Bacon's Rebellion

Democracy Thrives in Sunlight

Assembly Punts on Airbnb

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by

James A. Bacon
in ,

puntby James A. Bacon

Virginia could have been one of the first states in the nation to legalize the short-term rental industry, but after taking a good hard look at HB 812, the so-called Airbnb bill, the General Assembly decided to punt. The legislature will revisit the issue next year, reports the Washington Post.

Airbnb, whose web-based platform connects visitors with homeowners renting rooms, suites and entire houses, has run into opposition from the lodging industry around the country on the grounds that individual renters should be subject to the same taxes, laws and regulations as hotels. Rather than negotiate rules on a locality-by-locality basis, the San Francisco-based company has tried to hammer out laws at the state level.

Here in Virginia, Del. Christopher K. Peace, R-Hanover, took up the cause of small property owners and submitted a bill that would have legalized Airbnb while establishing a framework for collecting taxes and protecting neighbors against nuisances. He got pushback from Del. Tommy Norment, R-Williamsburg, who represents the hotel & lodging industry in the Williamsburg area.

According to the Post, legislators amended legislation to require stricter tax collection and penalties for noncompliance, but the laws must be revisited and approved again by the legislature in 2017. Meanwhile, the state will conduct a study of the short-term rental industry.

“We were making an effort to put Virginia on the map as being proactive, welcoming and embracing the new economy,” said Sen. Jill Holtzman Vogel, R-Fauquier, sponsor of a companion Senate bill.

“Airbnb is here to stay,” said Eric Terry, president of the Virginia Restaurant, Lodging & Travel Association. “It’s something the consumer is interested in and wants to do. We welcome Airbnb, but we just think they should be subject to the same requirements that a bed-and-breakfast or a hotel has to go through.”

Bacon’s bottom line: Technology is scrambling the old economic order. Established industries instinctively utilize the power of government to buttress their dominant position from incursions by newcomers — see how the taxi industry lobbied to freeze out Uber and Lyft — but they are justified in asking competitors in the lodging industry to play by basic rules regarding the collection of taxes, protection of consumers, and the regulation of nuisance. If it takes a year for Virginia lawmakers to work out a thoughtful set of rules that allow small property owners to compete on a level playing field, the delay is arguably worthwhile. If used instead to allow the lodging industry to regroup and defeat the legislation, the delay will be a shameful blow to property owners.

The greatest debate of our era is over the distribution of income and wealth. Airbnb allows small property owners to generate income from empty basements and bedrooms. It is an equalizer that does not rely upon punitive taxation to redistribute wealth. Virginia legislators should make it their business to foster the adoption of new technologies that empower Virginians in small ways.

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20 responses to “Assembly Punts on Airbnb”

  1. Cville Resident Avatar
    Cville Resident

    Interesting NYC stats:

    http://motherboard.vice.com/read/9-things-that-reveal-how-airbnb-lets-rich-people-run-a-bunch-of-illegal-hotels

  2. LarrytheG Avatar
    LarrytheG

    Some aspects of AirBnb are not THAT unique. People rent beach homes People own time-shares that they can trade and people in Pinehurst and other venues rent out their homes and rooms when big tournaments happen and in ski resorts… etc…

    and all of them could easily be incorporated into some kind of phone/database platform…

    but some issues that used to be in the shadows are now having more focus like – fire and municipal codes and taxes and regulations.

    Note the “job killing regulations” cry has not been shouted so far…

    so the cell phone/database platform technology is not unique to airbnb…just as it is not unique to uber/lyft.. traditional taxi’s can adopt it also

    what is NEW (but still not unique to Airbnb and Uber/lyft et all) is the idea that BOTH the provider AND the renter are “rated”.

    so until now Holiday Inn or Yellow Cab did not have the ability to rate a customer and now that capability is possible – and used.

    so if someone rents your room and craps it up.. guess what?

    you’re gonna get “outted”… and conversely -if you are a “good” customer who has good habits and perhaps tips… well.. you might well be able to use that to your advantage when negotiating… and who knows.. it might actually get formalized.. so that those with the highest scores get the best prices or first dibs in the case of “ties”… etc.

    now .. this could get ugly also – where perhaps the proprietor could use such rating in not good ways also, eh?

    but I think the idea of people being “rated” in transactions is a game changer.. in the world of willing seller/willing buyer transactions where both sides get to know more about each other than they might in a market where such info is not available.

    perhaps long ago in small towns – folks – both buyers and sellers did develop reputations and even today – your credit score can affect credit transactions (perhaps even for airbnb)…

    but now we get buyer/seller “ratings”… and perhaps the jury is still out if this is a “better” thing or not, eh?

