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- i - Senate Engrossed House Bill accessory dwelling units; requirements. State of Arizona House of Representatives Fifty-sixth Legislature Second Regular Session 2024 CHAPTER 196 HOUSE BILL 2720 AN ACT AMENDING TITLE 9, CHAPTER 4, ARTICLE 6, ARIZONA REVISED STATUTES, BY ADDING SECTION 9-461.18; AMENDING SECTION 9-500.39, ARIZONA REVISED STATUTES; RELATING TO MUNICIPAL PLANNING. (TEXT OF BILL BEGINS ON NEXT PAGE) H.B. 2720 - 1 - Be it enacted by the Legislature of the State of Arizona: 1 Section 1. Title 9, chapter 4, article 6, Arizona Revised Statutes, 2 is amended by adding section 9-461.18, to read: 3 9-461.18. Accessory dwelling units; regulation; 4 applicability; definitions 5 A. A MUNICIPALITY WITH A POPULATION OF MORE THAN SEVENTY-FIVE 6 THOUSAND PERSONS SHALL ADOPT REGULATIONS THAT ALLOW ON ANY LOT OR PARCEL 7 WHERE A SINGLE-FAMILY DWELLING IS ALLOWED ALL OF THE FOLLOWING: 8 1. AT LEAST ONE ATTACHED AND ONE DETACHED ACCESSORY DWELLING UNIT 9 AS A PERMITTED USE. 10 2. A MINIMUM OF ONE ADDITIONAL DETACHED ACCESSORY DWELLING UNIT AS 11 A PERMITTED USE ON A LOT OR PARCEL THAT IS ONE ACRE OR MORE IN SIZE IF AT 12 LEAST ONE ACCESSORY DWELLING UNIT ON THE LOT OR PARCEL IS A 13 RESTRICTED-AFFORDABLE DWELLING UNIT. 14 3. AN ACCESSORY DWELLING UNIT THAT IS SEVENTY-FIVE PERCENT OF THE 15 GROSS FLOOR AREA OF THE SINGLE-FAMILY DWELLING ON THE SAME LOT OR PARCEL 16 OR ONE THOUSAND SQUARE FEET, WHICHEVER IS LESS. 17 B. A MUNICIPALITY MAY NOT DO ANY OF THE FOLLOWING: 18 1. PROHIBIT THE USE OR ADVERTISEMENT OF EITHER THE SINGLE-FAMILY 19 DWELLING OR ANY ACCESSORY DWELLING UNIT LOCATED ON THE SAME LOT OR PARCEL 20 AS SEPARATELY LEASED LONG-TERM RENTAL HOUSING. 21 2. REQUIRE A FAMILIAL, MARITAL, EMPLOYMENT OR OTHER PREEXISTING 22 RELATIONSHIP BETWEEN THE OWNER OR OCCUPANT OF A SINGLE-FAMILY DWELLING AND 23 THE OCCUPANT OF AN ACCESSORY DWELLING UNIT LOCATED ON THE SAME LOT OR 24 PARCEL. 25 3. REQUIRE THAT A LOT OR PARCEL HAVE ADDITIONAL PARKING TO 26 ACCOMMODATE AN ACCESSORY DWELLING UNIT OR REQUIRE PAYMENT OF FEES INSTEAD 27 OF ADDITIONAL PARKING. 28 4. REQUIRE THAT AN ACCESSORY DWELLING UNIT MATCH THE EXTERIOR 29 DESIGN, ROOF PITCH OR FINISHING MATERIALS OF THE SINGLE-FAMILY DWELLING 30 THAT IS LOCATED ON THE SAME LOT AS THE ACCESSORY DWELLING UNIT. 31 5. SET RESTRICTIONS FOR ACCESSORY DWELLING UNITS THAT ARE MORE 32 RESTRICTIVE THAN THOSE FOR SINGLE-FAMILY DWELLINGS WITHIN THE SAME ZONING 33 AREA WITH REGARD TO HEIGHT, SETBACKS, LOT SIZE OR COVERAGE OR BUILDING 34 FRONTAGE. 35 6. SET REAR OR SIDE SETBACKS FOR ACCESSORY DWELLING UNITS THAT ARE 36 MORE THAN FIVE FEET FROM THE PROPERTY LINE. 37 7. REQUIRE IMPROVEMENTS TO PUBLIC STREETS AS A CONDITION OF 38 ALLOWING AN ACCESSORY DWELLING UNIT, EXCEPT AS NECESSARY TO RECONSTRUCT OR 39 REPAIR A PUBLIC STREET THAT IS DISTURBED AS A RESULT OF THE CONSTRUCTION 40 OF THE ACCESSORY DWELLING UNIT. 41 8. REQUIRE A RESTRICTIVE COVENANT CONCERNING AN ACCESSORY DWELLING 42 UNIT ON A LOT OR PARCEL ZONED FOR RESIDENTIAL USE BY A SINGLE-FAMILY 43 DWELLING. 44 H.B. 2720 - 2 - C. THIS SECTION DOES NOT PROHIBIT RESTRICTIVE COVENANTS CONCERNING 1 ACCESSORY DWELLING UNITS ENTERED INTO BETWEEN PRIVATE PARTIES. THE 2 MUNICIPALITY MAY NOT CONDITION A PERMIT, LICENSE OR USE OF AN ACCESSORY 3 DWELLING UNIT ON ADOPTING OR IMPLEMENTING A RESTRICTIVE COVENANT BETWEEN 4 PRIVATE PARTIES. 5 D. THIS SECTION DOES NOT SUPERSEDE APPLICABLE BUILDING CODES, FIRE 6 CODES OR PUBLIC HEALTH AND SAFETY REGULATIONS, EXCEPT THAT A MUNICIPALITY 7 MAY NOT REQUIRE AN ACCESSORY DWELLING UNIT TO COMPLY WITH A COMMERCIAL 8 BUILDING CODE OR CONTAIN A FIRE SPRINKLER. 9 E. AN ACCESSORY DWELLING UNIT MAY NOT BE BUILT ON TOP OF A CURRENT 10 OR PLANNED PUBLIC UTILITY EASEMENT UNLESS THE PROPERTY OWNER RECEIVES 11 WRITTEN CONSENT FROM ANY UTILITY THAT IS CURRENTLY USING THE PUBLIC 12 UTILITY EASEMENT OR THAT MAY USE THE PUBLIC UTILITY EASEMENT IN THE 13 FUTURE. 14 F. IF A MUNICIPALITY FAILS TO ADOPT DEVELOPMENT REGULATIONS AS 15 REQUIRED BY THIS SECTION ON OR BEFORE JANUARY 1, 2025, ACCESSORY DWELLING 16 UNITS SHALL BE ALLOWED ON ALL LOTS OR PARCELS ZONED FOR RESIDENTIAL USE IN 17 THE MUNICIPALITY WITHOUT LIMITS. 