Moving at the speed of government.
Arizona is a state on the leading edge in the technology sector, and now innovative and disruptive technologies in the property sector have a home thanks to Governor Doug Ducey when he signed HB 2673 into law on March 21.
The bill, commonly referred to as the PropTech bill, establishes a place and regulatory framework to test innovative property products or services on a limited basis to improve the way we design, construct, and manage residential and commercial property services. The PropTech sandbox as it’s called, provides key public-sector support and concierge services for companies starting to look or locate in Arizona. Currently some of these PropTech companies, such as Nest Thermostats, Ring Doorbells, various energy services and smart home applications, do not exist in a fully regulated market, according to committee testimony.
Because of concerns from the Arizona REALTORS®, we met with the bill sponsor and various other stakeholders and requested an amendment to the bill to remove the Department of Real Estate Commissioner as the regulatory entity overseeing the PropTech program, as the Department’s function is to regulate licensed real estate, cemetery and membership campground brokers and salespersons of which this bill does not impact. Further, our amendment established that the PropTech Sandbox does not apply to a profession that is regulated pursuant to Title 32, Chapter 20 (Real Estate).
The key provisions within the bill establish the PropTech Sandbox as an economic development tool to support emerging technology companies under the Arizona Commerce Authority (ACA) in consultation with the Department of Real Estate, the Department of Administration and other applicable regulatory agencies to support business start-up, expansion, and attraction opportunities in Arizona. The PropTech Sandbox will allow an approved company to test innovative products and or services, for a limited time without obtaining authorization that may otherwise be required.
The legislation additionally included provisions that provide safeguards to ensure that the products and or services offered:• Are innovated;• will benefit consumers;• do not provide a risk to consumers; and, • how the products and or services are tested.
The applicants will be required to submit the necessary forms and certifications to the Arizona Commerce Authority to receive approval and authorization to operate in the Sandbox. The Chief Executive Officer of the Arizona Commerce Authority will consult with all applicable agencies to ensure all criteria for admission to the PropTech Sandbox are satisfied.
Once an applicant is admitted to the PropTech Sandbox, a participant will have 24 months to test the approved innovative products and or services. Lastly, the bill required the Arizona Department of Administration to identify state-owned property that may be available to participants in the PropTech Sandbox and submit a list of those properties to the Arizona Commerce Authority.
“Each year Arizona’s footprint as a leader in the emerging technology sector grows larger and larger,” said Rep. Jeff Representative Weninger, the bill’s sponsor, in a statement. “I’m thankful that Governor Ducey supports this rapidly growing culture of innovation and that Arizona is now able to grant emerging property companies the opportunity to test new ideas without the weight of federal and state regulations on their backs.”
For historical perspective, Weninger introduced similar legislation (HB 2434) that was enacted to establish a FinTech Sandbox to reduce barriers for financial technology entrepreneurs utilizing emerging technologies, including blockchain, digital wealth management, payment processors, and several other concepts in 2018.