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1 City Policies for ShortTerm Rentals by the Sustainable Economies Law Center March 11, 2015 Table of Contents I. INTRODUCTION ................................................................................................................................... 2 Crafting ShortTerm Rental Policies for the Common Good .............................................................. 2 II. BACKGROUND .................................................................................................................................... 3 What is a Short Term Rental?.......................................................................................................................... 4 STRs are Not New ................................................................................................................................................. 4 STRs are on the Rise ............................................................................................................................................. 4 III. POSITIVE AND NEGATIVE IMPACTS OF SHORT TERM RENTALS ..................................... 4 IV. CURRENT LAW .................................................................................................................................. 6 V. SELC’S RECOMMENDATIONS .......................................................................................................... 6 1. BASIC COMPONENTS OF AN STR ORDINANCE ................................................................................................. 7 A. Establish Clear Definitions ........................................................................................................................... 7 B. Require Registration and Recordkeeping ............................................................................................. 7 C. Establish a System for Setting Limits on Rental Nights or Income ............................................ 9 D. Protect the Wellbeing of Guests............................................................................................................... 10 E. Establish Oversight, Complaint, and Sanction Procedures .......................................................... 11 2. REGULATING STRS TO PROTECT THE COMMON GOOD .............................................................................. 13 A. Regulating the Housing Supply for the Common Good ................................................................. 13 B. Ensuring that Travelers’ Dollars Benefit the Common Good ...................................................... 15 C. Neighborhoods for the Common Good .................................................................................................. 17 3. SOME CREATIVE APPROACHES ........................................................................................................................ 19 VI. SUMMARY ........................................................................................................................................ 21

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City  Policies  for  Short-­‐Term  Rentals  by  the  Sustainable  Economies  Law  Center  

March  11,  2015  

Table  of  Contents  I.  INTRODUCTION...................................................................................................................................2  

Crafting  Short-­Term  Rental  Policies  for  the  Common  Good .............................................................. 2  

II. BACKGROUND ....................................................................................................................................3What  is  a  Short  Term  Rental?.......................................................................................................................... 4  STRs  are  Not  New ................................................................................................................................................. 4  STRs  are  on  the  Rise............................................................................................................................................. 4  

III. POSITIVE  AND  NEGATIVE  IMPACTS  OF  SHORT  TERM  RENTALS .....................................4

IV. CURRENT  LAW ..................................................................................................................................6

V.  SELC’S  RECOMMENDATIONS..........................................................................................................6  1. BASIC  COMPONENTS  OF  AN  STR  ORDINANCE.................................................................................................7A.  Establish  Clear  Definitions........................................................................................................................... 7  B.  Require  Registration  and  Recordkeeping ............................................................................................. 7  C.  Establish  a  System  for  Setting  Limits  on  Rental  Nights  or  Income ............................................ 9  D.  Protect  the  Wellbeing  of  Guests...............................................................................................................10  E.  Establish  Oversight,  Complaint,  and  Sanction  Procedures ..........................................................11  

2. REGULATING  STRS  TO  PROTECT  THE  COMMON  GOOD ..............................................................................13A.  Regulating  the  Housing  Supply  for  the  Common  Good .................................................................13  B.  Ensuring  that  Travelers’  Dollars  Benefit  the  Common  Good......................................................15  C.  Neighborhoods  for  the  Common  Good..................................................................................................17  

3. SOME  CREATIVE  APPROACHES ........................................................................................................................19

VI. SUMMARY........................................................................................................................................ 21

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I.  Introduction  

Every  city  in  the  United  States,  sooner  or  later,  will  be  forced  to  adopt  policies  that  address  the  rapid  spread  of  short-­‐term  rentals  facilitated  by  online  platforms  such  as  Airbnb.  The  Sustainable  Economies  Law  Center  (SELC)  offers  the  following  recommendations  to  help  policymakers  draft  local  short-­‐term  rental  ordinances.  SELC’s  goal  is  for  these  ordinances  to  generate  inclusive  opportunities  for  local  wealth-­‐creation,  while  balancing  the  needs  of  all  members  of  the  community.  This  policy  brief  recognizes  that  each  city  must  regulate  short-­‐term  rentals  according  to  its  unique  circumstances  and  priorities,  and  should  do  so  through  open  dialogue  with  diverse  stakeholders.  Ideally,  the  result  will  be  an  equitable  policy  that  protects  public  interests  such  as  housing  affordability,  health  and  safety,  and  municipal  revenues,  and  retains  reasonable  latitude  for  city  residents  to  host  and  earn  money  from  short-­‐term  guests.  

