Short-Term Rental Violations Are Going to Count
By: Provident Law
Arizona’s legislature is making sure the party doesn’t go on too late and doesn’t get too loud. Governor Ducey has signed into law Senate Bill 1168, codified at A.R.S. § 9-500.39, as amended, which grants Arizona cities the right to implement certain restrictions on short-term rental properties, including a progressive “three-strike” regulatory scheme with increasing penalties for repeat violators. It is important to note, however, that Senate Bill 1168 is not a regulatory statute unto itself—it is instead a grant of power to Arizona cities to implement certain restrictions if the cities deem the regulations beneficial for their communities. Each city may or may not choose to enact regulations consistent with the bill to regulate their community.
Short-term rental operators will notice many similarities consistent with existing short-term rental regulations. Senate Bill 1168 allows cities to require operation permits and licenses from local agencies, as well as requiring property registration complete with the property owner’s contact information, proof of compliance with transaction privilege tax licensure, and emergency contact information.
New, however, is the power vested in Arizona cities to suspend short-term rental permits and licenses for repeated violations of city ordinances pertaining to short-term rentals. Implementing cities can suspend permits and licenses for a single violation in certain circumstances. Specifically, the bill authorizes increasing fines for serious, repeat offenses that affect public health and safety, including but not limited to raucous parties and fostering an environment where crimes may proliferate. Authorities will be able to impose the greater of $500 or one night’s rent, as advertised in the property’s listing, for the first verified violation. The violation fees increase to the greater of $1,000 or two nights’ rent for a second verified violation, and the greater of $3,500 or three nights’ advertised rent for the third verified violation.
A property receiving three verified violations within a twelve-month period will have its operation permit suspended for a period of twelve months. Importantly, however, a license only incurs a verified violation upon full adjudication on the merits of the violation. Therefore, the alleged violator can defend its rights and force the city to obtain a judgment of liability before a verified violation for purposes of the statute accrues. The twelve-month time period from which to calculate verified violations begins to run from the date of the first verified violation.
Beyond the three-strike policy, the regulation avails cities of the right to implement occupancy restrictions by instituting occupancy limits of up to two adults per bedroom. (It is unclear, at this point, whether any restriction on residential occupancy will withstand judicial scrutiny.) Additionally, hosts must carry a general liability insurance policy with limits of at least $500,000, or have the host platform provide such insurance to guests. Furthermore, before offering a vacation rental or short-term rental, the property owner or manager must notify all single-family residential properties adjacent to on either side, as well as directly and diagonally across the street from the property of the intended use as a short-term rental.