18 G. THIS SECTION DOES NOT APPLY TO LOTS OR PARCELS THAT ARE LOCATED 19 ON TRIBAL LAND, ON LAND IN THE TERRITORY IN THE VICINITY OF A MILITARY 20 AIRPORT OR ANCILLARY MILITARY FACILITY AS DEFINED IN SECTION 28-8461, ON 21 LAND IN THE TERRITORY IN THE VICINITY OF A FEDERAL AVIATION ADMINISTRATION 22 COMMERCIALLY LICENSED AIRPORT OR A GENERAL AVIATION AIRPORT OR ON LAND IN 23 THE TERRITORY IN THE VICINITY OF A PUBLIC AIRPORT AS DEFINED IN SECTION 24 28-8486. 25 H. FOR THE PURPOSES OF THIS SECTION: 26 1. "ACCESSORY DWELLING UNIT" MEANS A SELF-CONTAINED LIVING UNIT 27 THAT IS ON THE SAME LOT OR PARCEL AS A SINGLE-FAMILY DWELLING OF GREATER 28 SQUARE FOOTAGE THAN THE ACCESSORY DWELLING UNIT, THAT INCLUDES ITS OWN 29 SLEEPING AND SANITATION FACILITIES AND THAT MAY INCLUDE ITS OWN KITCHEN 30 FACILITIES. 31 2. "GROSS FLOOR AREA" MEANS THE INTERIOR HABITABLE AREA OF A 32 SINGLE-FAMILY DWELLING OR AN ACCESSORY DWELLING UNIT. 33 3. "LONG-TERM RENTAL" MEANS RENTAL USE IN WHICH THE TENANT HOLDS A 34 LEASE OF NINETY DAYS OR LONGER OR ON A MONTH-BY-MONTH BASIS. 35 4. "MUNICIPALITY" MEANS A CITY OR TOWN THAT EXERCISES ZONING POWERS 36 UNDER THIS TITLE. 37 5. "PERMITTED USE" MEANS THE ABILITY FOR A DEVELOPMENT TO BE 38 APPROVED WITHOUT REQUIRING A PUBLIC HEARING, VARIANCE, CONDITIONAL USE 39 PERMIT, SPECIAL PERMIT OR SPECIAL EXCEPTION, OTHER THAN A DISCRETIONARY 40 ZONING ACTION TO DETERMINATION THAT A SITE PLAN CONFORMS WITH APPLICABLE 41 ZONING REGULATIONS. 42 H.B. 2720 - 3 - 6. "RESTRICTED-AFFORDABLE DWELLING UNIT" MEANS A DWELLING UNIT 1 THAT, EITHER THROUGH A DEED RESTRICTION OR A DEVELOPMENT AGREEMENT WITH 2 THE MUNICIPALITY, SHALL BE RENTED TO HOUSEHOLDS EARNING UP TO EIGHTY 3 PERCENT OF AREA MEDIAN INCOME. 4 Sec. 2. Section 9-500.39, Arizona Revised Statutes, is amended to 5 read: 6 9-500.39. Limits on regulation of vacation rentals and 7 short-term rentals; state preemption; civil 8 penalties; transaction privilege tax license 9 suspension; definitions 10 A. A city or town may not prohibit vacation rentals or short-term 11 rentals. 12 B. A city or town may not restrict the use of or regulate vacation 13 rentals or short-term rentals based on their classification, use or 14 occupancy except as provided in this section. A city or town may regulate 15 vacation rentals or short-term rentals as follows: 16 1. To protect the public's health and safety, including rules and 17 regulations related to fire and building codes, health and sanitation, 18 transportation or traffic control and solid or hazardous waste and 19 pollution control, if the city or town demonstrates that the rule or 20 regulation is for the primary purpose of protecting the public's health 21 and safety. 22 2. To adopt and enforce use and zoning ordinances, including 23 ordinances related to noise, protection of welfare, property maintenance 24 and other nuisance issues, if the ordinance is applied in the same manner 25 as other property classified under sections 42-12003 and 42-12004. 26 3. To limit or prohibit the use of a vacation rental or short-term 27 rental for the purposes of housing sex offenders, operating or maintaining 28 a sober living home, selling illegal drugs, liquor control or pornography, 29 obscenity, nude or topless dancing and other adult-oriented businesses. 30 4. To require the owner of a vacation rental or short-term rental 31 to provide the city or town an WITH emergency point of contact information 32 for the owner or the owner's designee who is responsible for responding to 33 complaints or emergencies in a timely manner in person if required by 34 public safety personnel, over the phone or by email at any time of day 35 before offering for rent or renting the vacation rental or short-term 36 rental. In addition to any other penalty IMPOSED pursuant to this 37 section, the city or town may impose a civil penalty of up to $1,000 38 against the owner for every thirty days the owner fails to provide contact 39 information as prescribed by this paragraph. The city or town shall 40 provide thirty days' notice to the owner before imposing the initial civil 41 penalty. 