Short Term Rental Legislation and Other Sedona Issues: A Sedonan’s Perspective

By Kathy Howe

Sedona News: I live on a street in Uptown Sedona that has nine houses on it. Six are vacation rentals.

I love it! No more barking dogs. No more urging a neighbor to have dead trees cut down. No more looking at a house where a hoarder lived and one of my cats hunted for food. No more listening to neighbors who lived across the street from each other and argued often.

In the years the VRs have been operating in my neighborhood I have had only one incident which was quickly resolved by our fabulous Sedona police persons!

My cat, Muffy, liked to go across the street to one of the VRs and beg for food. One day she came home with half a sandwich! So, the day happened when I was in the yard gardening with Muffy. I left the yard for about 15 minutes and the next thing I knew she was gone. I went across the street and asked if they had seen her. Bottom line is they would not tell me what they did with her.

So, I called the police, who came, contacted the VR property management company, got the names of the people, talked with them, and within about two hours, Muffy was returned to me through the Humane Society of Sedona.

Why open with this incident?

Because we already have ordinances in place to take care of most issues.

I’m a strict constitutionalist at heart. I believe in our Republic, not the “democracy” that people keep touting. We are not a democracy, though we may vote in a democratic manner depending on what the “law” says. I believe in the rule of law.

Do you all remember “America’s Highway” — SR179? The moniker lasted less than two years when people realized it was a bottle-necked passage into Sedona from the Village on weekends and during the busy season. What it showed was a lack of planning made by a well-intentioned group of people who just wanted to keep Sedona the sleepy bedroom community it had been for many years. One lane each way and roundabouts.

At about the same time, the Uptown Enhancement was underway. The city council was besieged by shop owners who demanded parking in front of their shops, and in the end, the city purchased the Uptown stretch of SR89A after ADOT said, “we don’t allow parking on highways.”

The Andante Traffic Light

Most of us don’t ever want to live through that chaotic time ever again. I personally received death threats by Email and notes left on my car windshield. Over the years there had been accidents but the final straw for ADOT was a car-pedestrian death at that corner.

Soon afterwards, ADOT informed Sedona that a traffic light would be installed along with street lighting on SR89A, at ADOT’s expense, in West Sedona. Sedonans became enraged at having streetlights and wanted the city to purchase the West Sedona stretch of SR89A. Thankfully, wiser minds prevailed. Thank you, ADOT.

Affordable Housing

Many of us have asked for increased density for years in order to bring lower-cost housing to Sedona. Many of us applauded the Jordan Lofts only to watch a band of Sedonans, who decided they knew better than the city planners, put up so much resistance (many were from West Sedona), and Miramonte withdrew their request for a zoning change on one of the parcels. Miramonte then let everyone know they would build according to current code, which allows vacation rentals. We lost a good project. We desperately need apartments and multi-family units.

Parking

Sedona is finally putting in much needed parking and a road that has been on the books longer than the 16 years I have lived here. Originally, the Uptown extension to SR89A was supposed to be Manzanita Lane, my street, but, was changed to Forest Rd. Happily, we will have the parking garage on Forest Road and be able to access SR89A without going through the Hyatt parking lot and adding to the traffic at the roundabouts when heading to West Sedona. Thank you, Sedona. We Uptown residents recommended the multilevel parking garage over 10 years ago.

Walking/Bike Paths

They are awesome! Love seeing all the people using them even after so many Sedonans were against them prior to building them. Cannot wait to see more.

How can Sedona afford all of these new projects? Yes. Vacation Rental revenues, and a Governor who allowed us to continue to do business during years of lockdowns in other states.

Vacation Rental Legislation

Sedona hired a lobbyist at $75,000 to get a bill through the legislature after working with the League of Towns and Cities lobbyist and being unsuccessful for three years.

HB1350, commonly referred to as the Airbnb bill, went through the 2016 legislature in one session. Sedona was surprised! No one asked for Sedona’s opinion! And it had a companion bill which Sedona decided didn’t count and chose to violate it, causing Sedona to be censured.

