Hobbs vetoes limits on local oversight of home-based businesses

PHOENIX — Gov. Katie Hobbs killed legislation that proponents said was designed to make it easier for people to operate home-based businesses.

Current law allows such operations as long as they meet certain conditions and also allows temporary commercial signs and the offering of items for sale.

SB1162 would have gone a step beyond, declaring that home businesses are “allowed as a use by right” as long as they didn’t run afoul of deed restrictions. It would have eliminated any requirement for licensing that would have allowed city officials to be aware a business was operating in the area.

“You should be able to operate a home-based business,” said Sen. Steve Kaiser, R-Phoenix, sponsor of the legislation. He noted that many people started such businesses during COVID. “We don’t need heavy regulation,” Kaiser said.

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Hobbs, however, sided with local officials who opposed, effectively removing all their power to regulate.

“While there is no doubt that more can be done to support small businesses in Arizona, this approach is far too broad,” the Democratic governor said Tuesday in her 25th veto of the legislative session. “This bill would create challenges for public safety and code enforcement in neighborhoods.”

That mirrors the comments of Tom Savage, a lobbyist for the League of Arizona Cities and Towns, who was tested against the measure when it was heard by the Senate Commerce Committee. He said the bill would have made it more difficult for communities to meet the needs of adjacent property owners.

“The bill seems to tip the scale in favor of the property rights of those who want to operate a home-based business over the property rights of those who bought their home expecting their neighborhood to be quiet and free from commercial activity,” Savage said.

He said the fact there are home-based businesses now, under existing local regulations, proves there is no need to further restrict the ability of communities to have some oversight.

But Jenna Bentley, a lobbyist for the Goldwater Institute, which says it advocates against government overreach, said the measure was justified.

“Sometimes this is a primary source of income,” he tested. “Sometimes this is a side job they do to help pay for groceries.”

Bentley said SB1162 was structured to apply only to operations with “no impact” on neighborhoods.

Hobbs, in her veto message, was unconvinced.

“I believe that there is a common-sense approach that balances the needs of neighborhoods and small businesses,” she wrote. “This bill fails to strike that balance, and I look forward to working with the Legislature and local leaders to support entrepreneurs and small businesses.”

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Howard Fischer is a veteran journalist who has been reporting since 1970 and covering state politics and the Legislature since 1982. Follow him on Twitter at @azcapmedia or email azcapmedia@gmail.com.