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    October 13, 2021 Feature

    Short-Term Rentals: Can Cities Get in Bed with Airbnb?

    Marvin J. Nodiff

    ABSTRACT

    The phenomenal growth of Airbnb and other short-term rental platforms over the past decade has spurred cities to find appropriate regulatory frameworks. While the pandemic has sharply curtailed travel, it also provides a respite for local governments to evaluate their strategies. Fortunately, the rise in short-term rental activities has yielded a large body of data for research and analysis by universities and nonprofit organizations across the country during the past three years. This Article collects the new research to guide local leaders in their decision-making.

    Short-term rentals (STRs) (i.e., rentals for thirty days or less) have morphed since their introduction. The original notion of “home-sharing,” in which a homeowner or tenant rented a spare room, has exploded into a billion-dollar global industry. Led by Airbnb, online platforms enable hosts and travelers to connect, accounting for more lodging transactions than the major hotel chains combined. Investors are replacing the personal touch of the owner-host.

    The emerging body of research can help local leaders understand the risks and benefits of STR activities. Most notably, STRs remove existing long-term dwellings from the market. What are the impacts on the supply and price of housing for homeowners and long-term tenants? How are residential neighborhoods affected when a mini-hotel is dropped in the middle of the block?

    Zoning is available to locate different uses of property in separate areas, but are STR properties residential or commercial? Does self-regulation by the platforms provide adequate accountability for local government? Does it protect consumers’ health, safety, and privacy? Should local leaders expect that increased STR activities will yield more tourists, economic benefits, and tax revenue?

    To date, strategies adopted by cities across the country span the entire policy spectrum from total bans to registration to nonaction. This Article is designed to help local leaders evaluate the mosaic of issues and determine appropriate guideposts for getting in bed with STRs.

    I. Introduction

    How should local government embrace STRs, the latest innovation of the shared economy? What are the risks and benefits?

    In Cities, The Sharing Economy: and What’s Next, the National League of Cities (NLC) observes that sharing economic services presents cities with unprecedented complex questions.1 The overarching challenge is being receptive to innovation while protecting the best interests of the community.2 Considerations include impact on housing, neighborhood concerns, public safety, tourism, access, equity, impact on hotels, job creation, and revenue.

    Each city must tailor an approach based on its unique demographics and needs. “There is no one size fits all regulatory framework” that can be implemented to accommodate these new business models, and only a community can determine the best solution, observes the NLC.3

    STRs resemble mini-hotels and operate as businesses. They convert long-term housing to transient occupancy in entire houses and units in apartment and condominium buildings. Yet, in residential communities, STRs operate under the radar as some cities do not enforce existing zoning and do not require STRs to comply with health, fire and safety standards.

    Local governments are closest to their residents and most familiar with their needs and, thus, are best positioned to determine where STRs are a good fit. Preemption by state government is not appropriate because the needs and circumstances of cities and towns across the state vary substantially. Each must have autonomy and authority to tailor its own approach.

    Since STRs convert existing long-term housing, this business model reduces supply and increases costs for homeowners and long-term tenants. They diminish the quality of residential neighborhoods and the value of homeownership and social capital. However, while mini-hotels undermine residential neighborhoods, they may offer economic energy in some areas that could help mixed-use districts struggling to survive.

    This Article focuses on the mosaic of issues at the intersection of local government and STRs. It discusses the impact of STRs on housing and neighborhoods, the value of homeownership and social capital, zoning, preemption by the state, revenue and taxation, impact on hotels, and regulatory approaches taken in a range of cities across the country.

    II. The Rise of STRs

    A. Growing Popularity

    Short-term rentals show phenomenal growth led by Airbnb and other online platforms.4 Airbnb started in 2008 and went mainstream in 2013–14. Today, Airbnb operates in more than 34,000 cities across 191 countries with over 3 million listings.5 In March 2019, Vox reported “Airbnb recently sold common shares at a price that values the home-rental startup at roughly $35 billion.”6

    Property owners, acting as “hosts,” utilize global platforms that connect travelers with lodging and share fees with the platforms. As economist Thomas L. Friedman noted in 2016, Airbnb “has grown so large that it is now bigger than all the major hotel chains combined—even though, unlike Hilton and Marriott, it doesn’t own a single bed.”7

    This growth is attributable to several factors relating to the market, profitability and technology: STRs offer residential property owners a supplemental source of income by renting their dwelling to others while they’re out of town for any time from a few days to a month, while incurring little or no additional expense.

    Profitability incentivizes commercial operators to acquire residential property for the sole purpose of STRs. Research by online news site Curbed shows that, in Los Angeles “across all neighborhoods, it takes an average of just 83 nights per year to earn more on Airbnb than can be earned in a whole year of renting to a long-term tenant.”8

    Engaging in STR activities is easy through online services such as Airbnb and HomeAway, which promote their platforms through aggressive advertising programs.STRs are promoted by lenders through refinancing programs. In partnership with Quicken Loans, Citizens Bank, and Better Mortgage, homeowners can now count income from renting their properties on Airbnb when refinancing a mortgage. This initiative has government backing from Fannie Mae, the mortgage facilitator that’s still under government conservatorship. Airbnb stated, “This initiative was developed with Fannie Mae to identify new ways of recognizing home-sharing income, making it possible for homeowners to maximize their investment to better reach their financial goals. . . . The project is part of Fannie Mae’s work to find new, innovative ways to expand the availability of affordable mortgage credit.”9 Lenders will give a $50,000 down payment to homeowners who agree to be a host by renting out a room for three years.10

    In St. Louis, for example, although the Gateway Arch attracts an annual average of four million visitors, the city may not be among top tourist destinations. Even so, a June 2019 visit to Airbnb’s website revealed hundreds of STR properties listed on the Missouri side of the metropolitan area. Listings include entire houses, condo units and apartments, carriage houses, and private rooms in houses, condo units and apartments. One host listed a dozen “entire apartments” in the same building.

    B. Business Model

    The original concept of Airbnb was for homeowners to rent a spare room to travelers. Today, Airbnb claims the majority of its listings are either shared rooms or private rooms rented out while the hosts are present. However, data researched by Curbed shows this is not true. Rather, most of the listings are for entire homes: 58.6% in Los Angeles, 72.3% in New Orleans, 66.6% in Seattle. “This means that instead of a host welcoming a visitor into a guest bedroom, most tourists are renting out homes with lock boxes . . . without ever seeing the homeowner.”11 This evolution demonstrates that STRs are becoming more transactional in nature, like hotel activities, and losing their original quality of social interaction.

    Some population demographics adhere to the original notion of “home-sharing” in which the homeowner/host welcomes a guest to rent a spare room. Based on a survey posted on its website, Airbnb reports that seniors (60+) are growing faster than any other demographic as a share of hosts; women constitute nearly two-thirds of senior hosts; senior women earn highest satisfaction ratings of any gender/age demographic; senior women are more likely to offer a private room in their home than younger users; and seniors seek to supplement their retirement income and afford to remain in their homes, and to stay active.12

    Thus, senior hosts—living in the home while guests rent an individual room—preserve the original notion of “home-sharing.” This concept would be more compatible with residential neighborhoods and community associations because it would foster the quality of residential communities by preserving homeownership and owner-occupancy and protect against removal of single-family dwellings from the market, as discussed in section III below.

    C. Impact on Hotels

    In 2018, travel industry research group Skift reported that worldwide STR platforms grew more than eighty percent from $46 billion in sales in 2012 to $83 billion in 2017 while, during the same period, hotel room sales increased twenty-seven percent, from $404 billion to $512 billion.13 As described by the Huffington Post, the STR market “has exploded worldwide.”14

    The extent to which an increase in STRs affects hotel and motel occupancy rates and, in turn, affects city revenue should be of interest to local leaders. A recent Post-Dispatch article states St. Louis has a sixty-seven percent occupancy rate, which has risen over the past five years and matches the national average. Room rates are $20.00 lower than the national average and would need to be higher for proposed new hotels to recover development costs. But visitors to St. Louis are not accustomed to paying premium prices. Nine hotel proposals (adding 1,200 rooms downtown alone), and room prices, could affect the market.15 The Post-Dispatch article doesn’t address the impact of STRs, but hotel market conditions—location, supply and room rates—affect demand for STRs. For example, higher hotel room rates would make STRs more attractive.

    These factors deserve closer analysis. By itself, the prospect of additional city revenue from room sales taxes should not be the determining factor in shaping local public policy with respect to zoning, preserving residential neighborhoods, and protecting the health and safety of visitors and the public.

    III. STRs and Communities

    A. Neighborhoods

    The primary business incentive—profit—coupled with the transient occupancy inherent in STRs can undermine the quality of residential neighborhoods by creating tensions between host properties and owner-occupants in the neighborhood. STRs can affect marketability and resale value of nearby residential properties and invite nuisance problems such as noise and parking.

    The number of guests in a single-family dwelling can readily exceed local limits, which is difficult for cities to enforce. In St. Louis, it is common for listings of “entire” properties to exceed the city’s occupancy limit (not more than three unrelated persons) and load limit (maximum number of persons per bedroom for health and safety). Hosts should be required to comply with local ordinances, including occupancy limits, in their listings and other advertising.

    A more subtle but important impact is potential diminution in the quality of residential communities as single-family homes are converted to STRs. A recent study by online news source Curbed states that “thanks to companies like Airbnb, communities are losing their most important asset: neighbors.”16

    The Economic Policy Institute (EPI), which focuses on economic issues facing low and middle-income persons, compiled recent studies of the STR industry and describes the impact of STRs on neighborhoods:

    City residents likely suffer when Airbnb circumvents zoning laws that ban lodging businesses from residential neighborhoods. The status quo of zoning regulations in cities reflects a broad presumption that short-term travelers likely impose greater externalities on long-term residents than do other long-term residents. Externalities are economic costs that are borne by people not directly engaged in a transaction. In the case of neighbors on a street with short-term renters, externalities include noise and stress on neighborhood infrastructure like trash pickup. These externalities are why hotels are clustered away from residential areas. Many Airbnb rental units are in violation of local zoning regulations, and there is the strong possibility that these units are indeed imposing large costs on neighbors.17

    Airbnb hosts—typically off-site operators—are not directly affected by these externalities.

    B. Housing

    STR hosts do not create new housing for their guests. Instead, the business model converts existing long-term housing to STRs. Thus, this model removes long-term housing—for both owner-occupants and traditional annual rentals—from the market. Understanding the impact of increased STR activities on housing begins with analysis of current market conditions.

