PHOENIX — Arizona cities won't get a chance to limit the number or placement of short-term rentals.
But they will get some additional oversight of what has become, in some communities, a major problem of homes being bought up by investors to be turned into lodging for tourists while reducing the supply of affordable housing for residents.
By a wide margin, the state House approved legislation Tuesday to allow cities to limit the number of people who can occupy homes and condos being rented out by their owners. This would be the first time cities would be able to limit occupancy since the state first restricted local regulation of short-term rentals, like Airbnb, in 2016.
It also makes it somewhat easier for cities to suspend short-term rental licenses due to violations.
But Prescott Republican Rep. Selina Bliss could get the votes she needed for that legislation only after she agreed to jettison the most sweeping provisions sought by some communities.
As originally written, her House Bill 2429 would have allowed cities and towns to set a maximum limit on short-term or vacation rentals. Local officials also could have established minimum distances between such operations.
That provoked opposition from the Arizona Association of Realtors as well as Airbnb, which operates an online marketplace to connect homeowners with would-be vacationers. That was enough to kill the original plan, Bliss said, despite its support from the League of Arizona Cities and Towns.
What's left is something that the cities can live with, despite their preference for greater local control, Bliss said.
She had a message for those who wanted something more: "Folks, this is as good as it's going to get,'' Bliss told colleagues.
Sedona and other urban and rural areas in Arizona argue the explosion in short-term rental numbers has made it difficult for local residents to find affordable housing.
What it does include is designed to focus on what she called "repeat bad actors.''
It starts with limiting overnight occupancy to two for each bedroom, plus an additional two, not counting children; that restriction could curb rental use of properties — particularly those in residential neighborhoods — for "party houses.'' She said it also takes care of the problem of renters taking up all the available parking.
But nothing in the legislation, which now goes to the Senate, sets any limit on people who are not staying overnight.
HB 2429 also says local governments can suspend licenses if there are three violations of local permits within 24 months. Currently, suspension can occur only if the violations happen within a 12-month period.
But the legislation does permit suspension for a single violation that "presents a potential threat to public health or safety'' relating to modifying a vacation rental without a required building permit or "failing to remedy an unsafe and unsanitary condition.''
What's left from the original bill was enough to get the cities to support it, Bliss said.
She quoted from an email from the League of Cities and Towns calling HB 2429 "a targeted, balanced measure focused on repeat bad actors, not responsible short-term rental owners.''
More to the point, the Realtors dropped their opposition, Bliss said. She said they, too, said what's in the bill focuses on "bad actors from the short-term rental industry while protecting the private property rights of homeowners.''
"I don't know how we can do better for Arizona,'' Bliss said.
Scottsdale Republican Rep. Pamela Carter said she appreciates anything that provides more local control.
"I believe in property rights,'' she said. "But when those property rights infringe on your neighbor's rights and these short-term rentals become out of control, where there's parties, there's prostitution and all kinds of things being brought into our neighborhoods where we're supposed to have peaceful dwelling places," then regulation is needed, she said.
Then there's the impact on communities such as Sedona.
Lobbyist Kathy Senseman told lawmakers during a committee hearing that short-term rentals now make up a quarter of the housing there.
But Senseman found herself, like Bliss, having to accept what she could get.
"For rural Arizona, we hope it is simply the first step,'' she told Capitol Media Services after the vote. "Additional work remains to be done to ensure police, fire, teachers, nurses and hospitality workers can call the cities they work in 'home.' ''
Senseman said she believes more regulation is possible. "Legislation in other states have allowed local government to have more control over short-term rentals and the market still thrives,'' she said. "So why not here?''
None of what has developed with short-term rentals was mentioned when Arizona lawmakers voted in 2016 to allow homeowners to rent out their properties. In fact, Republican then-Gov. Doug Ducey painted quite a different picture: a family trying to earn a few extra bucks by renting out a spare room for a weekend.
That situation does exist. But there also have been investors who have bought up homes — homes they never intended to live in — solely for the purpose of being able to rent them out to visitors on a year-round basis.
One of the few lawmakers not surprised by how the law played out is Fountain Hills Republican Sen. John Kavanagh.
"I didn't move into a neighborhood to have the house next door to me turned into a weekly rental property,'' he said when he became the only senator in 2016 to vote against the legislation.
Every other sitting senator that year — including Democrat Katie Hobbs, who is now governor — was in support. And only six of the 60 state representatives were opposed.
