Airbnb sues Santa Monica over short-term rental ban

Airbnb sued a third California city Friday, arguing that the beach town of Santa Monica violated federal laws protecting privacy and online speech.

In its 22-page suit filed in U.S. District Court in Los Angeles, the company alleges that an ordinance Santa Monica officials passed in May 2015 violates the 1st and 4th Amendments of the U.S. Constitution with a series of onerous requirements for property owners who offer short-term rentals.

The ordinance mandates the property owners, or “hosts,” meet requirements such as posting their business licenses on their online listings and adhering to city fire and building codes. The law also subjects data held by the rental websites to review. Property owners and rental websites such as Airbnb and Homeaway could face civil and criminal penalties for violating the law.

“Santa Monica's clumsily written law punishes hosts who depend on home sharing to make ends meet and travelers looking for low-cost accommodations near the beach,” said Alison Schumer, a spokeswoman for Airbnb. “The city is unwilling to make necessary improvements to its draconian law, so while this isn’t a step we wanted to take, it’s the best way to protect our community of hosts and guests.”

Santa Monica city offices were closed Friday and officials were not immediately available to comment.

Airbnb’s lawsuit is the latest move by the company to counter attempts by local governments to keep the industry out of their neighborhoods. Residents near some of the rental homes have complained of noise, littering and other nuisances.

As part of the Santa Monica ordinance, city officials outlawed rentals of less than 30 days. The ordinance allows arrangements such as renting a spare room for longer periods, but hosts in those deals must acquire licenses and pay the city's 14% hotel tax.

Santa Monica passed the ordinance to assuage irritated neighbors, affordable housing advocates and the hotel industry. The law won unanimous passage and was seen as a test case for how cities might rein in the so-called sharing economy.

But Eric Goldman, a Santa Clara University law professor who has reviewed Santa Monica’s law, questioned the legality of the ordinance. Goldman said the way Santa Monica crafted its language requires Airbnb and other rental websites to ensure that property advertisers are in compliance with the city’s laws.

“They’re trying to hold the website accountable for what their advertisers are doing,” Goldman said. Federal law “doesn’t allow that.”

“There’s obviously a market demand for short-term rentals, both on the supplier and the renter side,” Goldman said. “We need to be really clear: What’s the problem created by those matches that needs to be resolved by the law?”

Airbnb’s lawsuit is the third case it has brought over the last three months against cities attempting to thwart the short-term rental industry.

In June, Airbnb sued San Francisco, its hometown, over a law that penalized rental websites that post properties for owners who don’t have a city permit or exceed the number of nights allowed to rent.

Then in July, Airbnb filed suit against Anaheim, challenging a new city law that imposes fines on short-term rental sites for listing homes and apartments that violate the city’s rental regulations during an 18-month period until such rentals are banned. 

Hundreds of short-term rental properties have flooded the market near the Disneyland Resort and the Anaheim Convention Center, drawing complaints from residents about noise, traffic and parking problems. 

Airbnb’s lawsuit contended that punishing the rental site for violations by property owners was unfair and unconstitutional. 

After Airbnb sued, Anaheim officials reviewed the law and agreed not to enforce the provision that would punish hosting sites. But the law will remain on the books, and the ban on short-term rentals is set to begin in April 2018.

Airbnb has said it plans to file for dismissal of the case against Anaheim.

ivan.penn@latimes.com

Follow me at @ivanlpenn

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This article states that in 2015, Santa Monica outlawed rentals of less than 30 days. In fact, such vacation rentals were already illegal. The 2015 law clarified the city’s ban on unsupervised short-term vacation rentals, but it allowed such rentals if the primary resident remains on the property, has a city business license and pays Santa Monica’s 14% occupancy tax.
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