    Housing supply is contracting while housing costs for homeownership and long-term rentals are increasing, according to national data published by the Census Bureau in its report ending 2019:

    • homeownership declined from a high of 69.1% in 2005 to 65.1% in 2019,
    • the rental vacancy rate fell from 9.7% in 2011 to 6.4% in 2019,
    • the homeowner vacancy rate fell from 2.6 percent in 2011 to 1.4 percent in 2019,
    • the median asking sales price for vacant for sale units rose from approximately $80,000 in 1995 to $226,800 in 2019, and
    • the median asking rent for vacant for rent units increased from approximately $450 in 1995 to $1,005 in 2019.18

    As the Census Bureau report indicates, the cost of homeownership—the greatest expense in the typical family budget—is increasing. The Federal Housing Finance Agency (FHFA), which tracks the price of single-family housing monthly based on sales, reported a 5.1 percent increase in the fourth quarter of 2019 over the same period of 2018.19

    The National Association of Realtors reported in early 2020 that the number of existing home sales nationwide increased 10.8 percent in 2019 compared to the previous year. Prices have increased every year for nearly eight years. Paired with slow wage growth, these factors have an impact on housing affordability:

    The median existing home price for all housing types in December was $274,500, up 7.8% from December 2018 ($254,700), as prices rose in every region. November’s price increase marks 94 straight months of year-over-year gains. “Price appreciation has rapidly accelerated, and areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth,” Yun said. “The hope is for price appreciation to slow in line with wage growth, which is about 3%.”20

    In the Midwest, the median price was $208,500, a 9.2% jump from December 2018.21

    A recent Harvard study of the nation’s housing observes,

    Although household growth is returning to a more normal pace, . . . housing production still falls short of what is needed, which is keeping pressure on house prices and rents and eroding affordability. While demographic trends alone should support a vibrant housing market over the coming decade, realizing this potential depends heavily on whether the market can provide a broader and more affordable range of housing options for tomorrow’s households.22

    Increased STR activities are impacting housing supply and price. “The largest and best-documented potential cost of Airbnb expansion,” states the Economic Policy Institute, “is the reduced supply of housing as properties shift from serving local residents to serving Airbnb travelers, which hurt local residents by raising housing costs.”23 Analyzing long-term rentals, the EPI finds that by converting existing housing, STRs not only take away from hotels but also convert existing long-term housing—both owner-occupied and long-term tenancies—which decreases supply of long-term housing while increasing prices. Since housing is inelastic, rising prices hurt both owner-occupants and long-term tenants.24

    Analyzing multiple years of nationwide Airbnb listings at zip code levels, researchers note that reallocation of housing supply by STRs “has led to increases in both rental rates and house prices” in two ways (1) “home-sharing increases rental rates by inducing some landlords to switch from supplying the market for long-term rentals to supplying the market for short-term rentals” and capitalizing the increase into house prices, and (2) it “increases house prices directly by enabling homeowners to generate income from excess housing capacity [which] raises the value of owning relative to renting and therefore increases the price-to-rent ratio directly.”25  The researchers summarize the economic significance of their findings:

    Our baseline result is that a 1% increase in Airbnb listings leads to a 0.018% increase in rents and a 0.026% increase in house prices at a median owner-occupancy rate zipcode.  The median year-on-year growth rate in Airbnb listings was 28% across zipcodes in the top 100 CBSAs.  Taken at the sample median, then, Airbnb growth explains 0.5% in annual growth and 0.7% of annual price growth.26

    Declining home loans indicates lower availability of affordable housing, as reported in the St. Louis Post-Dispatch in October 2019.27 According to Doug Schukar, chairman and CEO of DAS Acquisition Co. and USA Mortgage, a nationwide decline of 4.21 percent in home loan closings from 2017 and 2018 can be attributed to the rise in the ten-year Treasury yield in 2018, but a shortage of affordable housing was another reason cited for the drop. “When we do pre-approvals, usually the people are fine,” said Loura Gilbert, vice-president of community development for Commerce Bank. “They just can’t find a house within their guidelines.”28

    While various market and social factors beyond the scope of this article affect the supply and price of housing, the trend to remove long-term housing likely exacerbates these trends. The National Low Income Housing Coalition reports, “One of the biggest barriers to economic stability for families in the United States struggling to make ends meet is the severe shortage of affordable rental homes.”29 The Coalition “urges policymakers to focus on real solutions to housing instability, including a bold and sustained commitment to proven affordable housing programs to ensure that everyone has a safe, accessible and affordable home.”30

    In St. Louis, a recent study finds apartment rental rates in particular areas of the city are rising faster than the metro area as a whole.  The Metropolitan St. Louis Equal Housing Opportunity Council evaluated rental data by zip code from 2014 to 2019 and concluded that rent in the metro area for a two-bedroom apartment rose from $814 in 2014 to $924, an average annual increase of 2.7 percent.31  During the same period, however, Downtown rents rose from $670 to $1,030 (10.8% average annual increase) and the Ladue area rose from $820 to $1,210 (9.5% average annual increase).  The exception is North County, where rents declined.  The study attributes the increase to the rebound of the city’s real estate market since the 2008 housing crash plus an influx of luxury condominiums, and confirms concerns of housing experts that central corridor rents are driving out low-income residents and also workers who want to live near such large employers as Barnes-Jewish Hospital.32

    Public schools are also affected because conversion of long-term housing to STRs reduces the number of families. The city of Sedona, AZ, closed one of its public schools after enrollment in the district dropped from 1,300 students in 2009 to 766 students in 2019.33 In a recent report, online news service Wired notes Airbnb reduces the supply of long-term housing and affects school enrollment.34

    McGill University (“McGill”) studied three recent years’ data in New York City and finds greater profitability of STRs compared to traditional one-year residential leases attracts investors to acquire and convert existing residential housing. McGill finds that commercial operators in New York City control large portfolios of entire-home and apartment listings: twelve percent of hosts earn more than twenty-eight percent of the revenue.35

    The McGill report yields other significant findings with respect to the impact of STRs on rental housing in New York City:

    1. Higher revenue from STRs increases median rental rates for traditional long-term rentals for entire-home and apartment units: 1.4% over past three years.
    2. By forcing higher rental rates for traditional long-term rentals, Airbnb removes long-term rental units from the market: between 7,000 and 13,500 units.
    3. Short-term rental of individual apartment units creates “ghost hotels” and constitutes a new strategy to circumvent regulatory scrutiny.
    4. In certain NYC neighborhoods, STRs foster racial gentrification in terms of profits for hosts and impact on host communities.36

    In Los Angeles, the Alliance for a New Economy estimated that home-sharing platforms took eleven units off the local rental market each day of 2015, swallowing up a significant portion of new housing built.37

    In Arizona, three years after the state legislature preempted local government authority to regulate STRs in 2016, tourist-destination Sedona reported that of 6,500 housing units in the city, only 29 were available for long term rentals, the median cost of a home increased in 2019 to $562,000 compared to $518,000 the previous year, and that the median income of $56,000/year for a family of four makes purchasing a home unattainable. In short, long-term residents could not afford to live there.38

    Apartment complexes have become inviting targets for both landlords and individual tenants to convert units for STR activities, creating what McGill terms “ghost hotels.” As such conversions occur, the supply of long-term (typically one-year leases) rental housing diminishes and rental rates increase. Further, long-term tenants have similar expectations as owner-occupants in residential communities that they won’t be faced with a steady stream of transient visitors; thus, similar externalities impact long-term tenants in apartment buildings as owner-occupants in single-family neighborhoods. Long-term tenants should be protected by limits on the number of units that may be used for STR activities and leases should have disclosures.

    As this discussion of housing indicates, compared to its origins—where hosts rented spare rooms to supplement their income—the STR industry is now characterized by a relatively small number of off-site owners operating “mini-hotels” in multiple properties that were formerly owner-occupied single-family houses. Today, STR commercial operators are drawn to greater profits compared to long-term rental properties. These factors reduce the supply and increase the price of long-term housing.

    C. Homeownership

    The “American Dream” of homeownership is a vital cornerstone in framing public policy with respect to STRs. Homeownership helps individuals provide personal financial stability and equity. It also builds social capital, with important contributions to our society by fostering civic involvement as residents sink roots in their communities. Objective measurements indicate that homeownership builds social capital with the following community benefits:

    1. Homeownership creates incentives for households to improve the quality of their communities since community quality is capitalized into the value of their homes.
    2. Increased length of tenure encourages investments in community since homeowners will consume the benefits of community over a longer time.
    3. Homeowners have a greater sense of community and greater participation. A few examples: 15% are more likely to vote in local elections; 10% more likely to know their U.S. representative by name; 9% more likely to know the identity of their school board head; 6% more likely to work on solving local problems.
    4. Homeowners are more likely to invest in local amenities such as gardening and upkeep of their property.
    5. Social capital fosters communication by developing a common language with neighbors.
    6. Social capital fosters trust among neighbors through shared activities.39

    Thus, while residents have a personal self-interest in owning a home to build financial equity, homeownership also provides important societal benefits for the larger community that are undermined by STRs. Further, for the financial health of the city, strong residential communities reflect stable and rising property values, a reliable source of city revenue.

    D. Health and Safety

    STR operators provide transient lodging to travelers in the same manner as hotels, and STR guests have the same expectations as if they were staying in a traditional hotel. However, unless local government applies public health and safety standards to STRs, guests and the general public are left to rely on the ability of the STR industry to regulate itself. As Swor notes:

    The sharing-economy startups do not have the same level of regulation as their industry counterparts (i.e., . . . hotel industry compared to Airbnb). This can result in a lack of strictly enforced health and safety standards . . . a broad category but includes topics such as cleanliness, parking, fire prevention, and other aspects that would likely be present if one were to rent with a hotel as opposed to a short-term rental property. There is a concern with short-term rental properties not being inspected or maintained for cleanliness as a hotel would be.40

    Public fire and safety standards should be met, including fire extinguishers, CO monitors, and effective exits. Guests in STRs should be provided the same levels of sanitation and cleanliness as if they were staying in traditional hotels. All bathroom and kitchen spaces, and all dishes, pots, pans and utensils should be sanitized and cleaned prior to new guests occupying the STR. Clean sheets and towels should be provided.

