Lawmakers take small step to crack down on rental houses, but lack support for big changes

Arizona lawmakers — and many homeowners — have a host of concerns about short-term vacation rentals. But they don't have enough votes to make major changes that might fix problems.

On Thursday, lawmakers in the House advanced a bill to crack down on the most egregious rental situations such as large parties at homes rented through companies such as Airbnb, HomeAway and VRBO.

Rep. John Kavanagh, R-Fountain Hills, had to substantially water down his bill to keep it alive. He removed stipulations he and other lawmakers hoped to include, such as limiting the number of guests in short-term rental properties or requiring sound-monitoring equipment. 

Kavanagh said those measures threatened to cost the bill too many votes — or earn a veto from Gov. Doug Ducey.

"If we go too far trying to correct the problem we risk losing the votes and losing the bill," Kavanagh said as Democrats tried to amend the bill with more restrictions municipalities could use.

State law prohibits counties and municipalities from regulating vacation rentals except that they may protect public health and safety, set zoning ordinances, and they can limit the use of rentals to house sex offenders.

A prohibition on stricter rules was passed by lawmakers, who voted overwhelmingly in favor of it and signed by Ducey in 2016. Kavanagh was the lone 'no' vote in the Senate that year. The explosion in properties used for short rentals since then has caused a variety of problems. 

The prohibition limits cities, towns and counties from doing much to crack down on property owners who rent their homes to people who cause problems by playing loud music, crowding streets with parked cars or otherwise bothering permanent residents of the neighborhood.

Initially, House Bill 2672 would have allowed municipalities to regulate rental properties based on the number of occupants. The idea was to allow them to be restricted to two adults for every bedroom plus two, so a two-bedroom home could have no more than six adults present.

But Kavanagh removed that portion of the bill.

He also initially proposed to allow municipalities to require rental property owners to install monitoring equipment to detect noise levels and the number of occupants and to transmit that information to the owner or manager of investor-owned properties or those that have three legal violations in a year.

Those ideas also got stripped.

Bill allows for fines, requiring contact info

What was left for the House members to vote on was a bill that allows municipalities to restrict rentals to overnight lodging and require vacation-rental owners to provide contact information for a person responsible for handling complaints.

The restriction regarding overnight stays is an effort to block homes from hosting special events.

"This gets out the party houses," Kavanagh said after the vote.

The bill also will allow the Department of Revenue to impose fines of $500, $1,000 and $1,500 on property owners who receive a "verified violation" by any municipality.

A verified violation would occur any time the property is found in violation of municipal codes regarding safety or if the property was used for a special event, which can be prohibited under the bill.

The initial version of the bill had support from a variety of cities and towns, and opposition from groups such as the Arizona Free Enterprise Club, Goldwater Institute and others. 

'Party houses are destroying neighborhoods'

Some lawmakers said they wanted to do much more, but they didn't have the votes for that.

"If you had heard or read the number of complaints that we receive from people who own homes or live in apartments or have apartment buildings in Scottsdale, Fountain Hills, Rio Verde, Flagstaff," said Rep. Jay Lawrence, R-Scottsdale.

"The bill that was introduced ... I hope we can one day find a way to do that. Because people are coming in buying up property and turning them into party houses."

Lawrence said it was "unfortunate" that Kavanagh had to remove some portions of his bill.

"Party houses are destroying neighborhoods," Lawrence said.

Lawmakers including Rep. Isela Blanc, D-Tempe, tried to strengthen the bill. She wanted an amendment that would allow municipalities to prohibit investment firms from purchasing homes and using them for short-term rentals.

Blanc said homeowners should have the opportunity to earn money by renting their home or even a room within it, but that investor-owned rentals should be treated like hotels.

"These are large, money-grubbing capital investors who are using property rights in the state of Arizona as a way to have billions and billions of dollars go into their pocketbooks," Blanc said. "What about the property rights of the neighbors? What about the property rights of the people who actually own their home or have a second home?"

Kavanagh said he hopes to address problems like those, particularly in places like Sedona where investors have snapped up homes to convert them to rentals. That would have to happen in a future legislative session with a bill to allow municipalities to zone certain areas and limit the number of investor-owned properties, he said.

He said Blanc's amendment threatened to earn the bill a veto and eliminate any protections the lawmakers were trying to enact, and so she withdrew it.

"I have no idea how the governor would look at that," he said. "I expect he would not be particularly thrilled with knocking out the commercial players."

Reach reporter Ryan Randazzo at ryan.randazzo@arizonarepublic.com or 602-444-4331. Follow him on Twitter @UtilityReporter.

Subscribe to azcentral.com today.