ARIZONA HOUSE OF REPRESENTATIVES

HB 2672: vacation rentals; short-term rentals; regulation

PRIME SPONSOR: Representative Kavanagh, LD 23

BILL STATUS: Caucus & COW

Government: DPA 9-2-1-0

Overview

Makes various changes to statute relating to vacation and short-term rental regulations.

History

The terms vacation and short-term rentals are defined in statute as any collectively or individually owned single or one-to-four-family house or dwelling unit that is also a transient public lodging establishment.  Vacation and short-term rentals do not include a unit that is used for any nonresidential use, including banquet space, retail, restaurant, event center or another similar use.

Current statute prohibits a city, town or county from restricting the use of or regulating vacation or short-term rentals based on their classification, use or occupancy.  A city, town or county is allowed to regulate vacation and short-term rentals for the following reasons:

· Protecting the public's health and safety.

· Adopting and enforcing residential use and zoning ordinances.

· Limiting or prohibiting the use of a vacation or short-term rental for the purposes of housing sex offenders (A.R.S. §9-500.39, 11-269.17).

Provisions

1. Allows cities, towns and counties to restrict the maximum number of adult occupants allowed on the vacation or short-term rental property at any one time to not more than two adults per sleeping room plus two adults. (Sec. 1, 2)

2. Authorizes cities, towns and counties to restrict the numbers of guests allowed on the vacation or short-term rental property at any one time until 10:00 P.M. to not more than that of the allowed occupancy for that property. (Sec. 1, 2)

3. States that cities, towns and counties may require the installation of safety and monitoring equipment that monitors and detects the level of noise and number of occupants on the vacation or short-term rental property. (Sec. 1, 2)

4. Requires that the information collected by the safety and monitoring equipment be transmitted to the property owner or manager of:

a. Any investor-owned vacation or short-term rental.

b. Any vacation or short-term rental that has received three or more verified violations of a city, town or county's applicable laws, regulations and ordinances within a twelve-month period. (Sec. 1, 2)

5. Allows cities, towns and counties to require the owner of a vacation or short-term rental to provide the city, town or county with contact information for the person who is responsible for responding to complaints at any time of the day before offering for rent the vacation or short-term rental. (Sec. 1, 2)

6. Specifies that a city, town or county may request the Department of Revenue (DOR) to provide the identity of an individual online lodging operator to enforce regulations and ordinances pursuant to this Act. (Sec. 1, 2)

7. Mandates that the city, town or county notify DOR of verified violations of the city, town or county's applicable laws, regulations and ordinances. (Sec. 1, 2)

8. Restricts a vacation or short-term rental from being used for nonresidential uses, including a restaurant, retail, banquet space, event center or other similar use. (Sec. 1, 2)

9. Modifies the definition of confidential information to exclude applications for transaction privilege licenses and use tax licenses, a tax payer's identity and the nature and source of a taxpayer's income. (Sec. 3)

10. States that confidential information may be disclosed to any law enforcement agency. (Sec. 4)

11. Specifies that in order for a law enforcement agency to receive confidential information, they must provide an affidavit to DOR describing the investigation and how it may result in a proceeding involving tax administration. (Sec. 4)

12. Prohibits DOR from releasing any confidential information if they determine that the information will not be used for purposes defined in statute. (Sec. 4)

13. Stipulates that DOR is prohibited from disclosing confidential information that was provided to them by the Internal Revenue Service. (Sec. 4)

14. Authorizes DOR to disclose confidential information to a law enforcement agency if the law enforcement agency provides a grand jury subpoena or a court order directing DOR to provide the information. (Sec. 4)

15. Allows DOR to disclose information provided by an online lodging marketplace only with the written consent of the online lodging marketplace. (Sec. 4)

16. Specifies that the online lodging marketplace information from DOR may only be disclosed pursuant to statute and to a city, town or county in order to enforce laws, regulations and ordinances that are adopted. (Sec. 4)

17. Prohibits an online lodging operator from offering for rent or renting a lodging accommodation without a current transaction privilege tax license. (Sec. 5)

18. Requires the online lodging operator to list the transaction privilege tax license number on each advertisement for each lodging accommodation the online lodging operator maintains, including online marketplace postings. (Sec. 5)

19. Stipulates that if the online lodging operator does not comply with the requirement to list the transaction privilege tax license number on each advertisement, DOR must:

a. Impose a civil penalty of not more than $250 against the online lodging operator for a first offense.

b. Impose a civil penalty of not more than $1,000 against the online lodging operator for a second and any subsequent offense. (Sec. 5)

20. Requires DOR to suspend or revoke an online lodging operator's lodging accommodation's transaction privilege license on notification of verified violations from a city, town or county as follows:

a. For an online lodging operator that is required to install safety and monitoring equipment for any investor-owned vacation rental or short-term rental and that:

i. Receives notice of two verified violations of a city, town or county's applicable laws, regulations and ordinances within a six-month period, DOR shall suspend the transaction privilege tax license for a period of 60 days.

ii. Receives notice of three additional verified violations of a city, town or county's applicable laws, regulations and ordinances within the 12-month period after the suspension ends, DOR shall revoke all of the online lodging operator's transaction privilege tax licenses.

b. For an online lodging operator that is required to install safety and monitoring equipment for any vacation or short-term rental that has received three or more verified violations of a city, town or county's applicable laws, regulations and ordinances within a 12-month period.

i. Receives notice of two additional verified violations of a city, town or county's applicable laws, regulations and ordinances within a six-month period after the date the online lodging operator is required to install safety and monitoring equipment, DOR shall suspend the transaction privilege tax license for a period of 60 days.

ii. Receives notice of three additional verified violations of a city, town or county's applicable laws, regulations and ordinances within the 12-month period after the suspension ends, DOR shall revoke all of the online lodging operator's transaction privilege tax licenses. (Sec. 5)

21. Specifies that the definitions of lodging accommodation, online lodging marketplace and online lodging operator have the same meaning as prescribed in statute. (Sec. 5)

22. Makes technical and conforming changes. (Sec. 1, 2, 3, 4)

Amendments

Committee on Government

1. Removes the 10:00 P.M. requirement for guests to leave the vacation or short-term rental property.

2. Specifies that the allowance for regulation on vacation or short-term rentals by a municipality or county does not apply to a timeshare property as defined in statute.

3. Eliminates the required installation of monitoring equipment on vacation or short-term rental properties.

4. Stipulates that DOR must suspend or revoke an online lodging operator's transaction privilege tax licenses as follows:

a. If the online lodging operator receives two violations within a six-month period, DOR must suspend the license for 60 days.  The suspension period begins on the date on which a transaction privilege tax license is issued for an online lodging operator that receives a violation for offering for rent or renting a lodging accommodation without a current transaction privilege tax license.

b. If the online lodging operator receives three additional violations within the 12-month period after the suspension ends, DOR must revoke all of the online lodging operator's transaction privilege tax licenses.

5. Defines verified violation and violation.

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9. Fifty-fourth Legislature                       HB 2672

10. First Regular Session                            Version 2: Caucus & COW

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