    E. Economic Impacts

    The EPI reaches this overriding conclusion on economic impacts: “While the introduction and expansion of Airbnb into U.S. cities and cities around the world carries large potential economic benefits and costs, the costs to renters and local jurisdictions likely exceed the benefits to travelers and property owners.”41 More specifically, the EPI finds:

    1. Airbnb’s claim that it adds net tourism is not supported. Airbnb calculates total STR rental revenue plus estimated expenditures for food and recreation to support its claim. In fact, however, only 2–4% of guests would not have made the trip but for the lower cost of Airbnb. Simply put, the vast majority of travelers consider Airbnb as substitute lodging for hotels, not the deciding factor.
    2. The argument that Airbnb is lowering the cost of travel does not address a real need in the market. Compared to all costs of living, housing has been increasing while lodging costs have been relatively stable. Further, the typical family budget for travel is small.
    3. Revenue from the lodging sales tax is significant for local government, but Airbnb’s “voluntary” agreements to collect and remit such taxes are self-serving. Such agreements may dismiss taxes owed prior to the agreement and may preclude verification of the amounts collected.
    4. Airbnb disregards local zoning by operating hotels in areas zoned residential. Zoning expressly excludes hotels from residential districts, but Airbnb expects a pass by offering to collect hotel taxes.
    5. Airbnb may reduce the quality of employment in the hospitality industry to the extent lodging at hotels (with their housekeeping staff) declines and STRs increase (outsourcing to service companies). This may also lead to a decline in wages for hotel employees.42

    F. Revenue and Taxation

    Airbnb may pull tourists and revenue from hotels and motels based on lower pricing, but does it add a net benefit to tourism or the city? The long-term question of lost room sales taxes as STRs grow is uncertain, according to the National League of Cities.43

    As noted above, the EPI debunks Airbnb’s claim that it adds net tourism; instead, EPI finds that the vast majority of travelers consider Airbnb as substitute lodging, and only 2 to 4 percent of guests would not have made the trip but for the lower cost. In fact, it may yield a net loss in city revenue due to the difficulty in identifying all hosts.

    For tax purposes, the city of St. Louis treats STR arrangements in the same classification as hotels and motels. They are subject to room sales taxes. Airbnb hosts, like hotel and motel operators, are responsible to pay a tax on room sales for lodging under 31 days (3.5 percent for the Convention and Sports Tax and 3.75 percent for the Convention and Tourism Tax). Airbnb and the city reached an agreement whereby these taxes would be paid by Airbnb based on host transactions through its website. Arrangements with other platforms to pay these taxes are unknown.

    In an agreement with suburban St. Charles County, Missouri, Airbnb will collect and remit the 5% room tax to the county, which stands to realize tax income from Airbnb and its guests. Airbnb estimated that STR activities reflect a 182% year-over-year growth.44

    Fortune magazine reports that Airbnb has sought agreements with governments to collect and pay state and local taxes and that Airbnb now has twenty such agreements with states.45 A recent St. Louis Post-Dispatch article discusses Airbnb’s agreement with the State of Missouri. Airbnb’s strategy behind such voluntary agreements is to resolve issues of tax treatment for its transactions. Airbnb Midwest estimates $1.1 million in state tax revenue from 6,300 Missouri hosts on its website with 289,000 lodgers generating income for the hosts of $28.9 million. For 2017, it estimates that hosts generated $9 million in St. Louis (income, not tax revenue).46 Implicit is that the promise of higher tax revenue will deter local regulations.

    Whether such “voluntary collection agreements” are effective and subject to accountability should be examined further. According to Wired, Airbnb may leave the burden of paying local taxes to the host, and its agreements with state and local government are suspect because they call for forgiveness of back taxes and make audits impossible.47

    For property tax purposes, the city of St. Louis has reclassified STR properties from “residential” (19% of appraised value) to “commercial” (32%) effective with the 2019 biennial reassessment. The Assessor sent notices to the owners of 235 properties listed on Airbnb, noting they are operating as commercial enterprises where the owner lives off-site. The Assessor noted, “The owners of more than half of the reclassified properties live outside of St. Louis, in states as far as California, Colorado and Arizona.”48

    IV. Zoning: Commercial or Residential?

    A. Local Government Zoning

    Some cities allow STRs anywhere, some ban them everywhere, and others allow them only in certain districts. Zoning “was originally justified in part by looking at the concept of nuisances.”49 Some cities, including St. Louis, have not enforced STRs under current zoning ordinances, even though such activities arguably constitute commercial activities in violation of residential zoning. Are STRs residential or commercial use of property for zoning purposes?

    Airbnb and its hosts contend that the use of STR properties is “residential” because guests’ activities include sleeping, eating, and bathing, regardless of duration. Of course, this is the same nature and scope of activities as occur in hotels. And, like hotel visitors, STR guests occupy the premises in connection with their travel, whether business or pleasure, with no enduring interest or stake in the neighborhood or the city. Like hotel guests, they are purely transient visitors.

    The McGill researchers find that Airbnb has created a new class of rental housing in which short-term rentals occupy a gap between traditional residential rental housing and hotels.50 The STR business model provides global platforms for hosts and guests to connect and conduct transactions for a fee. As noted above, most hosts are off-site owners operating a business to generate revenue, with no stake in nurturing social capital for the neighborhood. In view of the profit motive and the transient nature of guests, STRs operate as the functional equivalent of mini-hotels that more accurately reflect commercial activities rather than residential use.

    1. Local Occupancy Limits. To maximize profit, STR platforms and hosts disregard local limits on the number of occupants for single-family dwellings and for health and safety. For example, the St. Louis code defines the term family and imposes a limit on the number of unrelated occupants as follows:

    Section 26.08.160: A person, or group of persons immediately related by blood, marriage or adoption, living as a single housekeeping unit; also, a group of not more than three (3) persons not necessarily related by blood, marriage or adoption, living as a single housekeeping unit.51

    Such disregard invites violations of local occupancy limits, which are difficult to enforce due to the transient nature of the violation. In St. Louis, it is common for listings of “entire” houses to invite seven or eight guests for two or three bedrooms or advertise fourteen guests in four bedrooms. One listing on a street of single-family houses advertised that the dwelling sleeps sixteen persons and, during the Washington University graduation weekend in spring 2018, reportedly housed twenty-five guests who arrived in five vehicles. This STR property was listed for more than eighteen months.

    2. Judicial Zoning Decisions. Corresponding to growth of STR activities, the past several years have witnessed legal challenges to local governmental efforts to regulate STRs through zoning restrictions. While the validity of local zoning authority is well-settled, the judicial decisions are split, with some courts applying a strict construction test to determine whether the particular ordinance expressly restricts the location of STR activities, and others considering the broader factors of the city’s intent and the nature of STRs to determine the validity of local zoning.

    (a) Decisions rejecting ordinances. Courts taking a strict construction approach have found a variety of reasons to reject local zoning ordinances intended to limit STRs. If the use as STR did not fit definitions of hotel or bed-and-breakfast, a strict reading of the ordinance meant that such use was not prohibited.52 A cabin used as a secondary residence and also used as vacation rental was found to be residential on the basis that the cabin was not like a hotel because it was not made available to anyone who could pay, but rather residents were screened, which made it more like sharing the home.53 An attempt to restrict STRs in residential districts failed for lack of a limitation on time or transience in the definition of single family and that some commercial uses were permitted in the zone.54

    Vagueness and ambiguity, as with any legislative enactment, defeated an attempt to restrict STRs where the zoning ordinance did not clearly state that all transient, or even significant transient use, was prohibited, so long as permanent use was the main use in an apartment building.55 An ordinance that defined family as a single housekeeping unit, but did not include any time limitation for rental, did not prohibit STRs.56 Vagueness can render a zoning ordinance void, such as failure to define non-transient to inform the public as to what uses would be considered illegal.57

    Ordinances that limit advertising could be subject to a freedom of speech claim reviewable under a strict scrutiny test. For example, a Nashville zoning code that prohibited hosts from displaying signs on the property advertising it for short-term rental led to a claim that it abridged the owner’s freedom of speech.58 However, between the trial and appeal, the city amended the ordinance by substituting a requirement that signage would be subject to the sign regulations of its code, and the trial court declared the owner’s free speech claim as moot. The case is noteworthy because it raises questions relating to limits on content-based speech.59

    (b) Decisions upholding ordinances. Some courts, faced with an ordinance that did not expressly restrict STRs in a residential zone, considered the nature of the activity to hold that the use constituted a violation under the ordinance.

    In Pennsylvania, the Supreme Court held that STRs constitute transient use not permitted in a local zoning residential district despite the ordinance not expressly excluding such use.60 The court found that the common definition of single housekeeping unit requires the person or persons residing in the home to function as a family and to be ‘sufficiently stable and permanent’ and not ‘purely transient.’” Citing a California case, the court stated that “short-term rentals of homes located in a single-family district ‘undoubtedly affect the essential character of a neighborhood and the stability of a community.’”61 The permanence and stability of people living in single-family residential zoning districts creates a sense of community, cultivates and fosters relationships, and provides an overall quality of a place where people are invested and engaged in their neighborhood and care about each other. The court also noted the Township’s argument that the “facts of this case clearly establish . . . that the character of Appellees’ ‘business enterprise’ does not share any of the hallmarks of a single-family residential district.”62

    The Indiana Supreme Court held that STR use violated a local ordinance for two reasons. First, the definition of single-family dwelling—“[a] separate detached building designed for and occupied exclusively as a residence by one family”—unambiguously was meant to exclude short-term rentals because one family did not mean one family at a time, but rather one family, consistent over time.63 Second, the court found that by dividing the city into residential and commercial districts, the zoning scheme implicitly meant that residential areas could not support commercial uses. Because money was exchanged for the rental, the use as a short-term rental was commercial, and could not be supported in the residential area.64

    Similarly, a Michigan court held that a zoning ordinance, even prior to adopting language specifically preventing STRs, made such use unlawful because the R-1 zone was to be occupied by one family only, and the definition of family excluded transient occupancy, and further that the STR was use as a hotel, which was also excluded.65 A Florida court held that a Miami ordinance, despite not specifically outlawing STRs, contained two provisions indicating STRs could be illegal in residential districts: (a) STRs were transient instead of permanent and (b) they might be considered lodging or hotels, which were precluded from those districts.66

    In considering an ordinance with a special use permit, the court noted that the owner-occupancy requirement was the cornerstone because it put responsibility for issues like noise violations on someone present on or responsible for the property; the area variance, which did not require owner-occupancy, had requirements that were not met for a hardship that was not self-created and ran with the property.67

    A Nashville, Tennessee ordinance limiting permits for non-owner-occupied single- or two-family dwellings to three percent for each census tract was challenged for violating the state constitution’s anti-monopoly clause by providing a monopoly to the existing three percent of owners with permits.68 On appeal, the court found the cap granted a monopoly, but not that the cap was constitutionally invalid because the city was protecting the public’s well-being in terms of residential concerns relating to allowing unlimited non-owner-occupied STRs in the particular neighborhood, including a decrease in the sense of community by replacing neighbors with transient strangers.69

    B. Community Associations

    Policy makers should also recognize the role of private residential communities: condominiums, subdivisions (homeowner associations or HOAs), and cooperatives, generically known as “community associations.” Nationwide, approximately twenty-five to twenty-seven percent of Americans live in a community association.70 While the form of property ownership differs, all share certain common characteristics including mandatory membership for owners and private deed restrictions on property that are recorded and run with the land.

    Private deed restrictions in community associations resemble local governmental zoning at the neighborhood level and, in residential communities, regulate land use by prohibiting or limiting non-residential use of property and occupancy; associations afford “wide flexibility in land planning and land use.”71 Condominiums are also subject to the Federal Housing Administration regulations on rentals of thirty days or less and on the number of leased units for the purpose of insuring mortgage loans.

