State senators voted Tuesday to block local governments from restricting the ability of property owners to rent out their homes — or even their couches — for short-term or vacation rentals.
The last-minute provision was added to legislation designed to eliminate the requirement for homeowners to collect local taxes every time they rent out a room or a house through “sharing” online services like Airbnb. Instead, it would be the responsibility of the online firms to collect the applicable taxes and forward them to the Department of Revenue which would send them to the affected jurisdictions.
But Sen. Debbie Lesko, R-Peoria, tacked language onto SB 1350 which says cities, towns and counties cannot prohibit or restrict these rentals simply because the property is not classified as a hotel.
The move is in line with efforts by Gov. Doug Ducey to “modernize” the state’s economy.
“Arizona should be to the sharing economy what Texas is to oil and what Silicon Valley used to be to the tech industry,” the governor said in his State of the State address.
Ducey specifically mentioned rideshare companies like Uber and Lyft and the efforts by his administration to free them from various regulations. The idea of having a single point of collection for taxes was designed to make it easier for homeowners to rent out space without worrying about running afoul of local tax collectors.
But Sen. John Kavanagh, R-Fountain Hills, said Lesko’s amendment goes farther by opening the door wide to temporary rentals.
“I didn’t move into a neighborhood to have the house next door to me turned into a weekly rental property,” he said in casting the lone dissenting vote against the measure.
Kavanagh said he’s not against long-term rentals, even to “snowbirds” who move into a residential neighborhood for a month or two.
“I have no problems with that,” he said.
“But we had a problem in Fountain Hills where people were renting houses and they were allowing individuals through services like this to rent them for the weekend when there are big golf or other events in town,” Kavanagh said. “And a whole bunch of people come and they party at the house, they arrive on Friday and they leave on Sunday.”
Ken Strobeck, executive director of the League of Arizona Cities and Towns, said his organization generally opposes measures which limit local control. But he said Lesko agreed to build in some protections to preserve the ability of communities to protect public health and safety.
For example, the legislation requires that rentals conform with fire and building codes as well as transportation regulations.
It also says that not every vacation rental is free from regulation. Local government remain free to prohibit short-term rentals for housing sex offenders, selling illegal drugs or creating pornography or obscene materials. Also off limits would be nude or topless dancing or other “adult-oriented businesses.”
David Drennon, executive vice president of the Arizona Lodging and Tourism Association, said late Monday that there may need to be changes in the legislation to ensure it is fair to all concerned.
“We absolutely support Airbnb,” he said. “It brings competition to the marketplace.”
But Drennon said what the legislation fails to address are abuses of the system.
“There are people who are buying multi-unit apartment housing and basically trying to operate them as a hotel,” he said. “They’re skirting the law.”
For example, Drennon said, a hotel would have to comply with requirements of the Americans with Disabilities Act to ensure that there are rooms and bathrooms that are accessible to people in wheelchairs.
That requirement does not exist for someone who is simply renting out a room in a home. But Drennon said that exemption should not exist for someone who really is in the business of running something that is a hotel in every way but a name.
Drennon said his organization will look for changes when the measure goes to the House following a Senate roll-call vote.