On May 21, Arizona Gov. Katie Hobbs signed House Bill 2720 into law, which amended Arizona Revised Statutes Title 9 to limit the type of zoning restrictions that any city that exercises zoning power may place on accessory dwelling units.

Introduced by Arizona Rep. Michael Carbone [R-District 25], HB2720 first passed the House of Representatives in a bipartisan 46-14 vote on March 4. The Senate passed an amended version of the bill 17-11 on May 8, and the House approved the amended version 35- 22 on May 15.

Twenty individuals and groups registered to speak in support of the bill, including the Goldwater Institute, the American Institute of Architects, the Arizona Neighborhood Project, the Home Builders Association of Central Arizona and Sedona resident Mike Schroeder.

The 113 individuals and groups who registered to speak against the bill included Sedona City Attorney Kurt Christianson as well as representatives of the cities of Cottonwood, Clarkdale, Flagstaff and 25 other municipalities, along with Sedona residents Ann Kelley, Carol Kurimsky and Mark TenBroek.

District 1’s Sen. Ken Bennett voted against HB2720, while Reps. Selina Bliss and Quang Nguyen voted in favor of the original bill but against the amended version.

HB2720’s passage prohibits a range of regulatory actions that municipalities may take with regard to ADU construction and use, including but not limited to:

• Banning the use or advertisement of ADUs as long-term rentals
• Requiring property owners to install additional parking for an ADU or pay in-lieu fees
• Requiring ADU design or finishing materials to match those of the primary dwelling on the property
• Imposing zoning rules for ADUs that are more restrictive than those applied to single-family homes
• Setting rear or side setbacks for ADUs greater than five feet
• Requiring ADUs to comply with commercial building code or contain fire sprinklers

The amended version of the bill eliminated a provision in the original language that would have prevented municipalities from either prohibiting or requiring kitchen facilities in an ADU.

The legislation twice addressed the subject of restrictive covenants on rental properties. Cities may no longer “require a restrictive covenant concerning an accessory dwelling unit on a lot or parcel zoned for residential use by a single-family dwelling.”

Furthermore, while private parties are permitted to create such covenants regarding ADUs, a municipality “may not condition a permit, license or use of an accessory dwelling unit on adopting or implementing a restrictive covenant between private parties.”

HB2720 also amended the state’s existing STR regulations to permit municipalities to require the owner of an STR to reside on the property if the property “contains an accessory dwelling unit that was constructed on or after the effective date of this amendment … and that is being used as a vacation rental or short-term rental.”

However, the bill’s language added, “Unless the time period specified in Section §12-1134, subsection G has expired, this paragraph does not apply to a property owner who has the right to build an accessory dwelling unit on the property owner’s property before the effective date of this amendment to this section whether or not the accessory dwelling unit has been built.”

Arizona Revised Statute §12-1134(G) provides for a time period of three years from the effective date of the legislation, and new statutes take effect 91 days after the legislative session ends, deferring municipalities’ ability to require on-site residence by existing owners of STR properties until the autumn of 2027.

In a similar application of the same principle of reasonable notice, the Arizona Supreme Court ruled in 2022 in Kalway v. Calabria Ranch that homeowners associations cannot ban STRs in their covenants unless their original covenants had included the possibility of such a prohibition in order not to infringe on property owners’ expectations. The court upheld its prior ruling on April 2, when it refused to hear the Village of Oakcreek Association’s appeal of the Court of Appeals’ rejection of its retroactive STR ban on the same grounds.

HB2720 further requires that municipalities with populations of more than 75,000 must adopt zoning regulations that allow a minimum of one accessory dwelling unit per parcel zoned for single-family use.

The Sedona City Council is scheduled to consider potential updates to the city’s Land Development Code and affordable housing guidelines on Wednesday, June 12. Members of council have repeatedly requested that city staff consider code changes to simplify the construction process for ADUs.

“The council work session is not intended to specifically address the ADU requirement of HB2720, as the requirements within the bill only apply to municipalities with a population of 75,000 or more,” Community Development Director Steve Mertes said when asked what code changes the department would be recommending to ensure compliance with state statute.

“HB2720 does not require the city adopt an ADU ordinance or make any changes to the existing Land Development Code because the city is below the 75,000-person threshold,” City Attorney Kurt Christianson stated when asked for clarification.

While HB2720 does contain three specific byright zoning provisions for cities with populations over 75,000 people, which are found in paragraph A of what is now ARS §9-461.18, it also defines “municipality” as “a city or town that exercises zoning powers under this title” in paragraph H4, a definition that applies to the provisions contained in paragraphs B through G of the legislation.

As passed, HB2720 provides that if a municipality fails to adopt zoning regulations to enact its provisions by Jan. 1, 2025, ADUs will be allowed on all parcels zoned residential “without limits.”