Airbnb Warns of ‘Unintended Consequences’ of Boston Ordinance

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By Aaron Nicodemus

Airbnb Inc. says Boston Mayor Marty Walsh’s (D) proposed short-term rental ordinance would prevent two-thirds of the city’s residents from renting out a unit on the online host’s platform.

The ordinance would allow homeowners to rent five bedrooms in their primary residence for 365 days a year, or three bedrooms if the owner is present. Owners who live in their two- or three-family building would be able to rent out one unit for up to 120 days a year. Anyone wishing to rent out a short-term rental would have to place their property on a short-term rental registry and pay an annual fee of between $25 and $200.

The ordinance also would require hosts to collect and remit the city’s 6.5 percent room occupancy tax. Short-term rental hosts in Massachusetts currently don’t collect the state or local occupancy tax. State lawmakers have convened a conference committee to hammer out differences in two competing bills that propose to regulate and tax short-term rentals statewide.

The new ordinance differs from a previous version by prohibiting investor hosts from renting out units in buildings they don’t occupy or own.

“Allowing non-owner, non-tenant occupied residential units to be used for short-term rentals, but only up to 90 nights per year, did not work for a variety of stakeholders,” Walsh wrote in a May 9 letter introducing the ordinance to the Boston City Council. “We knew when we proposed the policy that the investor unit category would be a point of contention. We tried to be balanced. Ultimately, we decided that this type of short-term rental use in residential units wasn’t what most Bostonians wanted, so we removed it from the policy.”

Property owners who don’t live in the building in which they wish to rent short-term units could apply to have the zoning changed from residential to commercial, he said, “which will give residents an opportunity to have their voices heard for each and every proposed change of use.”

At its May 16 meeting, the council referred the ordinance to its Committee on Government Operations.

Airbnb ‘Discouraged’

Will Burns, Airbnb’s Massachusetts public policy director, argued in a May 15 letter to the council that the ordinance “would completely foreclose renters from sharing their homes.” He said that nearly two-thirds of the city’s housing stock is rental units.

Burns said the company was “discouraged” that Walsh didn’t take some of its suggestions into account when he reworked the ordinance. Airbnb supports rules that would “target the truly bad actors” while still allowing renters who don’t own their property to rent out a spare room or unit.

“We recognize there is a difference between homeowners and renters sharing the homes in which they live and those who share a short-term rental full-time,” the letter said. “Any new rules should clearly distinguish between—but also recognize—these two types of hosts.”

Burns urged the mayor and council to create “a simple regulatory approach for all people sharing their primary residence” and “a more robust and restrictive regulatory framework for dedicated short-term rentals that provides a limited number of licenses for operation.”

‘Illegal Hotels’

Members of the Boston Host Alliance, formed earlier this year to represent investor hosts and the ancillary businesses they support, say the ordinance would kill a thriving small business.

“The complete elimination of the investor class will do little to aid in the expanded availability of affordable housing in Boston,” the group said in a pair of May 9 tweets. “This change will actively restrict the growth of a burgeoning small business ecosystem focused on meeting the demand for affordable short term rentals across the city.”

Airbnb, meanwhile, has taken to the airwaves, paying for radio and television ads featuring Boston Airbnb hosts telling their stories, in hopes of convincing the mayor and the council that the ordinance is too restrictive.

The Massachusetts Lodging Association, which has regularly criticized Airbnb for creating “illegal hotels” out of apartment buildings, had high praise for the ordinance.

“Mayor Walsh’s proposal is a balanced one that recognizes the legitimacy of true homesharing while reining in illegal hotels that are contributing to Boston’s housing crisis and diminishing the quality of life and unique character of Boston’s neighborhoods,” the group said in a May 9 email. “Predictably, Airbnb’s corporate headquarters opposes this thoughtful compromise to protect Boston’s housing stock from wealthy investors whose only goal is to make as much money as they can at the expense of local residents.”

To contact the reporter on this story: Aaron Nicodemus in Boston at anicodemus@bloomberglaw.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

For More Information

Boston's proposed short-term rental ordinance is at http://src.bna.com/yO2.

Airbnb's letter is at http://src.bna.com/yQW.

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