Arizona short-term rental reform lobbying ban divides leaders

By Judy J. Beasley Last updated Dec 21, 2022

A lobbying moratorium agreement between short-term rental companies and a statewide group representing municipalities has divided Arizona city and town leaders.

In June, the League of Arizona Cities and Towns signed an agreement with Airbnb and Expedia Group, owner of vacation rental company Vrbo, that temporarily limits the League’s ability to advocate for changes to rental laws in short-term state. The League is a membership organization from Arizona’s incorporated municipalities and has been fighting for years for greater municipal power to control short-term vacation rentals.

The agreement, which The Arizona Republic obtained, states that:

For three years, the parties will refrain from trying to change state law that limits how cities and towns can regulate short-term rentals. This includes SB 1168, the bill signed by Governor Doug Ducey in early July. which allows more local monitoring of rentals.
For five years, the League won’t try to completely repeal SB 1350, the 2016 law prohibiting municipalities from banning short-term rentals, and won’t push for “legislation regarding changes to add regulatory obligations and burdens in an online hosting market”.
The agreement precludes advocating for statutory changes “related to limiting the proliferation of short-term rentals” in communities, such as density limits or numerical caps.

The agreement was signed on June 24, the same day the legislature sent SB 1168 to Ducey. The law project empower local governments. It allows cities and towns to require municipal licenses for vacation rentals and allows local governments to crack down on intrusive properties.

Many cities and towns say vacation rentals have caused many problems, from nuisance complaints and safety issues to the depletion of the local housing supply. In 2016, SB 1350 stripped municipalities of power to regulate tenancies, spurring years of legislative struggle to reclaim local control.

League management and several League members said the signing of the agreement was necessary to pass SB 1168 and that it gives the new law time to work before one of the three parties fails. introduces other changes.

According to Tom Belshe, executive director of the League, the moratorium was approved by a task force made up of leaders from 10 jurisdictions: Scottsdale, Sedona, Flagstaff, Goodyear, Lake Havasu City, Fountain Hills, Paradise Valley, Phoenix, Tempe and Chandler. .

The agreement only applies to the League of Arizona Cities and Towns, Airbnb and Expedia Group. But while individual cities have the right to pursue short-term rental legislation independently, Belshe said the League could struggle to make similar deals in the future if municipalities don’t follow it as well.

“Towns could go out and do their own thing, but again, I don’t think that would be viewed favorably by the other side,” Belshe said.

Some municipalities disagree.

“We have our own lobbyist, and we will use our lobbyist regardless of the League of Towns and Villages agreement,” said Sedona Mayor Scott Jablow, who took office in November. About 16% of Sedona’s housing supply is now vacation rentals, according to city estimates.

What city officials are saying

The Arizona Republic has contacted officials in 17 cities and towns to find out if they plan to abide by the moratorium. Many said they intended to comply or that they did not yet have any legislative projects that would conflict with it. But a few said they would continue to push for more local control of short-term rentals, despite the deal.

Paradise Valley Mayor Jerry Bien-Willner, who has been outspoken in the fight for local control of short-term rentals, said the vacation rental industry likely would have prevented the passage of SB 1168 without the moratorium. .

“The completion of 1168 was a significant step forward,” he said. “I don’t see a standstill agreement between some players as a watershed moment. I think that’s just one of the realities of the state-level legislative process.

Tempe, Bisbee, Chandler and Fountain Hills officials said they do not intend to pursue additional short-term rental legislation or intend to see how changes made under SB 1168 addressed their concerns before deciding on next steps.

“I myself am more than happy to see how this plays out over the next two years,” said Bisbee Mayor Ken Budge. “And if we have to go back and say there has to be more control or more problems to solve, I think the League would be the one to do it, not just one city.

Scottsdale Mayor David Ortega also said the city plans to honor the moratorium, noting that doesn’t preclude advocating for legislation limiting the number of short-term rentals.

Officials from other municipalities had different views.

Lake Havasu City Manager Jess Knudson praised the League’s ongoing work on vacation rentals, but said the city is “beholden” to its residents.

“If our residents want additional tools in place or want the city to do more with short-term rentals, that’s exactly what we’re going to do,” Knudson said. The city, he said, would like to have more control over the short-term rental application process. The City of Lake Havasu would also like to require landlords to provide emergency contact information to all nearby homes, not just immediate neighbors, before they begin operating a rental, he said.

Former Payson Mayor Tom Morrissey, whose term ended in December, called the deal “weak”.

“I know Airbnbs have an extremely powerful lobby, and I feel the legislature has been handcuffed to deal with them,” he said. “But my personal feeling is that they’re out of control, and I think they’re counterproductive to the communities they enter.”

Tom Martinelli, Airbnb’s head of public policy, said if municipalities want additional rules, the company “would like to work with them to understand their needs.”

Ashley Hodgini, head of U.S. public policy at Expedia Group, said the company “remains committed to working with state and local officials on policies that support property owners, local communities and Arizona’s tourism economy.” .

Real estate attorney Sean Berens said municipalities that may not want to honor the moratorium need to consider whether ignoring the League’s position is worth the trade-off.

“When you disregard those commitments, you diminish your collective power for the future,” he said.

Officials from several municipalities, including Phoenix Mayor Kate Gallego and former Flagstaff Mayor Paul Deasy, whose term ended in December, did not respond to multiple requests for comment or did not comment on the file to find out whether or not they planned to honor the agreement. .

‘I’m certainly worried’: City officials and housing advocates left in the dark

Some city officials, housing advocates and anti-short-term rental activists were surprised to learn of the agreement and said they were troubled by it.

Phoenix City Council member Debra Stark, who represents District 3, said she found out about a voter’s agreement months after it was signed.

“I am certainly worried. I mean, we have an affordable housing problem in our state. And we need regulation of short-term rentals,” Stark said. “I don’t think anyone is against it; it’s just that they got out of hand.

Joanna Carr, director of research and policy for the Arizona Housing Coalition, agrees. She said SB 1168 only directly addresses nuisance issues, not the impact short-term rentals have had on the state’s housing supply.

“We’re already at a point where it’s gone too far,” Carr said. “It’s not, ‘How can we look at limiting the increase in short-term rental housing right now?’ …That’s it, and, ‘How can we get back what we’ve already lost?’ »

Kate Bauer is co-founder of the Arizona Neighborhood Alliance, a group that advocates short-term rental restrictions. She said the moratorium agreement raises questions about whether groups like hers can trust the League to represent community interests.

“We had heard rumors of a supposed moratorium, but we were also assured that there had been a push back on it and it hadn’t happened,” she said.

The silver lining, she said, is that the agreement also bars Airbnb and Expedia Group from negotiating any changes to SB 1168, which she says could facilitate future negotiations.

An exception to the moratorium allows the League to continue advocating for legislation that would allow cities and towns to limit the number of short-term rentals in their jurisdictions.

Berens said the legislation could take several forms, including an amendment to the section of the state law that includes both SB 1350 and SB 1168.

The League plans to continue working on legislation that would allow cities to limit the number of rentals, Belshe said, although he knows it will be an uphill battle.

“We haven’t seen any appetite from the Legislative Assembly to organize something like this,” he said. “So we could make it work, but we don’t know if we’d get enough votes to get it through.”