A bill with broad bipartisan support that would add new regulations to short-term and vacation rental properties, such as those on Airbnb and VRBO, is heading to the governor’s desk for final approval.
House Bill 2672 prohibits such properties from being used for non-residential purposes, such as making a home an event space.
“The industry should be able to turn around and say, you can have this type of an enterprise and you can put reasonable restrictions on it, and it will work,” the bill’s sponsor, Rep. John Kavanagh, R-Fountain Hills, told the Arizona Mirror.
The bill passed on a 42-18 vote. The measure had more support during the voting, but after House Speaker Rusty Bowers, R-Mesa, voted no, several Republican lawmakers switched to no as well, though it was not enough to kill the bill.
Kavanagh is confident Gov. Doug Ducey will sign the bill into law.
A provision that would have required properties to have “safety and monitoring equipment that monitors and detects the level of noise and number of occupants on the property” was removed because it was too controversial.
The law would also require owners of the property to provide contact information with the county for “responding to complaints at any time of day.” Additionally, the bill gives the Arizona Department of Revenue the ability to request tax information on those properties.
The bill also says short-term and vacation rental properties cannot be used for retail, restaurant, banquet space, event center or other non-residential purposes.
Any law enforcement agency in the state would be given the ability to get confidential tax information from the Department of Revenue on a short-term or vacation rental property. Currently, only the attorney general has that power.
The bill also specifically takes aim at companies like Airbnb and Booking.com with a section dedicated to “online lodging operators.”
It stipulates that an online lodging operator must include the transaction privilege tax in sales and advertisements, and failing to do so can result in fines of up to $1,000 per violation.
Kavanagh said Airbnb and similar vendors have voiced their support to him for the measure Airbnb did not respond to the Mirror’s request for comment on the bill.
Airbnb already collects transaction privilege taxes, as well as county excise tax and local transient occupancy taxes in Arizona.
Airbnb generated $11.5 million in tax revenue in 2017, and Ducey was quoted by the company saying it is “exciting to see companies like AirBnB expand and continue to thrive in Arizona.”
Proponents of companies like Airbnb say it drives competition, while others say the company increases rental costs.
A study by researchers in the Netherlands found that areas of Los Angeles with regulations in place drove down local rental and housing costs.