  3. TooManyTaxes Avatar
    TooManyTaxes

    The tax issue can probably be resolved, especially if the state offered a reward to people to who turned in tax cheats.

    The bigger and less resolvable issue is, IMO, the zoning/land use issues. There is a big difference between an owner renting his/her home either on a long-term basis, an investor renting a house, or an occasional short-term rental (say a week) on one hand, and the operation of a de facto B&B on the other hand. Perhaps, that’s why most zoning codes regulate B&Bs.

    My next door neighbors moved to Santa Fe and rented their SFH for about 18 months to a Dr. & her retired Dr. husband. A townhouse across the street and down the block is normally rented to diplomatic personnel. Absent some crazy tenants, this behavior is consistent with typical Fairfax County life. Living next to a B&B that has not be licensed or an illegal boarding house is not.

    Airbnb operation needs to be consistent with the zoning ordinance and appropriate codes contained therein.

    1. Cville Resident Avatar
      Cville Resident

      That’s my biggest worry as well (land use/zoning issues). Is this legislation a gateway to boarding houses? I’m not necessarily opposed to “legalizing” Air BnB so long as it’s not another name for non-compliance with B&B zoning laws or in effect creating de facto hotels in residential neighborhoods.

      1. TooManyTaxes Avatar
        TooManyTaxes

        A B&B requires a special exception in residential districts in Fairfax County. That requires two public hearings – one before the Planning Commission and one before the BoS. Also, a Special Exception is subject to development conditions and a variety of regulations. I suspect the rest of the state is similar.

        The question that comes to my mind is: When does an occasional AirBnB short-term rental turn into an unlawful B&B or even boarding house?

        1. Cville Resident Avatar
          Cville Resident

          JMO, but maybe more than 9 days a year? I can see perhaps allowing someone in a residential district to let their house on AirBnB 3 weekends (Fri.-Sun.) a year or a whole week (Sun.-Sun.). But beyond that, it does start to look a lot more like a business.

  4. Malcolm Baldwin Avatar
    Malcolm Baldwin

    As owners of a B&B and wedding venue in Virginia and members of the B&B Association of Virginia and the Loudoun B&B Guild, my wife and I welcome new entrants to the hospitality community. There’s enough demand for lodging to support growth in our business and that of the many vineyards, historic sites, l landscapes, weddings and events that bring tourists and their dollars to Virginia.

    Like other B&Bs, we underwent a rigorous licensing process under Loudoun County’s zoning regulations, and we collect and remit 6% of our lodging fees in sales tax and 7% in county transient occupancy tax. We pay annually for our business license and taxes on the furniture and other “business personal property” in our lodging rooms. We also undergo an annual health inspection and pay for an annual permit to host up to 20 weddings per year.

    Fair competition is fine, but not from unlicensed B&Bs operating in the shadows, which too many Airbnb owners do. We recently fielded a call from a nearby homeowner who has listed her property on Airbnb and now rents out three bedrooms, offers breakfast to her guests, and has 17 nice reviews from guests on the Airbnb website. She called for tips about holding weddings, because she has already accepted a reservation to host one this summer. And she is completely unlicensed and probably untaxed. (We didn’t ask.)

    The legislation that passed the General Assembly would, when applied, solve a few problems while creating new ones. Airbnb has agreed to serve as tax collector and remitter of tax revenues to the state and localities, but without identifying the properties or owners on whose behalf they are remitting. Hence a host of other regulations will can be avoided by the owners. The bill also legalizes these accommodations in every residentially zoned area of the state, whether or not local zoning regulations would otherwise limit or prohibit lodging uses. It would appear to prohibit local governments from enforcing health, noise or fire regulations concerning these lodging facilities.

    The coming study will offer an opportunity to address these concerns, which are widely shared across the Virginia hospitality industry. Let’s hope that the study is objective, notwithstanding that it is sponsored by the Airbnb bill’s sponsors who are obviously eager to see the legislation move forward. So it’s essential for representatives of the B&B community serve on the panel conducting and approving the study.

  5. James A. Bacon Avatar
    James A. Bacon

    Somebody please explain to me what is so disruptive about letting out a residential house to a vacationer? Say you have a family of two, three or four people, and they come and go a couple of times a day in a car. Is that any worse than having relatives come visit for a week? Or having three teenagers in the house, each with his or her own car? Odds are, there are fewer people living in the typical residential dwelling now than 30 or 40 years ago. (Average household size has shrunk.) I don’t understand the angst.

