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Vote on short-term rental bill delayed until after Spring Break

Rep. Brit McKenzie (R-Rogers) presents SB 197 in committee on Mar. 15, 2023.
Arkansas Legislature
Rep. Brit McKenzie (R-Rogers) presents SB 197 in committee on Mar. 15, 2023.

An Arkansas lawmaker pulled down a bill to deregulate short-term rental properties to amend it after hours of discussion and testimony on the proposal Wednesday.

Senate Bill 197 would prohibit local municipalities from enacting ordinances to prohibit or limit the use of property as a short-term rental.

The legislation defines short-term rental as a single-family home, a unit in a condominium or timeshare, or an owner-occupied residential home that’s offered for a fee for 30 days or less. It comes as state and local governments contemplate how to deal with the increasing popularity of services like Airbnb and Vrbo.

Co-sponsor Rep. Brit McKenzie (R-Rogers) told the House City, County and Local Affairs Committee that municipalities should not require Arkansans “to abandon their constitutional right to private property.” McKenzie also addressed criticism that the bill goes against the principle of local control.

“I argue that when local control is attempting to subdue a constitutional right, we have a duty to debate this control and determine if this is the will of our state,” he said.

McKenzie said short-term rental regulations in Arkansas range from cities having none to outright bans, so SB 197 would create “a level playing field” under which all municipalities could operate.

Homeowners associations and property owners associations would not be prohibited from creating covenants to restrict short-term rentals, he said.

Municipalities could address short-term rental issues like excessive noise or parking problems by enforcing existing ordinances that apply to all of a city’s residents, McKenzie said.

Under the proposed legislation, local governments could require short-term rental operators to obtain a no-fee permit. Rep. Ashley Hudson (D-Little Rock) questioned the rationale of favoring short-term rental operators by requiring they be given a free license over other small business owners, who typically have to pay a licensing fee.

McKenzie said it’s not providing preference because he didn’t concede that short-term rental operators were small business owners. He said they are private property owners.

“I believe that’s putting private property owners back on the same level as their neighbors who are long-term rentals or individuals who live in multi-family homes or folks who live in any type of dwelling in their community,” McKenzie said. “This bill would take away any government permitting, licensures or onerous penalties for people availing themselves to their property rights.”

The committee approved an amendment Wednesday morning, but that vote was expunged when the panel reconvened in the afternoon because McKenzie said he wanted to pull down the bill to file a clean amendment.

The amendment discussed in committee includes the addition of what McKenzie called a “three-strike policy.” If a short-term rental violates the same ordinance three times in a 90-day period, a city could take that property offline for no more than 30 days to address the problem and pay any fines.

The amendment would also allow a municipality to take a short-term rental offline in the case of a wrongful or negligent death. Additionally, the amendment would prohibit short-term rentals from being used by registered sex offenders or for adult-oriented businesses.

SB 197 states that short-term rentals “are vital to tourism and marketability of the state,” and local ordinances can hold tourism back by limiting how Arkansans can use their property. McKenzie represents House District 7 in Northwest Arkansas, encompassing the majority of Beaver Lake, a popular tourist destination.

While the town of Eureka Springs in Carroll County relies heavily on tourism, the city council in 2021 approved an ordinance to prohibit tourist lodging for properties in residential zones.

At Wednesday’s meeting, an alderman who spoke against SB 197 said the growth of short-term rentals has contributed to a lack of affordable housing in the town.

Ethan Avanzino, the owner of a bar, restaurant and motel in Eureka Springs, also spoke against the bill because he said many of his employees have had to live in their cars, campgrounds or in another town due to limited affordable housing.

“If there is no housing available for people working in the tourism industry, then there is no tourism industry,” Avanzino said.

Speaking against the bill, Don Senate said he was worried about short-term rentals exacerbating the housing shortage for working class residents through gentrification.

“The economic interests of special interest groups is superseding the rights of the residents..we’ve got a housing shortage,” he said. “You read about it all the time in cities like Bentonville where Walmart’s bringing in the world and doesn’t know where to park the world.”

Lori Frank, a Northwest Arkansas resident who owns her own home as well as a short-term rental and a long-term rental, spoke in favor of the bill. As a property owner, Frank said she has the right to sell, lease or rent her properties, but cities are trying to ban that.

“Please, treat every homeowner the same and don’t disregard our freedoms,” she said.

Marion Heath, a widow who said she managed a short-term rental with her husband until he died a few years ago, spoke in favor of the bill. Heath said she lives on a fixed income and the revenue generated from her short-term rental helps her pay the bills.

“It prevents me from being a burden to anyone,” she said. “If I succumb to what the city has dictated me to do, who is to say their financial demands won’t increase even more?”

A dozen people spoke in favor of the bill. Thirty-three people spoke against the bill, including the mayors of Eureka Springs, Hot Springs and Mountain Home.

A handful of city council members from around the state also spoke against the bill, including North Little Rock councilman Steve Baxter. He said the bill was about property rights, neighbor rights and city rights, and those could be balanced best at the local level.

“Let us have that local control, let us determine what is important, what works for us,” Baxter said. “We’re not against STRs, but at least let us regulate them in some form or fashion that makes it a win situation for our neighbors, for the city and for those property owners.”

Because the sponsor pulled the bill for an amendment, committee chair Rep. Lanny Fite (R-Benton) said the panel will vote on the bill after Spring Break. The Arkansas General Assembly will recess on Friday and return on Mar. 27.

Antoinette Grajeda is a multimedia journalist who has reported since 2007 on a wide range of topics, including politics, health, education, immigration and the arts for NPR affiliates, print publications and digital platforms. A University of Arkansas alumna, she earned a bachelor’s degree in print journalism and a master’s degree in documentary film.