    When enforcing restrictive covenants purporting to prohibit STRs, the courts often strictly construe a restrictive covenant in favor of the free use of land.72 The Alabama Court of Civil Appeals took this approach in Slaby v. Mountain River Estates Residential Ass’n73 when it interpreted two restrictions that community associations commonly use when attempting to forbid short-term rentals: a limitation to single-family residential purposes74 and prohibition of commercial use.75

    The court in Slaby analyzed the issue of single-family residential use in four aspects.76 First, the court considered the physical structure of the house. Though the house may have been a duplex rather than a single-family structure, plaintiffs had not raised that argument in the lower court and the court moved on to other areas of analysis.77 Second, the court considered the identity of the families making use of the property and determined that, lacking a limitation to “not more than one single family unit,” as long as the property was used by not more than one family unit at a time, then the covenant was not violated.78 Third, the court considered whether the use by renters was residential, and based on evidence that renters used the property for “ordinary living purposes,” such as to “relax, eat, sleep, bathe, and engage in other incidental activities,” found the use was residential.79 Finally, after considering the short duration of the rentals, the court found the covenants allowed leasing of property but did not address duration of allowable leases; the court concluded that a limitation based on time was not supported by the phrase residential use and could not be read into the covenant.80

    Next, the Slaby court held that the limitation to residential use and prohibiting commercial use did not preclude short-term rentals.81 The court relied on two primary reasons: (1) any commercial activity in renting the property for short periods occurred over the internet, rather than on-site, meaning that no commercial activity actually happened in the home82 and (2) the fact that money was exchanged did not make the use commercial because that exchange did not alter the manner of the use of the property from being residential.83

    The courts will also examine the words and intent of the restrictive covenant. In a recent Texas case, an owner rented his San Antonio home in a community association 102 days over five months, with guests staying from one to seven days.84 Some rentals involved several families and as many as ten people at one time. The restriction stated that lots could be used solely for residential purposes, and no business could be conducted that was noxious or harmful. The Texas Supreme Court found “residential use” involved activities generally associated with a personal dwelling, and the covenants did not define “business” or impose time limits on occupants, and held that so long as the renters used the home for a residential purpose, no matter how short-lived, such activities did not violate the covenant.85

    Broad statutory authority may allow a community association to utilize rulemaking to limit STRs. In a recent Texas case, the recorded declaration of a homeowners’ association’s limited the use of properties to single families.86 Investor owners used two units for STRs and paid state and local hotel and motel taxes on the rental proceeds. The board adopted a rule prohibiting hotel, motel or transient use, and defined “transient” to include any use for which a hotel or motel tax was applicable. The owners argued that the declaration stated the board could adopt rules relating to the common areas, not the individual units. But the Texas Court of Appeals found the declaration did not limit the association’s other powers under the broad rulemaking authority contained in the Texas Property Code.87

    As with zoning ordinances adopted by public government, the courts review private restrictive covenants for vagueness and ambiguity. Where properties were restricted for “residential purposes” and an owner rented his property to friends and others as a vacation home, the court found the restriction did not prohibit STRs because “residential purposes” was ambiguous.88 Where the use of houses in a subdivision was prohibited for “any commercial purpose,” and specifically named “motels” and “hotels,” the court held that it was not clearly apparent that short-term rentals were prohibited, despite the restriction including specific examples.89

    1. Reconciling the Cases

    In view of the differing tests applied by the courts, cities and community associations should carefully draft their respective ordinances and restrictive covenants to indicate intent and to define important terms. They should recognize that STRs involve purely transient occupancy more typical of a traditional hotel than a single-family dwelling unit. STR occupants undermine the purpose of residential districts because they do not exhibit the qualities of permanency and stability associated with long-term residency by families and long-term tenants.

    As cities evaluate alternative strategies for exercising their well-settled zoning authority to accommodate STRs while preserving residential neighborhoods, local government leaders should consider optimum areas where short-term rental activities could yield the greatest benefits. For example, in many urban areas including St. Louis, existing zoning designates properties along major arteries as districts for mixed uses, including neighborhood, and local or area commercial and residential uses. These corridor zones include retail shops, restaurants, entertainment venues and residential spaces located in buildings that typically consist of two and three stories. In these eclectic but often struggling areas, landlords face difficulty maximizing profitability of the upper floors, commonly renting the space to residential tenants under traditional annual leases. Channeling STRs into these corridor zones would represent a strategy of positive growth where the potential economic energy would yield the greatest benefits.

    C. State Preemption

    Local governments—from large cities to small towns—are closest to and most familiar with their residents and the unique characteristics of their areas. Thus, local governments are best positioned to determine appropriate regulation of STRs through the exercise of zoning authority tailored to their particular needs. The observation that local government is most familiar with their residents includes community associations with private restrictions on use of property.

    However, as reported by the NLC in its 2017 report on preemption, “We see many instances where state-level politicians work to usurp the will of people in cities both through preemption and Dillon’s Rule provisions.” Concludes the NLC, “As a result, the work of city leaders and the mandate of the people is undermined.”90

    The notion of preemption by the state, advocated by Airbnb, is gaining ground across the country to preempt local governments in matters of zoning and regulatory authority.91 Wired reports that Airbnb is spending huge amounts of money on lobbyists at the state level to preempt local authority.92 When the Florida legislature was considering preemption, arguments were made that cities are best positioned to use their zoning authority.93

    As reported in USA Today, three years after Arizona preempted local governments from regulating STRs in 2016, residents of Sedona voiced dismay at the results of investors moving into neighborhoods to buy up multiple homes, vacation renters driving up housing costs and the changing neighborhood dynamics (see also, page 237 preceding). State Rep Bob Thorpe, R-Flagstaff, said, “We never anticipated that somebody would go into a neighborhood, purchase a home and turn it into a mini-hotel.”94

    V. Is Self-Regulation an Effective Business Model?

    A. Self-Regulation

    Under its business model, Airbnb approves its hosts and the hosts select their guests. Is this self-regulatory process adequate? What enforcement is available? How effectively does this process protect guests and neighboring property owners?

    1. Security vs. Privacy. Guests have complained about surveillance cameras they were surprised to discover in bedrooms, bathrooms and kitchens disguised in lightbulbs and smoke detectors. While hosts contend the cameras are “security” measures for safety and to detect violations, guests understandably are offended by the invasion of privacy.

    Airbnb procedures allow hosts to use cameras in common spaces such as living rooms and kitchens, but not in private spaces. Hosts must disclose the use of cameras.

    NBC reported on March 7, 2019 that its review of San Francisco Airbnb listings found disclosed security cameras in less than one percent of rentals. Do Airbnb guests have the same expectations as hotel guests? “People expect cameras in their hotel lobbies. They don’t tend to expect them in their hotel room.”95

    A CBS story related how travelers have found recording devices such as cellphones hidden under bathroom sinks. Guests discovered iPads and cameras disguised in motion detectors. In June 2017, a German tourist settled with Airbnb for an undisclosed amount after allegedly finding a hidden “remote-controlled camera” at a property in California.  “Simply put, property owners can be ‘peeping toms,’ ” said Cameron Russel, a professor at Fordham University School of Law.96

    When incidents of privacy invasion and breaches of Airbnb’s rules are reported to Airbnb, the guest may receive a refund and the host banned from the platform. But what deters the host from using the images captured from victimized travelers?

    Jamie Court, president of the nonprofit Consumer Watchdog group, told NBC, “It’s not good enough to disclose something in fine print. It’s not good enough to disclose something in large print, because the presence of a camera is in itself something dangerous. . . . The conflict between nosy or wary hosts and privacy-minded renters—for every hidden-camera horror story, there are plenty of Airbnbs getting trashed by partying vacationers—shows how society and Airbnb are struggling to come to grips with the unfettered mass marketing of surveillance.”97

    2. On-Site Criminal Activities. Does the ease of booking Airbnb sites invite criminal activities? Illegal activities at Airbnb properties and abuse of the online booking process may have been facilitated by several factors: ease with which properties may be listed and the inherent attributes of STRs, including short transiency of guests and on-site behavior that’s hidden from view.

    According to a newspaper report, a thirty-six-year-old South Carolina man, who met a thirteen-year-old Fenton, Missouri, girl on social media, rented a home in the St. Louis area through Airbnb and had sex with the girl. The man was caught with the help of Airbnb’s record of his license and was charged with travel with the intent to engage in illicit sexual conduct.98

    The website Townhall described how STRs could be used for money-laundering schemes by creating a dummy Airbnb site and using phony bookings and fake guests.99

    As reported in Fortune, an indictment details how Paul Manafort laundered $18 million in Russian funds, including purchasing a $2.85 million Manhattan property in 2012 with money from his offshore account in Cyprus. The indictment alleges Manafort rented the property on Airbnb to make thousands of dollars a week.100

    Russian fraudsters funnel money through STRs, reported The Daily Beast. “Scammers are leveraging Airbnb to launder dirty cash from stolen credit cards, according to posts on underground forums and cybersecurity researchers consulted by The Daily Beast,” which

    found a number of recent posts on several Russian-language crime forums, in which users were looking for people to collaborate with to abuse Airbnb’s service. . . . [T]hese operations rely on an individual or group using legitimate or stolen Airbnb accounts to request bookings and make payments to their collaborating Airbnb host. The host then sends back a percentage of the profits, despite no one staying in the property.101

    Guests may have a greater exposure to criminal activities. The University of Massachusetts (Amherst) published a study by the Travel and Tourism Research Association in 2017 entitled “Explore the Spatial Relationship between Airbnb Rental and Crime.” Compiling data in Florida counties, the authors found that “Airbnb is positively related with property crime” against guests (robbery and motor vehicle theft) “and negatively related with violent crime” (murder and rape). In less tourism-intense areas, shared room type is the most solid crime-related listing; the authors warn that hosts and renters should take extra precautions when renting shared lodgings.102

    3. Dangerous Conditions. In general, property owners have a legal duty to disclose dangerous conditions of which they have notice to persons entering upon the property and to take appropriate corrective measures. Dangerous conditions include such matters as loose rugs, locks that don’t operate properly, and tripping hazards. For the STR guest who suffers injury on the property, however, pursing a claim for relief may be complicated. The host may be the property owner or may have retained a managing agent. The guest may be renting an apartment, in which case he or she would be a subtenant of the tenant or landlord who, in turn, may have a managing agent. Homeowner insurance policies typically exclude liability for injuries where the insured is using his or her home for profit. Airbnb offers additional coverage up to $1 million as host protection for personal and bodily injury, but availability is dependent upon the host procuring such additional coverage. The STR platform may be liable, depending on the adequacy of its procedures for screening properties. In short, STRs guests face greater uncertainty and difficulty if they are injured due to dangerous conditions on the property.103

    4. Online Listings. As discussed above, Airbnb and other platforms do not actively require their hosts to be accurate in online advertising to attract guests, and the platforms do not monitor listings. Compliance with local governmental limitations on occupancy and loading of dwellings are routinely ignored, inviting violation of city ordinances designed to protect health and safety.

