In the 11 years since its launch, Airbnb has disrupted the hotel industry by taking the centuries-old concept of boarding houses and reworking it for the 21st century. Travelers would get to experience cities like a local for a relatively affordable price and homeowners would generate extra income.
In recent years, however, Airbnb has gained as many enemies as it has fans — cities like Los Angeles, San Francisco, and New York City have wrestled with the $35-billion company over hotel taxes and other regulations, such as limits on the number of days a property can be rented.
Now the battle has extended to smaller metros, such as the picturesque desert town of Sedona. According to a report by AZ Central, 20 percent of the city’s existing housing inventory are short-term rentals. Furthermore, developers are investing millions into building new housing for the same purpose.
“We have a very good city council, and the state of Arizona has emasculated them in this area,” said Sedona resident Avrum Cohen in a city council meeting. “It’s the only state in the union that has done this to its cities, and it’s a state that doesn’t like the federal government.”
In 2017, Arizona passed one of the country’s most lenient short-term rental laws. Senate Bill 1350 stripped cities, towns and counties of their right to pose limitations on short-term rentals in their jurisdiction. Moreover, the law allowed investors and developers to build additional housing solely for short-term rental use. Debbie Lasko, the senator who co-sponsored the bill, also wants to eliminate short-term rental taxes, but failed.
Sedona leaders say the passage of the bill has turned neighborhoods into mini-hotel conclaves that are driving up home prices as developers gobble up more inventory. Sedona City Manager Justin Clifton told AZ Central there are more than 1,000 short-term rentals in the city, which accounts for 20 percent of the city’s housing. As a result, the median cost of a home in Sedona has risen to $562,000 — a $50,000 increase from the previous year.
Arizona state representatives are trying to reverse the damage done by SB-1350 through House Bill 2672, which allows cities and counties to limit short-term rentals to overnight stays and stops short-term rentals from being used for weddings and large-scale parties. The bill originally included a clause that would limit investors and developers, but it was stripped.
Even though HB-2672 offers some solace for Sedona residents, it seems unlikely they’ll get the solution they’re looking for. Arizona governor Doug Ducey has been public in his support of loose short-term rental laws, saying, “In Arizona, we respect the right to do what we want with our property without undue government interference.”
Although Airbnb and other short-term rental platforms seem to be winning the battle in Arizona, it’s important to note that The Grand Canyon State is an anomaly — states like Massachusetts, New York, and California are cracking down on the short-term rental industry.
Massachusetts in July passed a tax reform that applies the state’s 5.7 percent hotel tax to short-term rentals. The law is expected to boost short-term rental rates, which Governor Charlie Baker says will “[level] the playing field for short-term rental operators who use their properties as de-facto hotels.”
Los Angeles and New York City have also fought back against short-term rentals this year, enacting new rules that limit the kinds of properties eligible to become short-term rentals and how long properties can be rented out.