Arizona lawmakers propose new restrictions on vacation rentals
An Arizona lawmaker wants to limit some owners of short-term vacation rentals from renting out their homes more than once a month, a proposal that comes in response to complaints from across the state.
The latest salvo in the debate over short-term rentals comes from Sen. Kate Brophy McGee, R-Phoenix, who introduced a bill Monday to mitigate neighborhood problems caused by rowdy renters.
Brophy McGee wants to limit the number of times owners can rent out their properties to just once a month if the property is not the owner's primary or secondary residence. Her Senate Bill 1554 would allow for more frequent rentals if a municipality specifically allows it.
Arizona lawmakers in 2016 prohibited municipalities from regulating vacation rentals. But since then the industry has exploded and some lawmakers have tried to address concerns of permanent residents who don't want to share their neighborhoods with short-term visitors.
"My legislative approach is to bring it back to the original (2016) policy intent," Brophy McGee said. "I was trying to figure out, why in the heck did we all vote for that?"
FOR SUBSCRIBERS: Phoenix tries to rein in problem Airbnbs, angering neighbors and renters alike
She said when the law passed in 2016 preventing municipalities from regulating such rentals, the concept was "sold to" lawmakers as a way to help people earn extra cash by renting out a spare room or guest house. But since then, the state has seen an explosion in rental properties where the actual property owner is out of the state or even out of the country.
Some homes rented through online sites such as Airbnb and VRBO have become a nuisance in places as diverse as midtown Phoenix and Sedona, with full-time residents complaining about noise, parties, rude or drunken behavior and dangerous driving in usually quiet neighborhoods.
Gov. Doug Ducey, however, is unlikely to sign such a bill, as he said Tuesday he believes the state has already done its part.
“We did have a concern with what were ... described as 'party houses.’ We addressed that in legislation,” he told reporters after an unrelated event Tuesday. “If there are other issues beyond that, I believe HOAs — homeowners associations — can do whatever they like.”
Pressed about ongoing complaints from cities and towns, Ducey bristled, implying reporters were manufacturing controversy.
The question keeps coming up as if that wasn't solved in legislation,” he said. “The press and the folks at these (media) gaggles are the only ones that are asking me about this, not citizens.”
Bill limits rentals, adds penalties
Her bill states that if a vacation rental or short-term rental is not a person's primary or secondary residence, or if it is owned or operated by a corporate entity, and a majority homeowner is not on the premises, it can only be rented once every 30 days. To rent it more often than that, a municipality would have to adopt an ordinance allowing more frequent rentals.
Her bill also would prohibit rentals from advertising that a property accommodates more people than the occupancy limit of the property, or that the home can be used for any "nonresidential use." This would bar homes from being advertised for special events that would normally require a special municipal permit.
Owners who falsify information would be guilty of a petty offense.
Brophy McGee's proposal builds on the penalties lawmakers approved last year for "verified violations" of state law or local ordinances of $500 and $1,000 for the first and second violations, respectively.
She would add a six-month suspension of the owner's transaction privilege tax license for the third violation, and only reinstate the license if the owner can show how future violations will be prevented.
She said that additional penalties are needed because the city of Scottsdale tried fining some troublesome rentals and the owners simply didn't respond.
"'Sue me,' I think, is the attitude," Brophy McGee said.
"What we are having is big corporations from the South China Sea, where they have their base of operations, coming over here and scooping up these homes and renting them out," she said. "That is not on-site ownership."
NOT FOLLOWING CA'S LEAD: Bill to preserve natural-gas hookups to new homes advances
Proposal has bipartisan support
Brophy McGee has Republicans Sen. Heather Carter of Cave Creek and Rep. John Kavanagh of Fountain Hills as cosponsors of the bill, as well as Sen. Sean Bowie, D-Phoenix.
Kavanagh and Brophy McGee co-chaired a legislative committee to investigate short-term rentals between the 2019 and current Legislative sessions.
Democrats wanting major changes submitted the first bill of the 2020 Legislative session back in November.
Reps. Isela Blanc, D-Tempe, and Aaron Lieberman, D-Paradise Valley, want to repeal the blanket protections for vacation rentals that lawmakers enacted in 2016. They both were on the legislative committee on short-term rentals as well.
Brophy McGee said that she thinks a repeal would be problematic for cities and towns that want to crack down on vacation rentals. She said if the repeal were to pass, and small towns heavily affected by rentals try to prohibit them, they may face legal challenges from rental companies that could be a burden on municipalities.
"The state created this problem, the state needs to fix it," she said.
A NO GO: AZ effort to restrict auto-title loans won't be on November ballot
She expects passing her legislation to be a tough fight, considering the support for the rental industry in the state, including from the conservative Goldwater Institute, which pushed for the 2016 protections.
The Goldwater Institute declined to comment on Brophy McGee's bill on Tuesday before having time to evaluate the proposal.
The Democrats' repeal effort drew a rebuke from Ducey.
Airbnb released a joint statement with Expedia Group on Tuesday opposing the new legislation.
"Arizona has set itself apart as a leader in smart, reasonable policymaking, and over the course of the last three years has advanced innovation, protected neighborhoods, promoted travel and tourism, contributed millions to local economies, and aided tax revenue collection," the statement said. "That leadership should be supported, sustained and emulated; not reversed."
It was identical to the statement the companies released in November when the Democrats proposed their repeal of the 2016 law.
Municipalities want restrictions
The Arizona League of Cities and Towns has supported placing restrictions on the short-term rental industry.
But municipalities are hesitant to take any action on their own to regulate such rentals after a ruling from the attorney general in 2018 that said a rental registration Sedona set up was in violation of the 2016 prohibition on short-term rental rules, said Nick Ponder, legislative director for the League of Cities and Towns.
Cities and towns that take action that runs afoul of the 2016 law could jeopardize other funding they receive from the state. A separate 2016 law gives legislators the ability to make complaints when they believe municipal codes are in conflict with state law. The attorney general must follow up on those complaints.
Municipalities see that "as a dangling cleaver over our heads," Ponder said.
"We're looking to return some local control in the area of occupancy," Ponder said.
And despite the contention from the Goldwater Institute that municipalities have the ability to regulate noise complaints and party houses, Ponder said dealing with those complaints is a strain on municipal resources.
Brophy McGee agreed. She said that even if police are called to a noisy house and get the renters to quiet down, new renters might show up the following week and cause the same problems for neighbors.
"Do the property rights of the owners of a (rental) home ... trump the property rights of the people who actually live there?" Brophy McGee said. "The answer is no."
Reach reporter Ryan Randazzo at ryan.randazzo@arizonarepublic.com or 602-444-4331. Follow him on Twitter @UtilityReporter.