HB2663 - 552R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 9-500.39, Arizona Revised Statutes, is amended to read:

START_STATUTE9-500.39. Limits on regulation of vacation rentals and short-term rentals; state preemption; definitions

A. A city or town may not prohibit vacation rentals or short-term rentals. a city or town may limit the percentage of vacation rentals or short-term rentals based on the total housing stock in that city or town.

B. A city or town may not restrict the use of or regulate vacation rentals or short-term rentals based on their classification, use or occupancy except as provided in this section. A city or town may regulate vacation rentals or short-term rentals for the following purposes as follows:

1. Protecting To protect the public's health and safety, including rules and regulations related to fire and building codes, health and sanitation, transportation or traffic control, solid or hazardous waste and pollution control, and designation of an emergency point of contact, if the city or town demonstrates that the rule or regulation is for the primary purpose of protecting the public's health and safety.

2. Adopting To adopt and enforcing enforce residential use and zoning ordinances, including ordinances related to noise, protection of welfare, property maintenance and other nuisance issues, if the ordinance is applied in the same manner as other property classified under sections 42-12003 and 42-12004.

3. Limiting To limit or prohibiting prohibit the use of a vacation rental or short-term rental for the purposes of housing sex offenders, operating or maintaining a sober living home, selling illegal drugs, liquor control or pornography, obscenity, nude or topless dancing and other adult-oriented businesses.

4. Requiring To require the owner of a vacation rental or short-term rental to provide the city or town with contact information for the owner or the owner's designee who is responsible for responding to and resolving complaints in a timely manner in person, or over the phone or by email at any time of day before offering for rent or renting the vacation rental or short-term rental.

5. To require the owner of a vacation RENTAL or short-term rental to obtain and maintain a local regulatory permit or license issued by the city or town before offering a vacation rental or short-term rental for rent. A city or town may require the owner of a vacation rental or short-term rental to provide the city or town proof of a valid transaction privilege tax license issued pursuant to section 42-5005.

6. to require the owner of a vacation rental or short-term rental to offer the vacation rental or short-term rental for a minimum two-night rental period.

C. Within thirty days after a verified violation, a city or town shall notify the department of revenue and the owner of the vacation rental or short-term rental of the verified violation of the city's or town's applicable laws, regulations or ordinances and, if the owner of the vacation rental or short-term rental received the verified violation, whether the city or town imposed a civil penalty on the owner of the vacation rental or short-term rental and the amount of the civil penalty, if assessed. If multiple verified violations arise out of the same response to an incident at a vacation rental or short-term rental, those verified violations are considered one verified violation for the purpose of assessing civil penalties pursuant to section 42-1125.02, subsection B.

D. If the owner of a vacation rental or short-term rental has provided contact information to a city or town pursuant to subsection B, paragraph 4 of this section and if the city or town issues a citation for a violation of the city's or town's applicable laws, regulations or ordinances or a state law that occurred on the owner's vacation rental or short-term rental property, the city or town shall make a reasonable attempt to notify the owner or the owner's designee of the citation within seven business days after the citation is issued using the contact information provided pursuant to subsection B, paragraph 4 of this section. If the owner of a vacation rental or short-term rental has not provided contact information pursuant to subsection B, paragraph 4 of this section, the city or town is not required to provide such notice.

E. This section does not exempt an owner of a residential rental property, as defined in section 33-1901, from maintaining with the assessor of the county in which the property is located information required under title 33, chapter 17, article 1.

F. A vacation rental or short-term rental may not be used for nonresidential uses, including for a special event that would otherwise require a permit or license pursuant to a city or town ordinance or a state law or rule or for a retail, restaurant, banquet space or other similar use.

g. Vacation rentals and short-term rentals are not residential rental dwelling units as defined in section 9-1301 and are subject to the health and safety regulations prescribed in title 36 and the rules adopted by the department of HEALTH services pursuant to title 36 for the transient lodging classification established pursuant to section 42-5070.

