Key Points

• A bill that would regulate the short-term rental industry is likely dead this session

• The bill sponsor is working on how to reintroduce it next year

• Some policy analysts say short-term rentals don’t contribute to housing affordability issues

It’s been a decade since Arizona lawmakers passed a law prohibiting cities from restricting short-term rentals, and with this year’s attempt at regulation stalling in the Senate, advocates are likely looking at another year waiting for reform. 

That comes from Rep. Selina Bliss, R-Prescott, who after several years of failed attempts has finally seen some movement on a bill to regulate the controversial rental industry.

Her bill, House Bill 2429, would have given cities and towns another tool to address problematic rental hosts and properties. It passed the House in March, 37-14, but with no committee hearing in the Senate and no alternative striker bill to try to revive the proposal this session, Bliss told the Arizona Capitol Times she’s begun thinking about her plans for next year. 

“We’re already talking about how to bring this bill back,” Bliss said. “I don’t care whose name is attached to it. Let’s just get the job done.” 

HB 2429 would allow local governments to limit maximum occupancy in sleeping areas of a short-term rental property and give cities permission to suspend a short-term rental license if there is a building code violation at a property that presents a serious threat to public health and safety.

But the most significant part of the bill, for Lake Havasu City Mayor Cal Sheehy, is a provision that increases the time period wherein accruing three nuisance violations on a single property can lead to license revocation from 12 months to 24 months. 

City officials say the law currently doesn’t give them enough time to adjudicate properties that have repeat nuisance violators. 

“When you do have a bad actor, the impact to the neighborhood is very big. Residents are looking to the local municipal government for solutions, and we don’t have any solutions,” Sheehy said. “We don’t have the ability to address that concern for them.”

This was the fourth year that Bliss has introduced short-term rental legislation. No previous measure was considered by a legislative committee, but she said reaching the Senate this year was positive progress. And as for new ideas for next year, she said she’s considering running mirror legislation with a Senate sponsor or running the bill in the Senate from the start. 

Bliss was hoping to get her bill heard by the Senate Regulatory Affairs and Government Efficiency Committee or the Senate Appropriations, Transportation and Technology Committee, but it was never put on an agenda for either committee. Senate President Warren Petersen, R-Gilbert, has also said on multiple occasions that he doesn’t like going around his committee chairs with striker amendments for bills that aren’t heard in committee.

It took some work for Bliss to get the bill to the Senate. HB 2429, as currently written, has reduced scope compared to previous versions of the bill she sponsored, which included the ability for municipalities to establish minimum distance requirements between short-term rental properties and control how many short-term rental licenses can be issued within a city. This year’s bill was a collaborative effort with cities, the Arizona Association of Realtors and Airbnb. 

League of Arizona Cities and Towns Executive Director René Guillen said: “It’s clear there’s growing support for the provisions in Rep. Bliss’ bill, but we also must address the critical issues facing communities like Sedona, Jerome and others. The rapid, unregulated growth of STRs, operating as de facto hotels in residential neighborhoods, is doing significant long-term harm to our housing supply.”

Roughly 20% of Sedona’s housing stock are short-term rental units, according to the city. Bliss’ district covers Sedona and she said the city is the “poster child” of where short-term rentals can go “terribly wrong.” 

The Common Sense Institute, a nonpartisan think tank, concluded in an April 16 report that short-term rentals have little impact on Arizona’s housing affordability, instead attributing the rise in housing prices to “weak” housing production in the decade since the short-term rental law took effect. 

The report also found that places with high short-term rental activity were already expensive, supply-constrained and tourism-oriented before vacation home activity expanded. The Common Sense Institute estimated short-term rentals make up about 57,000 of Arizona’s 3.3 million housing units and many of the short-term rentals were already acting as seasonal or vacation homes. 

“Arizona’s housing challenge is fundamentally a supply issue,” said Glenn Farley, Director of Policy and Research at Common Sense Institute. “Homebuilding slowed dramatically after the Great Recession and has struggled to catch back up, even as Arizona continued adding people and jobs.”

Bliss compared the industry to artificial intelligence and said the Legislature is behind in enacting regulations for it.

In Lake Havasu City, short-term rentals make up about 1,500 housing units, Sheehy said. The city has a strong tourism industry and an estimated 35,000 total housing units with short-term rentals placed throughout the city, but Sheehy said cities need some ability to manage them to address complaints from residents. 

“We have cities and towns of all sizes coming to the table from all over the state,” Bliss said. “This is an Arizona problem.”