CATALINA FOOTHILLS, Ariz. (KGUN) — Governor Katie Hobbs recently proposed a $3.50 nightly fee on short-term rentals, while the City of Tucson raised its short-term rental tax from 6% to 10% to address budget shortfalls. The Tucson tax increase goes into effect March 1 and also gets rid of the surtax.
The proposed fee would go toward the Arizona Affordability Fund, a $20 million investment aimed at helping working-class families with utility bills, home weatherization to lower costs, and affordable housing construction.
"We must not lose sight that for many, simply living has gotten harder as expenses have increased," Hobbs said.
During her speech, Hobbs also unveiled the Housing Acceleration Fund, which would combine public and private money to build affordable housing more quickly and invest more than $2 million in the effort.
"We've launched a war on the cost of housing and it's starting to pay off," Hobbs said.
The governor highlighted that Arizona has broken ground on more affordable housing units in the past three years than in any other three-year period in state history. She pointed to the Arizona is Home program, which has offered down payment assistance and interest rate buydowns to help residents purchase homes.
Bree Richmond and Claude Bailey, who own Short Term Rentals Tucson and operate six units and manage 18 more, report their occupancy rate has dropped 15% compared to a few years ago.
"Arizona is kind of…we're a little bit behind the curve in terms of the trends that we're seeing," Richmond and Bailey said.
The Arizona Office of Tourism reports daily revenue for short-term rentals is down about 2%.
"The way people are booking, it's a lot more…not so far in advance," Richmond and Bailey said.
The rental operators worry the combined proposed fee increase and tax increase could further impact Tucson's tourism competitiveness.
“It’s just going to affect more of the occupancy rate….how much people are willing to spend to come to Tucson as opposed to a different market, or come to Arizona in general,” Richmond and Bailey said.
Tucson City Councilman Paul Cunningham supports the tax increase as a housing solution.
"I'll support the Airbnb tax. I think that's prudent and I think that's good for housing," Cunningham said.
The City Council voted 6-1 to approve the new tax last month.
While Bailey and Richmond acknowledge the need for affordable housing solutions, they express concern about the cumulative impact of multiple fee increases.
"It's important to understand how that's going to stack with some of the other rate increases," Richmond and Bailey said.
"This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy."
——-
Andrew Christiansen is a reporter for KGUN 9. Before joining the team, Andrew reported in Corpus Christi, Texas for KRIS6 News, Action 10 News and guest reported in Spanish for Telemundo Corpus Christi. Share your story ideas with Andrew by emailing andrew.christiansen@kgun9.com or by connecting on Facebook, or Twitter.
