Arizona Senate bill lauded as ‘middle ground’ in statewide short-term rental battlefield

Arizona cities and towns fight for all property rights at capitol

Posted 2/25/20

For Arizona residents hoping --- maybe even praying --- for some type of solution to combat the devil-may-care attitudes of short-term rental property owners in their neighborhood, a proposed Arizona …

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Arizona Senate bill lauded as ‘middle ground’ in statewide short-term rental battlefield

Arizona cities and towns fight for all property rights at capitol


For Arizona residents hoping --- maybe even praying --- for some type of solution to combat the devil-may-care attitudes of short-term rental property owners in their neighborhood, a proposed Arizona Senate bill has taken its first steps to find a resolution.

On Feb. 20, the Senate Commerce Committee heard testimony at the Arizona capitol and voted 5-3 on Arizona Senate Bill 1554 --- legislation seeking to provide solutions to short-term rental units causing a living nightmare in Valley neighborhoods, especially Scottsdale and Town of Paradise Valley.

SB1554, sponsored by Senator Kate Brophy McGee, will continue through the lengthy legislative process seeking to officially become an Arizona law.

In part, SB1554 seeks to prohibit a city, town or county from regulating a short-term rental or vacation rental that is one additional residence to a primary residence; prohibits a corporation from operating STRs; caps the number of housing units in multifamily properties that can be utilized as STRs; and establishes an occupancy rate.

Ms. Brophy McGee also introduced Senate Bill 1553, an ancillary bill to SB1554, which did not receive enough votes to continue through the legislative process.

The issue of short-term rentals, stemming from Arizona Senate Bill 1350, is an emotional topic for people on both sides of the issue.

While many local residents are contacting their elected leaders and seeking solutions to resolve the problematic short-term-rental operations in their neighborhood, many hosts and property owners depend on the income for their livelihood.

SB1350, which went into effect at the end of 2016, restricts local cities and towns from regulating or restricting the use of vacation or short-term rentals within municipal boundaries.

Officials say the bill was thought to provide homeowners with the option of renting out a spare bedroom as a way to earn extra cash. However, the realities of short-term rentals have been much different for some folks who claim raunchy and foul behavior stemming from properties that are rented out to large groups, bachelor parties and vacationers.

In 2019, realizing SB1350 was being abused, the state passed House Bill 2672 tightening regulations on vacation-rental properties.

Proponents of short-term rentals say HB2672 needs time to correct the unintended consequences of the state law; however, changes can’t come soon enough for residents who endure constant suffering at the hands of vacationers looking for a good time, they claim.

Ms. Brophy McGee’s proposal seeks to create a means for cities and towns to address the problematic properties.

“We know there are good operators, and this bill is not about them,” Ms. Brophy McGee said during the Feb. 20 hearing.

“This bill is to address SB1350 conflict and it’s important to those who are here for SB1350 to know that it conflicts with itself. By saying we can’t regulate short-term rentals for their use, but then says we can regulate them for fire and building codes --- we don’t know which it is. We have to figure it out. This bill provides a path forward so cities can regulate quality-of-life issues.”

Paradise Valley Mayor Jerry Bien-Willner called the issue of short-term rentals the No. 1 problem identified in his town --- and he has been heavily engaged in seeking a solution.

In late 2019 an ad-hoc committee was formed to understand the impacts short-term rentals have on local municipalities, which Mr. Bien-Willner testified at, in addition to the Feb. 20 Senate Commerce Committee meeting.

Scottsdale Mayor Jim Lane also testified during an ad-hoc committee meeting; and Scottsdale Councilman Guy Phillips testified at the commerce committee meeting.

All three elected officials voiced the problem short-term rentals are creating on local, luxury neighborhoods.

Restoring guardrails

Members of the public both supporting and opposing SB1554 attended the Senate Commerce Committee meeting, which yielded several testimonies.

A group opposing the bill wore bright orange t-shirts donning the phrase, “I Support AZ Vacation Rentals.”

Ms. Brophy McGee says the 2016 “Airbnb bill” completely stripped cities and counties of regulating short-term rentals, affecting quality of life. This was then backed up by another senate bill, 1467, which would withhold shared revenue from cities and towns, which have been found by the Arizona Attorney General to have violated state law.

Sedona was one such municipality that was threated with having its revenue withheld because it attempted to put in some provisions that spoke to short-term rentals.

“Our neighborhoods are disrupted and in danger of losing their character and dying,” Ms. Brophy McGee said.