    The New York Times recently reported that Airbnb and Miami Beach were at war, with travelers caught in the crossfire. Airbnb’s listings do not require disclosure of local areas where STRs are banned, leaving such warnings to the host. Like others around the country, Miami Beach is trying to control the home-sharing market and enforcing its residential zoning ordinance. Renters often find out their weekend home is illegal when they get a knock on the door.104

    New York City is pursuing an investor scheme designed to circumvent its Airbnb regulations reflecting the city’s concerns that Airbnb reduces the number of long-term rental housing and increases leasing rates.  The investor/host used multiple names and entities to lease apartment units, filled the units with Airbnb guests, and realized millions in revenue.105 Wired reported that NYC’s lawsuit filed in June 2019 described a “sprawling network” from 2015–2019 in which thirteen individuals illegally converted residential units in thirty-six buildings in Queens, Brooklyn, and Manhattan; the suit claims the scheme realized $5 million through Airbnb, booking more than 24,000 rooms for nearly 64,000 guests.106 While the scheme involves apartments in New York City, it readily applies to apartment buildings and single-family homes elsewhere with the message that Airbnb’s profitability invites disruptive commercial operators, and cities must have strong enforcement tools.

    The above information relating to privacy, criminal activities, dangerous conditions and accuracy in listings, while brief, raises important issues as to whether Airbnb’s business model of self-regulation provides adequate protection for guests, neighboring property owners and the public at large. In the absence of appropriate industry-wide standards, cities should apply effective regulations relating to selection of hosts, privacy for guests, advertising practices and other matters, with broad enforcement tools for noncompliance, including injunctive relief and monetary penalties.

    B. Cooperation by the Platforms

    Diligent local government efforts to design a regulatory framework for STR activities must begin with reliable data to quantify and measure them. But gathering such information relies on cooperation by the platforms.

    Local government leaders need basic facts: How many STR properties exist? What is the breakdown among entire houses, apartments and condo units, and private rooms where the host resides on the premises? Where are the properties located? How many hosts? How many transactions? How much revenue is generated? Do the listings comply with city ordinances?

    Creating an accurate database is critical to measuring performance and effectiveness of local regulation and revenue collection, and impacts on housing supply and rates, over time. To quantify STR activities, local government should be able to obtain transaction data from the platforms themselves, so long as the data does not include content. While the platforms have fought such requests, recent developments support local authority to require transaction data.

    Airbnb and New York City have been embroiled in a high-profile feud for a decade but have reached agreement on sharing data, according to Wired.

    Airbnb wants legitimacy in its biggest market. City officials want to limit home-sharing platforms, which they argue exacerbate the city’s housing crisis and pose safety risks by allowing people to transform homes into illegal hotels. Despite years of lawsuits, countersuits, lobbying campaigns, and failed attempts at legislation, progress on resolving the dispute has been incremental at best. . . . On May 14, Airbnb agreed to give city officials partially anonymized host and reservation data for more than 17,000 listings. Two days later, a judge ordered Airbnb to turn over more detailed and non-anonymized information on dozens of hosts and hundreds of guests. . . .107

    In 2015, Santa Monica enacted an ordinance requiring STR platforms to report transactional data to the city. The ordinance, as amended in 2017, imposes four obligations on hosting platforms: (1) collect and remit Transient Occupancy Taxes; (2) regularly disclose listings and booking information to the City; (3) refrain from booking properties not licensed and listed on the City’s registry; and (4) refrain from collecting a fee for ancillary services. HomeAway and Airbnb challenged the ordinance, asserting it required them to monitor and remove third-party content, and therefore interfered with federal policy protecting internet companies from liability for posting third-party content under the Communications Decency Act of 1996.108 The Ninth Circuit Court of Appeals rejected this argument, stating,

    The Ordinance prohibits processing transactions for unregistered properties. It does not require the Platforms to review the content provided by the hosts of listings on their websites. Rather, the only monitoring that appeared necessary in order to comply with the Ordinance related to incoming requests to complete a booking transaction—content that, while resulting from the third-party listings, was distinct, internal, and nonpublic.109

    The court concluded that the Ordinance was not inconsistent with the Communications Decency Act, and therefore was not expressly preempted by its terms, and concluded that the Ordinance would not pose an obstacle to Congress’s aim to encourage self-monitoring of third-party content, and therefore obstacle preemption did not preclude Santa Monica from enforcing the Ordinance. The court held that the Ordinance “does not implicate speech protected by the First Amendment,” concluding that the Ordinance’s prohibitions regulate non-expressive conduct, specifically booking transactions, and do not single out those engaged in expressive activity.110

    Santa Monica City Attorney Lane Dilg, as reported by the Associated Press, said that “the ordinance prevents residences from being converted into de facto hotels, protects affordable housing and helps residents stay in their homes.”111 Observed attorney Andrew Zacks,

    The Santa Monica ruling was a blow to Airbnb in failing to stop a local ordinance that required home sharing platforms to monitor and regulate hosts’ listings to ensure compliance with local laws and regulations, and the impact will have far-reaching consequences as online short-term rental companies attempt to utilize the same federal laws to block similar ordinances in major cities across the country. . . .112

    Similarly, in November 2016, Reuters reported a federal circuit judge in San Francisco rejected Airbnb’s attempt “to block a San Francisco ordinance that forbids the home-rental company from taking bookings from hosts who have not registered their home with the city.”113

    Federal legislation would codify these judicial decisions and help state and local governments enforce restrictions by limiting the immunity enjoyed by STR platforms relating to content of third-party listings under the Communications Decency Act, 47 U.S.C. § 230. H.R. 4232 was introduced in the U.S. House of Representatives on September 6, 2019, by Representatives Case (D-HI) and King (R-NY).114 It would enable state and local authority to enforce STR regulations against platforms listing STRs that are in violation of state and local law. For example, if a city requires registration, a platform listing an unregistered property would be subject to action by the city.

    VI. Local Regulatory Approaches

    Cities across the country and locally are taking varying approaches to protect the quality of residential neighborhoods. Nationally, many cities prohibit STRS. Some regulate the activity where permitted by requiring permits and insurance. Others appear more interested in revenue from a hotel tax and fines for enforcement.

    Several cities in metropolitan St. Louis have adopted ordinances prohibiting STRs, including, for example, Chesterfield, Frontenac, Glendale, Hazelwood, and Maplewood. Frontenac’s ordinance emphasizes that short-term rentals conflict with the “sense of community.”115

    The St. Louis Post-Dispatch reported that the Hazelwood ordinance states that “the short-term rental of all or a portion of residences is not in keeping to the stability, shared commitment and sense of community that give Hazelwood its exceptional quality, and that such rentals conflict with the neighborhood environment that makes both our single-family and multi-family areas special, welcoming and desirable.”116 Chesterfield Councilman Barry Flachsbart said, “I believe that they are not in the best interests of the residential areas of the City . . . we do have adequate hotel and motel space for most people who want to stay in Chesterfield. . . . [I]t’s not a matter of getting revenue from them.”117

    The following are examples of regulatory approaches in a sample of jurisdictions:

    1. Austin, Washington, D.C., Madison, Chicago and San Francisco: STR activities include hotel taxes in their rates, either voluntarily or as part of regulations.118

    2. Boston: Hosts must be owner-occupants and be present while guests are on premises.119 Hosts must register and certify with the city, at minimum, compliance with condominium governing documents.120 In Airbnb, Inc. v. Boston, the U.S. District Court for the District of Massachusetts, in April 2019, upheld the ordinance, including fines if the company collects a fee for an ineligible unit, rejecting claims that the ordinance violated the federal Communications Decency Act, much like the issue in the Santa Monica case.121 In addition, Massachusetts requires STRs to register with the Commonwealth and pay a five percent tax and allows local municipalities to assess an additional six percent tax and creates a state-run affordable housing fund.122

    3. Denver: Hosts must obtain a Business License and Lodger’s Tax ID, certify the property is the primary residence in a Residential Zone, carry insurance, have smoke detectors and carbon monoxide detectors, pay the 10.75% lodger’s tax, obtain written permission from landlords, owners, and HOAs, and more.123

    4. Kansas City: Kansas City, Missouri, bans STRs in “low-density residential” areas with single-family dwellings. Where permitted, hosts must be owner-occupants with option to obtain a special use permit.124

    5. Arlington: Arlington County, Virginia, adopted a new “accessory homestay” use with the following purposes: protect character of its neighborhoods, reduce barriers for those intending to use their homes for short-term rental through online services, implement safety requirements to ensure the residential rental property complies with zoning, building, fire and other safety codes to protect public health and safety, property values, and neighborhood character, and provide an enforcement mechanism. Standards: host occupies property as primary residence at least 185 days/year; lodgers may use entire home, including accessory dwellings; number of lodgers is capped at larger of six lodgers or two lodgers per bedroom, but not more than allowed by building code; smoke detectors and fire extinguishers must be provided; does not authorize other commercial activities such as parties, banquets, weddings, meetings, etc.; all building code requirements must be met; units in apartment buildings and condominiums must be occupied as permanent residence (more than fifty percent of the time).125

    6. New Orleans. Governing reports that in residentially zoned neighborhoods, people in New Orleans can only rent out rooms in homes they occupy. STRs in the popular French Quarter and Garden District are subject to a nine-month ban, which the city council permanently extended in January 2019.126

    7. Seattle: Seattle limits new short-term rentals to two units per host, adding a tax, and requires a license. The ordinance differentiates downtown core and other neighborhoods.127 The Seattle city council considered impacts on low-income housing and gentrification.128

    8. San Luis Obispo: San Luis Obispo requires the dwelling be owner-occupied. The purpose is to ensure the owner is involved in the homestay and temper the likelihood that homes would be converted to STRs. The presence of the owner is encouraged but not mandated due to difficulty of enforcement. The ordinance does not include inspections.129

    9. Portland, OR: Portland considered (but did not adopt) a bill in which a portion of revenue from home-sharing would be diverted to an affordable housing fund to promote equity.130

    10. Indianapolis and Philadelphia: These cities (as of NLC’s 2015 report) do not regulate STRs; rather, they rely on complaints from neighbors to resolve issues on a case-by-case basis.131

    11. Santa Monica, CA: The city, concerned that STRs had negatively impacted the quality and character of its neighborhoods by “bringing commercial activity and removing residential housing stock from the market,” passed an ordinance authorizing licensed “home-sharing” (rentals where residents remain on-site with guests) but prohibiting all other short-term home rentals of thirty consecutive days or less.132 The U.S. Court of Appeals for the Ninth Circuit upheld the ordinance, dismissing claims brought by HomeAway and Airbnb (see also pages 256–57 supra).133

    12. Other Cities: A study by Curbed describes some efforts by other cities to address the growth of home-sharing.134 The Huffington Post, citing impacts in New Orleans, New York, Amsterdam and Barcelona, reported that many cities are tightening their restrictions on Airbnb and other platforms.135

    13. Michigan: The State of Michigan has zoning and tax issues similar to other states. Information describing legislative efforts in Michigan are informative for addressing these concerns, particularly with respect to community associations.136

    VII. Recommendations

    Cities can take embrace short-term rentals and their potential benefits while protecting residential neighborhoods, visitors, and the public through a balanced approach:

    1. Zoning: Amend the zoning code to focus STRs in mixed-use local and area mixed-use commercial-residential districts in corridors along major arteries and to prohibit STRs in residential districts including single-family dwellings and multiple family buildings up to four units. Allow owner-occupants with a primary residence within (a) a two-to-four unit multi-family building to operate an STR in one unit if the owner-occupant is present and (b) a single-family house to rent individual room(s) if the unit is not within a single-family district and the owner-occupant is present.