42 5. To require an THE owner of a vacation rental or short-term 43 rental to obtain and maintain a local regulatory permit or license 44 pursuant to title 9, chapter 7, article 4. As a condition of issuance of 45 H.B. 2720 - 4 - a permit or license, the application for the permit or license may require 1 an applicant to provide only the following: 2 (a) THE name, address, phone TELEPHONE number and email address for 3 the owner or owner's agent. 4 (b) THE address of the vacation rental or short-term rental. 5 (c) Proof of compliance with section 42-5005. 6 (d) Contact information required pursuant to paragraph 4 of this 7 subsection. 8 (e) Acknowledgment of an agreement to comply with all applicable 9 laws, regulations and ordinances. 10 (f) A fee not to exceed the actual cost of issuing the permit or 11 license or $250, whichever is less. 12 6. To require, before offering a vacation rental or short-term 13 rental for rent for the first time, the owner or the owner's designee of a 14 vacation rental or short-term rental to notify all single-family 15 residential properties adjacent to, AND directly and diagonally across 16 the street from the vacation rental or short-term rental. Notice shall be 17 deemed sufficient in a multifamily residential building if given to 18 residents on the same building floor. A city or town may require 19 additional notification pursuant to this paragraph if the contact 20 information previously provided changes. Notification provided in 21 compliance with this paragraph shall include the permit or license number 22 if required by the city or town, the address, OF THE VACATION RENTAL OR 23 SHORT-TERM RENTAL and the information required pursuant to paragraph 4 of 24 this subsection. The owner or the owner's designee shall demonstrate 25 compliance with this paragraph by providing the city or town with an 26 attestation of notification compliance that consists of the following 27 information: 28 (a) The permit or license number of the vacation rental or 29 short-term rental, if required by the city or town. 30 (b) The address of each property notified. 31 (c) A description of the manner in which the owner or owner's 32 designee chose to provide notification to each property subject to 33 notification. 34 (d) The name and contact information of the person attesting to 35 compliance with this paragraph. 36 7. To require the owner or owner's designee of a vacation rental or 37 short-term rental to display the local regulatory permit number or license 38 number, if any, on each advertisement for a vacation rental or short-term 39 rental that the owner or owner's designee maintains. A city or town that 40 does not require a local regulatory permit or license may require the 41 owner or owner's designee of a vacation rental or short-term rental to 42 display the transaction privilege tax license NUMBER required by section 43 42-5042 on each advertisement for a vacation rental or short-term rental 44 that the owner or owner's designee maintains. 45 H.B. 2720 - 5 - 8. To require the vacation rental or short-term rental to maintain 1 liability insurance appropriate to cover the vacation rental or short-term 2 rental in the aggregate of at least $500,000 or to advertise and offer 3 each vacation rental or short-term rental through an online lodging 4 marketplace that provides equal or greater coverage. 5 9. TO REQUIRE THE OWNER OF A VACATION RENTAL OR SHORT-TERM RENTAL 6 TO RESIDE ON THE PROPERTY IF THE PROPERTY CONTAINS AN ACCESSORY DWELLING 7 UNIT THAT WAS CONSTRUCTED ON OR AFTER THE EFFECTIVE DATE OF THIS AMENDMENT 8 TO THIS SECTION AND THAT IS BEING USED AS A VACATION RENTAL OR SHORT-TERM 9 RENTAL. UNLESS THE TIME PERIOD SPECIFIED IN SECTION 12-1134, SUBSECTION G 10 HAS EXPIRED, THIS PARAGRAPH DOES NOT APPLY TO A PROPERTY OWNER WHO HAS THE 11 RIGHT TO BUILD AN ACCESSORY DWELLING UNIT ON THE PROPERTY OWNER'S PROPERTY 12 BEFORE THE EFFECTIVE DATE OF THIS AMENDMENT TO THIS SECTION WHETHER OR NOT 13 THE ACCESSORY DWELLING UNIT HAS BEEN BUILT. 