-claim provisions and the lack of a clear definition of "short-term rental" (ARS statute allows 30-day threshold, absent here).

Main concerns raised by opposition:

  1. Three-strike suspension mechanism (three violations in 12 months) too slow to help residents experiencing current nuisances
  2. Burdensome licensing fees and mandatory vendor hiring create unnecessary bureaucracy
  3. Ordinance conflates three separate issues: nuisance complaints, tax enforcement, and short-term rental licensing
  4. Loss of small affordable rental inventory; encourages conversion to long-term or underground operations
  5. Vague definitions and inconsistent language throughout the text
  6. No provision for false claims, wasting town resources
  7. Ordinary revenue-negative implementation

Support

Chris Swainhart, a resident at 5701 East Rancho Manana, testified in favor:

"One of my neighbors told me that a party group was walking down the street of 10 people smoking dope as they were enjoying our neighborhood... but today we accepted as a matter of course... I think a large part of it is the surveillance of big e-commerce sites that are shoving this down the communities all over this country. I don't think that's a good thing for America and I think it's a very bad thing for Cave Creek." — Chris Swainhart, resident

Swainhart referenced Dallas's recent decision to ban short-term rentals in single-family residential neighborhoods and warned that without regulation, Cave Creek risked becoming "more of a mecca for short-term rentals for people that are partying" rather than a community of residents. He called on council to prioritize community living over profit-driven investment.

Main arguments supporting the ordinance:

  1. Residential neighborhoods deserve protection from recurring party-house nuisances
  2. Consistency with surrounding jurisdictions (Scottsdale, Phoenix, Tempe); failure to regulate invites more operators
  3. Suspension threat (losing rental license) provides leverage against out-of-state investors in ways fines cannot
  4. Vendor 24/7 monitoring and rapid-response enforcement (60-minute requirement) addresses nighttime disturbances
  5. Owner-occupied rentals and responsible local operators unlikely to face three violations
  6. Tax compliance and nuisance reduction are separate goals; ordinance addresses both

Town Attorney Explanation and Key Mechanisms

The town attorney, identified only by title in the transcript, presented the enforcement machinery and answered common objections. On sex-offender safeguards—a statutory concern—the attorney explained:

"[The legislature] said if a short-term operator knowingly leases out to a sexual offender that's a violation, but then how—there's no way that you could when the Uber drives up with the person you stand at the curb to do it to do a check. So what we've said is to acknowledge the duty to look into it. We said you can get have a safe heart. You can in effect demonstrate you didn't knowingly violate by checking the national register." — Town Attorney

The attorney also clarified that the ordinance does not levy a new sales tax—both a three percent transaction privilege tax and a four percent bed tax already existed since at least 1999. The ordinance's tax-collection benefit lies in enlisting the vendor to identify unlicensed operators. Finance Director Carrie reported that in February 2023, the town had 205 STR listings but only 19 businesses reported fees and bed taxes paid—a significant compliance gap the ordinance aims to close.

On the critical enforcement difference between owner-occupied and investor-owned STRs, the town attorney stated:

"If it's a short-term rental owned by an out-of-state investor, then guess what: that manager better show up in 60 minutes, otherwise it's a violation. Three strikes you're out and they get suspended in one year." — Town Attorney

For owner-occupied properties, the attorney noted, the owner is likely present and can resolve issues directly with the marshal without triggering the 60-minute clock.

Vote and Council Discussion

Council Member Dusty Rhoades articulated the consensus rationale:

"I think what we have here is a reasonable approach to this. We do want the business. We do want to make available the opportunity for good, good-behaving people to come in. We want to protect the people who have the mom and pop short-term rentals. Those have not been a problem. We do not want to penalize them." — Council Member Dusty Rhoades

Council Member Tom Augustine emphasized protection of residential character:

"[Eighty] percent of the short-term rentals in town are not paying their taxes. Second, this is not a business area or industrial area where you expect noise. These are residential neighborhoods where people are raising kids, they're trying to sleep at night. Third point is consistency: if we aren't consistent, we will need the Mecca and all the houses and the problem will get far worse." — Council Member Tom Augustine

Vote: Resolution R 2023-02 (short-term rental public health resolution) and Ordinance 2023-02 (short-term rental regulations) both passed 7-0.

Fire Station Renovation: Comprehensive Redesign Approved

Jim Ford, Community Risk Reduction Director, presented the redesign and renovation of Cave Creek Fire Station Number One, a project that has been in development since the town established its own fire department.

