The fight that determines the future of vacation rental websites like Airbnb in Arizona is ongoing, and this year’s election will play a key role in the process.
In 2016, the Arizona Legislature passed Senate Bill 1350, which prohibits cities and towns across the state from regulating “vacation rentals or short-term rentals.”
According to local real estate agent Greg Hague, Arizona is the only state to have a law like this. What started as a small movement to repeal the law may end up as a referendum on a future ballot.
Vacation rental websites allow travelers to rent all kinds of lodging, from single rooms to entire homes and apartments, for a daily rate. These sites offer alternatives to hotels, usually costing less, and placing visitors directly into neighborhoods, which comes with its ups and downs. Those rentals don’t come without issues for the neighborhoods that surround them. Some of the most common issues with unregulated short-term rentals are tenants using properties for partying, corporations buying homes across the state for the sole purpose of short-term rentals and residents having to deal with a new neighbor every week.
Mr. Hague has been in Arizona since 1981, owning and building several real estate firms, as well as being an attorney. He said when Arizona Gov. Doug Ducey signed SB 1350 into law, it ushered into the local real estate market a sharing economy as “a place where people can come and go, and we share our homes, and the whole Airbnb model, we embrace that fully.”
That sharing model developed by San Francisco-based Airbnb and others has seen dramatic growth in the Valley and state. Arizona, even with current COVID-19 conditions, has a large tourism base.
“The Airbnb model is more about you, or some family having an extra bedroom, and renting that out occasionally, to make some extra income,” Mr. Hague said.
That model, however, has changed dramatically, with Mr. Hague referring to investors buying properties and turning them into short-term “neighborhood motels.”
“What happens is, all of a sudden, every weekend, you've got new people coming in, suitcases, typically they're partying, they're here on vacation,” Mr. Hauge said.
He worries that visitors are endangering local neighborhoods.
“They're partying in an uncontrolled environment without security, they tend to drink more, they create a lot of noise, and they create, quite frankly, a danger and a hazard to kids in the community,” he said.
The effects of vacation rental sites can be seen throughout Arizona, but they have had a major impact in Sedona. According to AirDNA, a data aggregation website, there are currently 2,010 active rentals in the city, with the majority of properties being entire homes. Mr.. Hague said that investors “snapped up” properties, driving up housing costs, which in turn forced Sedona workers to move to surrounding towns like Cottonwood.
Mr. Hague and several others have started movement to repeal 1350. He spoke with local politicians, leading to senate bills being introduced to repeal or modify 1350, with little to no progress being made. Mr. Hague said he hopes the Legislature will support repealing SB 1350, but if it doesn’t, he has another plan.
“If that does not look likely, then we are going to initiate a movement to file a referendum. A referendum would actually put this on the next ballot in Arizona, where we can actually override the Legislature,” Mr. Hague said.
If he needs to go the route of a referendum, he is ready.
“We'll raise the money to market this on television,” he said. “I'm a pretty prolific TV advertiser anyway with my company and see if we can persuade the public that this is bad law for Arizona and to overturn it into referendum.”
Arizona Rep. Aaron Lieberman, D-Dist. 28, who represents district 28, is the driving political force behind repealing SB 1350.
“My first dream would be to just say, ‘Hey, we screwed up, let’s remove it,’ that might be difficult to do,” he said.
In regards to repealing SB 1350 becoming a referendum, Mr. Lieberman said, “Unfortunately, it may take that. That’s what we see when the Legislature doesn’t get its act together to do the business of they people and do what they want in overwhelming majorities.” He believes ballot initiatives are not a great way to make policy but are sometimes necessary.
The main issue of a referendum would be cost, according to Mr. Lieberman.
“It’s also incredibly expensive to do, so it would require a real commitment of funding and resources to get it done,” he said. “But when this question comes to the ballot before people, local control is overwhelmingly supported as a potential solution,” Mr. Lieberman said regarding the possible referendum.
Mr. Lieberman said some elements of SB 1350 were helpful, clarifying tax code.
“I think the most likely solution is decoupling, or pulling apart, to give cities and towns the ability to regulate short-term rentals separately than they regulate long term rentals,” Mr. Lieberman said.
He said he believes a full repeal of SB 1350 may not be necessary, just a piece of legislation that allows for regulation. Mr. Lieberman called SB 1350 a “one size fits all” senate bill, which doesn’t allow any city or town in the state of Arizona to approach short-term rentals as they see fit.
“I learned a long time ago that the best solution to a problem usually comes from those closest to the problem itself,” Mr. Lieberman said, explaining how repealing SB 1350 would not be a one size fits all solution. He continued, “That’s our cities and towns, our local town councils, our local city councils, I think they’re best equipped to figure out what’s right for their city or their town.”
Ryan Tisminezky is a student at the Walter Cronkite School of Journalism and Mass Communications at Arizona State University.