14 C. A city or town that requires a local regulatory permit or 15 license pursuant to this section shall issue or deny the permit or license 16 within seven business days of receipt of the information required by 17 subsection B, paragraph 5 of this section and otherwise in accordance with 18 section 9-835, except that a city or town may deny issuance of a permit or 19 license only for any of the following: 20 1. Failure to provide the information required by subsection B, 21 paragraph 5, subdivisions (a) through (e) of this section. 22 2. Failure to pay the required permit or license fee. 23 3. At the time of application the owner has a suspended permit or 24 license for the same vacation rental or short-term rental. 25 4. The applicant provides false information. 26 5. The owner or owner's designee of a vacation rental or short-term 27 rental is a registered sex offender or has been convicted of any felony 28 act OFFENSE that resulted in death or serious physical injury or any 29 felony use of a deadly weapon within the past five years. 30 D. A city or town that requires a local regulatory permit or 31 license pursuant to this section shall adopt an ordinance to allow the 32 city or town to initiate an administrative process to suspend a local 33 regulatory permit or license for a period of up to twelve months for the 34 following verified violations associated with a property: 35 1. Three verified violations within a twelve-month period, not 36 including any verified violation based on an aesthetic, solid waste 37 disposal or vehicle parking violation that is not also a serious threat to 38 public health and safety. 39 2. One verified violation that results in or constitutes any of the 40 following: 41 (a) A felony offense committed at or in the vicinity of a vacation 42 rental or short-term rental by the vacation rental or short-term rental 43 owner or owner's designee. 44 H.B. 2720 - 6 - (b) A serious physical injury or wrongful death at or related to a 1 vacation rental or short-term rental resulting from the knowing, 2 intentional or reckless conduct of the vacation rental or short-term 3 rental owner or owner's designee. 4 (c) An owner or owner's designee knowingly or intentionally housing 5 a sex offender, allowing offenses related to adult-oriented businesses, 6 sexual offenses or prostitution, or operating or maintaining a sober 7 living home, in violation of a regulation or ordinance adopted pursuant to 8 subsection B, paragraph 3 of this section. 9 (d) An owner or owner's designee knowingly or intentionally 10 allowing the use of a vacation rental or short-term rental for a special 11 event that would otherwise require a permit or license pursuant to a city 12 or town ordinance or a state law or rule or for a retail, restaurant, 13 banquet space or other similar use. 14 3. Notwithstanding paragraphs 1 and 2 of this subsection, any 15 attempted or completed felony act OFFENSE, arising from the occupancy or 16 use of a vacation rental or short-term rental, that results in a death, or 17 actual or attempted serious physical injury, shall be grounds for judicial 18 relief in the form of a suspension of the property's use as a vacation 19 rental or short-term rental for a period of time that shall not exceed 20 twelve months. 21 E. A city or town that requires sex offender background checks on a 22 vacation rental or short-term rental guest shall waive the requirement if 23 an online lodging marketplace performs a sex offender background check of 24 the booking guest. 25 F. Notwithstanding any other law, a city or town may impose a civil 26 penalty of the following amounts against an owner of a vacation rental or 27 short-term rental if the owner receives one or more verified violations 28 related to the same vacation rental or short-term rental property within 29 the same twelve-month period: 30 1. Up to $500 or up to an amount equal to one night's rent for the 31 vacation rental or short-term rental as advertised, whichever is greater, 32 for the first verified violation. 