A lot of questions have been swirling around Sedona following the passing of Senate Bill 1350, which allows short-term vacations rentals throughout Arizona.

The bill, which was introduced in early March by Sen. Debbie Lesko [R-District 21], now allows short-term vacation rentals of less than 30 days anywhere in the state. On May 6, the bill was passed on a final vote by the Arizona Senate. The bill, as amended in the Arizona House of Representatives, was then signed by Gov. Doug Ducey.

SB 1350 impacts just a handful of cities in the state that ban short-term rentals, the largest of which is Scottsdale.

The Sedona City Council will be addressing the bill during its Wednesday, June 29, meeting.

City Attorney Robert Pickels agreed to answer some of the most common questions that have been posed to the city and the Sedona Red Rocks News over the last month:

What does SB 1350 mean for Sedona in terms of the current ordinance?

“The passage of SB 1350 rendered Sedona’s short-term vacation rental ordinance invalid and unenforceable. No longer can local jurisdictions in Arizona implement an outright ban on short-term vacation rental activities.”

When will this go into effect?

“The new law will be immune from referendum on Aug. 6, 2016, but will not be effective until Dec. 31, 2016.”

Will those who rent their homes be taxed and if so, how?

“Yes. Those who rent their homes will be subject to taxation in the same manner as hotels. The city tax code definition of hotels includes ‘houses…within the city offering lodging … for compensation … to any transient.’ The rate will be the general 3 percent privilege tax and the additional 3.5 percent transient lodging tax, for a total of 6.5 percent.”

Who will be responsible for collecting these taxes — the city or state?

“Cities can no longer collect local taxes on their own behalf. The Arizona Department of Revenue will be responsible for collecting taxes on short-term vacation rental activities. Homeowners will have two options: They can either register with ADOR for a license to collect the 6.5 percent tax themselves for homes that they are renting out on their own, or they can allow an online lodging marketplace business to collect and remit the tax on their behalf if they are using such a service to market and rent out their properties.”

Who will be in charge of enforcing that taxes are paid on these rentals?

“The ADOR will also have the enforcement responsibility for ensuring that taxes are paid on these rentals. The city will still conduct periodic audits of what is actually being collected by ADOR and remitted to the city, so some coordination between the city and ADOR will be required to make sure that all people engaged in short term
vacation rental activities are doing to responsibly.”

What role do homeowner’s associations play in terms of short-term rentals?

“Homeowner associations typically govern themselves through contractual arrangements in place at the time lots are sold. Government agencies do not get involved with enforcement of any covenants or restrictions that groups of homeowners choose to impose upon themselves.”

If an HOA does not allow a member to rent their home now that it’s legal throughout the state, do you feel this can be challenged in court?

“I can’t express a formal opinion about the enforceability of private agreements between homeowners, but the mere existence of a law preventing government agencies from restricting an activity doesn’t necessarily preclude private individuals or groups from doing so.”