G. H. For the purposes of this section:

1. "Transient" has the same meaning prescribed in section 42-5070.

2. "Vacation rental" or "short-term rental":

(a) Means any individually or collectively owned single-family or one-to-four-family house or dwelling unit or any unit or group of units in a condominium, or cooperative or timeshare, that is also a transient public lodging establishment or owner-occupied residential home offered for transient use if the accommodations are not classified for property taxation under section 42-12001. Vacation rental and short-term rental do

(b) Does not include a unit that is used for any nonresidential use, including retail, restaurant, banquet space, event center or another similar use.

3. "Verified violation" means a finding of guilt or civil responsibility for violating any state law or local ordinance relating to a purpose prescribed in subsection B or F of this section that has been finally adjudicated. END_STATUTE

Sec. 2. Section 11-269.17, Arizona Revised Statutes, is amended to read:

START_STATUTE11-269.17. Limits on regulation of vacation rentals and short-term rentals; state preemption; definitions

A. A county may not prohibit vacation rentals or short-term rentals. a county may limit the percentage of vacation rentals or short-term rentals based on the total housing stock in that county.

B. A county may not restrict the use of or regulate vacation rentals or short-term rentals based on their classification, use or occupancy except as provided in this section. A county may regulate vacation rentals or short-term rentals for the following purposes as follows:

1. Protecting To protect the public's health and safety, including rules and regulations related to fire and building codes, health and sanitation, transportation or traffic control, solid or hazardous waste and pollution control, and designation of an emergency point of contact, if the county demonstrates that the rule or regulation is for the primary purpose of protecting the public's health and safety.

4. Requiring To require the owner of a vacation rental or short-term rental to provide the county with contact information for the owner or the owner's designee who is responsible for responding to complaints in a timely manner in person, or over the phone or by email at any time of day before offering for rent or renting the vacation rental or short-term rental.

5. To require the owner of a vacation RENTAL or short-term rental to obtain and maintain a local regulatory permit or license issued by the county before offering a vacation rental or short-term rental for rent. A county may require the owner of a vacation rental or short-term rental to provide the county proof of a valid transaction privilege tax license issued pursuant to section 42-5005.

6. to require the owner of a vacation rental or short-term rental to offer the vacation rental or short-term rental for a minimum two-night rental period.

C. Within thirty days after a verified violation, a county shall notify the department of revenue and the owner of the vacation rental or short-term rental of the verified violation of the county's applicable laws, regulations or ordinances and, if the property owner received the verified violation, whether the county imposed a civil penalty on the owner of the vacation rental or short-term rental and the amount of the civil penalty, if assessed. If multiple verified violations arise out of the same response to an incident at a vacation rental or short-term rental, those verified violations are considered one verified violation for the purpose of assessing civil penalties pursuant to section 42-1125.02, subsection B.

D. If the owner of a vacation rental or short-term rental has provided contact information to a county pursuant to subsection B, paragraph 4 of this section and if the county issues a citation for a violation of the county's applicable laws, regulations or ordinances or a state law that occurred on the owner's vacation rental or short-term rental property, the county shall make a reasonable attempt to notify the owner or the owner's designee of the citation within seven business days after the citation is issued using the contact information provided pursuant to subsection B, paragraph 4 of this section. If the owner of a vacation rental or short-term rental has not provided contact information pursuant to subsection B, paragraph 4 of this section, the county is not required to provide such notice.

F. A vacation rental or short-term rental may not be used for nonresidential uses, including for a special event that would otherwise require a permit or license pursuant to a county ordinance or a state law or rule or for a retail, restaurant, banquet space or other similar use.

g. Vacation rentals and short-term rentals are not residential rental dwelling units as defined in section 11-1701 and are subject to the health and safety regulations prescribed in title 36 and the rules adopted by the department of HEALTH services pursuant to title 36 for the transient lodging classification established pursuant to section 42-5070.