    2. Annual permit: Require that (a) the operator must obtain a permit by submitting an application with basic information (e.g., proof of insurance, paid taxes) and (b) a certificate of inspection for health, fire, and safety conditions based on standards in the ordinance.

    3. Advertising: Require that online listings comply with city code, including zoning districts and occupancy limits.

    4. Nuisances: Prohibit operations that create nuisances such as excessive noise and parking issues.

    5. Health and Safety: STR properties should be treated in the same manner as hotels by requiring that operators meet health, fire, sanitation, and safety standards, maintain insurance, and comply with occupancy limits. Require operators to clean and sanitize bathroom and kitchen areas, all cooking and eating utensils, and provide clean sheets and towels, before new guests occupy the dwelling. Prohibit interior cameras to protect guests’ privacy expectations.

    6. Taxes: Require operators pay room sales tax, online platforms pay city earnings tax.

    7. Monitoring: Establish a city registration and reporting system to monitor STR activities and compliance, measure impact on housing supply and rates, and verify collection of revenue. Require online platforms to provide transaction data to the city.

    8. Community Associations: Cities should respect and support the authority of community associations to determine and enforce their own STR regulations, which may be more restrictive. Local zoning and regulations should supplement, rather than preempt or impair, the autonomy of community associations.

    9. Apartments: Conversion of apartment units to STRs creates “ghost hotels” and reduces the supply of long-term rental housing and increases rates. The quality of long-term apartment living may be impacted by a steady stream of transient visitors. Tenants should be protected by limits on the number of units that may be converted to STRs, and leases should disclose such limitations.

    10. Enforcement: Foster compliance through effective remedies for the city and aggrieved parties. Regulation of STRs must include effective and timely enforcement tools and penalties to ensure that hosts comply with city ordinances and regulations, including operation of the properties as well as platform listings and advertising.

    VIII. Conclusion

    With a balanced approach, cities can preserve residential neighborhoods, protect homeownership, and provide safeguards for visitors while focusing economic energy in mixed-use areas that could benefit from STR activities. The city should be known as a community that embraces innovation and is a welcoming place to live, work, and visit.

    Endnotes

    1. Lauren Hirshon et al., National League of Cities, Cities, the Sharing Economy, and What’s Next 6 (2015), https://www.nlc.org/sites/default/files/2017-01/Report%20-%20%20Cities%20the%20Sharing%20Economy%20and%20Whats%20Next%20final.pdf.

    2. Id.at 7.

    3. Nicole DuPuis & Brooks Rainwater, National League of Cities, Cities, The Sharing Economy 2 (2014), https://www.nlc.org/wp-content/uploads/2016/12/Sharing20Economy20Brief.pdf.

    4. For a brief background, beginning with the role of boardinghouses, see Richard W. F. Swor, Long Term Solutions to the Short-Term Problem: An Analysis of the Current Legal Issues Related to Airbnb and Similar Short-Term Rental Companies with a Proposed Model Ordinance, 6 Belmont L. Rev. 278 (2018).

    5. Airbnb Stock, Sharepost, https://sharespost.com/airbnb_stock/?abt=1&utm_source=google&utm_medium=cpc&utm_campaign=20190103catchbycompanyname&utm_content=192-airbnb&utm_term=invest%20in%20airbnb&device=c&cmpgnid=1674054610&adgrpid=70431488532&kw=invest%20in%20airbnb&adid=324487125009&MT=b&site=&sepos=1s1&campid=1674054610&adgid=70431488532&adtype=&merchant_id=&product_channel=&product_id=&product_country=&product_language=&product_partition_id=&store_code=&loc_interest_ms=&loc_physical_ms=9022888&network=s&gclid=EAIaIQobChMI6L3p59W84wIVBhgMCh26OA7kEAEYASAAEgKyg_D_BwE (last visited Feb.24, 2021).

    6. Thomas Schleifer, Airbnb Sold Some Company Stock at a $35 Billion Valuation, but What Is the Company Really Worth? (Mar. 19, 2019), https://www.vox.com/2019/3/19/18272274/airbnb-valuation-common-stock-hoteltonight.

    7. Thomas L. Friedman, Thank You for Being Late 109 (2016); id. at 97 (“Airbnb, the world’s largest accommodation provider, owns no real estate.”).

    8. Megan Barber, Airbnb vs. the City, Curbed (Nov. 10, 2016), https://www.curbed.com/2016/11/10/13582982/airbnb-laws-us-cities.

    9. Jeff Andrews, Refinancing A Mortgage? You Can Now Count Airbnb Income, Curbed (Feb. 9, 2018), https://archive.curbed.com/2018/2/9/16995338/airbnb-income-mortgage-refinancing.

    10. Alison Griswold, Loftium Will Finance Your Downpayment for a House If You Rent It Continuously on Airbnb, Quartz (Sept. 19, 2017), https://qz.com/1081598/startup-loftium-gives-home-down-payments-to-people-who-continually-rent-their-house-on-airbnb.

    11. Barber, supra note 8.

    12. Airbnb’s Growing Community of 60+ Women Hosts, Airbnb, https://www.airbnbcitizen.com/wp-content/uploads/2016/03/Airbnb_60_Plus_Women_Report.pdf (last visited Feb. 24, 2021).

    13. Wouter Geerts, Why Short-Term Rentals Are Mainstream and Booming, Skift (July 17, 2018), https://skift.com/2018/07/17/why-short-term-rentals-are-mainstream-and-booming.

    14. Elaine S. Povich, Shootings and Wild Airbnb Parties Renew Calls for Crackdown on Short-Term Rentals, HuffPost (June 24, 2019), https://www.huffpost.com/entry/wild-airbnb-parties-crackdown-rules_b_5d0d1281e4b09125ca46633d.

    15. David Nicklaus, Flood of Hotel Rooms Could Swamp Some Would-Be Developers, St. Louis Post-Dispatch (Dec. 22, 2017), http://www.stltoday.com/business/columns/david-nicklaus/flood-of-hotel-rooms-downtown-could-swamp-some-would-be/article_adb5d8b0-8f8f-58e0-b46d-1ea2444f25a6.html.

    16. Barber, supra note 8.

    17. Josh Bivens, The Economic Costs and Benefits of Airbnb, Econ. Pol’y Inst. (Jan. 30, 2019), https://www.epi.org/publication/the-economic-costs-and-benefits-of-airbnb-no-reason-for-local-policymakers-to-let-airbnb-bypass-tax-or-regulatory-obligations (emphasis omitted).

    18. See U.S. Census Bureau, Quarterly Residential Vacancies and Homeownership, Fourth Quarter 2019 (Jan. 30, 2020), https://www.census.gov/housing/hvs/files/qtr419/Q419press.pdf.

    19. Press Release, Federal Housing Finance Agency, U.S. House Prices Rise 1.3 Percent in Fourth Quarter; Up 5.1 Percent from Last Year (Feb. 25, 2020), https://www.fhfa.gov/Media/PublicAffairs/Pages/US-House-Prices-Rise-1pt3-Percent-in-Fourth-Quarter-Up-5pt1-Percent-from-Last-Year.aspx (“FHFA produces the nation’s only public, freely available house price indexes (HPIs) that measure changes in single-family house prices based on data that cover all 50 states and over 400 American cities and extend back to the mid-1970s. The HPIs are built on tens of millions of home sales and offer insights about house price fluctuations at the national, census division, state, metro area, county, ZIP code, and census tract levels. The FHFA HPIs use a fully transparent methodology based upon a weighted, repeat-sales statistical technique to analyze transaction data from Fannie Mae and Freddie Mac. FHFA releases data and reports on a quarterly and monthly basis. The flagship FHFA HPI uses seasonally adjusted, purchase-only data, unless otherwise noted. Additional indexes are based on other data including refinances, FHA mortgages, and real property records. All the indexes can be downloaded from the FHFA website.”).

    20. Press Release, Nat’l Ass’n Realtors, Existing-Home Sales Climb 3.6% in December (Jan. 22, 2020), available at https://www.prnewswire.com/news-releases/existing-home-sales-climb-3-6-in-december-300991393.html.

    21. Id.

    22. Harvard Joint Center for Housing Studies, The State of the Nation’s Housing: 2019, https://www.jchs.harvard.edu/node/2924 (report overview).

    23. Bivens, supra note 17.

    24. Id.

    25. Kyle Barron, Edward Kung & Davide Proserpio, The Effect of Home-Sharing on House Prices and Rents: Evidence from Airbnb 32–33 (Mar. 29, 2018), https://marketing.wharton.upenn.edu/wp-content/uploads/2019/08/09.05.2019-Proserpio-Davide-Paper.pdf.

    26. Id. at 30.

    27. Janelle O’Dea, Mortgage Lending Is Down in St. Louis Area, Following Nationwide Trend, St. Louis Post-Dispatch (Oct. 4, 2019), https://www.stltoday.com/business/local/mortgage-lending-is-down-in-st-louis-area-following-nationwide/article_7e96385c-fa2f-51de-8ea5-6a6346676fe6.html.

    28. Id.

    29. Nat’l Low Income Hous. Coal., The Gap: A Shortage of Affordable Homes 2 (Mar. 2018), https://reports.nlihc.org/sites/default/files/gap/Gap-Report_2018.pdf.

    30. Id. at 3 (“Of the 43.8 million renter households in the U.S., 11.2 million (more than one-quarter) are extremely low income. Assuming housing costs should consume no more than 30% of a household’s income, a common standard of housing affordability, approximately 7.5 million rental homes are affordable to extremely low-income renters, leading to an absolute shortage of approximately 3.7 million affordable rental homes.”). This shortage impacts wage earners. “[I]n order to afford a single-bedroom apartment with a monthly rent of $713, a renter would have to earn $13.71 an hour.  At the current minimum wage of $8.60, such a renter would have to work 64 hours a week to afford the rent and still be able to take care of other basic needs.” Editorial: St. Louis Rents Are Zooming Higher. Can Affordable Housing Keep Up, St. Louis Post-Dispatch (Dec. 15, 2019).

