There are still a lot of unanswered questions when it comes to the Arizona State Senate bill that now allows short-term rentals throughout the state — something that until just recently was banned in Sedona.

The bill, which was introduced in early March by Arizona State 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 by a vote of 27-1.

The bill, as amended in the Arizona House of Representatives, was then signed by Gov. Doug Ducey on May 12. It becomes effective statewide on Saturday, Dec. 31.

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

On Tuesday, June 28, the Sedona City Council directed staff to develop the framework for a basic regulatory ordinance that would address items of immediate importance, such as the identification of an emergency contact person. Additionally, staff should monitor and evaluate short-term rental activity following implementation of SB 1350 to determine what additional action by the city may be necessary.

City Attorney Robert Pickels said at this point the city has little recourse to the bill other than in areas relating to health, safety and welfare.

“The door is not completely closed,” he said. “There may be an opportunity to do something but it’s limited.”

He said those who do rent their homes for less than 30 days will be obligated to obtain a Transaction Privilege Tax license through the Arizona Department of Revenue. Tax must be collected and remitted by individual property owners or by online lodging businesses such Airbnb. However, Pickels added that there is a “clear inconsistency” with the fact that taxes will be collected on short-term rentals but those with long-term rentals are not required to pay a tax.

Pickels said some of the important facts to remember include:

• SB 1350 renders Sedona’s ordinance prohibiting short-term rental invalid.
• Any new regulations must demonstrate a health, safety and welfare issue and must be consistent with regulations applied to other residential uses.
• SB 1350 authorizes the city to require an emergency contact for a rental property, which could prove a valuable mechanism to track short-term rental activity.
• It remains unclear if rental activity will proliferate or whether the activity will cause negative impacts greater than those experienced with other residential uses.
• SB 1350 contemplates collection of sales tax.
• It is not clear how the state will enforce sales tax collection.

City Manager Justin Clifton said for now the city is in a bit of a holding pattern to see what may or may not occur once the bill goes into effect.

“What we can say now is that we really don’t have any kind of evidence that we’ll have excessive problems with short-term rentals that we don’t otherwise have,” he said, noting that there are still laws on the books when it comes to noise and other types of nuisances.

“We don’t have reason to believe we’re going to have a rash of new violations and problems that never occurred. As much as we like to be proactive, we’re content at the staff level to wait and see what happens.”

Councilman Jon Thompson said the best approach to the law is to accept it and look at these short-term rentals as a legitimate business, move forward and “try and make lemonade” out of the situation.

“The state government has spoken now and this is the way the new law is and it was obviously very widely approved in the legislature,” he said. “I feel any efforts for us to fight it is probably not wise.”