The project scope includes:

The council approved a pre-construction services contract with FCI Constructors for $36,250. The project team underwent formal procurement compliance: six firms initially responded to a request for proposals, narrowed to three finalists (FCI, Core Construction, and Wilming Construction), who made in-person presentations to a selection committee consisting of a contractor representative from outside the bidding pool, an architect/engineer, and town staff including Chief Alan from Daisy Mountain.

Key personnel presented:

Council Kathryn Royer praised the elevations: "I've seen the drawings the elevations they look great Jim, and you know that we're looking at a streetscape work trying to clean that up a little bit." She also requested permanent signage (the current banner was donated and is temporary). Jim Ford agreed to work with FCI on a permanent sign and suggested it could be moved if needed.

Vote: Resolution R 2023-17 (Fire Station Pre-construction Services Contract) passed 7-0. FCI will now conduct pre-construction phase work, including contractor outreach, constructability review, and cost/timeline breakdown, before returning to council with a guaranteed maximum price (GMP) contract.

Phoenix Water System Interconnect: Game-Changer Infrastructure

The town's utility director, John (presenting via video from vacation), introduced the long-awaited interconnect project with the City of Phoenix—a project that staff indicated has been in development for approximately eight years.

Project scope:

The interconnect provides approximately half the town's summer water demand and allows maintenance of critical infrastructure (CAP pipeline, watershed plan facilities, Neary treatment plant) without system shutdown—a major operational advantage.

Funding and timeline challenges: Equipment procurement (large pumps, motors, electrical gear) anticipated to take 12+ months. The town has delayed applying for broader funding pending completion of the integrated master plan and establishment of pre-purchase mechanisms.

Council approved a pre-construction services CMAR (Construction Manager-at-Risk) contract with MGC Contractors for $181,933. Utility Director John noted that MGC President Randy Gates was scheduled to attend but was not visible in the council chamber.

Council Member Joe Freedman, noting his prior service on the water advisory committee in 2015, praised the effort:

"The first ideas I heard about this were on the water advisory committee back in 2015 or so... I think this is one of the best things we advocated for the town. It's a pleasure for me to see it coming because it's going to be a game changer for the reliability of the town, and the town without water is unlivable." — Council Member Joe Freedman

Vote: Resolution R 2023-18 (Phoenix Water Interconnect CMAR Contract) passed 7-0.

Traffic Calming and Pedestrian Safety: Road Diet Redux

The presentation of the Kimberly Horn pedestrian safety study and Y2K Engineering traffic warrant analysis generated the most extended council debate outside the STR ordinance, centered on the tension between safety engineering and small-town character preservation.

Study recommendations (from 2021 MAG-funded Local Area Safety Study):

Three high-priority projects were identified based on cost-benefit analysis:

  1. Roadhouse crossing: Speed table + rectangular flashing beacon (RRFB), cost-benefit ratio 6.2. Hilltop (Kiwanis/Dairy Queen) crossing: Speed table + RRFB, ratio 4.7
  2. Hidden Valley crossing: Speed table, ratio 2.7

Combined three-project ratio: 8.5 (meaning $1 invested yields $8.50 in safety return)

Town Engineer Hal and traffic consultant Young Krakowski (Y2K Engineering) presented the designs and warrant studies. Speed tables are raised platform crosswalks approximately 4 inches high with ramps; they do not affect speed as aggressively as speed bumps but are removal-friendly (asphalt construction).

Council Member Tom Augustine raised the core objection: the town's transformation from two-lane to four-lane divided highway, loss of medians, and urban design inconsistency with Cave Creek's small-town character. He asked whether the underlying science of traffic calming could be reapplied at a smaller scale and questioned why the town did not revisit a "road diet" option (two lanes traffic, two lanes alternative use—parking or events) from prior MAG studies.

"I was coming through town the other day and I saw basically six lanes of asphalt... we don't really have a function in the town with staff, we've never really had it, and it's been picked at by volunteers over the years... I mean I kind of wonder whatever happened to our two-lane road through downtown Cave Creek... I wish we could take the genius of engineers who understand the science of using national experience to design things that truly increase pedestrian safety and have a measurable impact on people who are motorists, whether they're impaired or not, but somehow counterbalance it with what little we have left in this town that's not being urbanized." — Council Member Tom Augustine

Hal responded that road diet studies had shown significant level-of-service degradation and was not the preferred option. However, Council Member Cynthia Driskell noted:

"Every option and that study had a number of options you have not presented here tonight, and something new Council people probably do not have that background. Narrowing the lanes bring the lanes down so that it's inconvenient to drive through town at high speeds, and there were two factors—the speed and getting people across the streets safely." — Council Member Cynthia Driskell

Augustine specifically requested that staff revisit the road diet analysis and explore median restoration as a compromise. He proposed that if urbanization is inevitable, the town should consider creative surface design, ramadas, shade structures, and eventually underground parking (possibly modeled on Scottsdale's approach) to maintain character while improving walkability.

