Arizona Moves To Regulate Peer-To-Peer Car Rentals

By Howard Fischer, Capitol Media Services
Published: Thursday, February 21, 2019 - 9:25am
Updated: Thursday, February 21, 2019 - 9:43am

Arizona lawmakers are weighing what kind of new regulations they should put on what's becoming the Lyft and Uber of car rentals.

The proposal by Republican Sen. David Livingston would set a standard for things like insurance and safety when individuals choose to rent out the cars they own to others. Proponents of Senate Bill 1305 said it's necessary to ensure that people are protected against riding around in unsafe vehicles.

But the heart of the bill — and the big point of contention — is taxes amid concerns ranging from fairness to trying to ensure that cities and tourism groups do not lose the revenues now generated from traditional car-rental companies.

The move is getting some kickback from Turo, which acts as the conduit between owners and renters.

Peer-To-Peer

Lobbyist Michelle Peacock told members of the Senate Committee on Public Safety and Transportation on Wednesday that her company is willing to work with lawmakers on some reasonable regulations. But she is objecting to efforts to impose the same rules on her company and the car owners that now exist for companies like Enterprise, which supports the bill, that actually own their own cars and whose vehicles are used exclusively for rentals.

Put simply, Peacock said Turo is not in the rental car business.

“SB 1305 is built on the foundation that peer-to-peer car sharing is the same thing as a rental car company,'' she said.

As Peacock described it, Turo maintains a web site to connect people who want to rent out the vehicles they own to those who need a car or truck for a few days at the most. But, she said the actual details are worked out between the vehicle owner and the renter, with Turo taking a share of the transaction which Peacock said is in the 25 percent range.

Much of that money, she said, provides basic insurance coverage. But Turo also runs its own insurance firm selling additional coverage to renters who want additional protection.

Livingston asked Peacock to detail how the business operates, including whether people can rent out multiple cars that they own. And she said that, at least theoretically, owners could be renting out 10, 20 or 30 or more cars.

“You made it sound like it's mom and pop only,'' Livingston said, people sharing personal vehicles when they don't need them versus people buying vehicles specifically to rent them out.

Peacock said that 95 percent of those on her company's web site have no more than two or three vehicles.

Livingston cited TV ads being run by Turo, which he said make it seem much more like a traditional car-rental company.

In Working Condition

Sen. Lupe Contreras said his big issue is safety.

Peacock said vehicle owners are required to sign agreements saying that their vehicles are in good working condition and have adequate tires and breaks. Contreras, however, said that self-attestation is not good enough, that anyone who is going to rent out a vehicle for money should first have it physically examined, with periodic requirements for checkups.

“These are their personal cars that they're using to transport their families to work and to school and to the grocery store,'' Peacock told Contreras. “And just like you, I'm sure, take care of your own cars, these folks are taking care of their own cars.''

Contreras, however, rejected the comparison.

“If you're going to use it as a commercial vehicle, there should be something that states that you have maintained that vehicle,'' he said. Contreras added that people have different ideas of what is sufficient on things like tire tread.

“Just because they ride their family in there does not mean that they care,'' he said.

But Sen. Sine Kerr from Buckeye, said some things should not be regulated by the state.

“Ultimately, it's my decision if I decide to use a company like Turo to put my family in,'' she said.

Defining Taxes

What's causing the most concern, however, is that question of what taxes must be collected.

Jaime Molera, representing the Arizona Lodging and Tourism Association, pointed out that the current levy on car rentals helped pay, not only for the Arizona Cardinals stadium, but also to underwrite the cost of smaller venues for Cactus League teams.

Barry Aarons, who lobbies for visitor bureaus in Tucson, Mesa, Scottsdale and Phoenix, said those organizations also get a share of the car-rent taxes.

The measure passed the committee and will now go to the Senate floor.

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