G. H. For the purposes of this section:

1. "Transient" has the same meaning prescribed in section 42-5070.

2. "Vacation rental" or "short-term rental":

(b) Does not include a unit that is used for any nonresidential use, including retail, restaurant, banquet space, event center or another similar use.

Sec. 3. Section 42-1125.02, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1125.02. Civil penalties; online lodging operators; transaction privilege tax license suspension; definitions

A. An online lodging operator that fails to comply with section 42-5042 shall pay the following civil penalty:

1. For a first offense, $250.

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

B. If an online lodging operator received a verified violation, the online lodging operator shall pay the following civil penalty:

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

(a) If the city, town or county did not impose a civil penalty on the online lodging operator for the verified violation, $500.

(b) If the city, town or county imposed a civil penalty on the online lodging operator for the verified violation, the difference between the amount prescribed in subdivision (a) of this paragraph and the amount of the civil penalty the city, town or county imposed on the online lodging operator for the verified violation.

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

(a) If the city, town or county did not impose a civil penalty on the online lodging operator for the verified violation, $1,000.

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

(a) If the city, town or county did not impose a civil penalty on the online lodging operator for the verified violation, fifty percent of the gross monthly revenues of the lodging accommodation at which the violation occurred for the month in which the violation occurred or $1,500, whichever is greater.

C. If the department imposes a civil penalty pursuant to subsection B, paragraph 1 of this section and the online lodging operator appeals the civil penalty, the hearing officer may 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 city's or town's applicable laws, regulations or ordinances. In determining whether to waive or lower the civil penalty, the hearing officer shall consider both of the following:

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

2. Whether the rules described in paragraph 1 of this subsection were posted in a conspicuous location inside the lodging accommodation, vacation rental or short-term rental.

B. The department of revenue shall suspend for a twelve-month period the transaction PRIVILEGE tax license of the owner of a vacation rental or short-term rental that has received three verified violations for the same vacation rental or SHORT-term rental within the SAME twenty-four-month period pursuant to section 9-500.39 or 11-269.17.

D. c. For the purposes of this section:

1. "Lodging accommodation" has the same meaning prescribed in section 42-5076.

2. 1. "Online lodging marketplace" has the same meaning prescribed in section 42-5076.

3. 2. "Online lodging operator" has the same meaning prescribed in section 42-5076 and includes an owner of a vacation rental or short-term rental that is not offered through an online lodging marketplace.

4. 3. "Vacation rental" and "short-term rental" have the same meanings prescribed in section 9-500.39 or 11-269.17.

5. 4. "Verified violation" has the same meaning prescribed in section 9-500.39 or 11-269.17. END_STATUTE

Sec. 4. Section 42-5042, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5042. Online lodging operators; requirements; verified violations; penalty; definitions

A. An online lodging operator may not offer for rent or rent a lodging accommodation without a current transaction privilege tax license. The online lodging operator shall list the transaction privilege tax license number on each advertisement for each lodging accommodation the online lodging operator maintains, including online lodging marketplace postings.

b. the department of revenue shall suspend for a twelve-month period the transaction PRIVILEGE tax license of the owner of a vacation rental or short-term rental that has received three verified violations for the same vacation rental or SHORT-term rental within the SAME twenty-four-month period pursuant to section 9-500.39 or 11-269.17.

B. c. For the purposes of this section:

1. "Lodging accommodation" has the same meaning prescribed in section 42-5076.

2. "Online lodging marketplace" has the same meaning prescribed in section 42-5076.

3. "Online lodging operator" has the same meaning prescribed in section 42-5076 and includes an owner of a vacation rental or short-term rental, as defined in section 9-500.39 or 11-269.17, that is not offered through an online lodging marketplace.

4. "Vacation rental" and "short-term rental" have the same meanings prescribed in section 9-500.39 or 11-269.17.

5. "Verified violation" has the same meaning prescribed in section 9-500.39 or 11-269.17. END_STATUTE