Assigned to COM FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
FACT SHEET FOR S.B. 1162
home-based businesses; restrictions; prohibition
Purpose
Requires a municipality or county to allow a home-based business as a use by right if
certain conditions are met. Outlines purposes for which a municipality or a county may establish
regulations on a home-based business.
Background
Current statute prohibits any county ordinance from restricting or otherwise regulating the
owner of a home-based business that holds a valid license from: 1) making residential property
improvements to add doors, shelving or display racks for use by the home-based business;
2) displaying a temporary commercial sign on the residential property during business hours, if
the sign is not more than 24 inches by 24 inches; 3) selling or offering for sale any goods;
4) generating traffic, parking or delivery activity that does not cause on-street parking congestion
or a substantial increase in traffic through the residential area; 5) having more than one client on
the property at a time; and 6) employing residents of the primary dwelling, immediate family
members or one or two individuals who are not residents of the primary dwelling or immediate
family members. A county is not precluded from imposing reasonable operating requirements on
a home-based business or a residential property used by a home-based business. A home-based
business is any business for the limited manufacture, provision or sale of goods or services that is
owned and operated by the owner or tenant of the residential property (A.R.S. ยง 11-820).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1. Requires a home-based business to be allowed as a use by right if the home-based business
does not supersede any deed restriction, covenant or agreement restricting the use of land, a
master deed or other document applicable to a common interest owner.
2. Precludes a municipality or county from prohibiting a no-impact home-based business or
requiring a person to apply for, register or obtain a permit, license, variance or other type of
prior approval to operate a no-impact home-based business.
3. Allows a municipality or county to establish regulations on a home-based business if the
regulations are tailored for the following purposes:
a) protecting the public health and safety, including existing municipal or county regulations
related to fire and building codes, health, sanitation, transportation or traffic control and
solid or hazardous waste, pollution and noise control; FACT SHEET
S.B. 1162
Page 2
b) limiting or prohibiting the use of a home-based business for the purposes of maintaining a
structured sober living home, selling illegal drugs or liquor, pornography, obscenity, nude
or topless dancing or other adult-oriented businesses; and
c) ensuring that the business activity is:
i. compatible with residential use of the property and the surrounding residential area;
ii. secondary to the use of the property as a residential dwelling; and
iii. complying with state and federal law and applicable taxes.
4. Prohibits a municipality or county from requiring, as a condition of operating a home-based
business, a person to:
a) apply for rezoning of the property for commercial use;
b) obtain a home-based business license or other general business license; or
c) install or equip fire sprinklers in a single-family detached residential dwelling or any
residential dwelling with not more than two dwelling units.
5. Deems a question about whether an adopted municipal or county regulation complies with the
home-based business restrictions as a judicial question.
6. Requires the municipality or county that enacted the regulation to establish by clear and
convincing evidence that the regulation complies with the home-based business restrictions.
7. Redefines home-based business as any business for the manufacture, provision or sale of goods
or services, rather than the limited manufacture, provision or sale of goods or services, that is
owned and operated by the owner or tenant of the residential property.
8. Defines no-impact home-based business as:
a) business activities that are limited to the sale of lawful goods or services;
b) a business that employs only the following:
i. residents of the primary dwelling;
ii. immediate family members of residents of the primary dwelling; and
iii. not more than three individuals who are not residents of the primary dwelling; and
c) business activities that:
i. do not generate on-street parking or substantial increase in traffic in the residential area;
ii. occur inside the residential dwelling;
iii. are not visible from the street; and
iv. do not violate any municipal or county regulation on home-based business.
9. Eliminates the current restrictions on a county for regulating the owner of a home-based
business that holds a valid license.
10. Defines terms.
11. Makes conforming changes.
12. Becomes effective on the general effective date.
Prepared by Senate Research
February 6, 2023
JT/FB/sr