Young Krakowski addressed the road diet feasibility:

"To answer the question about the traffic Council on Cave Creek Road, they are about 13,000 vehicles per day. In regards to the comments about a roadway reconfiguration to two lanes, that would be within a threshold of a potential roadway reconfiguration. Just at a high planning level, the trade-off is the cost and the timeline for design and construction." — Young Krakowski, Y2K Engineering

She confirmed that the road diet had been studied in prior MAG work and added that the cost would be prohibitive.

Traffic warrant studies—three intersections:

The council also requested updated warrant studies for three intersections, following April 2023 motion.

  1. Cave Creek Road & Schoolhouse Road (currently four-way stop with flashing beacons)

    • Finding: Meets traffic signal warrant (volumes, crash history) but operations are adequate; average delay 19 seconds with stop control vs. 14 seconds with signal (Level of Service C vs. B)
    • Crashes: Six in five years; none prevented by signal; none serious injury
    • Recommendation: Maintain flashing beacons; no signal warranted

  2. Cave Creek Road & Spur Cross Road (stop on Spur)

    • Finding: Does not meet warrant for all-way stop
    • Crashes: Five in five years; one serious injury (bicyclist)
    • Recommendation: Restripe crosswalk closer to roadway; add conflict pavement markings; upgrade stop sign; implement stop-ahead pavement markings

  3. Cave Creek Road & Rancho Manana Boulevard (stop on Rancho Manana)

    • Finding: Not warranted for all-way stop
    • Crashes: Two in five years; no serious injury
    • Recommendation: Paint stop bars and crosswalk; upgrade stop signs; add conflict markings

Costs for safety enhancements at all three: approximately $400–$470K, with most expense driven by RRFBs ($100–$150K each), speed tables (~$10–$15K each).

Grant outcome: Town applied for $470K in MAG funding; denied, but staff advised to resubmit with "shovel-ready" designs. The town ranked sixth on at least one evaluation, indicating strong competitiveness.

Public commenter David Phelps questioned the validity of warrant studies based on one-day traffic counts, particularly after the town's busy season (Easter onwards). He suggested that implementation followed by a year of monitoring would be more accurate and noted that paint markings alone would not slow 43 mph average speeds:

"I have to agree with part of the analysis done by here and part of the advice, because part of it is science and opinion. The science tells us that our nature is that when you slow us down a little bit here, if we know where we feel late, we're going to go even faster to the next spot." — David Phelps, resident

Phelps also recommended temporary stop signs with later removal if ineffective and called attention to speed as a factor in a prior monument sign accident.

Mike Haddock, also commenting, supported the nuisance ordinance as more effective than STR regulations and endorsed the speed tables, despite concerns about horse trailers:

"I am very much in favor of this. I see this as your best timely tool to be effective for the short-term rental nuisance properties... I'm a surprise, surprise. I'm very much in favor of this." — Mike Haddock, STR operator (on noise ordinance)

He suggested that citations issued to guests for noise violations would be reported on rental platforms (Airbnb, VRBO) by future renters, effectively self-policing without heavy enforcement cost.

No formal vote on traffic calming was required; staff was directed to revisit road diet options and report back to council.

Noise and Nuisance Ordinance: First Reading

Council approved the first reading of Ordinance 2023-05 (Noise and Nuisance, amended) 7-0. This ordinance incorporates references to state disorderly conduct statute (ARS 13-2904), enabling both the marshal and Maricopa County Sheriff's Office to enforce residential noise complaints under state law rather than solely town code.

Town Attorney clarified that the ordinance is intentionally broader than vehicular noise, addressing general residential disturbance. Council Member Tom Augustine requested that the text be expanded beyond muffler and vehicle-specific violations to include general residential noise sources.

Key provisions discussed:

Laura G. provided detailed amendments on enforcement, emphasizing that responding officers must be given authority to act on a preponderance of evidence and issue citations on-site, and that the ordinance must apply to all residential properties, not just STRs. She was critical of council's lack of detailed line-by-line review:

"I'm really disappointed that the talent didn't seem to care enough to sit down and go through these ordinances line by line. It is filled with problems and unexpected consequences and I could send you email after email but no one wants to read it and no one wants to talk about these items." — Laura G., resident

Second reading scheduled for a future meeting.

