Efforts to return some authority to local governments to regulate short-term rentals in their communities has apparently failed for this session of the Arizona State Legislature.

Representative John Kavanagh (R-D23) of Fountain Hills introduced a bill in the House of Representatives at the beginning of the session that had the support of most local governments, including the Fountain Hills Town Council and the League of Arizona Cities and Towns.

Kavanagh told The Times that a bill introduced in the Senate as an alternative to his bill was really “watered down” and had no teeth. That bill was defeated in the Senate on a vote of 17-43.

“That pushed my House version out of the way,” Kavanagh said, leaving the effort dead for this session.

Kavanagh said he was involved in efforts to negotiate changes to the Senate bill to make it more attractive. He said proponents of that version would not agree to any changes.

“It is my understanding that a group in Paradise Valley is starting an effort to gather signatures for an initiative to put the question to the ballot,” Kavanagh said. “That would likely return all authority to local government.

“The threat of an initiative in 2022 might be enough to bring the industry back to the table and allow some teeth in the law to counteract the initiative.”

Fountain Hills Town Manager Grady Miller outlined the situation to the Town Council at its April 6 regular session. The town has had numerous complaints about the various nuisance activity that seems attracted to the short-term rentals including noise and neighborhood traffic.

In an email to The Times, Miller said the Senate bill was supported by the short-term rental (STR) industry as an attempt to address some of the nuisance issues associated with short-term rentals. SB1379 would have allowed the Department of Revenue to suspend the TPT (sales tax) license of an STR owner after being the subject of three verified violations within a 12-month period and outlined caps on civil penalties imposed on STR owners.

“Cities and towns opposed the bill because it did not provide meaningful remedies to address the issues stemming from STRs in communities that have been overrun by boutique hotels in residential neighborhoods,” Miller said. “SB1379 also failed to reinstate local control for zoning options that cities and towns across the country are able to exercise.”

The House Bill sponsored by Kavanagh would have restored the ability of municipalities to regulate short-term rentals as it was before the state legislature took preemptive action with legislation five years ago with SB1350, according to Miller.

“Fountain Hills and other communities are concerned that the issues related to short-term rentals go beyond party houses and nuisance,” Miller said. “Short-term rentals have completely altered neighborhoods in some of Arizona’s most popular communities – affecting quality of life, in addition to housing availability and affordability.

“Many mayors and elected officials are considering the possibility of (the) state-wide citizen initiative that would restore the ability of municipalities to regulate short-term rentals.”

In December, Fountain Hills Mayor Ginny Dickey was one of 33 Arizona mayors who signed a letter to Brian Chesky, CEO, Airbnb, Inc., and Peter M. Kern, CEO, Expedia Group, Inc. In that letter the mayors stated the issues regarding STR and their case for having local government regulate the industry. They asked for the support of the executives on the issue. That support has not been seen.

Short-term rental regulation seems to have significant support among citizens. Councilwoman Peggy McMahon told the council that the homeowners association for the Eagle Mountain subdivision in Fountain Hills recently passed an amendment to its CC&Rs banning short-term rentals. The amendment had the support of 75 percent of the residents, according to McMahon.

Miller noted that courts have consistently upheld HOA regulations in these situations, and it appears to be the most effective way to have rules in place. He said among the larger HOAs in Fountain Hills, SunRidge Canyon regulates the practice and he believes FireRock Country Club has an effort underway to amend its CC&Rs. Miller added that the town has discussed the issue with the Fountain Hills Neighborhood Property Association, but thus far NPOA has not taken steps to regulate short-term rental.