    31. Equal Hous. Opportunity Council, Publicly Viewable FMR Changes in Stl City and County 2014–2019, https://docs.google.com/spreadsheets/d/1y5Ji4s0Wg2-tvxKIgf8cK-NJT6HuOSxpe7l_MdlnJgY/edit#gid=1930991852 (last visited Feb. 24, 2021).

    32. Id. The St. Louis Post-Dispatch reported the EHOC study, Janelle O’Dea, Rents Are Soaring in Parts of St. Louis, Driving out Lower-Income Residents, St. Louis Post-Dispatch (Nov. 3, 2019), https://www.stltoday.com/business/local/rents-are-soaring-in-parts-of-st-louis-driving-out/article_4a76e25d-c4ae-5daf-8234-7ff40a311866.html, and followed with an editorial, Editorial, supra note 30 (noting “demand for housing in the city is outstripping supply”).

    33. Lorraine Longhi, ‘They Killed Our City’: Locals Feel Helpless as Vacation Rentals Overrun Sedona, Arizona, USA Today (July 27, 2019), https://www.usatoday.com/story/news/nation/2019/07/27/vacation-rentals-killing-arizona-city-locals-say/1846713001.

    34. See Inside Airbnb’s ‘Guerrilla War’ Against Local Governments, Wired (Mar. 28, 2019), https://www.wired.com/story/inside-airbnbs-guerrilla-war-against-local-governments.

    35. McGill Univ. Sch. Urban Plan., The High Cost of Short-Term Rentals in New York City 2 (Jan. 30, 2018), https://www.mcgill.ca/newsroom/channels/news/high-cost-short-term-rentals-new-york-city-284310.

    36. Id. at 7.

    37. J. Brian Charles, As Airbnb Battles Cities Trying to Regulate It, One State Joins the Fight, Governing (Feb. 1, 2019), https://www.governing.com/topics/urban/gov-massachusetts-airbnb-housing-regulations.html?utm_term=As%20Airbnb%20Battles%20Cities%20Trying%20to%20Regulate%20It%2C%20One%20State%20Joins%20the%20Fight&utm_campaign=As%20Airbnb%20Battles%20Cities%20Trying%20to%20Regulate%20It%2C%20One%20State%20Joins%20the%20Fight&utm_content=email&utm_source=Act-On+Software&utm_medium=email.

    38. Longhi, supra note 33.

    39. Denise DiPasquale & Edward L. Glaeser, Incentives and Social Capital:  Are Homeowners Better Citizens? (Nat’l Bureau Econ. Rsch. Working Paper, Paper No. 6363, Jan. 1998), https://www.nber.org/papers/w6363.

    40. Swor, supra note 4.

    41. Bivens, supra note 17.

    42. Id.

    43. Hirshon et al., supra note 1.

    44. Brian Feldt, Airbnb, St. Charles County Reach Tax Agreement, St. Louis Post-Dispatch (Mar. 1, 2018), http://www.stltoday.com/business/local/airbnb-st-charles-county-reach-tax-agreement/article_918f3c32-70cc-5ce9-993b-a78c5e352e72.html.

    45. Reuters, Airbnb Spruces Up Image with More Tax Agreements in U.S. and France, Fortune (Apr. 12, 2017), http://fortune.com/2017/04/12/airbnb-tax-agreements.

    46. Mike Faulk, Airbnb, Missouri Enter Tax Agreement Estimated at $1.1 Million Annually, St. Louis Post-Dispatch (Jan. 3, 2018), http://www.stltoday.com/business/local/airbnb-missouri-enter-tax-agreement-estimated-at-million-annually/article_2ca34ca7-2114-5b78-bcb6-57a1214d57d3.html.

    47. Inside Airbnb’s ‘Guerrilla War,’ supra note 34.

    48. Corinne Ruff, Taxes Spike on Dozens of St. Louis Airbnb Properties, St. Louis Pub. Radio (May 13, 2019), https://news.stlpublicradio.org/post/taxes-spike-dozens-st-louis-airbnb-properties?utm_source=newsletter&utm_medium=email&utm_content=recent%20tax%20spike&utm_campaign=newsletter_LRL#stream/0.

    49. Swor, supra note 4, at 287 n.77 (citing Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 387–88 (1926) (“A nuisance may be merely a right thing in the wrong place, like a pig in the parlor instead of the barnyard.”)).

    50. David Wachsmuth, David Chaney, Danielle Kerrigan, Andrea Shillolo & Robin Basalaev-Binder, School of Urban Planning, McGill Univ., The High Cost of Short-Term Rentals in New York City 5 (Jan. 30, 2018)

    51. St. Louis, Mo., Code § 26.08.160 (emphasis added).

    52. In re Fruchter v. Zoning Bd of Appeals of Town of Hurley, 20 N.Y.S.3d 701 (App. Div. 2015).

    53. O’Neil v. Conejos Cnty. Bd. of Comm’rs, 395 P.3d 1185, 1192 (Colo. Ct. App. 2017).

    54. In re Toor, 59 A.3d 722, 727–28 (Vt. 2012).

    55. City of New York v. 330 Cont’l LLC, 873 N.Y.S.2d 9, 16 (App. Div. 2009).

    56. Brown v. Sandy City Bd. of Adjustment, 957 P.2d 207 (Utah Ct. App. 1998).

    57. See Morgan County v. May, 824 S.E.2d 365 (Ga. 2019); Viviano v. Sandusky, 991 N.E.2d 1263 (Ohio Ct. App. 2013).

    58. Anderson v. Metro. Gov’t of Nashville & Davidson Cnty., No. M2017-00190-COA-R3-CV, 2018 WL 527104 (Tenn. Ct. App. 2018).

    59. See, Swor, supra note 4, at 304 (“[G]overnment regulation of speech is content based if a law applies to particular speech because of the topic discussed or the idea or message expressed,” and would be subject to strict scrutiny (citing Reed v. Town of Gilbert, 135 S. Ct. 2218, 2226 (2015)).).

    60. Slice of Life, LLC v. Hamilton Twp. Zoning Hearing Bd., 207 A.3d 886 (Pa. 2019).

    61. Id. at 899 (citing Ewing v. City of Carmel by the Sea, 286 Cal. Rptr. 382, 288 (1991)).

    62. Id. at 898.

    63. Siwinski v. Town of Ogden Dunes, 949 N.E.2d 825, 828 (Ind. 2011).

    64. Id. at 830.

    65. Reaume v. Township of Spring Lake, 937 N.W.2d 734, 740–41 (Mich. Ct. App. 2019).

    66. City of Miami v. Airbnb, Inc., 260 So. 3d 478 (Fla. Ct. App. 2018).

    67. In re Cooperstown Eagles, LLC v. Village of Cooperstown Zoning Board of Appeals, 77 N.Y.S.3d 716, 720 (App. Div. 2018).

    68. Anderson v. Metro. Gov’t of Nashville & Davidson Cnty., No. M2017-00190-COA-R3-CV, 2018 WL 527104 (Tenn. Ct. App., 2018).

    69. Id. at *9.

    70. Found. for Cmty. Ass’n Rsch., Community Association Fact Book 2018 (Clifford J. Treese ed., 2018), https://foundation.caionline.org/publications/factbook.

    71. Wayne S. Hyatt, Condominium and Homeowner Association Practice: Community Association Law 30 (3d ed. 2000). “[T]he community association, in its governing role, preserves and enforces the land use plan through architectural, environmental, design, land use, occupancy, and other restrictions.” Id.

    72. Vera Lee Angel Revocable Trust v. Jim O’Bryant & Kay O’Bryant Joint Revocable Trust, 537 S.W.3d 254, 257 (Ark. 2018) (“[C]ourts must strictly construe restrictive covenants against limitations on the free use of land. Any restriction on the use of land must be clearly apparent in the language of a restrictive covenant.”); see also, e.g., Slaby v. Mountain River Ests. Residential Ass’n, 100 So. 3d 569, 578 (Ala. Civ. App. 2012); cf. Lowden v. Bosley, 909 A.2d 261, 266 (Md. 2006) (applying a “reasonably strict construction” standard that looks beyond the language of the covenant in attempting to resolve ambiguities, but which still interprets any ambiguous restriction in favor of free use of the land).

    73. Slaby, 100 So. 3d at 578.

    74. See, e.g., id.; Bosley, 909 A.2d at 263.

    75. See, e.g., Slaby, 100 So. 3d at 582; Eager v. Peasley, 911 N.W.2d 470, 473 (Mich. Ct. App. 2017).

    76. Slaby, 100 So. 3d at 575–80.

    77. Id. at 575–76.

    78. Id. at 577.

    79. Id. at 578–79 (citing Lowden v. Bosley, 909 A.2d at 267) (“The court [in Bosley] reasoned that “‘[r]esidential use,’ without more, has been consistently interpreted as meaning that the use of the property is for living purposes, or a dwelling, or a place of abode,’ and that ‘[t]he transitory or temporary nature of such use does not defeat the residential status.’”).

    80. Id. at 579; cf. Adams v. Kimberley One Townhouse Owner’s Ass’n, 352 P.3d 492, 495 (Idaho 2015) (noting that a restriction on rentals of less than six months was not ambiguous as applied to short-term rentals).

    81. Slaby, 100 So. 3d at 580–82. But see Eager v. Peasley, 911 N.W.2d 470, 479 (Mich. Ct. App. 2017) (“That defendant and her renters may use the property as a private dwelling is not dispositive. Short-term rentals still violate the restrictive covenant barring commercial use of the property. Because defendant’s commercial use of the home was in clear violation of the unambiguous restrictive covenant, the trial court should have granted plaintiffs’ request for injunctive relief.”).

    82. Slaby, 100 So. 3d at 580 (“The actual renting of the cabin, and any financial transactions associated therewith, occurs off-site. The Slabys do not solicit renters on-site, but do so through the Internet, where potential tenants can view the premises without actually going there. While occupying the cabin, the tenants must cook and clean for themselves and they do not receive any services from the Slabys. Although the Slabys remit a lodging tax, which is payable by persons ‘engaging in the business of renting or furnishing any room or rooms, lodging, or accommodations to transients in any . . . tourist cabin . . . in . . . . DeKalb [County],’ § 40–26–1, Ala.Code 1975, that fact does not detract from the conclusion that no commercial activity takes place on the premises.”).

    83. Id. (“[T]he income the Slabys derive from the rental of the property derives solely from the use of the property in the same manner as the other landowners in the subdivision use their properties. The fact that the Slabys receive rental income does not transform the character of the surrounding subdivision like the maintenance of a mobile-home park or a hotel would.”); see also Lowden v. Bosley, 909 A.2d 261, 267–68 (Md. 2006) (“The owners’ receipt of rental income in no way detracts from the use of the properties as residences by the tenants. There are many residential uses of property which also provide a commercial benefit to certain persons. Both in Maryland and in a great majority of other states, over 30 percent of homes are rented rather than owned by the families residing therein, thus providing much rental income to landlords. In addition to conventional rentals, a commercial benefit may be realized from residential property by persons or entities holding ground rents, mortgages, or deeds of trust. When property is used for a residence, there simply is no tension between such use and a commercial benefit accruing to someone else.”).