Water Drought Management Ordinance (First Reading)

Council approved the first reading of Ordinance 2023-06 (water code amendments) 7-0. This comprehensive ordinance implements the drought management plan approved by council in November 2022 and addresses long-term Colorado River water shortage risks.

Context:

Key ordinance amendments:

  1. Section 52.031 (Waste of Water): Clarifies that waste penalties attach to water overuse, not just enforcement of repairs.

  2. Section 52.406 (Rates and Charges): Allows future council action (without full rate study) to impose surcharges on high water users during shortage stages—a significant operational authority. Language ties to cost of service but allows council flexibility for additional reasonable factors.

Council Member Joe Freedman raised concern about cost-neutral rate-setting language that lumps Cave Creek and Desert Hills equally, arguing that Cave Creek residents subsidize Desert Hills (which uses ~600–700 acre-feet, or ~33%, of town's allocation). He requested language be softened to "reasonable" rather than strictly "cost recovery." Town Attorney (advised by consulting attorney Michelle Vanquisen) noted existing Arizona Supreme Court precedent (Young v. City of Phoenix, 1989) permitting different rates for different service areas if they are reasonable and non-discriminatory. Costs of service and infrastructure investment are well-established factors. The town attorney confirmed existing code (52.406) already permits cost-based differentiation and recommended adding "reasonable" language for future flexibility.

  1. Section 52.501 (Drought Management Response Procedure): Most extensive amendment. Establishes tiered drought response stages:

    • Stage 0 (Voluntary): Always active; education and outreach
    • Stages 1–3: Escalating voluntary measures (public awareness, irrigation restrictions, etc.)
    • Stage 4: Severe shortage; restrictions on outdoor water use; potential flow restrictors on customer meters

    The ordinance obligates the utility director to present annual water supply projections and forecasts to council, recommending a response stage. Council can authorize enforcement actions (flow restrictors, fines, suspension of service) without full rate studies.

    Sean (utility director, surname not given in transcript) emphasized that flow restrictors—which limit meter flow to domestic usage only—are an extreme measure used only if customers refuse voluntary conservation. Las Vegas and California have employed similar tactics; Phoenix recently implemented this in a pilot program.

  2. Section 52.999 (Penalties and Administrative Procedures): Defines violations, administrative sanctions, civil remedies, and flow restrictor installation authority.

  3. Section 151.15 (Building Code Standards): Cleanup updating reference from 1997 Maricopa County standards to current uniform construction standards updated annually.

Council Member Tom McGuire also requested adding engineering flexibility for water quality or conservation goals within the building code standards, noting that national standards are designed by suppliers with vested interests in larger-diameter pipes and higher volumes. Utility director and consultant Michelle Vanquisen agreed to explore this in the town's draft supplemental utilities standards.

Public commenter David Phelps raised concerns about the strike-through of "Cave Creek and Desert Hills" language in Section 52.406 and clarification on standpipe service eligibility. Sean confirmed that existing customers (per 2021 Water Resource policy) may continue standpipe service, but no new customers—even standpipe—will be added in Desert Hills. Phelps also asked about expansion potential along the 12-inch water line on Spur Cross Road (extended in anticipation of a development that did not materialize). Sean confirmed this is a long-term negative asset for the system (water quality issues requiring flushing) and that master plan discussions will address potential looping or replacement; the town has no plans to extend service into undeveloped areas in the Cave Creek wash north of Rancho Manana.

Vote: Ordinance 2023-06 (First Reading) passed 7-0. Second reading scheduled for future meeting; 30-day effective date after second reading.

Other Items

Resolution R 2023-10 (Ground Leases): Tabled pending resolution of a legal question; no discussion.

Consent Agenda: Approved 7-0, including June 19 meeting minutes.

T-Mobile Lease Renewal: Five-year renewal (July 1, 2023–June 30, 2028) at $7,500/year for cell tower at southwest corner of Cave Creek and Carefree Highway. Approved 7-0.

Public Works and Wastewater Vehicle Purchases: Up to $195,000 for two replacement vehicles (2007 Public Works truck and Wastewater vehicle) via state contract. Approved 7-0. Council Member Dusty Rhoades noted the practical need for pre-approved spending caps to avoid losing vehicles to other buyers during the long procurement process.