“If we skip past the financing mechanisms, which range from sketchy to diabolical --- we are left with the most important policy work we do here in the state: safety.”

Ms. Brophy McGee was very adamant her bill did not target the good, responsible homeowners who rent out their properties --- hosts who follow local nuisance laws, meet their renters and keep conditions safe.

“That’s not what I’m trying to interrupt or end; I think when we adopted 1350 and 1467 almost simultaneously, we turned over complete control of those quality-of-life issues I listed --- yes. there are health and safety issues --- to a platform, a remote, out of state, whatever, technology platform,” she explained.

“We need to put some more guardrails back in place the platform can do what it does, and we can do what we do.”

Tug-o-war between residents and commerce

Scottsdale business owner Becca Valcik is against SB1554, but supports implementing rules and regulations.

She owns List My Rental Home --- a vacation rental property management company offering “one-stop-shop” services to take the stress out of vacation home property management.

“We don’t want to have this type of bill,” she said. “We have lots of rules that our business focuses on --- we have contracts, we show them bills, we do the nuisance laws, we have them responsible --- we do think there’s a way to have the best of both worlds.”

Ms. Valcik pointed to her staff and the ability to provide jobs to people through her Scottsdale business.

“We want to allow what we can, and continue to do so, but at a reasonable rate. This would cut all of us out of business,” Ms. Valcik said. “That’s not what we want, but we do want to find a win-win solution so we are willing to do so.”

Paradise Valley resident and self-proclaimed “snowbird” William Hunter says the makeup of his cul-de-sac changed drastically in one short year.

“Last year our cul-de-sac neighborhood was a very neighborly place. This year I returned to short-term rentals in the area,” he said. “One right next door for 33 people, and another one house away that hosts 16-plus people. All the Animal House stories apply here too --- it’s a nightmare.”

Mr. Hunter described his lovely neighborhood turning into a war zone in one year. He also fears that two properties for sale under renovation will add to the problem.

“If they go to short-term rental, it will push the area beyond the tipping point and any notion or enjoyment of a quiet neighborhood will be totally destroyed,” Mr. Hunter said. “There are plenty of other investments that can support your family without destroying neighborhoods and terrorizing families. SB1350 is a disease we desperately need a cure.”

A middle ground

For elected officials in Scottsdale and Paradise Valley, both Mr. Phillips and Mr. Bien-Willner, say they get countless emails on the issue.

Speaking for himself, Mr. Phillips says he supports the bill, calling it a middle ground.

“We get plenty of emails every day from people complaining about this problem. Spring training’s coming up; we’re going to get hundreds, hundreds of emails complaining about this problem,” he said.

“You look at it like maybe it’s residents against Airbnbs, or people who want to rent out their homes. I don’t think that’s what it is. I think we want to learn how to get along --- that’s what this bill does. I think it’s a good middle ground, I think it’s very responsible. It will allow us to work together and alleviate a lot of issues we have in our neighborhoods.”

For Mr. Bien-Willner, Paradise Valley is a non-commercial municipality --- nearly all of the properties in town are residential.

“Quiet enjoyment is a property right, there are property rights on both sides,” he explained. “As we discussed, SB1350 disables me and my colleagues --- we’d rather not be here and troubling you with this, we’d rather be handling it ourselves. This legislation advances things for us in order to allow us to solve many problems for our residents.”

Mr. Bien-Willner says he has heard from “thousands of people” in town that support SB1554, with “no one supporting the current regime.”

He closed by noting that transient activity is not residential activity.

“A hotel is not a home; a resident votes, a resident receives mail, a resident receives bills --- a transient guest does not,” he said.

Next steps

  • SB1554, with amendments, was approved 5-3 by the Commerce Committee. Next steps for the bill may include:
  • Committee of the Whole hearing where the entire Senate convenes as a committee providing an opportunity for debate, questions or comments;
  • A third read --- a final roll call vote on the bill; and
  • Be transmitted to the House.

The bill needs to receive 16 votes in the Senate to pass during its third read before being passed to the Arizona House, where it will go through a new approval process.

If SB1554 passes both chambers there are still a handful of routes the bill can take depending on if any changes have been made. If the bill is exactly the same, it can then be sent to the governor. If the bill has been changed, the Senate must vote on the amended version of the bill.

If the bill succeeds through all of its approvals, and reaches the governor’s desk, the governor can:

  • Sign the bill;
  • Veto the bill;
  • Allow the bill to become law without his signature.