First, we must understand the current definition of a vacation rental.

“Vacation rental” or “short-term rental” means any individually or collectively owned single-family or one-to-four-family house or dwelling unit or any unit or group of units in a condominium, cooperative or timeshare, that is also a transient public lodging establishment or owner-occupied residential home offered for transient use if the accommodations are not classified for property taxation under section 42-12001.

Currently, Arizona Statute, ARS 9-500.39(A), states: “A city or town may not prohibit vacation rentals or short-term rentals.”

HB2711

https://apps.azleg.gov/BillStatus/BillOverview?SessionID=125

Bill passed committee on 2-14-22 Votes: 10-1

Authorizes a municipality with less than 17,000 people to:

1. a) Require the owner of a vacation rental or short-term rental to obtain and maintain a municipal-issued permit or license before going into business;
2. b) Limit the number of vacation and short-term rentals based on a percentage of total residentially zoned buildings or structures within that municipality; and
3. c) Regulate vacation rentals or short-term rentals like transient lodging activities.

HB2663

https://apps.azleg.gov/BillStatus/BillOverview/77719

Passed House 2-16-22 late afternoon by 1 vote, after a “do over” requested by Rep. Kavanaugh. 3 members changed their abstention votes in order to pass the bill.

1. Stipulates that a local jurisdiction may limit the percentage of vacation or short-term rentals based on the total housing stock in that local jurisdiction. (Sec. 1, 2)
2. Authorizes a local jurisdiction to require the following from a rental owner: a) To obtain a local regulatory permit or license before offering rentals and to provide proof of a valid TPT license; and b) To require a minimum two nights’ rental period. (Sec. 1, 2) 3. States that vacation and short-term rentals are not residential rental dwelling units and are subject to the rules adopted by the Arizona Department of Health Services pertaining to the health and safety of transient lodging. (Sec. 1, 2)
3. Modifies statutory language regarding verified violations resulting in civil penalties and requires the Arizona Department of Revenue to suspend the rental owner’s TPT license for 12 months upon the rental owner receiving three verified violations within the same 24-month period. (Sec. 3, 4)
4. Modifies the definition of vacation rental or short-term rental to exclude a timeshare. (Sec. 1, 2)

HB2625

https://apps.azleg.gov/BillStatus/BillOverview?SessionID=125

Passed 10-3

1. Allows a city or town and a county to regulate a vacation rental or short-term rental by requiring its owner to:
2. a) Provide the name and phone number of the owner or owner’s designee to all property owners within 300 feet of the rental property;
3. b) Display a sign that is smaller than two square feet and that contains a local 24-hour emergency contact number; and
4. c) Obtain and maintain a local regulatory permit or license before renting the property and provide proof of a valid TPT license. (Sec. 1, 2)

Rep. Regina Cobb wanted the bill amended o remove b.

HB2321

https://apps.azleg.gov/BillStatus/BillOverview?SessionID=125

Is mysteriously absent from committees. A Kavanaugh prime bill. Has it morphed into HB2663?

No information after January.

SB1168

https://apps.azleg.gov/BillStatus/BillOverview?SessionID=125

It passed the Dem and R Caucus’ and is headed to the Senate floor for a vote.

1. Removes the residential use and zoning limitation on ordinances that a local government may adopt and enforce.
2. Allows a local government to require the owner of a vacation or short-term rental to: a) maintain liability insurance appropriate to cover the rental in the aggregate of at least $500,000; or
3. b) advertise and offer each rental through an online lodging marketplace that provides equal or greater coverage.

