- Associated Press - Thursday, May 12, 2016

PHOENIX (AP) - Arizona tourist destinations want restrictions on short-term rentals to keep quiet neighborhoods from becoming raucous hotels, but the state sees dollar signs from the increased tax revenue websites like Airbnb and VRBO help bring to the state.

Gov. Doug Ducey weighed in Thursday, signing a proposal that sets regulatory standards, permits tax collection and blocks cities from banning short-term rentals on lodging websites.

As cities like Chicago seek to clamp down on short-term rentals, Ducey’s banking on a plan to build Arizona’s reputation as a leader in the sharing economy - a term used to describe peer-to-peer based goods and services that also include Uber and Lyft.

“We are committed to doing everything we can to support 21st-century companies that employ Arizonans, advance the way we do business and improve the way we live,” Ducey said in a statement.

The proposal undermines ordinances in tourism-driven locales like Scottsdale, Sedona and Jerome that prevent residents from using online booking companies to rent out their properties to visitors for a few days at a time.

The proposal was one of several bills pushed through during Arizona’s recent legislative session designed to usurp municipal authority to regulate things like employee benefits, plastic shopping bags, pet stores and drones.

Some homeowners are protesting the bill. They say short-term rentals bring increased traffic and noise to otherwise peaceful neighborhoods.

“Are we to sacrifice the tranquility of our most precious property, our very homes, for the sake of state tax revenue?” asked Warren Woodward, president of a Sedona homeowner’s association, before a House panel.

Officials from the northern Arizona city of Sedona - famous for its red-rock buttes and arts community - say they are concerned the measure will lead to more homeowners purchasing properties solely to rent them to visitors.

“We wanted to be able to manage where the best locations would be for those lodging uses,” said Karen Daines, Sedona assistant city manager. “We certainly didn’t think it was appropriate in residential neighborhoods.”

Along with criticism from residents and cities, Airbnb is the target of complaints by the hotel industry, which is losing profits to online booking companies.

The American Hotel & Lodging Association has called for stricter regulation of short-term renters that run fulltime commercial operations out of their properties.

It’s difficult to estimate how many people host short-term rentals through online lodging websites, but Airbnb reports there were at least 5,000 hosts in Arizona last year that hosted more than 130,000 visitors.

The proposal by Sen. Debbie Lesko of Peoria also allows Airbnb and similar websites to collect taxes on behalf of renters and turn them over to the state to be divided up for municipalities.

Lesko said the measure would reduce bureaucracy for homeowners and make it easier for the Arizona Department of Revenue to collect taxes.

Peter Bramley, an Airbnb host in Tucson, said the provision will help short-term renters handle their businesses.

“To manage that sort of paperwork becomes a disincentive to hosts and allows them to go underground and perhaps not even charge and pay those taxes,” Bramley said.

The legislation also sets standards for regulating short-term and vacation rental sites. Cities, towns and counties can still pass ordinances to protect public safety and enforce zoning ordinances.

Patrice Kraus, who lobbies for the League of Arizona Cities and Towns, said municipalities need local control to ensure quality of life in Arizona neighborhoods. But local leaders hope the legislation provides enough flexibility for cities and towns to balance the needs of their residents.

Some opponents say the bill doesn’t do enough to force online lodging platforms to collect taxes, or force renters to abide by regulations.

“I think they should be paying their taxes. I think they should be inspected. I think they should have business licenses,” said Marion Hook, owner of Adobe Rose Inn, a bed and breakfast in Tucson.

Although cities are still allowed to pass ordinances related to noise and nuisance issues, Hook said that’s not enough to discourage bad behavior from visitors staying at short-term rentals in residential neighborhoods.

“We have to wait until somebody complains,” she said. “There is absolutely no way of knowing whether the new neighbor is actually going to live there or just show up occasionally to make sure everything is all right.”

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