Crafting  Short-­‐Term  Rental  Policies  for  the  Common  Good  It’s  important  to  begin  with  a  reality  check:  It  may  be  impossible  to  craft  a  short-­‐term  rental  ordinance  that  fully  achieves  equity  and  justice.  A  ban  on  short-­‐term  rentals  could  deprive  underemployed  people  of  an  important  source  of  supplemental  income  needed  to  meet  the  rising  costs  of  living.  At  the  same  time,  completely  de-­‐regulating  short-­‐term  rentals  could  also  intensify  wealth  inequality  by  exacerbating  a  scarcity  of  affordable  housing  options.  The  growing  popularity  of  online  platforms  for  short-­‐term  rentals  is,  to  some  extent,  a  red  herring  of  a  much  deeper  problem:  The  failure  of  our  economic,  political,  and  legal  systems  to  ensure  an  adequate  supply  of  housing  and  opportunities  to  make  a  livelihood.  Within  a  fundamentally  imbalanced  system,  it’s  impossible  to  craft  perfectly  equitable  laws.  

Nevertheless,  an  ordinance  to  regulate  short-­‐term  rentals  offers  cities  a  lever  for  change.  Cities  can  use  their  power  as  regulators  to  ensure  that  certain  vital  resources  are  stewarded  for  the  common  good.  The  resources  in  question  are  1)  housing  and  land,  2)  travelers  and  the  wealth  and  work  opportunities  they  bring  

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into  a  city,  and  3)  neighborhoods  and  public  spaces,  such  as  streets  and  sidewalks.  How  can  cities  ensure  equitable  access  to  and  long-­‐term  stewardship  of  all  three  resources?    

Initially,  it  may  sound  strange  to  view  travelers  as  a  “resource”  that  can  be  managed  for  the  common  good.  But  it  helps  to  compare  travelers  to  another  key  resource  that  nourishes  us  as  it  falls  or  flows  into  cities:  water.  Like  water,  visitors  can  percolate  throughout  cities  and  nourish  communities  by  bringing  in  essential  resources  from  outside,  such  as  income,  ideas,  opportunities,  and  cultural  exchange.  At  a  time  when  jobs  have  dried  up  in  many  neighborhoods,  short-­‐term  rentals  present  an  opportunity  to  spread  the  wealth  and  benefits  in  ways  that  can  replenish  income-­‐parched  neighborhoods.  

Cities  already  make  policies  and  regulate  markets  in  order  to  ensure  fair  access  to  vital  resources.  Cities  protect  access  to  affordable  housing  through  planning,  inclusionary  zoning,  and  rent  control,  for  example.  Cities  also  attempt  to  steward  the  long-­‐term  vitality  of  neighborhoods  and  public  spaces  through  zoning,  nuisance  laws,  and  public  works.  Cities  even  seek  to  recapture  and  spread  the  wealth  brought  by  travelers  by  collecting  a  hotel  tax  and  spending  those  funds  on  city  improvements.  Without  such  tools,  a  city’s  land,  housing,  and  other  resources  could  be  disproportionately  shaped  by  unregulated  markets,  privileging  the  highest  bidders,  and  concentrating  wealth  in  the  long  term.    

With  this  in  mind,  short-­‐term  rentals  should  similarly  not  be  allowed  to  operate  in  a  completely  unregulated  market.  A  smart  short-­‐term  rental  ordinance  could  protect  neighborhood  livability  and  housing  supply  while  providing  income-­‐earning  opportunities  to  many  who  need  them.    

II. Background

What  is  a  Short-­‐Term  Rental?  A  short-­‐term  rental  (STR)  refers  to  a  room  or  housing  unit  that  is  rented  to  a  person  or  group  for  a  short  period  of  time,  typically  under  30  nights.  STRs  are  distinct  from  long-­‐term  rentals  in  the  sense  that  the  room  or  unit  is  rented  on  a  nightly  basis,  rather  than  on  a  monthly  or  yearly  basis.  Therefore,  STR  occupants  are  typically  transient  occupants  such  as  travelers  who  would  otherwise  stay  in  a  

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hotel  or  similar  accommodation.  Long-­‐term  rentals,  on  the  other  hand,  typically  house  individuals  who  work,  attend  school,  or  otherwise  wish  to  “permanently”  reside  in  the  city.  

