By AWD LAW Attorney John Carlson.
In May 2016, Governor Doug Ducey signed Senate Bill 1350, which seeks to protect residential property owners’ rights to rent their homes for short-term “vacation” rentals. Notably, SB 1350 will have a big impact on the various zoning ordinances and restrictions currently in place in Coconino and Yavapai counties and the cities of Flagstaff and Sedona.
The chief provision of SB 1350 makes it illegal for Arizona towns, cities, or counties to prohibit property owners from using their residential property as short-term rentals (usually defined as rentals for periods of less than thirty days). SB 1350 became effective on January 1, 2017, and now Arizona residents cannot be restricted from offering their home for short-term rentals on websites such as Airbnb, HomeAway and VRBO.
However, local governments can still enact regulations covering short term vacation rentals, but only if the regulations are narrowly tailored to either (1) protect the public health and safety, such as rules and regulations related to fire and building codes, health and sanitation, transportation or traffic control, solid or hazardous waste and pollution control, or (2) to limit or prohibit the use of the vacation rental for adult-oriented businesses. In other words, local governments, if they so choose, can attempt to regulate limited aspects of a short-term rental, primarily related to safety concerns but they cannot ban them outright.
Currently, Sedona city code chapter 5.25 expressly prohibits property owners from using their property for short-term vacation rentals. As of January 1, 2017, those restrictions will no longer be valid or enforceable.
The Yavapai County zoning ordinances prohibit property zoned as residential from being used for short-term rentals. This restriction will also be unenforceable come January 1, 2017.
The Flagstaff zoning code currently does not expressly prohibit short-term rentals, but it does require a conditional use permit to operate a residential property as a short-term rental. SB 1350 will eliminate this requirement, meaning residential properties within the city limits of Flagstaff will no longer be required to obtain a conditional use permit before operating the property as a short-term rental.
Coconino County zoning ordinance section 3.7 directly addresses and outlines Coconino County’s rules and regulations for short-term rentals. Coconino County does not currently prohibit the operation of short-term rentals, but it does require short-term rental properties to meet certain performance standards. Coconino County also requires those property owners wishing to operate a short-term rental to apply for a permit before offering the rental to the public. Unlike the previous three governmental entities discussed, Coconino County does not put a flat ban on short-term rentals, but instead attempts to regulate them, thus presenting the question of whether the regulations are sufficiently narrowly-tailored to survive the enactment of SB 1350. It is arguable that several of the regulations are narrowly-tailored to protect the public’s health and safety so that they would not controvert SB 1350, and thus would remain enforceable. However, it is more likely that the permit and application process, combined with certain of the regulations, such as the maximum occupancy restrictions (10), are not sufficiently narrowly tailored to be enforceable under SB 1350. Coconino County has made no official statement regarding its plans for section 3.7 after SB 1350 becomes effective. Because unlike Sedona and Yavapai County, it is unclear whether section 3.7 is preempted by SB 1350, it will remain in force until it is either repealed by the county or held unenforceable by the courts.