Rio Rancho staff proposes permit-and-regulate short‑term rental program with 1% citywide cap

Assistant City Attorney Jessica Toll laid out a draft short‑term rental ordinance the city will bring back for formal consideration, recommending the council adopt a permit-and-regulate model rather than an outright ban.

Toll told the governing body that the city considers most short‑term rentals to be impermissible commercial uses under current zoning and lodgers‑tax rules, but that the market of listed rentals in Rio Rancho has grown rapidly. "We are limiting it to 1% of the total housing units within Rio Rancho," Toll said, explaining the cap would be calculated using the American Community Survey and would amount to roughly 420 permits based on the latest 42,000 housing‑unit figure. The draft would permit STRs as a regulated business use in single‑family residential zones, require a natural‑person permit holder, limit two permits per person and impose an annual safety inspection.

The ordinance as presented includes public‑safety and neighborhood‑quality provisions: mandatory posted evacuation plans, functioning smoke and carbon monoxide detectors, short‑term rental insurance, pool and spa safety measures, and off‑street parking requirements tied to bedrooms. Toll described occupancy rules she said are designed to limit turnover and crowding: "We are limiting it to 2 people per bedroom, plus an additional 2 people per unit," which produces a maximum occupancy example of eight for a three‑bedroom house. Rentals would also be limited to once every seven days to reduce high turnover.

On finances, Toll described an estimated revenue stream and cost model: a median nightly rate of about $135 and a lodgers‑tax estimate of roughly $150,000 tied to an approximate $3 million annual short‑term rental revenue base; staff estimated $208,000 in combined fees and tax revenue under a 50% conversion assumption while noting that only a portion of lodgers tax may be used for administration due to statutory restrictions.

Councilors questioned enforcement and scope. Councilor Culbreth asked whether homeowners associations could still prohibit STRs within their boundaries; Toll confirmed HOAs may adopt stricter rules that a city ordinance would not override. Several councilors pressed staff for better data on how many housing units are rentals and the likely housing‑stock impact if permits move units out of the long‑term market. Toll said staff would follow up with additional data from the affordable housing study.

The council did not vote on the draft; staff said they would return with a formal ordinance at a future meeting and an implementation timeline that could include a multi‑month ramp for staffing, permitting, inspections and public education.