  6. LarrytheG Avatar
    LarrytheG

    I know this will shock but I’m in the same place Jim is.

    Can someone lay out a couple of worst case examples that are what need to be prevented from happening?

  7. LarrytheG Avatar
    LarrytheG

    re: ” The bill also legalizes these accommodations in every residentially zoned area of the state, whether or not local zoning regulations would otherwise limit or prohibit lodging uses.”

    I’m on board with all Airbnb lodging (ALL such lodging) to meet the same regulatory requirements that say – traditional B&Bs have to meet – apples to apples regulations – for the same public health and safety reasons.

    We may need to also revisit the reasons why we “separate” uses like commercial and residential since things have evolved to return to the days when residential on the 2nd floors of commercial was okay for “compact” development or where large old homes in residential neighborhoods can now become B&Bs and in days past might have been perfectly acceptable as boarding houses also.

    and to be honest – boarding homes used to fill an important need so why are we now demonizing them? There is still a need for some for that kind of affordable housing especially for service workers.

    If someone wants to live in a gated community – fine – chose that option but let’s not pervert regulations and laws to restrict legitimate uses that serve legitimate public needs that have no more impacts than other uses – basically to suit some individuals – preferences.

    you know – there is a certain irony and perhaps some hypocrisy these days in the way that some folks advocate strict regulations – when it suits their wants and “needs” – and yet, some of these very same people will rail politically about “job killing” govt regulations that don’t gore their own particular ox!!!

    sort of like opposing the EPAs restrictions on smokestacks that generate low cost electricity for you but blow cancer-causing soot all over other folks homes, eh?

    1. TooManyTaxes Avatar
      TooManyTaxes

      It is possible to operate a B&B or even a boarding house in a residential area. But you first need approval for a Special Exemption other authorization. What has people angry is that others operate them without first obtaining authorization. That, and the often-found reluctance by local government to shut the illegal ones down.

      1. LarrytheG Avatar
        LarrytheG

        okay, we’re getting closer so let me ask.

        why is it not an already-included use and instead requires a special exception?

        what is it about it – specifically – that requires special permission instead of it being an existing accepted use?

        can we call out those things in particular?

        1. TooManyTaxes Avatar
          TooManyTaxes

          Larry, good question. I’d say that a B&B is a use that is sufficiently different from the prevailing use in a residential district that a B&B proposal must be evaluated for its impact on the neighborhood for compatibility and minimal impact.

          The following are the permissible special exception uses in R-2 zones (two houses per acre) for Fairfax County.

          1. Category 1 – Light Public Utility Uses.
          2. Category 2 – Heavy Public Utility Uses, limited to:
          A. Electrical generating plants and facilities
          B. Landfills
          C. Water purification facilities
          3. Category 3 – Quasi-Public Uses, limited to:
          A. Alternate uses of public facilities
          B. Child care centers and nursery schools
          C. Churches, chapels, temples, synagogues and other such places of worship with a child care center, nursery school or private school of general or special education
          D. Colleges, universities
          E. Conference centers and retreat houses, operated by a religious or nonprofit organization
          F. Congregate living facilities
          G. Cultural centers, museums and similar facilities
          H. Dormitories, fraternity/sorority houses, rooming/boarding houses, or other residence halls
          I. Independent living facilities
          J. Medical care facilities
          K. Private clubs and public benefit associations
          L. Private schools of general education
          M. Private schools of special education
          N. Quasi-public parks, playgrounds, athletic fields and related facilities
          4. Category 4 – Transportation Facilities, limited to:
          A. Electrically-powered regional rail transit facilities
          B. Regional non-rail transit facilities
          5. Category 5 – Commercial and Industrial Uses of Special Impact, limited to:
          A. Bed and breakfasts
          B. Commercial off-street parking in Metro Station areas as a temporary use
          C. Convenience centers
          D. Funeral chapels
          E. Golf courses, country clubs
          F. Marinas, docks and boating facilities, commercial
          G. Offices
          H. Plant nurseries

          It’s clear B&Bs have not been singled out. Keep in mind, however, that Special Exceptions are not granted automatically.

          1. LarrytheG Avatar
            LarrytheG

            great list TMT. THANKS!

            to me , what this shows is that these uses, to include boarding houses, B&Bs, even ” Congregate living facilities” – per se – are NOT deemed fundamentally incompatible with residential:

            that ought to get us to the specifics as to how they are acceptable (or not).

  8. Malcolm Baldwin Avatar
    Malcolm Baldwin

    Did anyone read my post that I obviously spent too much time on? AirB&B is a big business with a mass of lobbyists, and it profits imeasurably from the present competition with small B&Bs et al. that are subject to often draconian regulations. The result as well is loss of local revenue. Easing of regulations on B&Bs would be a nice thing to advocate, so, Jim, where are you on that?