STRs  are  Not  New  Short-­‐term  rentals  are  getting  a  lot  of  attention  these  days.  So  are  the  online  platforms  that  facilitate  connections  between  guests  and  hosts,  including  Airbnb,  VRBO,  Homeaway,  and  Craigslist.  But  hosting  short-­‐term  guests  is  not  a  new  phenomenon,  nor  was  it  invented  by  these  platforms.  Indeed,  before  these  platforms  became  available,  travelers  who  wanted  a  different  type  of  vacation  experience  opted  to  stay  with  locals  rather  than  in  hotels,  in  order  to  more  fully  experience  the  culture,  food,  and  lifestyle  of  the  region.  Locals  who  host  backpackers,  “couch  surfers,”  pilgrims,  and  touring  cyclists  often  do  so  in  exchange  for  money  or  skill  trades,  to  be  an  ambassador  of  their  locale,  or  simply  to  interact  with  visitors  from  faraway  places.    

STRs  are  on  the  Rise  Within  the  past  several  years,  both  the  number  of  properties  available  for  short-­‐term  rental,  and  the  frequency  with  which  they  are  rented,  have  skyrocketed.  STRs  have  gone  from  a  casual  and  occasional  practice  to  an  increasingly  pervasive  activity  in  many  places.  Online  platforms  have  played  an  important  role,  enabling  millions  of  people  around  the  world  to  list  and  browse  rentals,  and  to  connect,  coordinate,  and  transmit  payments  through  one  interface.    

III. Positive  and  Negative  Impacts  of  Short  Term  Rentals

STRs  can  have  a  positive  impact  on  cities,  in  that  they  can:  

• Contribute  to  local  wealth  by  enabling  local  residents,  and  not  justabsentee  hotel  owners,  to  earn  money  from  hosting  tourists,

• Make  efficient  use  of  space  that  might  otherwise  be  unused,

• Prevent  economic  hardship  and  displacement  by  allowing  some  residentsto  use  STR  revenue  to  make  ends  meet,

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• Provide  both  tourists  and  hosts  with  valuable  social  and  culturalexchange,  and

• Spread  tourist  dollars  beyond  typical  hotel  and  tourism  districts  byattracting  travelers  to  less  frequented  neighborhoods  where  they  canpatronize  local  businesses.

At  the  same  time,  STRs  can  have  a  negative  impact  on  cities,  in  that  they  can:  

• Incentivize  property  owners  to  keep  rooms  and  units  vacant  or  evenevict  tenants  in  order  to  make  higher  profit  from  short-­‐term  renters,

• Take  long-­‐term  rental  housing  units  off  the  market,  creating  a  scarcity  ofhousing  options,  and  pushing  up  prices,

• Unfairly  compete  with  established  hotels,  inns,  and  bed  and  breakfastswhen  short-­‐term  rentals  are  not  subject  to  the  same  level  of  taxation  orregulation,

• Reduce  “hotel  tax”  revenues  for  the  city  when  short-­‐term  rental  hostsevade  the  tax  or  avoid  remitting  the  tax  on  the  grounds  that  they  are  notoperating  a  hotel,

• Violate  residential  zoning  codes  that  are  intended  to  limit  noise,  traffic,parking  shortages,  and  activities  incompatible  with  the  character  of  aneighborhood,

• Adversely  impact  community  cohesion  because  vacation  rentals  house  arevolving  circuit  of  transient  occupants  who  are  not  invested  in  thecommunity,  and

• Reinforce  class,  gender,  and  racial  inequities,  because  online  platformsmake  it  easy  for  hosts  to  act  on  biases  when  selecting  guests,  and  becauseSTRs,  like  everything  else  in  the  economy,  disproportionately  privileges  theprivileged.

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IV. Current  Law

Many  municipal  codes  prohibit  residents  from  hosting  short-­‐term  guests  in  exchange  for  payment  unless  residents  comply  with  all  regulations  applicable  to  commercial  hotels  and  bed  and  breakfasts.  These  laws  tend  to  require  zoning  approval,  compliance  with  health,  building,  and  safety  laws,  and  payment  of  a  transient  occupancy  tax  (TOT),  also  known  as  a  “hotel  tax.”  Given  that  such  laws  are  generally  designed  for  commercial  hotels,  in  the  absence  of  a  local  ordinance  that  tailors  such  laws  to  STRs,  many  cities  have  laws  that  effectively  ban  STRs.    

