John Kavanagh

John Kavanagh

Committees in the state House and Senate have given their approval to two competing bills that would give cities more power to regulate short-term rental properties.

Some Valley cities have come out in opposition to Chandler Sen. J.D. Mesnard’s SB 1379, which tries to prevent those rentals from turning into rowdy party houses by allowing local governments to set occupancy limits and insurance requirements on the owners who lease out their homes through websites like Airbnb and VRBO.  

Scottsdale Rep. John Kavanagh’s bill would go much further, restoring much of the authority that previous legislatures and Gov. Doug Ducey stripped away in recent years.

Houses rented through the digital applications have been the source of several complaints in recent years by neighbors who don’t appreciate seeing residential properties turned into de facto hotels. 

One such rental was the site of a homicide in Chandler a couple years ago after a deadly fight broke out during a house party. 

Airbnb and VRBO, which have more than 500 rental listings spread out across Chandler, claim many of their hosts are conscientious residents simply trying to earn some extra income by leasing out empty rooms.  

Lawmakers have been trying to appease the conflicting interests between municipalities and rental owners ever since Ducey prevented local governments from banning short-term rentals.

Mesnard said he intentionally wrote his bill to specifically target rentals that become a revolving door for boisterous revelers by letting cities decide whether to restrict the number many tenants who can occupy them. 

The bill allows the revocation of homeowners’ tax license if they violate local regulations at least three times within a one-year period. 

But the Arizona League of Cities and Towns, which represents the interests of most East Valley communities, said Mesnard’s bill does not go far enough to resolve the issues brought up by local governments. 

Nick Ponder, the League’s legislative director, said SB 1379 doesn’t make enough substantive changes to the state’s current laws that are favorable to municipalities. 

The League is not advocating for outlawing short-term rentals, he added, but cities and towns want more autonomy over how to control these properties.  

“The prominent issue here is that the law that was passed in 2016 requires cities and towns to treat short-term rentals exactly the same as we treat long-term residential rentals,” Ponder said. 

Ryan Peters, Chandler’s government relations manager, said Chandler opposes the bill for similar reasons to the ones expressed by other cities. 

Mesnard’s bill caps civil penalties at the amount of daily rent advertised by the short-term rental where a violation occurred. 

SB 1379 additionally requires a municipality to wait 30 days before imposing a civil penalty to a rental owner who fails to provide their contact information to the city. 

On Feb. 3, the Senate Commerce Committee voted unanimously to pass Mesnard’s bill to the Rules Committee for further review. 

Despite the bipartisan support for Mesnard’s bill, representatives from the cities of Scottsdale, Surprise, Casa Grande and Fountain Hills have come out in opposition to the legislation.  

Paradise Valley Mayor Jerry Bien-Willner said his town opposes SB 1379 because it doesn’t go far enough to restore the rights of ordinary citizens who feel their neighborhoods have been impacted by short-term rentals. 

“Our state’s predicament will, I think, get worse if we don’t take action here,” the mayor said. “We want real reform.” 

Mesnard said he is not interested in overregulating the rental industry, stating, “I know there are other proposals out there that would like to go broader. I will not be on board with those.” 

Meanwhile, a House panel last week voted 8-5 to would allow city and town councils to impose limits on how many people can be in a short-term rental based on the number of bedrooms.

Potentially more significant, Kavanagh said his legislation would permit cities to enact zoning restrictions that could limit the number of these short-term rentals in any one neighborhood – or entirely within the community’s borders.

The 2016 law “was sold as the elderly couple, empty nesters with the extra bedroom, who could make a few extra bucks renting out their room to tourists or whatever,’’ Kavanagh said. 

“That seemed benign,’’ he said, what with the owners on the premises to control any problems.

“But in reality, short-term rentals are such that an investor can make far more money buying a house and renting it out as a hotel -- as a horizontal, decentralized hotel -- than renting the house out for long-term rental,’’ he said. 

Kavanagh said it has created problems in places like Sedona, where he said 40 percent of the available rental units are now vacation properties, “driving up the prices of all rentals and making it impossible for city employees or even business employees, store employees, to live in the town.’’

Rep. Jake Hoffman, R-Queen Creek, said the whole concept is offensive.

“Property and the ability to use one’s property to its fullest extent, and to the fullest enjoyment, is your right,’’ he said, contending there are enough ordinances already in place to deal with “bad apples.’’

Kavanagh said that Hoffman is wrong.

“There is not an absolute right to do whatever you want with your property,’’ he said.

“If there’s a vacant lot in a residential neighborhood, maybe next to your house, and somebody buys it, they shouldn’t be allowed to open up a McDonald’s,’’ Kavanagh continued. “When you invest your life savings in a home in a residential neighborhood, you have a right to make sure that it stays residential.’’

Kavanagh said his legislation would have no effect on individuals who are owner-occupants and rent out rooms in their own homes. He said they are not the problem.

And he promised to amend his legislation when it goes to the House floor to “grandfather’’ in any existing short-term rentals so they could continue to operate if and when his measure becomes law.

Capitol Media Services contributed to this report.