Caught off guard by the surging popularity of the “sharing economy,” governments have struggled in recent years to adapt the rules they developed for taxi and limousine services to ride-sharing outfits such as Uber and Lyft. Now a new front is opening in the regulatory battle, as the state Legislature and numerous cities train their sights on room-sharing services such as Airbnb and Vacation Rentals by Owner. Arguing that local governments don't have the resources to stop illegal short-term rentals, proposals in the Legislature and a handful of cities around the state would require Airbnb and its rivals to become de facto code enforcers. There's a role for room-sharing services to play in helping cities manage the problems posed by short-term rentals, but that's not it.
A good example is what's happening in Santa Monica. The city's zoning ordinance bars short-term rentals in residential areas, but the city isn't enforcing the widely flouted ban. Instead, it has tentatively approved a new ordinance that would allow a dwelling to be rented out only when the primary resident obtains a license and remains on the premises while the renter is there.
That's one way to deter landlords from depriving the city of much-needed permanent housing by converting apartments into unregulated hotels. Where the proposal goes off the rails, though, is in requiring the room-sharing companies to regularly report to city officials who's listing properties at what addresses, along with the number of days each property has been rented out and the price paid. That would set a dangerous precedent for forcing private companies to monitor the behavior of their customers on behalf of the government. If it's good for Airbnb, why not require automakers to have their cars generate reports for the police whenever they're driven faster than 70 mph in California, the highest possible legal speed? Or require contractors to alert the city when they're asked to build an addition that's too large?
The Legislature is considering a bill that would go even further, mandating that online rental platforms bar listings of properties in areas where it's illegal. Even if the services found a way to stay on top of the block-by-block zoning rules in every community, there's no way for them to tell the difference between what's legal and illegal in a community that, like Santa Monica, bars rentals only when the owner isn't present.
Online rental services can and should do more to help cities collect the transient occupancy taxes that hosts should be paying, as Airbnb has agreed to do in three California cities. And they can make it easier for local governments to use their sites to track down units that aren't legal. But if lawmakers try to turn them into arms of the government, people will quickly shift their rentals to other sites such as Craigslist that aren't equipped to collect their data. Such a move won't make these rentals any less popular, it will just make them harder to regulate.