Investigators at the Arizona Attorney General's Office are warning Sedona to stop forcing licenses on residents who want to use their property as a short term rental home.

For decades, the city of Sedona has frowned upon "transient" rentals.

But, as Airbnb and other online rental programs grew in popularity, state lawmakers passed a law barring municipalities from interfering with property owners who want to use their homes as vacation rentals.

Sedona city councilors repealed their ban, opting instead to impose an annual $50 license fee on property owners who rent for less than 30 days.

That prompted an investigation by the Attorney General's Office, which found cities can impose zoning restrictions and regulate health and safety, but anything outside of that puts Sedona — and any other city — at risk of losing half of its state aide.