    84. Tarr v. Timberwood Park Owners Ass’n, Inc., 556 S.W.3d 274, 276 (Tex. 2018).

    85. Id. at 292.

    86. JBrice Holdings, L.L.C. v. Wilcrest Walk Townhomes Ass’n, Inc., No. 14-17-00790-CV, 2020 WL 4759947, at *3 (Tex. Ct. App. Aug. 18, 2020).

    87. Id. at *4–5.

    88. Dunn v. Aamodt, 695 F.3d 797 (8th Cir. 2012).

    89. Vera Lee Angel Revocable Tr. v. Jim O’Bryant & Kay O’Bryant Joint Revocable Tr., 537 S.W.3d 254, 258 (Ark. 2018).

    90. Nicole DuPuis, Trevor Langan, Christiana McFarland, Angelina Panetteri & Brooks Rainwater, National League of Cities, City Rights in an Era of Preemption: A State-by-State Analysis, 2018 Update at 1 (2018), https://www.nlc.org/sites/default/files/2017-03/NLC-SML%20Preemption%20Report%202017-pages.pdf.

    91. In Missouri, State Representative Derek Grier (R-Chesterfield) sponsored HB 473 in 2019, which would sharply narrow local authority to regulate home-based businesses, although STRs were deleted from the measure as it passed the House. In 2018, HB 2569 was sponsored by State Representative Keith Frederick (R-Rolla) to describe short-term rentals as “residential” rather than “commercial,” and preempt not only local government, but also the private restrictions of community associations.

    92. Inside Airbnb’s ‘Guerrilla War,’ supra note 34.

    93. Pamela Peters, Airbnb Regulations: Local Governments Know Best, Orlando Sentinel (Apr. 13, 2017), http://www.orlandosentinel.com/opinion/os-ed-airbnb-rules-local-governments-know-best-20170413-story.html.

    94. Longhi, supra note 33.

    95. Ben Popken, At an Airbnb? You Might Be on Camera, Whether You Like It or Not, NBC News (Mar. 7, 2019), https://www.nbcnews.com/tech/security/airbnb-you-might-be-camera-whether-you-it-or-not-n974776.

    96. Meghan Hilden, Airbnb Guests Are Finding Hidden Cameras Planted in Their Rentals, CBS News (Dec. 6, 2017), https://www.cbsnews.com/news/airbnb-guests-find-hidden-cameras.

    97. Popken, supra note 95.

    98. Kim Bell, South Carolina Man Rented Home Here Through Airbnb to Have Sex with Fenton Girl, St. Louis Post-Dispatch, May 11, 2019, at A4.

    99. Mytheos Holt, What Is It with Airbnb and Crime?, Townhall (Dec. 8, 2017), https://townhall.com/columnists/mytheosholt/2017/12/08/what-is-it-with-airbnb-and-crime-n2420044.

    100. Jennifer Calfas, Paul Manafort Allegedly Used Laundered Money to Make Thousands Through Airbnb, Fortune (Oct. 30, 2017), http://fortune.com/2017/10/30/paul-manafort-airbnb-money-laundering-indictment.

    101. Joseph Cox, Inside Airbnb’s Russian Money-Laundering Problem, Daily Beast (Nov. 27, 2017), https://www.thedailybeast.com/inside-airbnbs-russian-money-laundering-problem.

    102. Yu-Hua Xu, Jin-won Kim & Lori Pennington-Gray, Explore the Spatial Relationship Between Airbnb Rental and Crime (Univ. Mass. Amherst, Travel & Tourism Rsch. Ass’n 2017), https://scholarworks.umass.edu/ttra/2017/Grad_Student_Workshop/5.

    103. See generally Steven M. Sweat, APC, Airbnb in Los Angeles and Beyond: Potential Legal Issues, Nat’l L. Rev. (Sept. 11, 2019), https://www.natlawreview.com/organization/steven-m-sweat-apc.

    104. Tariro Mzezewa, Airbnb and Miami Beach Are at War. Travelers Are Caught in the Crossfire., N.Y. Times (Mar. 9, 2019), https://www.nytimes.com/2019/03/09/travel/airbnb-miami-beach-war.html.

    105. Luis Ferré-Sadurni, Inside the Rise and Fall of a Multimillion-Dollar Airbnb Scheme, N.Y. Times (Feb. 23, 2019), https://www.nytimes.com/2019/02/23/nyregion/airbnb-nyc-law.html.

    106. Paris Marineau, How 9 People Built an Illegal $5M Airbnb Empire in New York, Wired (June 24, 2019), https://www.wired.com/story/how-9-people-built-illegal-5m-airbnb-empire-new-york/?CNDID=43030790&CNDID=43030790&bxid=MjM5NjgxMjkwNTAwS0&hasha=c37506c6316e0cceced9d83.

    107. Paris Martineau, Airbnb and New York City Reach a Truce on Home-Sharing Data, Wired (May 24, 2019), https://www.wired.com/story/airbnb-new-york-city-reach-truce-on-home-sharing-data.

    108. HomeAway.Com, Inc. v. City of Santa Monica, 918 F.3d 676 (9th Cir. 2019) (describing Santa Monica Mun. Code §§ 6.20.010–6.20.100).

    109. Id at 682; see also Airbnb, Inc. v. City & County of San Francisco, 217 F. Supp. 3d 1066 (N.D. Cal. 2016); La Park La Brea A LLC v. Airbnb, Inc., 285 F. Supp. 3d 1097 (C.D. Cal. 2017).

    110. Homeaway.com, Inc., 918 F.3d at 685.

    111. Airbnb, HomeAway Lose Legal Challenge to Santa Monica Rules, AP News (Mar. 13, 2019), https://www.apnews.com/1e73d87c2c3644769721ce7574c81f98.

    112. Fact Sheet: Why Airbnb’s Challenges to State and Local Regulations Don’t Pass Legal Muster, ZFP Law (May 9, 2019), https://www.zfplaw.com/News/STR-Legal-Fact-Sheet-June-2019.pdf. Andrew Zacks is Managing Shareholder, Zacks Freedman & Patterson PC, and co-authored an amicus brief in the in the Ninth Circuit Court of Appeals in LA Park La Brea A LLC v. Airbnb for the California Apartment Association.

    113. Dan Levine & Heather Somerville, Judge Rejects Airbnb’s Bid to Halt San Francisco Ordinance, Reuters (Nov. 8, 2016), https://www.reuters.com/article/us-airbnb-sanfrancisco-ruling/judge-rejects-airbnbs-bid-to-halt-san-francisco-ordinance-idUSKBN1332OE.

    114. H.R. 4232, 116th Cong. (2019), https://www.congress.gov/bill/116th-congress/house-bill/4232/text.

    115. Frontenac Shuts Door on Short-Term Home Rentals, St. Louis Post-Dispatch (Nov. 28, 2017), http://www.stltoday.com/news/local/metro/frontenac-shuts-door-on-short-term-home-rentals/article_bd0c7aa5-794e-5870-9aaa-049835e50812.html.

    116. Ashley Lisenby, St. Louis Area Governments Take Different Paths on Short-Term Rentals, St. Louis Post-Dispatch (July 21, 2017), https://www.stltoday.com/business/local/st-louis-area-governments-take-different-paths-on-short-term-rentals/article_c2ea3b71-c1b2-54f5-8243-8d206a82c921.html.

    117. Id.

    118. Hirshon et al., supra note 1, at 11.

    119. See Boston, Mass., Ordinance 9-14, Ordinance Allowing Short-Term Residential Rentals in the City of Boston 9-14 (June 13, 2018), https://www.boston.gov/sites/default/files/document-file-08-2018/short-term_rental_ordinance.pdf.

    120. Id.

    121. Airbnb, Inc. v. City of Boston, 386 F. Supp. 3d 113 (D. Mass. 2019); see also supra text accompanying notes 107–11.

    122. Charles, supra note 37.

    123. See City & County of Denver, Short-Term Rentals (2021), https://www.denvergov.org/content/denvergov/en/denver-business-licensing-center/business-licenses/short-term-rentals.html.

    124. See Bill Turque, With Council OK, Here’s How KC Will Regulate Airbnb and Other Short-Term Rentals, Kansas City Star (Feb. 22, 2018).

    125. Arlington, Va., Projects & Planning, Short-Term Residential Rentals (2016), https://projects.arlingtonva.us/plans-studies/land-use/zoning-studies/short-term-residential-rentals.

    126. Charles, supra note 37.

    127. Monica Nickelsburg, Seattle Approves New Airbnb Regulations to Limit Short-Term Rentals to 2 Units Per Host, GeekWire (Dec. 11, 2017), https://www.geekwire.com/2017/seattle-approves-new-airbnb-regulations-limit-short-term-rentals-2-units-per-host.

    128. Daniel Beekman, Seattle Imposes New Limits on Airbnb, Other Short-Term Rentals with 7-0 Council Vote, Seattle Times (Dec. 11, 2017), https://www.seattletimes.com/seattle-news/politics/seattle-imposes-new-limits-on-airbnb-other-short-term-rentals-with-7-0-council-vote.

    129. Hirshon et al., supra note 1, at 18, 22, 23.

    130. Id. at 18.

    131. Id. at 24.

    132. HomeAway.com v. City of Santa Monica, 918 F.3d 676, 679 (9th Cir. 2019) (discussing Santa Monica Municipal Code on STRs).

    133. Id.

    134. Barber, supra note 8.

    135. Senay Boztas, Airbnb Is Accused of Destroying Cities. This Company Says It’s the Ethical Alternative. Huffpost (Feb. 6, 2019), https://www.huffpost.com/entry/airbnb-affordable-housing-gentrification-tourism-fairbnb_n_5c5949c3e4b00187b554828d.

    136. Matthew Heron, HB4503 and SB 329: Recent Skirmishes Regarding Short-Term Rentals and Their Effect on Community Associations, Mich. Cmty. Ass’n LawBlog (July 13, 2017), https://micondolaw.com/2017/07/13/hb-4503-and-sb-329-recent-skirmishes-regarding-short-term-rentals-and-their-effect-on-community-associations.

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    Marvin J. Nodiff

    Marvin J. Nodiff, is a retired St. Louis attorney, who represented condominium and homeowner associations in Missouri for more than thirty years. He is a Fellow in the College of Community Association Lawyers. Thanks go to Trevor Alexander, a third-year law-school student at Washington University in St. Louis, for his help as research assistance. The research for this Article was conducted over a period of three years ending in January 2020.