“Local Control” Must Not Be a Weapon Against Individual Rights

by Christina Sandefur
April 11, 2018

Americans’ lives are increasingly governed by a never-ending series of rules. In addition to the myriad federal and state regulations we must live by, counties, cities, and towns are increasingly imposing restrictions on citizens in the name of “local control.” But while local control is a tool that allows communities to come together and make decisions within the proper scope, it should never be used as a weapon against individual rights. When local control becomes destructive, when it is being oppressive, then the state has a duty to step in and protect people’s rights.

Unfortunately, that’s often easier said than done. Cities frequently flout state laws and the Constitution, daring their citizens—who often lack the financial means and perseverance to defend their rights in court—to do something about it. Fortunately for Arizonans, there is another way.

Two years ago, the legislature passed and Governor Doug Ducey signed SB 1487, a state measure that puts teeth in state laws that safeguard our rights from local abuse. Under SB 1487, if a county, city, or town is found to have violated state law or the state Constitution, the state treasurer can withhold state shared monies from the municipality until the violation is resolved. That’s significant—in Arizona, the state shares 15 percent of collected taxes on income, sales and transportation with local governments.

Here’s how SB 1487 works: Any state legislator can file a complaint with the Attorney General, alleging that a county, city, or town has violated state law or the Arizona Constitution. The Attorney General’s Office has 30 days to investigate the complaint and issue a written report. If the AG concludes:

• The county, city, or town violated state law or the Constitution, it has 30 days to fix the violation. If it fails to do so, the treasurer will withhold state shared monies from the municipality until the violation is resolved.
• The county, city, or town may have violated state law or the Constitution, the AG files a “special action” – a special request asking the Supreme Court to quickly decide the issue. While the case is pending, the municipality has to post a bond equal to the amount of state shared monies it has received in the past six months.
• The county, city, or town did not violate state law or the Constitution, no further action is taken.

The AG’s Office keeps a list of all open SB 1487 investigations on its website, and members of the public are welcome to provide written comments on pending investigations.

The latest SB 1487 investigation involves enforcing a groundbreaking state property rights protection.

Home-sharing is a centuries-old tradition, but the internet has enabled homeowners and travelers to connect better than ever before, and online home-sharing platforms such as Airbnb and Homeaway now help millions of homeowners and travelers rent out rooms or houses. Home-sharing helps homeowners pay their mortgages and other bills and gives entrepreneurs an incentive to buy dilapidated houses and restore them. Most importantly, home-sharing is an important way for property owners to exercise their basic right to choose whether to let someone stay in their home.

Yet cities nationwide have responded to innovations in home-sharing not by welcoming this economic opportunity or respecting the rights of property owners, but by imposing draconian new rules that deprive Americans of some of their most basic constitutional rights. Arizona cities began following suit.

But that all changed in 2016, when pioneering legislation made the Grand Canyon State the most home-sharing-friendly state in the nation. To stop city officials from imposing extreme and arbitrary rules against home-sharing, Arizona lawmakers adopted legislation that expressly forbids local governments from imposing blanket bans on home-sharing. The Home-Sharing Act allows cities to enforce nuisance rules that protect quiet, clean, and safe neighborhoods, but blocks one-size-fits-all prohibitions that cause more problems than they solve. To protect property owners from abuse, the law requires local governments to demonstrate that new regulations are specifically needed to prevent crime, loud noises, or other nuisances. Municipal officials cannot limit what homeowners may do with their land out of simple dislike or distaste.

Tailoring rules to legitimate government public health and safety concerns protects property rights as well as rights that are often incidentally violated or burdened by severe restrictions on home-sharing. And requiring local governments to treat home-sharing the same as other residential occupancies, without regard for the duration of the rental, whether the home is the owner’s primary residence, or what compensation is offered, protects homeowners against unclear rules and arbitrary enforcement.

Arizona’s Home-Sharing Act was an immediate relief to homeowners across the state, such as Glenn Odegard who rents his home in the eccentric tourist town of Jerome. In 2012, Glenn bought an abandoned house that had been vacant for 60 years after a landslide filled it with rocks and mud. A skilled builder, he lovingly restored it to its original historical condition so that he could rent it out to visitors. Glenn’s work was so impressive that the home was featured in Arizona Highways and visitors lined up to stay there. After Glenn invested time, money, and his own hard labor into restoring his home, the town threatened to wipe out everything he invested by suddenly declaring vacation rentals to be illegal. Thankfully, the Home-Sharing Act restored Glenn’s rights to rent, and Jerome reversed its ban on vacation rentals.

Unfortunately, not all Arizona cities are treating home-sharers equally as the law requires. Cities may not impose on short-term rentals any rule that does not also apply to all other residential properties, unless the city can demonstrate that the regulation is “for the primary purpose” of protecting public health and safety. Yet the city of Sedona voted to require homeowners to apply for a business license before they can offer their homes as short-term rentals, even though homeowners who offer their homes as long-term rentals don’t have to ask for government permission. But Arizona’s Home-Sharing Act makes clear that cities cannot impose any requirement—licensing or otherwise—on short-term rentals that is not also imposed on long-term rentals.

Why does this matter? The permitting process can be lengthy, uncertain, and expensive for homeowners. And it isn’t fair or necessary. If Sedona wants to keep a homeowner’s emergency contact information on file, it can simply require those home-sharers to complete a designation of emergency contact form—indeed, Arizona’s Home-Sharing Act explicitly provides for this.

Sedona homeowners fought hard to protect their rights at the legislature, and they were understandably distraught when Sedona started shirking the law. So the Goldwater Institute send two letters to the city, reminding officials that all residential rental property must be treated the same. We noted that Sedona could either remove the business license requirement, or require a business license for all rentals (short-term and long-term), but the city cannot discriminate between different types of rentals. But the city has not fixed its violation.

That’s why we’re pleased to see that Representative Darin Mitchell has come to the defense of Sedona homeowners. Last week, Rep. Mitchell sent a request to the AG for an SB 1487 Investigation of Sedona’s discriminatory rule. But city officials shouldn’t wait until the state starts withholding funds—instead, it should take action now to respect property rights, treat all homeowners equally, and protect taxpayers.

Christina Sandefur is the executive vice president at the Goldwater Institute.