ARIZONA HOUSE OF REPRESENTATIVES Fifty-fifth Legislature Second Regular Session
	Senate: COM DP 8-0-1-0 | 3^rd Read 22-6-2-0 House: COM DPA 9-0-0-1

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SB 1168: vacation rentals; short-term rentals; enforcement

Sponsor: Senator Mesnard, LD 17

House Engrossed

Overview

Outlines further regulations of vacation or short-term rentals and restructures the civil penalties for verified violations.

History

A city, town or county (local government) may not restrict the use of or regulate vacation or short-term rentals based on their classification, use or occupancy, except to: 1) protect the public's health and safety; 2) adopt and enforce residential use and zoning ordinances; and 3) limit or prohibit the use of a rental for specified purposes.

Local governments are statutorily required to, within 30 days after a verified violation, notify the Department of Revenue (DOR) and the vacation or short-term rental owner of the violation and whether a civil penalty has been imposed. A verified violation is a finding of guilt or civil responsibility for violating any state law or local ordinance that has been finally adjudicated (A.R.S. §§ 9-500.39 and 11-269.17).

Pursuant to A.R.S. § 42-1125.02, DOR may impose civil penalties for an online lodging or a vacation or short-term rental owner that receives a verified violation. If the local government did not impose a civil penalty, the owner or operator must pay: 1) $500 for the first verified violation; 2) $1,000 for a second verified violation within a 12-month period; or 3) the greater of $1,500 or 50% of the gross monthly revenues for the month the violation occurs, for a third or subsequent violation within a 12-month period. If the local government imposed a civil penalty, the owner or operator must pay the difference between the statutory amount and the amount of the civil penalty the local government imposed.

Provisions

1. Caps the civil penalties a local government may impose on a vacation or short-term rental owner within the same 12-month period as follows:

a) The greater of up to $500 or one-night's rent, for the first verified violation;

b) The greater of up to $1,000 or two-night's rent, for the second verified violation; and

c) The greater of up to $3,500 or three-night's rent, for the third and any subsequent verified violation. (Sec. 1, 2)

2. Allows a local government to require a vacation or short-term rental owner to:

a) obtain and maintain a local regulatory permit or license and specifies the information that an application for a permit or license may require the applicant to provide.

b) notify residential properties in close proximity.

i. specifies the information that must be included in the notification.

ii. requires the owner to demonstrate compliance by providing the local government with an attestation of notification compliance.

c) display the required local regulatory permit number, license number or TPT license on each advertisement for a short-term rental that the owner maintains.

d) maintain liability insurance appropriate to cover the rental in the aggregate of at least $500,000; or to advertise and offer each rental through a hosting platform that provides equal or greater coverage. (Sec. 1, 2)

3. Reinserts the authority of a local government to adopt and enforce ordinances relating to use and zoning. (Sec. 1, 2)

4. Authorizes a local government to impose a civil penalty of up to $1,000 for every 30 days a vacation or short-term rental owner's failure to provide required contact information. (Sec. 1, 2)

5. Directs a local government to provide a vacation or short-term rental owner 30 days' notice prior to imposing an initial penalty for failure to provide required contact information. (Sec. 1, 2)

6. Removes language relating to the requirement for notifying DOR and the vacation or short-term rental owner of verified violations. (Sec. 1, 2)

7. Directs a local government to issue or deny a regulatory permit or license within seven days of receiving the required information and outlines the ground for denying a permit or license. (Sec. 1, 2)

8. Specifies a local government that requires a local regulatory permit or license must adopt an ordinance allowing the initiation of an administrative process to suspend the permit or license for a period of up to 12 months for outlined verified violations associated with the property. (Sec. 1, 2)

9. Specifies a local government that requires sex offender background checks on a short-term rental must waive the requirement if an online lodging marketplace performs a sex offender background check of the booking guest. (Sec. 1, 2)

10. Asserts a short-term rental must cease operations for failure to apply for a required regulatory permit or license within 30 days of the permit or license application process being available. (Sec. 1, 2)

11. Allows a local government to impose a civil penalty of up to $1,000 per month for failure to apply for a required regulatory permit or license. (Sec. 1, 2)

12. Restates multiple verified violations that arise out of the same incident are considered one verified violation when assessing civil penalties or suspending the regulatory permit or license. (Sec. 1, 2)

13. Provides a definition for online lodging marketplace. (Sec. 1, 2)

14. Removes timeshare from the definition of vacation rental or short-term rental. (Sec.1, 2)

15. Removes the authorization for DOR to impose civil penalties or suspend a TPT license. (Sec. 3, 4)

16. Prescribes civil penalties for online lodging operators who offer for rent or rent a lodging accommodation without a TPT license. (Sec. 4)

17. Makes technical and conforming changes. (Sec. 1, 2)

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21.                   SB 1168

22. Initials PRB           Page 0 House Engrossed

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