Arizona REALTORS® Rally to Repeal Regressive Rental Tax

For more than ten years, eliminating the transaction privilege tax (TPT) has been a legislative priority for the Arizona REALTORS^®.  But what had begun as an effort to relieve property managers of an onerous administrative burden escalated into a major battle against a wrongful practice assailing housing affordability.  This summer, the REALTORS^® pulled out all the stops to convince the state’s new governor to sign the latest repeal effort into law.  An Issues Mobilization Grant from the REALTOR^® Party was of critical importance throughout the process.

As Matthew Contorelli, Arizona REALTORS^®’ Senior Director of External Affairs, explains, Arizona was one of only two states allowing city governments to impose the TPT on long-term residential rental properties. On average, based on a $2,000 lease, this tax cost the state’s renters about $51 each month.  “As advocates for affordable housing, how could we stand by when rented homes were being rendered less affordable – during a worsening housing crisis?” he asks.  Affordability issues are amplified in Maricopa County, he notes, the fastest growing county in the nation; the regressive tax on rented homes also disproportionately affected people of color, who according to multiple studies, were more likely to be renters.

Contorelli makes it clear that “It was still pretty controversial for the REALTORS^® to oppose a tax that several cities asserted was necessary.”  However, because many cities were actually sitting on significant surplus revenue, the legislature was willing to consider repealing the tax.  “We were constantly challenging the narrative that cities would be losing millions of dollars a year,” he recalls.  “‘No!’ we’d counter, ‘Renters are losing millions a year!”

An attempt to repeal the tax in the 2022 state legislative session had failed by one vote, and early in 2023, another effort had been vetoed.  By July, tireless advocacy by the REALTORS^® had once again resulted in a promising bill approved with bipartisan support in both houses and was ready for the governor to sign – or not.

Arizona REALTORS^® launched an all-out campaign urging Governor Hobbs to sign the repeal.  Using its own Issues Mobilization funding, reports Tim Beaubien, the Association’s Director of Legislative & Political Affairs, the Arizona REALTORS^® posted digital billboards throughout the state and parked digital sign trucks strategically in front of the governor’s office and in the path of legislators headed to-and-from the statehouse.  “We kept the pressure constant, and it was unescapable.  We heard a lot of ‘You guys won’t quit!’”  An Issues Mobilization Grant from the REALTOR^® Party then funded a campaign of patch-through calls to the governor’s office from renters across Arizona, seeking relief from the burdensome tax.

2,100 calls were placed, and five days into a two-week campaign, the governor signed the bill.  As of January 1, 2025, Arizona’s renters will be able to spend their hard-earned dollars each month on something other than the transaction privilege tax, or save it towards buying a home, while the property management community will be freed from the administrative burden of the convoluted and error prone TPT system.

It was an immense win for affordable housing in Arizona, says Contorelli, who credits the fact that the REALTORS’ effective advocacy was able to secure strong bipartisan support for the repeal, as well as the big public campaign supporting the effort as it approached the finish line.  “REALTORS^® relish the opportunity to deliver a pure, apolitical win.  This wasn’t about money in the pockets of our members,” he asserts.  “This was doing the right thing, and demonstrating that REALTORS^® care about affordable housing, whether rented or owned.”

The victory was the result of a tremendous uphill battle, and it emphasizes the power of the REALTORS^® in Arizona, agrees Beaubien.  “We spend a lot of time traveling around the state, and since this win, members having been saying to us, ‘I didn’t know how important advocacy was until now; I’m going to be investing in RPAC, because now, I get it.’  They’ve seen the REALTOR^® Party in action, and it works.”

To learn more about how Arizona REALTORS^®  is fighting practices that threaten affordable housing, contact Matthew Contorelli, Sr. Director of External Affairs, at  matthewcontorelli@aaronline.com or 949.436.2328; or Tim Beaubien, Director of Legislative & Political Affairs, at timbeaubien@aaronline.com.