HB2234

https://apps.azleg.gov/BillStatus/BillOverview?SessionID=125

Passed Commerce 10-0

1. Caps the civil penalties a local government may impose on a vacation or short-term rental owner within the same 12-month period as follows:
2. a) The greater of $500 or one-night’s rent, as advertised on an online lodging marketplace, for the first verified violation;
3. b) The greater of $1,000 or two-night’s rent, as advertised on an online lodging marketplace, for the second verified violation on the same property; and
4. c) The greater of $3,500 or three-night’s rent, as advertised on an online lodging marketplace, for the third and any subsequent verified violation on the same property. (Sec. 1, 2)
5. Allows a local government to require a vacation or short-term rental owner to: a) Maintain liability insurance appropriate to cover the rental in the aggregate of at least $500,000; or b) Advertise and offer each rental through a hosting platform that provides equal or greater coverage. (Sec. 1, 2)
6. Permits DOR, after proper notice and hearing, to suspend for one year the TPT license of a vacation or short-term rental owner that has three verified violations within the same 12-month period. (Sec. 1, 2,
7. Authorizes a local government to impose a civil penalty of up to $1,000 for every 30 days a vacation or short-term rental owner’s failure to provide required contact information. (Sec. 1, 2)
8. Directs a local government to provide a vacation or short-term rental owner 30 days’ notice prior to imposing an initial penalty for failure to provide required contact information. (Sec. 1, 2)
9. Removes language relating the requirement for notifying DOR and the vacation or short-term rental owner of verified violations. (Sec. 1, 2)
10. Restates multiple verified violations that arise out of the same incident are considered one verified violation when assessing civil penalties or suspending a TPT license. (Sec. 1, 2)
11. Repeals laws relating to civil penalties imposed by DOR. (Sec. 3)
12. Removes the limitations on the types of ordinances that a local government may adopt and enforce. (Sec. 1, 2)
13. Provides a definition for online lodging marketplace. (Sec. 1, 2) 11. Removes timeshare from the definition of vacation rental or short-term rental. (Sec.1, 2) 12. Prescribes civil penalties for online lodging operators who fail to comply with certain advertisement requirements.

Conclusion

None of these bills have “crossed the aisle.” That means that as of the date of publishing this Op-Ed, none of these bills have passed a floor vote and moved across the aisle to the other chamber. If any of these bills goes “across the aisle” it would then have to pass by a full vote of that chamber. If any bills are amended, they would have to go back to the chamber that originated the bill, have a vote of the entire chamber on any changes made to the bill. It’s called going back for “concurrence”.

Anything that passes both chambers must be signed by the Governor. The Governor has 3 choices: 1) sign into law; 2) veto; 3) don’t sign and after 10 days, it automatically becomes law. Note: There is a period of 90 days after the governor’s decision where a bill is open to legal challenge.

There is a rumor going around that the only bill that will pass will be a bill that licenses VRs. The fight is currently whether the State or the City will issue the licenses.

Many of you won’t share my opinion and that is your prerogative. For those of you who believe that the VRs are not the scourge of the century, please let your legislators know. They keep a list on the website as to who is for and who is against. Better yet, let the City Council know that you want them to look further into the Vail InDeed Program. Everyone wins. Especially, the constitution.

Editor’s Note/A Personal Note From the Author:

I dreamed of living in Sedona in the 1970s when we had houses in Phoenix and Flagstaff, often enjoyed cocktails with Bill Garland on the lawn before dinner, visited Tlaquepaque with friends when it first opened in the ‘70s, served as NAU’s Foundation Board President ‘90-’92, served as the Arizona Association of REALTOR’s Legislative Chair for two years in the early ‘90s, served as one of the lead lobbyists (AAR) for the planned community and condo statutory redos in 1997, returned to Arizona after a 10 year hiatus in Hawaii (I served on the Republican platform committee the year Linda Lingle was elected Governor) and then was appointed by Janet Napalitano to the Arizona Department of Real Estate’s Advisory Board in 2007. I currently teach and sell real estate, am an adjunct professor at Yavapai College teaching Law202 Real Estate, and I have written the Dearborn book on Arizona Real Estate Principles, revised. I’m an Uptown girl who loves to garden, parents 5 rescue cats, and loves to call Sedona “home.”