  9. James A. Bacon Avatar
    James A. Bacon

    I read your comment and found it to make a useful contribution to the conversation. I can totally understand why you, after complying with all the licensing and tax requirements, would be ticked off at competitors who fail to do so. I guess my questions is this: Is Airbnb overregulated or are you underregulated? Do you believe that some of your requirements are unnecessarily onerous, or do you think everyone should comply with them?

  10. LarrytheG Avatar
    LarrytheG

    re: ” Is Airbnb overregulated or are you underregulated?”

    that’s why I asked for specifics of what was regulated and why.

    we can actually try to move away from the left/right food fight over regulation if we actually look at what is regulated and why.

    AirBnB obviously doesn’t want to talk about specifics – they just want to pretend that any room in any home is essentially the same as any room in any motel or BnB.

    is it?

  11. LarrytheG Avatar
    LarrytheG

    while we’re at it – I wonder if Jim would be amenable to an article about this:

    ” Venture Capital’s Answer to High-Priced Housing: Dorms for Grown Ups”

    Venture capitalists think they have an answer to the growing housing crunch in San Francisco and other big cities across the U.S.: adult dorms.

    Shared office space giant WeWork Cos., recently valued at $16 billion, and a handful of smaller startups are experimenting with “coliving,” a concept that involves tiny apartments, shared kitchens and lounges, and a communal atmosphere.

    wsj

  12. Malcolm Baldwin Avatar
    Malcolm Baldwin

    Here’s my answer to Jim’s good question.
    The regulations affecting B&B, while sometime onerous, nevertheless make sense. Everyone — AirB&B or B&B — should comply with them. They are designed to protect human health and safety (water quality and fires), and noise and traffic affecting neighbors. That we have no neighbors nearby, and that we’ve been drinking the same water ourselves, and not getting sick!, is a fact that regulations really can’t take into practical account.

    So, since we’re part of a larger community, and because we believe in government as a force for good, we comply, and we don’t complain about essentially reasonable regulations. The regulations make, on the whole, good sense in protecting “the commons” — the water quality of visitors, the traffic and noise affecting the larger community. Residences that seek to make money without acceding to these regulations need to be corrected. It’s that simple. They don’t lose their homes, they simply become civic!

    We’ve paid a lot for this belief, but “no man”, as we know John Donne said, “is an island unto himself.” Edmund Burke understood this, but today’s pseudo conservatives clearly don’t. Don’t get me started.

  13. LarrytheG Avatar
    LarrytheG

    interesting listening to Baldwin talking about acquiescing to govt regulations – that he essentially agrees are for a good and valid purpose and those to his political right who rail on and on these days about the “job killing regulations” and are used as a partisan cudgel to hammer those who want the same regulations for companies like Uber and Airbnb.

    Why, for instance, do we feel the need to treat Airbnb as if it were a brand new and uniquely different business that deserves different regulatory treatment than just ADDING it to the list of regulated uses that now also include traditional Bnbs?

    why is this such a big deal instead of a simple text amendment to existing codes and regulations?

    I’m sure Malcolm might as the same question.

    And I can tell the answer right now and that is that some folks think the existing regulations are to onerous and wrong right now and they want to use Airbnb to knock them down.

    so this is not really just about Airbnb , it’s really about regulation in general and rolling it back… we saw this same discussion with Uber and Lyft… and to be honest, part of a larger movement that now attacks the EPA, the FDA, OSHA and even Public Schools…. (“rules” that Charters won’t follow and as a result do better), etc.

    We SHOULD re-examine regulations and have the debate about what needs to go away but also what needs to stay – as opposed to viewing any/all regulation as a property-rights depriving govt evil.

    But instead of doing it openly – some prefer use what boils down to – stalking horses like Airbnb… to do that – suggesting it’s about Airbnb being treated unfairly rather than about why Airbnb SHOULD be treated ANY DIFFERENT than Malcolm Baldwin’s BnB.

    The one thing I truly regret is how long it takes to get to the essential truth about these issues now days because instead of dealing with it directly at the get go – we have these end runs and dialogues that churn the issues.

    I’m also sorry that I’m so loquacious , a flaw I admit to instead of being able to elegantly and efficiently make the point like Malcolm Baldwin does.

    And I blame Jim B for causing this by more often than not – mightily attempting to frame the issue in the partisan ways we see rather than in the simple way that it really is… just kidding Jim… seeing if you read… 😉

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