Amid Airbnb debates, Arizona offers sensible solutions
Ronald Reagan famously summed up the federal government’s view of the economy as, “If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.” And perhaps no sector has provided a larger moving target in recent years than the “sharing economy,” the meteoric rise of which was all but certain to garner significant interest from government entities keen to ensure they receive the full measure of their perceived slice of the regulatory pie.
Unfortunately, clumsy, shortsighted efforts to apply old regulatory methods to prominent short-term-rental services like Airbnb, HomeAway and VRBO have threatened to impede these emerging innovations. But a bill approved last week by 27-1 vote of the Arizona Senate – S.B. 1350, sponsored by state Sen. Debbie Lesko, R-Glendale – just might offer a practical, flexible model for the rest of the country.
The measure would prohibit localities from banning so-called “spacesharing,” while also barring county tax assessors from changing a property’s classification solely on the basis that it is sometimes used for short-term rentals.
In addition, the bill very sensibly gives short-term-rental companies the ability (but not the duty) to collect taxes on behalf of the government. This could dramatically simplify the process for the end-user by rolling all necessary costs into one transaction conducted through one site (as users have come to expect from any modern e-commerce site). The process would be no different, essentially, than making a purchase on Amazon or paying for a hotel room through a travel site.
In the R Street Institute’s new Roomscore study, released earlier this week, Arizona’s cities consistently ranked very highly in terms of how friendly their regulatory frameworks were toward short-term rental services. Out of 100 possible points, Phoenix, Mesa and Tucson received scores of 90, 90, and 85, respectively, outpacing the national average of 74.7.
The results are no accident. Arizona Gov. Doug Ducey has made it a mission to welcome innovation in the state, creating a Governor’s Council on the Sharing Economy at the beginning of this year. A January article in the Arizona Republic noted that “Ducey hopes Arizona, with its sunshine, sporting events, and national landmarks, will become to the sharing economy what ‘Texas is to oil and what Silicon Valley used to be to the tech industry.” The piece quotes Ducey “saying its mission is to ‘stop shackling innovation, and instead – put the cuffs on out-of-touch regulators.”
This full-throated support of technological progress has paid off for the state. A January 2016 report from Airbnb found that roughly 5,000 Arizonans had used the service to rent space to guests in 2015, with the average host earning $4,000 each year on the rentals. All told, 131,000 travelers stayed in Airbnb listings in Arizona over the course of the past year.
Much like the debate over ridesharing companies like Uber and Lyft, there are plenty of parties – including some in the traditional hospitality industry – who would be more than happy to see innovative newcomers fail in hopes of protecting their own interests. But for the millions of consumers and property owners alike who benefit from having a stagnant industry shaken up and, ultimately, expanded, the best path forward goes through Arizona and its commendable, common-sense commitment to sensible regulatory solutions.