Meanwhile,  a  handful  of  cities  have  crafted  local  ordinances  that  both  legalize  some  STRs  and  impose  limitations  and  regulations  that  protect  public  interests.  When  formulating  an  ordinance,  policymakers  grapple  with  the  impact  STRs  have  on  housing  affordability,  tax  revenue,  health  and  safety,  parking,  and  the  quality  and  character  of  neighborhoods.  Interestingly,  of  the  dozens  of  new  STR  ordinances  around  the  U.S.,  no  two  regulations  are  exactly  alike.  Indeed,  the  differences  among  them  may  lend  valuable  insight  into  each  city’s  political  priorities,  social  and  economic  values,  and  in  some  cases,  their  most  influential  stakeholders.  Each  city  will  likely  want  to  calibrate  a  short-­‐term  rental  ordinance  to  its  particular  social  and  economic  concerns,  but  there  are  several  basic  considerations  that  all  cities  should  take  into  account  when  drafting  such  a  policy.  

V.  SELC’s  Recommendations  

SELC  believes  that  cities  can  benefit  from  adopting  more  nuanced  regulations  that  simultaneously  lift  any  implicit  ban  on  STRs,  channel  STR  opportunities  to  those  who  need  them,  and  restrict  STRs  in  ways  that  reduce  negative  impacts.  

The  following  are  key  considerations  for  a  balanced  short-­‐term  rental  ordinance.  We  emphasize  that  it  is  essential  for  cities  to  consider  these  recommendations  within  their  unique  local  contexts,  and  to  involve  a  diverse  set  of  stakeholders  in  developing  regulations  that  fairly  and  accurately  reflect  local  needs  and  priorities.  

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1. Basic  Components  of  an  STR  Ordinance

A.  Establish  Clear  Definitions  We  recommend  that  cities  establish  clear  definitions  that  distinguish  between  “Hotel,”  “Bed  and  Breakfast,”  and  “Short-­‐Term  Rental,”  and  that  further  distinguish  types  of  short-­‐term  rentals.  For  these  purposes,  we  provide  the  following  suggested  definition  of  STR  and  STR  subcategories:    

Short-­‐Term  Rental  (STR)  is  the  short-­‐term  occupation  of  a  residential  unit  or  portion  thereof  for  a  period  off  less  than  30  nights,  and  in  which  the  guest  pays  compensation  to  an  owner  or  lessee  of  the  unit.  

Hosted  Primary  Residence  STRs:  In  a  Hosted  Primary  Residence  STR,  the  host  occupies  the  dwelling  unit  as  a  primary  residence  for  the  majority  of  the  year  (often  defined  as  a  minimum  of  nine  months).  The  primary  resident  hosts  short-­‐term  guests  in  a  bedroom  or  some  portion  of  the  unit  while  the  resident  simultaneously  resides  in  the  unit  and  is  present  for  at  least  6  hours  out  of  any  24  hour  period.  

Un-­‐Hosted  Primary  Residence  STRs:  In  an  Un-­‐Hosted  Primary  Residence  STR,  the  host  occupies  the  dwelling  unit  as  a  primary  residence  for  the  majority  of  the  year,  but  leaves  his  or  her  unit  for  a  period  of  time  –  for  example,  over  a  weekend,  when  traveling  for  work,  or  while  on  vacation  –  and  in  his  or  her  absence  rents  out  all  or  part  of  the  unit  to  a  short-­‐term  guest.    

Vacation  Rentals:  A  Vacation  Rental  is  a  unit  that  is  not  used  as  someone’s  primary  residence  but  is  instead  rented  on  a  short-­‐term  basis.  

