Written by Matthew Contorelli, Government Affairs Director for the Arizona REALTORS®
February 2, 2023
The legislative session is underway as committee meetings and floor action pick up. Last Monday is the bill introduction deadline for the Senate, so there was a big drop in bills. The House deadline was yesterday, so expect lots of new reading material!
Repeal Arizona’s Regressive Residential Tax (Rental TPT)
SB1184 (Kaiser): PASSED THROUGH SENATE COMMERCE COMMITTEE
HB2067 (Carter): PASSED THROUGH HOUSE WAYS AND MEANS COMMITTEE
The top priority for the Arizona REALTORS® this session is rallying support for SB1184 and HB2067, which will repeal Arizona’s regressive residential rental tax (Rental TPT). Last week, both bills passed through committees on party-line votes. The Arizona REALTORS® are actively meeting with members on both sides of the aisle to secure bipartisan support for this critical step toward affordable housing. This effort has a long road ahead before reaching Governor Hobbs’ desk, but the Arizona REALTORS® is confident in its strategy to pass this important legislation, which will help renters struggling to make ends meet and property owners and managers dealing with the bureaucratic administration of this tax.
Responsible Solutions to the Housing Crisis
Draft: municipal platting; technical correction
The Arizona REALTORS® has met with Senator Steve Kaiser, Chair of the 2022 Housing Supply Study Committee, on legislation to address the housing crisis. This legislation will likely be struck on to another bill as an amendment, as the bill-introduction deadline has passed in the Senate. The language may include investments and flexibility for the Arizona Housing Trust Fund, offsets for Rural Impact Fees, by-right zoning and zoning review timeline mandates for cities, policies to expand the construction and use of Additional Dwelling Units (ADUs), removing and/or reducing minimum parking requirements for developer, among other topics. The Arizona REALTORS® is committed to working with Senator Kaiser, while ensuring that any passed legislation does not deteriorate private property rights or put homeowners and homebuyers at risk.
Rio Verde Foothills
Outside of the legislature, the Arizona REALTORS® has been tracking the fight for water service in the Rio Verde Foothills. The Corporation Commission (Commission) held a public comment session on Monday, January 23, which lasted about 4 hours. The comments fell in two categories: residents who do not want to be served by a private water companies and those that do (allow EPCOR to serve the area).
On Wednesday, January 25th, the Commission held a staff meeting and into Executive Session to receive legal advice on whether they can and should accelerate the procedural schedule for EPCOR to be granted the CC&N to serve Rio Verde. After the session ended, the Commissioners returned and indicated they will stay with the existing procedural schedule but try to shorten some aspects of the case.
As of now, the evidentiary hearing will begin April 10th. This procedure has become a feeding frenzy for attorneys – Jeff Crockett representing the Rio Verde Community Association, Michele Van Quathem representing the Rio Verde Country Club, Court Rick representing CR Community Association, Patrick Black representing Rio Verde Services, and Angela Cooner representing Tonto Verde Golf Association.
The Arizona REALTORS® will continue to track and support solutions and look for ways to avoid similar situations in the future, as Rio Verde is far from the last community to face such challenges.
Additional legislative priorities for the Arizona REALTORS® include water (of course), short-term rentals, legislation around HOA regulations, and requirements for appraisers. Stay tuned as the Arizona REALTORS® continue to advance and defend our 2023 Legislative Policies!
January 24, 2023
It’s week three of the legislative session and things are settling into a normalish pace around the Capitol. Several committees met last week but mostly heard agency presentations and only a handful of bills. Governor Hobbs’ budget staff officially presented their budget to the Joint Committee on Appropriations Tuesday morning and got a downright chilly reception from majority committee members. And so, the negotiating begins.
Senate Education Chair Ken Bennett, a former Secretary of State, lightened the mood this week when he trotted out his favorite visual aids to illustrate the state budget and the primary areas of spending–tall towers made of building blocks and tissue boxes (check it out here). Anything that helps all the newcomers understand the state budget is a welcome addition.
This week should bring more committee action on bills, along with the added excitement of the first full floor votes of the session.
The top priority for the Arizona REALTORS® this week is rallying support for SB1184 (Kaiser) and HB2067 (Carter), which would repeal Arizona’s regressive residential rental tax (Rental TPT). For over a decade the Arizona REALTORS® Board of Directors, by way of the legislative policies, has advocated support for repealing Rental TPT in Arizona. Arizona law allows city governments to impose a transaction privilege tax (TPT) on properties that are rented for residential purposes for 30 or more consecutive days. Arizona is one of a few places in the country that allows TPT collection on residential rental properties, which places countless burdens on property managers and negatively impacts housing affordability. With bills heading to the committee soon, this is the top priority for the Arizona REALTORS®.
Arizona Renters pay an average of $600 in TPT charges annually, or $51 monthly, based on a $2,000 a month lease with related taxable charges. Money that could be used for gas, food, or other monthly expenses or savings towards buying a home. Rental TPT is charged on the taxable gross income, not just the rent amount. Charges for such items as internet, telecommunications, utilities, pet fees, or maintenance are considered part of the taxable gross income, per the Arizona Model City Tax Code.
Since 2020, cities’ total TPT collections have increased by $1.15 billion and Rental TPT collections have increased by almost $50 million (28%). That means that as rents go up, the tax cities impose on renters becomes even more financially burdensome. Property owners already pay property, income, and sales taxes, so why are cities arguing that rental properties require greater services than homeowners? The additional revenue, that’s why.
Additional priorities the Arizona REALTORS® are working on include water (of course), short-term rentals, legislation around HOA regulations, and proposals to address the housing crisis. New bills are dropping by the hour so stay tuned to find out how the Arizona REALTORS® are fighting for you!