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Correction: A similar bill sponsored by former Sen. Kate Brophy-McGee in 2020 passed the Senate on a 23-5 vote, not a 25-5 vote.

Rep. John Kavanagh’s attempt to reign in short-term rentals has won the support of Scottsdale officials but could struggle with his Republican colleagues due to a competing bill supported by the rental industry.

Kavanagh’s bill would return some power to cities and towns that was lost in 2016 when a new state law banned them from regulating short-term rentals.

If passed, HB 2481 would allow cities to create zoning restrictions to limit or even eliminate most short-term rentals, though he said the bill would not affect owner-occupied properties that rent out a room or backyard guest house.

Scottsdale is home to at least 4,000 active short-term rental properties, according to Air DNA, a market research firm.

The properties have long drawn the ire of some residents, who complain that they attract partiers and lead to noise and trash problems by dropping what are essentially commercial operations into the middle of neighborhoods.

“HB 2481 is moving forward and contains multiple reform measures that would begin to provide relief for local neighborhoods suffering the negative impacts of short-term rentals,” city spokesman Kelly Corsette said, noting it “establishes local licensing options and provides for more local zoning oversight.”

Scottsdale City Council passed ordinances in 2019 to reign in unlawful or nuisance parties at problematic short-term rentals, though the new regulations – and associated fines – applied to all properties in the city because of the 2016 state law. 

“Scottsdale sees HB 2481 as the best option this year and the minimum acceptable bill that would allow the city to begin to address the many negative impacts of short-term rentals,” Corsette said.

Kavanagh, who represents much of Scottsdale, also has the support of Mayor David Ortega, who said cities are in a better position to know the impact of these rental properties.

“We know our neighborhoods; we know our traffic patterns; and, of course, we know the cost and impact on our policing and trash pick up and all these other ramifications,” Ortega said.

Kavanagh’s bill passed the House Government and Elections Committee on Feb. 10 on a 8-5 vote with bipartisan support, but Kavanagh told the Progress it still faces an uphill battle.

“We’re currently pushing (former Sen. Kate Brophy-McGee)’s bill from last year that died when we adjourned, but we’re having trouble getting the votes,” Kavanagh said.

Last year, the bill also had industry support and passed the Senate on a 23-5 vote, Kavanagh said.

However, industry heavyweights like Expedia and Airbnb, have now lined up behind a competing bill supported by Sen. J.D. Mesnard, a Chandler Republican. 

SB 1379 would include occupancy limits and insurance requirements for rentals and allow for revocation of a property owner’s tax license if they repeatedly violate local regulations – but stops well short of empowering cities to actually limit the number of rentals in a given area.

That bill was also passed out of committee on with support of both Democratic and Republican lawmakers, including Scottsdale Sen. Michelle Ugenti-Rita.

It does not have the support of the City of Scottsdale, though.

“Senate Bill 1379 is wrong on so many levels and just picks around the edges of the situation that we are encountering as cities and having to police and commit resources to,” Ortega said.

Ortega said the senate bill is too reliant on state-level regulation of tax licensing and argued the state does not have the staffing to ensure that short-term rentals are registering.

He also criticized the penalties under Mesnard’s bill – which caps them at the amount of daily rent at the property where a violation occurred.

Critics of the Kavanagh bill, including Queen Queek Republican Rep. Jake Hoffman, have argued the new legislation infringes on a property owners’ right to use their property as they please.

Kavanagh said the bill would just give cities the ability to reign in corporate rental companies that are essentially setting up commercial operations in neighborhoods.

He said it’s a compromise that returns some power to local governments without repealing the 2016 completely.

Kavanagh suggested the industry has been empowered by the emergence of support at the Legislature for the laxer regulations, but did not rule out convincing them to switch loyalties.

“We’re going to try and get them flipped over, but it’s going to be difficult,” he said. “I’ve got to get 60 Republicans in the House to agree with it.”

Scottsdale officials argue that Mesnard’s bill simply does go far enough.

“We do not believe the bill provides the necessary local governance structures needed to effectively manage short-term rentals and mitigate their negative impacts,” Corsette said.

Kavanagh was blunter, stating, “The Senate bill doesn’t really do anything; it’s no reform at all.”