33 2. Up to $1,000 or up to an amount equal to two nights' rent for 34 the vacation rental or short-term rental as advertised, whichever is 35 greater, for the second verified violation. 36 3. Up to $3,500 or up to an amount equal to three nights' rent for 37 the vacation rental or short-term rental as advertised, whichever is 38 greater, for a third and any subsequent verified violation. 39 G. A vacation rental or short-term rental that fails to apply for a 40 local regulatory permit or license in accordance with subsection B, 41 paragraph 5 of this section, within thirty days of the local regulatory 42 permit or license application process being made available by the city or 43 town issuing such permits or licenses, must cease operations. In addition 44 to any fines CIVIL PENALTIES imposed pursuant to subsection F of this 45 H.B. 2720 - 7 - section, a city or town may impose a civil penalty of up to $1,000 per 1 month against the owner if the owner or owner's designee fails to apply 2 for a regulatory permit or license within thirty days after receiving 3 written notice of the failure to comply with subsection B, paragraph 5 of 4 this section. 5 H. If multiple verified violations arise out of the same response 6 to an incident at a vacation rental or short-term rental, those verified 7 violations are considered one verified violation for the purpose of 8 assessing civil penalties or suspending the regulatory permit or license 9 of the owner or owner's designee pursuant to this section. 10 I. If the owner of a vacation rental or short-term rental has 11 provided contact information to a city or town pursuant to subsection B, 12 paragraph 4 of this section and if the city or town issues a citation for 13 a violation of the city's or town's applicable laws, regulations or 14 ordinances or a state law that occurred on the owner's vacation rental or 15 short-term rental property, the city or town shall make a reasonable 16 attempt to notify the owner or the owner's designee of the citation within 17 seven business days after the citation is issued using the contact 18 information provided pursuant to subsection B, paragraph 4 of this 19 section. If the owner of a vacation rental or short-term rental has not 20 provided contact information pursuant to subsection B, paragraph 4 of this 21 section, the city or town is not required to provide such notice. 22 J. This section does not exempt an owner of a residential rental 23 property, as defined in section 33-1901, from maintaining with the 24 assessor of the county in which the property is located information 25 required under title 33, chapter 17, article 1. 26 K. A vacation rental or short-term rental may not be used for 27 nonresidential uses, including for a special event that would otherwise 28 require a permit or license pursuant to a city or town ordinance or a 29 state law or rule or for a retail, restaurant, banquet space or other 30 similar use. 31 L. For the purposes of this section: 32 1. "ACCESSORY DWELLING UNIT" HAS THE SAME MEANING PRESCRIBED IN 33 SECTION 9-461.18. 34 1. 2. "Online lodging marketplace" has the same meaning prescribed 35 in section 42-5076. 36 2. 3. "Transient" has the same meaning prescribed in section 37 42-5070. 38 3. 4. "Vacation rental" or "short-term rental": 39 (a) Means any individually or collectively owned single-family or 40 one-to-four-family house or dwelling unit or any unit or group of units in 41 a condominium or cooperative that is also a transient public lodging 42 establishment or owner-occupied residential home offered for transient use 43 if the accommodations are not classified for property taxation under 44 section 42-12001. 45 H.B. 2720 - 8 - (b) Does not include a unit that is used for any nonresidential 1 use, including retail, restaurant, banquet space, event center or another 2 similar use. 3 4. 5. "Verified violation" means a finding of guilt or civil 4 responsibility for violating any state law or local ordinance relating to 5 a purpose prescribed in subsection B, D, F or K of this section that has 6 been finally adjudicated. 7 APPROVED BY THE GOVERNOR MAY 21, 2024. FILED IN THE OFFICE OF THE SECRETARY OF STATE MAY 21, 2024.