Fact vs. Fiction: Arizona's Home-Based Business Fairness Act

by Christina Sandefur
March 20, 2018

Technological advances have transformed our economy, empowering entrepreneurs to start businesses from home. Unfortunately, cities and counties throughout our state are applying outmoded zoning, licensing, and permitting requirements to these home-based businesses. The Home-Based Business Fairness Act presents an opportunity for Arizona to modernize and standardize its regulations, eliminating confusion and refocusing local resources on addressing true nuisances, while embracing the new economy and empowering individuals and small businesses to pursue the American Dream.

Unfortunately, some serious misinformation has been floating around about this modest yet much-needed reform.

First, there’s a rumor that the bill would allow unlimited employees to work out of a home, creating noise, massive traffic and parking congestion, and other nuisances. But those concerns are unfounded.

The bill caps the number of non-resident and non-relative employees that can be present at three. That number is based on the best practice standards that a number of cities already have in place. And although the bill does not limit the number of residents or immediate family members that can participate in a home-based business, there’s no reason to be concerned that this will cause problems. First, cities can still enforce nuisance rules that protect quiet, clean, and safe neighborhoods, including fire and building codes that limit the number of individuals that can be in a home, as well as noise restrictions. And cities can still enforce their traffic and parking rules. No-impact home-based businesses cannot “generate on-street parking” – employees and clients must park on site – and they cannot create a “substantial increase in traffic” in the neighborhood. Finally, “no-impact” home-based businesses must operate within the home and may not be visible from the street.

It’s hard to see how, with cities retaining the power to regulate noise, traffic, parking, activities taking place outside the home, and other nuisance, any home-based business could employ enough residents or family members to cause concern.

Second, there’s a concern that the bill will make it difficult for cities to maintain residential neighborhoods and could open them up to businesses like dog boarding, auto repair facilities, and dental offices.

In reality, cities retain their authority to ensure all home-based businesses are compatible with the residential environment and that the business activity is secondary to the property’s use as a home. In other words, the bill leaves cities with a great degree of flexibility to set forth what uses are permitted in residential zones and only requires that any such regulations are a reasonable fit to ensure the businesses are compatible and secondary to the residential use. And home-based businesses will still be required to obtain and maintain any applicable professional licenses, remit taxes, and comply with public health and safety standards. Cities will be able to prevent dangerous or disruptive activities in neighborhoods just as they do now. This bill is about protecting those activities that don’t cause any impact on their communities. If it’s ok for a person to do her own income taxes at her kitchen table, it should be ok for an accountant to do someone else’s income taxes in her home office.

Most neighborhoods already have multiple home-based businesses that operate without disturbing anyone – and those are the practices this bill will protect. The Home-Based Business Fairness Act modernizes Arizona’s piecemeal and outmoded regulations in favor of a clear, consistent, and common-sense approach. Let’s let local governments focus on nuisance while embracing the new economy and empowering individuals and small businesses to pursue the American Dream.

Christina Sandefur is Executive Vice President of the Goldwater Institute.