Bill would give Arizona home-based businesses a boost

Business News | 5 Mar, 2018 |

Arizonans who operate home-based businesses may soon have an easier time using their homes for work.

The Arizona House of Representatives on Feb. 22 approved HB2333, which would give homeowners the right to do business from their homes without worrying about local government restricting their ability to do so. It would also prohibit city governments from requiring business owners to obtain a license for their business or to rezone their property for commercial use.

However, the bill requires the business to be a secondary use of the residence. In other words, the people running the business must actually live in the home, not use it solely to run their business, Rep. Jeff Weninger, R- Chandler, who sponsored the bill, said on the House floor.

Many home-based business owners currently ignore the regulations often put in place by Homeowners Associations that prohibit business practices at single-family homes. Weninger said this bill would “level the playing field,” for all those who seek to run these extremely small businesses, such as contracted accountants or massage therapists, by limiting the city’s ability to restrict their business practices.

“My theme with this bill is there’s a business and you don’t know it exists, why does the city need to regulate it?” Weninger said.

Kim O’Neil, the owner of KMB Enterprises, a home-based medical billing company, testified in front of the House Commerce Committee on Jan. 30. She told an emotional story of being monitored by the City of Chandler over the course of 18 months in their effort to prevent her from using her home to run her business.

O’Neil was forced to rebuild her backyard and meet with city officials monthly regarding her business. If passed, the bill would protect O’Neil and KMB Enterprises.

The bill dictates that the business must have no more than three employees, all of whom must be residents of the home or their family members. The business cannot generate additional neighborhood traffic and its employees cannot park on the street.

HOAs would still have the power to enforce their rules, said Aimee Rigler, the Director of Government Affairs at the Free Enterprise Club, who also testified to the commerce committee.

The bill will is now being debated in the Senate.

A similar bill, SB1175, sponsored by Sen. Dave Farnsworth, D- Mesa, did not make it to a vote on the Senate floor. Weninger said the difference in the Senate bill is that it would have allowed homeowners to post signage and other displays outside their homes. The House bill is more narrow, aiming to grant protection to those whose work doesn’t interfere with their neighbors’ lives at all.

The bill does not include protection for home-sharing businesses like AirBnb, Weninger said.

A 2016 Pennsylvania State University study showed there were 1,976 Airbnb hosts in Phoenix, including 22 who were considered full-time operators and made over $2 million in combined revenue. The bill was amended before the House voted to limit its reach only to those businesses which sell goods and services.

Patrice Kraus of the Arizona League of Cities and Towns testified earlier in January against the bill, arguing that the bill prioritizes home-based business owners over their neighbors. She said the bill uses the state’s authority to overrule local government regulations of homeowners.

The League’s executive director, Ken Strobeck, said that because the bill only regulates city- and state-owned land, it could give homeowners associations more power. “If [the business] does impact their neighbors, we want the ability to go in and say what needs to be corrected in order for it to be an acceptable activity within a residential area,” Strobeck said.

On the House floor the day the House approved the bill, Rep. Kirsten Engel, D- Tucson, and Rep. Jay Lawrence, R- Maricopa, expressed concern about property values for nearby homes, as well as safety in communities that might see increased traffic based on the freedoms this bill allows.

“I do think the inevitable impact of this bill would be to bring more people to home-based business, and that will inevitably bring more traffic,” Engel said.

With so many sides battling to have their voices heard on the issue, Weninger said it will be a fight to get the bill through the Senate.

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