Arizona Lawmakers Ignore STR Regulation for 2024 Session

[Melanie Johnston]

STR owners across the state are breathing a sigh of relief as the Arizona Legislature "declined to consider" the issue of STR regulation during the current legislative session, according to a report in The Arizona Republic today.

"This year, a group of bipartisan residents was hoping the Legislature would return cities' power to limit the number of short-term rentals in an area and regulate the rentals in the same manner as hotels. Former Gov. Doug Ducey took that authority away in 2016, when he signed a law that prevented cities from banning short-term rentals and required them to treat short-term rentals the same as long-term rentals," The Republic reported.

"But Republican lawmakers declined to consider Republican Rep. Selina Bliss's proposal to limit short-term rentals in the Regulatory Affairs subcommittee this week, meaning it has no chance of advancing to Gov. Katie Hobbs' desk to be signed into law."

This was the most concerted effort to return greater regulatory power back to the cities. 

The article leads with what could happen as a result: "Furious Arizona voters are threatening to vote out Republicans after the Legislature declined to consider short-term rental regulations this session, dashing any hope they had for change in the immediate future."

What does this mean for STR operators? For now it's business as usual.

Major cities, including Phoenix, Scottsdale, Mesa, Sedona and others, have adopted their own STR rules and regulations, primarily requiring operators to register their rentals. Each city has its own laundry list of licensing requirements, but they have not had the power to limit the number of rentals or make other market-limiting moves.

This issue is likely to come up again. But if the effort that went into promoting it for inclusion in the 2024 legislative session was not successful, it makes you wonder about the issue's traction in the future.

[Chad McMahan]

Quote from @Melanie Johnston:

STR owners across the state are breathing a sigh of relief as the Arizona Legislature "declined to consider" the issue of STR regulation during the current legislative session, according to a report in The Arizona Republic today.

"This year, a group of bipartisan residents was hoping the Legislature would return cities' power to limit the number of short-term rentals in an area and regulate the rentals in the same manner as hotels. Former Gov. Doug Ducey took that authority away in 2016, when he signed a law that prevented cities from banning short-term rentals and required them to treat short-term rentals the same as long-term rentals," The Republic reported.

"But Republican lawmakers declined to consider Republican Rep. Selina Bliss's proposal to limit short-term rentals in the Regulatory Affairs subcommittee this week, meaning it has no chance of advancing to Gov. Katie Hobbs' desk to be signed into law."

This was the most concerted effort to return greater regulatory power back to the cities. 

The article leads with what could happen as a result: "Furious Arizona voters are threatening to vote out Republicans after the Legislature declined to consider short-term rental regulations this session, dashing any hope they had for change in the immediate future."

What does this mean for STR operators? For now it's business as usual.

Major cities, including Phoenix, Scottsdale, Mesa, Sedona and others, have adopted their own STR rules and regulations, primarily requiring operators to register their rentals. Each city has its own laundry list of licensing requirements, but they have not had the power to limit the number of rentals or make other market-limiting moves.

This issue is likely to come up again. But if the effort that went into promoting it for inclusion in the 2024 legislative session was not successful, it makes you wonder about the issue's traction in the future.

Spot on- well said. It's amazing how often I need to help course correct investors that have been fed bad info by other investors, incorrect blogs/articles, by agents that should know better, etc.

I'm relieved, but surprised Hobbs hasn't pushed on the "giving restriction choices back to local municipalities", as that was a big part of her campaign platform. Fortunately for investors, that is turning out to be mainly feather fluffing for votes. Even if this change does happen, great news is some towns such as Sedona- the local governments are going on record stating they will "grandfather in" the operating STR's. That's obviously not a legal dependable statement, but it sure helps and gives me hope that investors will be treated right, if things get shaken upside down. I predict that it is more likely that we will see a law or 2 that come through the AZ pipeline that let towns/counties choose to restrict the percentage of STR's, with a hard stop on a max percentage. The grand majority of towns wouldn't be impacted by that, and many areas would fall within county jurisdiction, and counties tend to be quite flexible and non-restrictive toward STR's- for example parts of Greater Sedona and Greater Cottonwood.

To further clarify for investors AND for agents that don't dive deep into this stuff, AZ STR restrictions ONLY come from CC&R's or other subdivision restrictions- notice I am NOT saying restrictions come from HOA's. That is a very important difference. The reason- there are HOA's that approve STR's. Also, there are subdivisions with *no* HOA, that have STR restrictive CC&R's/subdivision restrictions. These written restrictions are where legally binding restrictions come from- not from a HOA, or the people who "decide" within the HOA.

Another AZ tidbit- In 2022, RE: Kalway v. Calabria Ranch HOA, LLC, the AZ supreme court ruled that CC&R's amended to restrict STR's AFTER purchase, don't stop owners from operating a STR there, as long as they purchased before the change to restricting it. Purchasing after the change does restrict STR's. This ruling sets a wonderful precedent for investors in AZ. I'm a fan.