July 11, 2022

The state Legislature has passed a bill aimed at providing local cities and towns with more authority to fine and penalize short term rental “bad actors,” but stops well short of banning them or limiting the length of their leases. 

Co-sponsored by Republicans Sen. J.D. Mesnard of Chandler and Steve Kaiser of Phoenix, and SB 1168 is being called a “compromise,” and gives cities and towns increased authority to fine homeowners whose occupants violate noise and other community ordinances. 

Those rules are often breached by weekend visitors who rent a large house for the weekend, fill it with raucous revelers who party late into the night, disrupting families and year-round residents’ peace and quiet, as well as their normal routines. 

Philip Minardi, a spokesman for Expedia Group, hailed the legislation, calling it “a targeted, sensible package of protections and reforms to Arizona’s vacation-rental industry.”

He said the measure puts “Arizona at the forefront of innovative policy solutions for this important industry that supports over 75,000 jobs statewide” and said it creates “new mechanisms to ensure neighborhood safety while fostering an environment that will allow vacation rental hosts and their guests to continue their important contributions to a vibrant tourism economy in Arizona.”

The Legislature in 2016 took away municipalities’ authority to impose regulations on short-term rentals but in recent years has given them some leeway to control rowdy party houses.

The northeast Mesa community of Las Sendas recently voted to amend its Covenants, Conditions and Restrictions, or CC&Rs, to restrict rentals to no fewer than 31 days. 

The measure passed with the support of 75% of Las Sendas residents after a six-month campaign that the HOA board publicly supported. Of the 3,090 total votes cast, 2,604 votes were in favor of the amendment and 486 were opposed. 

SB 1168 really has no bearing on authority to regulate short-term rentals, according to Las Sendas attorney Curtis Ekmark.

“The state doesn’t have anything to do with communities,” he said. “They left intact an association’s ability to ban STRs. But it allows the City of Mesa to fine people who violate noise and other ordinances.”

The measure also shifts fines and penalties away from online rental platforms such as Airbnb and VRBO and places them on the property owner or management company that is renting out the house. It also makes various other technical and legal changes to the terms of STR agreements in Arizona. 

In an earlier interview with the Tribune, Shannon Preston who, with her husband Colin owns a home in Las Sendas but lives in Oregon, said that an outright ban on STRs is not in line with what they thought they bought into when they purchased their Mesa home. 

“The CC&Rs are a contract that we entered into when we purchased our property with the homeowner’s association. 

“For them to just take a one-sided majority vote and remove our property rights doesn’t seem like that’s fair,” Preston said. “They are using our dues to take our property rights away from us.”  

The Prestons advocated for an approach that stops short of banning short term rentals outright, such as a higher fee structure, which Senate Bill 1168 addresses, or a “three strikes and you’re out” policy for people who receive multiple complaints about their renters. 

“There has to be some ways around just changing everyone’s rights,” Preston said. 

The new state law may give people who live near disruptive party houses in Las Sendas an avenue for their frequent complaints. 

Given that the new law empowers the City of Mesa to enforce noise ordinances, disgruntled neighbors will be able to call the police with their complaints. As it stands now, annoyed neighbors say they themselves fear being the target of legal action for “harassing” short-term homeowners’ “guests.” 

Newer communities write short term rental bans directly into their CC&Rs as a matter of course, but older, more established communities that are often sought by weekend partiers have remained wide open and largely unregulated. 

This issue is not likely to go away any time soon for Las Sendas or any other community that votes to ban the short-term rentals.  

A quick internet search reveals page after page of suggestions on how to get around such regulations, for instance. Beyond that, Valley real estate attorney Ben Gottlieb says a decision in March by the Arizona Supreme Court, Kalway v. Calabria, could have a significant impact across the entire state, and on a community’s ability to change its CC&Rs. 

In a nutshell, the case states that in order to amend them, a community’s original CC&Rs must make mention of the possibility that the rules could, potentially, be altered in the future.  

“You have short term renters who will come in and seek declaratory relief,” said Gottleib. “And say ‘wait a minute, under the Kalway case this amendment is invalid and I want to protect my investment here and I had no notice that this would happen.’ So, I think this is going to have interesting ramifications. The Kalway case really makes it clear that everything hinges on what is in the original CC&Rs.” 

State Rep. John Kavanaugh, R-Scottsdale, who has been involved in short-term rental legislation since they became an issue, said it will be difficult to get around the HOAs approved ban. 

“The HOA’s will have no problem enforcing that,” he said. “First of all, the neighbors will know when different people start showing up every weekend.” 

Kavanaugh, a pro-business Republican understands both sides of the issue, but falls clearly on the side of people opposed to short term rentals. 

“On one side there is the right of people to own their property and do what they want,” he said. “On the other side is the right of people to rely on zoning laws that were in effect when they bought their land. 

“No one purchased their homes thinking that there would be horizontal hotels popping up next to them. The fact that people made the biggest investment of their lives and then had that open up next to them is a real shame. It destroys their life and their property value, he said.”

As far as the Kalway v. Calabria case? 

“That’s gonna play out in the courts.” Kavanaugh said.

* Story originally appeared on eastvalleytribune.com*


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