Memorial: Council acknowledged the passing of former Planning Commission member Tom Davenport, described as "a veteran volunteer" and "a positive contributor" who "had strong thoughts and was willing to share them."

Duration and Procedural Notes

Controversies & Context

Short-term Rental Regulation: The fundamental tension pitted neighborhood livability against property rights and small-business viability. State legislation (likely passed by recent legislature) authorized cities and towns to regulate STRs, and the state League of Arizona Cities and Towns' legal counsel provided detailed analysis of the consequences of failing to pass a budget (entered into record by Mayor Robert Morris), establishing that municipal collapse—loss of shared revenues, inability to pay employees, insurability crisis—follows budget failure. This framing elevated council duty to act on STRs as part of baseline governance.

Critics argued the ordinance would create a two-tier system favoring large out-of-state investors (who can absorb fines) while punishing small local operators. They pointed to studies showing >50% loss of affordable overnight lodging inventory in jurisdictions adopting such rules, paradoxically increasing party-house concentration. Supporters countered that consistency with surrounding cities (Scottsdale, Phoenix, Tempe) is necessary to prevent Cave Creek becoming a destination for problem operators and that the suspension mechanism (three violations = 12-month license revocation) provides the "teeth" fines alone cannot.

Water Shortage and Rate-Setting: Joe Freedman concern about cost-neutral rate-setting between Cave Creek and Desert Hills reflects a deeper equity issue: the town's water entitlement is being depleted by an area (Desert Hills) over which the town has limited control (existing customers must be served per law; new connections restricted per 2021 policy). Fredman's suggestion to add non-cost factors to rate-setting (e.g., allocation scarcity, investment opportunity) was not acted upon at this meeting but noted for future consideration.

Traffic Calming and Character Preservation: Council Member Tom Augustine's extensive remarks on the loss of medians, evolution from two lanes to four, and urbanization pressures reflect a broader Arizona challenge: how small towns maintain identity and livability as growth pressures mount. The engineering rationale for speed tables (silent policeman effect, measured pedestrian survival improvement at 30 mph vs. 40+ mph) is sound but visually and practically costs the town character it valued. His request to revisit road diet options—even if rejected before—signals council willingness to trade some traffic throughput for livability and design coherence.

Vote Breakdown

ItemVoteResult
Consent Agenda (June 19 Minutes)7-0Approved
Resolution R 2023-10 (Ground Leases)TabledPending legal clarification
Resolution R 2023-02 (STR Public Health Resolution)7-0Approved
Ordinance 2023-02 (STR Regulations)7-0Approved
Ordinance 2023-05 (Noise & Nuisance, First Reading)7-0Approved
Resolution R 2023-17 (Fire Station Pre-construction)7-0Approved
T-Mobile Lease Renewal7-0Approved
Vehicle Purchases (Public Works & Wastewater)7-0Approved
Resolution R 2023-18 (Phoenix Water Interconnect)7-0Approved
Ordinance 2023-06 (Water Drought Management, First Reading)7-0Approved

All seven council members present and voting: Mayor Robert Morris, Vice Mayor Kathryn Royer, Council Members Tom Augherton, Cynthia Driskell, Joe Freedman, Thomas McGuire, Dusty Rhoades.

Key Speeches

"Although a majority may be in 10 and passing this STR proposal with time and effort invested let's review what we expect this STR to accomplish for Cave Creek… this proposal does inflict overwhelming and undeserved punishment on the 40 local mom and pop operators who cause no problems. This is all to apply pressure and knock out two or three nuisance party houses. This is not smart business or public policy approach." — Mike Haddock, STR operator and public speaker

"I think what we have here is a reasonable approach to this. We do want the business. We do want to make available the opportunity for good, good-behaving people to come in. We want to protect the people who have the mom and pop short-term rentals. Those have not been a problem. We do not want to penalize them." — Council Member Dusty Rhoades

"The first ideas I heard about this were on the water advisory committee back in 2015 or so… I think this is one of the best things we advocated for the town. It's a pleasure for me to see it coming because it's going to be a game changer for the reliability of the town, and the town without water is unlivable." — Council Member Joe Freedman (on Phoenix water interconnect)

"I was coming through town the other day and I saw basically six lanes of asphalt… I mean I kind of wonder whatever happened to our two-lane road through downtown Cave Creek… I wish we could take the genius of engineers who understand the science of using national experience to design things that truly increase pedestrian safety and have a measurable impact on people who are motorists, whether they're impaired or not, but somehow counterbalance it with what little we have left in this town that's not being urbanized." — Council Member Tom Augustine (on traffic calming)