The Sedona STR Bill That Was Supposed to Change Your Math Just Died in the Senate
If you spent the spring pricing a Sedona short-term rental purchase around the assumption that state lawmakers were about to hand the city new teeth to cap listings or squeeze occupancy, you were underwriting against a bill that no longer exists. House Bill 2429 passed the Arizona House 36-19 on March 10, 2026, cleared a second House vote after amendments on March 16, and then sat untouched. Two Senate committee chairmen never put it on an agenda. By late April, Rep. Selina Bliss was already talking about bringing it back next session.
That matters less because a specific bill failed and more because of what its failure confirms: the regulatory ceiling on Sedona short-term rentals in 2026 is not coming from Phoenix. It is the one the city already built for itself in September 2024, and most of the underwriting conversations happening around Sedona STR purchases right now are still pointed at the wrong lever.
HB 2429 started as something with real teeth. Earlier drafts would have let cities like Sedona cap the total number of STR licenses issued and set minimum distance requirements between rental properties, the two provisions Arizona municipalities have wanted since the state first preempted local STR bans under SB 1350 back in 2016. Both provisions got cut before the bill ever reached the House floor, after the Arizona Association of Realtors and Airbnb signaled opposition to anything resembling a supply cap.
What survived was narrower: a statewide occupancy formula of two adults per sleeping area plus two additional people, a shorter window for stacking permit violations toward a suspension, and a requirement that rentals using local permits also run sex offender background checks on guests unless the booking platform already does it. You can read the engrossed bill text directly on the legislature's site. It's a compliance bill, not a supply bill, and even that version couldn't get a Senate hearing.
The League of Arizona Cities and Towns backed the stripped-down version, with director René Guillen framing the fight around STRs "operating as de facto hotels" in residential neighborhoods. That framing didn't move the Senate. The bill missed the Regulatory Affairs and Government Efficiency Committee's agenda, then missed Appropriations on March 31. By April 23, Sedona Red Rock News was reporting the bill was effectively dead for the session.
Sedona's own lobbyist, Kathy Senseman, gave the city council a blunt update on April 14: "It's so hard. I've never worked harder for a consensus bill." Bliss had already told colleagues on the House floor that the trimmed-down version was as much as the chamber would tolerate: "Folks, this is as good as it's going to get." Then the Senate didn't act on even that.
This is the second year running a version of this bill has failed. A predecessor, HB 1086, died in 2025 without reaching a final vote. If you are pricing a Sedona STR purchase on the theory that stricter statewide rules are imminent, you are betting against a two-year losing streak.
With the state bill gone, the operative rulebook is the one the city has been running since 2022, expanded in 2024. It lives in Sedona City Code Chapter 5.25, and it is more detailed than what most Arizona cities have on the books.
| Requirement | Detail |
|---|---|
| Annual permit fee | $210 per unit, non-refundable, non-transferable |
| Late renewal fee | $50 if 2-90 days late, $100 if more than 90 days late, effective January 1, 2026 |
| Liability insurance | $500,000 minimum per rental unit |
| Neighbor notification | Written notice by certified mail or hand delivery to every adjacent, across-the-street, and diagonal neighbor |
| Special events | Zero-tolerance ban on weddings, retreats, conferences, and workshops of any size |
| Combined tax rate | 13.325% in Yavapai County, 13.90% in Coconino County |
| ADU restriction | In effect since September 2024, described below |
That ADU line is the one that actually does what HB 2429 was trying to do. Since September 2024, an accessory dwelling unit on a Sedona property can only be operated as a short-term rental if the owner lives in the main house on the same parcel. A property advertised as "main house plus guest house, two listings" does not comply unless someone is living there full time. Grandfathered guest quarters with documented prior STR use are exempt, but new conversions are not. You can review the compliance flowchart on the city's own STR page.
That single rule quietly closed the most common way investors were adding a second income stream to a single Sedona parcel. It happened eighteen months before HB 2429 was even introduced, and it is still the binding constraint today.
When Sedona's lobbyist and the League of Arizona Cities and Towns argued for more state authority this spring, the number they were pointing at was already public. As of February 2026, Sedona had roughly 1,805 active short-term rental permits against a permanent population of about 10,300, an increase of 62% from the 1,113 permits recorded in 2021. Do the arithmetic and you get roughly one active STR permit for every six residents in a city that size.
That ratio is the argument for tighter state rules. It is also the argument that failed to move the Senate. For an investor, the useful reading is not that Sedona is about to get harder to enter. It is that the market has already absorbed five years of permit growth under the current rules, without the cap or distance requirement that would have slowed it further. The ceiling investors were pricing in this spring was never installed.
A few adjustments follow directly from what actually happened this session, not what was proposed.
Is Sedona about to cap the number of STR permits? No. State law under SB 1350 still prevents any Arizona city from capping STR licenses, and the version of HB 2429 that reached the Senate had already dropped the cap provision before it died there anyway.
Can I list a guest house separately from the main house? Only if you occupy the main house full time. Sedona's September 2024 ADU rule blocks two-listing arbitrage on a single parcel unless the owner lives on site, with an exception only for guest quarters that had documented STR use before the rule took effect.
What's the real tax load on a Sedona short-term rental? Combined rates run 13.325% in Yavapai County and 13.90% in Coconino County, on top of the state Transaction Privilege Tax license every operator is required to hold before applying for a city permit.
Will a version of HB 2429 come back next year? Bliss has said publicly she plans to reintroduce the concept, and the League of Arizona Cities and Towns has signaled it isn't done pushing. Nothing currently on the books changes that timeline, so 2026 underwriting should be based on today's rules, not next year's possible ones.
The Sedona STR market didn't get easier or harder this spring. It got clearer. The rules an investor needs to model are the ones the city already wrote, not the ones that stalled in a Senate committee room. If you're weighing a short-term rental purchase in Sedona or comparing it against options elsewhere in the Verde Valley, Martin de Bókay can walk through the current permit stack, the ADU restriction, and what it actually means for your numbers. Schedule your Sedona investment consult to get the math right before you write an offer.
Get assistance in determining current property value, crafting a competitive offer, writing and negotiating a contract, and much more. Contact me today.