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Legislative Update: Airbnb Regulations

As we find ourselves at the height of the summer vacation season, we thought it might be a good time to review the status of some of the new and pending short-term rental regulations, commonly referred to as Airbnb laws, around the country.

In March, we reviewed newly enacted legislation, some of which actually went into effect this month. Today, we take a look at some of the latest developments in this ever-growing market.

Arizona

In late May, Arizona Governor Doug Ducey signed into law House Bill 2672, imposing new regulations on the more than 4,000 short-term rental properties in The Grand Canyon State.

After lawmakers expanded opportunities for these types of rentals in 2016, Arizonans reportedly began to complain about new traffic, noise and trash in their neighborhoods, particularly thanks to what had turned into “party houses.”

This new measure, written partly in response to these types of complaints, aims to address the issues created by these particular short term rentals.

Primarily, the new law will prohibit short term rental properties from being used for events that would otherwise require a permit (like a wedding) and will provide municipalities with the option to restrict rentals to overnight stays.

Additionally, owners of short-term rental properties will be required to acquire a sales tax license from the state and list that license number on any advertisements for the property.

As the market continues to grow in Arizona, and nationwide, anticipate additional regulations to be considered.

California

In one of the more specifically targeted regulations, California Assembly Bill 1731 addresses short-term rentals along the extreme southern California coast.

Assemblywoman Tasha Boerner Horvath has introduced this measure to generally prohibit short-term rental sites, likes Airbnb, from listing properties in San Diego County which fall under both a residential zone and and a state coastal zone.

AB 1731 has so far managed to pass through the full Assembly, but has bounced around committees in the Senate. It currently sits in the Senate Committee on Governance and Finance, awaiting action.

Connecticut

Despite what appeared to be early movement on House Bill 7177, it failed to pick up the necessary traction to get through the legislature this session.

Under this proposal, individuals renting out their property through a service like Airbnb would be required to share with their neighbors information like the names of renters and the length of their stay. Additionally, this legislation would subject these rentals to the state’s 6.5% sales tax, on top of the existing 15% hotel tax. It would also give municipalities the option to add their own tax.

This measure, introduced by 32-year-old Rep. Sean Scanlon, was the first attempt to regulate services like Airbnb, but not the first regulations of the new sharing economy. Rep. Scanlon also led the effort to regulate services like Uber and Lyft in the Constitution State.

Rep. Scanlon has been quoted saying that “The sharing economy is great, but we need to make sure it’s great for everyone. These rentals shouldn’t come at the expense of neighbors and safety. Neighbors need to know what’s going on.”

For its part, Airbnb has claimed that they are not opposed to new regulations in Connecticut, and are interested in working together with the legislature to find common ground.

Rep. Scanlon has expressed his intention to restart this effort in the 2020 legislative session.

Hawaii

Earlier this month, Hawaii Governor David Ige vetoed a bill sent to him by the legislature that would have required websites like Airbnb to collect taxes from the operators of the short term rental properties.

He cited an insistence on working with counties and local governments, who have their own regulations. Additionally, he expressed a concern that it would legitimize the currently illegal practice of renting a home in a residential area to tourists without a permit.

For example, on Oahu, there are currently only 800 licensed bed and breakfast operators authorized to rent for fewer than 30 days, but an estimated 10,000 vacation rentals.

The question of how to handle Airbnb in the Aloha State will continue to be debated with Gov. Ige’s veto.

New Jersey

Beginning in October 2018, a new tax was imposed on short-term rental properties in New Jersey.

While this was not an uncommon measure, what made it a unique problem for the Garden State are the 141 miles of coastline commonly referred to as The Jersey Shore.

Aimed specifically at short-term rentals booked through sites like Airbnb, the new tax specifically exempted vacation rentals which were arranged through a licensed real estate brokers – for those familiar with the Jersey Shore, think Berger or Monihan.

However, the unintended consequence of this new tax was that individuals who rented their shore house on their own, without a broker, but also not through Airbnb, VRBO, or the like, were stuck paying the tax as well.

So, in late June, the New Jersey legislature passed legislation also exempting rentals in which the homeowner deals directly with the client without the use of a 3rd party website or broker.

As the sharing economy continues to grow across the country, it will be important to watch any legislation that may pop up in the upcoming 2020 legislative sessions.

Categories: Politics & Elections

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