State SealARIZONA HOUSE OF REPRESENTATIVES

 

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

PRIME SPONSOR: Representative Kavanagh, LD 23

BILL STATUS: Senate Engrossed

                                Senate 3rd Read: 17-12-1-0

 

 

Overview

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteMakes 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 require the owner of a vacation or short-term rental to provide the city, town or county with contact information for the owner or owner's designee who is responsible for responding to complaints in a timely manner in person, over the phone or by email at any time of the day before offering for rent the vacation or short-term rental. (Sec. 1, 2)

2.       Mandates that the city, town or county notify the Department of Revenue (DOR) and the property owner of verified violations of the city, town or county's applicable laws, regulations and ordinances within 30 days after a verified violation. (Sec. 1, 2)

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

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

5.       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)

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

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

8.       Authorizes the redisclosure of transaction privilege tax license information by the tax official if the municipality or county has a legitimate business need. (Sec. 4)

9.       Excludes the redisclosure of the above information from elected officials, their staff and the public. (Sec. 4)

10.   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)

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

12.   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)

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

14.   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)

15.   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)

16.   Requires DOR to do the following if an online lodging operator receives a verified violation:

a.       For a first verified violation, impose a civil penalty of $500 against the online lodging operator.

b.       For a second verified violation received on the same property within a 12-month period, impose a civil penalty of $1,000 against the online lodging operator.

c.        For a third and any subsequent verified violation received on the same property within the same 12-month period, impose a civil penalty of 50% of the gross monthly revenue for that month of the lodging accommodation in which the violation occurred or $1,500, whichever is greater. (Sec. 5)

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

18.   Defines verified violation and tax official. (Sec. 1, 2)

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

Senate Amendments

1.       Requires the municipality or county to notify DOR and the owner of the vacation or short-term rental within 30 days of a verified violation of the municipality or county's applicable laws, regulations or ordinances.

2.       Stipulates that the municipality or county must notify DOR if they imposed a civil penalty on the owner of the vacation or short-term rental for a verified violation and the amount of the civil penalty, if assessed.

3.       Declares that if multiple verified violations occur from the same response to an incident at a vacation or short-term rental, those verified violations are considered one verified violation for the purpose of assessing civil penalties.

4.       Stipulates that the municipality or county must make a reasonable attempt to notify the owner or the owner's designee of the issuance of a citation for a violation of the municipality or county's laws, regulations or ordinances or a state law within seven business days after the citation is issued if the owner of the vacation or short-term rental has provided contact information to the municipality or county.

5.       Asserts that the municipality or county is not required to provide such notice of a citation if the owner of the vacation or short-term rental has not provided contact information to the municipality or county.

6.       Specifies that a vacation or short-term rental may not be used for a special event that would otherwise require a permit or license pursuant to a municipal or county ordinance or a state law or rule.

7.       Outlines the following penalties for an online lodging operator that fails to comply with statute:

a.       For a first offense, $250.

b.       For a second and any subsequent offense, $1,000.

8.       Requires the online lodging operator to pay the following civil penalty if they received a verified violation:

a.       For a first verified violation received for a property, either:

                                 i.      If the municipality or county did not impose a civil penalty, $500.

                               ii.      If the municipality or county did impose a civil penalty, the difference between the amount prescribed above and the amount of the civil penalty that was imposed on the online lodging operator for the verified violation.

b.       For a second verified violation received on the same property within a twelve-month period, either:

                                 i.      If the municipality or county did not impose a civil penalty, $1,000.

                               ii.      If the municipality or county did impose a civil penalty, the difference between the amount prescribed above and the amount of the civil penalty that was imposed on the online lodging operator for the verified violation.

c.        For a third and any subsequent verified violation received on the same property within the same twelve-month period, either:

                                 i.      If the municipality or county did not impose a civil penalty, 50% of the gross monthly revenues for that month of the lodging accommodation in which the violation occurred or $1,500, whichever is greater.

                               ii.      If the municipality did impose a civil penalty, the difference between the amount prescribed above and the amount of the civil penalty that was imposed on the online lodging operator for the verified violation.

9.       Allows, if DOR imposes a civil penalty for a first verified violation and the online lodging operator appeals the civil penalty, the hearing officer to waive or lower the civil penalty based on the online lodging operator's diligence in attempting to prohibit renters from violating state law or the municipality's applicable laws, regulations or ordinances.

10.   Requires the hearing officer to consider both of the following in determining whether to waive or lower the civil penalty:

a.       Whether rules that prohibit activities that violate state law or the municipality's applicable laws, regulations or ordinances were included in the advertisement for the lodging accommodation or vacation or short-term rental.

b.       Whether such rules were posted in a conspicuous location inside the lodging accommodation or vacation or short-term rental.

11.   Specifies that the definitions of lodging accommodation, online lodging marketplace, online lodging operator, vacation rental, short-term rental and verified violation have the same meaning as prescribed in statute except that online lodging operator includes an owner of a vacation or short-term rental that is not offered through an online lodging marketplace.

12.   Removes the authority of DOR to disclose confidential information to any law enforcement agency.

13.   Authorizes a county or municipal tax official, if there is a legitimate business need relating to enforcing laws, regulations and ordinances, to redisclose transaction privilege tax information relating to a vacation or short-term rental property owner or online lodging operator from the new license report and license update report, subject to the following:

a.       The redisclosed information is limited to the following:

                                 i.      The transaction privilege tax license number.

                               ii.      The type of organization or ownership of the business.

                             iii.      The legal business name and doing business as name, if different.

                             iv.      The business mailing address, tax record physical location address, telephone number, email address and fax number.

                               v.      The date the business started in this state, the business description and the North American Industry Classification System Code.

                             vi.      The name, address and telephone number for each owner, partner, corporate officer, member, managing member or official of the employing unit.

b.       Redisclosure is limited to nonelected officials in other units within the county or municipality.  The information may not be redisclosed to an elected official or their staff.

c.        All redisclosures of confidential information may not be disclosed to the public unless otherwise provided in statute.

14.   Prohibits DOR from disclosing confidential information provided by an online lodging marketplace without written consent.

15.   Makes technical and conforming changes.

16.    

17.    

18.   ---------- DOCUMENT FOOTER ---------

19.   Fifty-fourth Legislature                       HB 2672

20.   First Regular Session                            Version 4: Senate Engrossed

21.    

22.   ---------- DOCUMENT FOOTER ---------