Madison is thinking about trying to regulate AirBnB-type rentals.It probably should, but it’d be helpful for them to step back and think about what we’re trying to accomplish. The proposal right now is terrible, but this may be one of the easiest examples ever of where just a little bit of common sense can amend it into something reasonable. There’s a public meeting to discuss this all on Thursday, September 26th at 7:00pm.
First, should the city even regulate short-term rentals through services like AirBnB? There are a couple of good reasons with it should:
- There’s cold, hard cash involved, through the room tax. The actual amount of money depends on how many places rent each year and for how much, of course, but taking a pessimistic estimate there’s probably $30,000 or so not being collected each year.
- The City has some responsibility to its visitors that they’re going to stay in a safe place that is no danger to their health. At a minimum, we should know where these rentals occur.
- We have a zoning code to provide some predictability as to how many people and what sort of activities may occur somewhere. If short-term AirBnB style rentals consistently and materially change an area, it’s worth reexamining.
- It’s an interesting question if someone renting out a spare bedroom is offering a public accommodation and needs to follow anti-discrimination laws or the Americans with Disabilities Act. I’d say yes, but even if they don’t have to, it would be useful for the City to be able to obtain a pledge from those locations that commit to observing them.
What are some bad reasons to regulate short-term rentals:
- Keeping “transients” out of neighborhoods. How long a person stays in a place has nothing to do with their character. This is the same language that disparages renters and I really can’t stand it. We don’t regulate who can rent where.
- Protecting hotels and other lodging establishments. AirBnB is not going to kill off hotels. I, for one, will never use AirBnB to stay in a stranger’s spare bedroom for a weekend. If I’m in a strange place, I like that hotels are impersonal and I can close the door and be completely on my own. (I admit to using VRBO (Vacation Rental By Owner) for a stay in Florida, but that was to rent an entire condo for a week). Yes, AirBnB undoubtedly takes some business away from hotels, but on the whole, they’ll be fine.
- Guarantee peace and quiet and freedom from other people. We have noise ordinances and other laws to do that already.
We don’t regulate where people can rent, and we don’t regulate subleases. We don’t get concerned when in-laws or old college buddies come to visit for a few days. We don’t regulate which neighborhoods can have placement of foster kids. We don’t even get too worked up when the zoning code is ignored – many of the residential districts in Madison are limited to two unrelated adults and their children, but I’m sure everyone knows at least a few couples who have an additional roommate who live with them.
The City’s proposal is online here but the gist of it is:
- It defines some new terms: “tourist or transient”, as someone who lives somewhere else but is here for under a month and “tourist rooming house”, which is something that accepts money from a “tourist” to sleep there, and is not a hotel, motel, hostel, or bed and breakfast. Someone pays you to stay in your spare bedroom? You’re a tourist rooming house – it doesn’t matter how much or how many times.
- It requires anyone who wants to be a tourist rooming house to go before the plan commission and get a conditional use permit. That costs $600, though it’s one-time.
- It requires anyone who wants to be a tourist rooming house to get a license from Health Services. That costs $595 the first year, and $220 every year after that. (The requirement to get a license comes from the State, the County sets the price)
- Requires that only the owner of a property be allowed to rent it. If you’re a renter and your lease lets you AirBnB your den, too bad.
- Requires that 500 feet separate every tourist rooming home. If you live in a condo tower, you’d best hope you’re the first person in your building to apply for a permit.
- Requires that you collect the room tax.
Now, as I understand it, this draft was meant more as a starting point for a discussion. That’s good, because this is entirely too heavy-handed. $1200 to get started, with a full public hearing, all for renting out your spare bedroom come World Dairy Expo time? This is a rare instance where I mostly agree with Bridget Maniaci on a local issue.
A more sensible proposal eases into the regulation. Want to rent your spare bedroom for a handful of nights a year? No problem, just fill out this online form to register with the city, certify that you’ve read some health standards, maybe agree that you don’t discriminate, and have at it. Want to rent for more than say 20 or 30 room-nights a year? That should probably trigger some sort of health inspection. Want to go for a 50 or 60 room-nights a year? Then that should probably trigger some sort of zoning review. The exact numbers of room-nights aren’t important, or even using room-nights as the metric. It’s having some sort of progression that matters.
Strike the 500 foot rule, certainly for casual use. Strike the requirement that only owners be allowed to participate, and stop all talk about requiring the owner to be on-site. We don’t require that for longer rentals, and it doesn’t serve a compelling purpose in a tourist rental.
Work with the State to think about how to collect room taxes. I’m not sure of the details, but as I understand it, in order to pay room taxes someone using AirBnB would have to register with the State as a separate business entity and pay that way. Oh, and by the way, now that you’re registered with the State, they’re going to go digging and see what else you might owe. That burden needs to be reduced – either that State modernizes its requirements, or we invent the “People’s Republic of Madison Tourist Rooming Matching Service, LLC” that everyone in Madison is cooperative member and can route taxes through to the State.
As an aside, this is a good opportunity for the City to work on its API strategy, and make as much of this process as seamless as possible. When I last bought a car, I was impressed by how easy the dealer’s computers talked to the State’s computers, and took care of updating my registration and title information. If we offered a simple API, AirBnB could build much of this right into their site so it’s automatically managed. Ideally, we’d go into this cooperatively with other cities or through some central clearing house so we all use the same API, which would encourage AirBnB to play along. The goal should be compliance, and whatever we can do to reduce friction encourages compliance. The city needs to resist the urge to treat this as a revenue stream.
That AirBnB has gotten ahead of the regulations is not news – in fact, it may well have been part of their strategy to establish themselves first and counting on regulation to catch up. It’s well established in Madison and it’s only going to grow. We should use this as an opportunity not to fight the sharing economy , but to demonstrate that Madison can quickly adapt to changing environments, preserving what is important and moving past what is not.