B.  Require  Registration  and  Recordkeeping  

Proof  of  Primary  Residency:  

We  recommend  that  STRs  be  limited  to  primary  residences.  As  defined  above,  a  primary  residence  is  a  housing  unit  in  which  a  renter  or  owner  resides  for  the  majority  of  the  year.  By  definition,  a  person  may  have  only  one  primary  residence,  and  it  follows  that  a  person  may  have  only  one  STR  address.  An  STR  

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registration  process  could  require  hosts  to  provide  records  demonstrating  that  the  unit  is  their  primary  residence.  .  We  recommend  that  cities  follow  the  example  of  San  Francisco,  CA,  and  require  hosts  to  provide  at  least  two  of  the  following  documents  in  order  to  register:  motor  vehicle  registration,  driver’s  license,  voter  registration,  or  a  utility  bill.1  

Registration:  Enforcing  the  provisions  of  an  STR  ordinance,  particularly  caps  on  the  number  of  units  per  host,  rental  nights  per  year,  payment  of  transient  occupancy  taxes,  and  other  recommendations  outlined  below,  necessitates  that  hosts  be  accountable  to  some  local  oversight  office.  By  requiring  short-­‐term  rental  hosts  to  register  with  the  Planning  Department  or  some  similar  office,  cities  will  identify  a  point  person  for  complaints  and  a  party  who  will  be  held  liable  for  violations.  We  suggest  that  cities  keep  the  registration  process  relatively  simple.  A  primary  objective  of  registration  should  be  to  collect  basic  information  from  hosts  and  to  open  a  line  of  communication  between  hosts  and  the  city.  As  discussed  below,  we  do  not  recommend  that  approval  of  registration  be  contingent  on  inspection.  

Cost  of  Registration:  We  suggest  that  cities  keep  registration  costs  low  enough  to  make  registration  economically  feasible  even  for  someone  who  plans  to  host  guests  only  one  or  two  weeks  out  of  the  year.  Both  registration  and  subsequent  renewal  fees  should  be  aimed  at  simply  covering  the  administrative  cost  of  processing  registrations,  as  in  Anaheim,  CA.2  The  cost  of  fielding  complaints  and  enforcing  the  ordinance  should  be  factored  into  setting  the  fines  and  tax  rate,  rather  than  into  registration  costs.  That  way,  people  who  host  guests  on  a  casual  and  infrequent  basis  will  not  bear  the  cost  of  oversight  and  complaints  for  more  frequent  hosts.  

Registration  Renewal:  Registration  renewal  could  be  required  yearly  (as  in  Anaheim3  and  Dana  Point,4  CA),  every  two  years  (as  in  Portland,  OR5  and  St.  Helena,  CA6),  or  follow  a  model  

1  S.F.,  Cal.,  Administrative  Code  ch.  41A,  § 41A.5.(g)(3)(A) (2015).  2 Anaheim, Cal., Municipal Code ch. 4.05, § 4.05.090 (2014). 3 Anaheim, Cal., Municipal Code ch. 4.05, § 4.05.070 (2014). 4 Dana Point, Cal., Municipal Code ch. 5.38, § 5.38.055 (2013). 5 Citation needed

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like  Maui  County,  HI,7  where  permit  renewal  is  required  every  two  years,  but  will  be  required  yearly  for  hosts  subject  to  complaints.    

Recordkeeping:  To  assist  the  city  in  enforcing  ordinance  requirements,  a  city  may  want  to  require  hosts  to  keep  records  of  guest  names,  guest  contact  information,  dates  of  stay,  indication  of  the  host’s  presence  or  absence  during  the  stay,  and  revenue  earned.  Cities  already  requiring  this  level  of  detail  in  recordkeeping  include  Madison,  WI8  and  Portland,  OR,  the  latter  requiring  hosts  to  maintain  guests’  license  plate  numbers  (if  traveling  by  car)  and  a  record  of  the  room  assigned  to  each  guest.9  Cities  should  require  hosts  to  maintain  the  records  for  at  least  two  years  and  make  them  available  to  the  city  for  inspection  upon  request.      

Advertising:  To  assist  with  enforcement,  a  city  should  require  that  hosts  include  the  STR  registration  or  permit  number  on  all  advertisements.  Cities  with  such  a  requirement  include  Dana  Point,  CA,10  Maui  County,  HI,11  San  Francisco,  CA,12  and  St.  Helena,  CA.13  Cities  should  follow  Maui  County’s  lead  and  require  online  advertisements,  such  as  those  on  STR  platforms,  to  include  or  link  to  the  jurisdiction’s  short-­‐term  rental  policies.14  

C.  Establish  a  System  for  Setting  Limits  on  Rental  Nights  or  Income  

Cities  have  a  powerful  lever  to  protect  various  city  interests  and  resources:  Setting  caps  on  number  of  STRs  per  person,  STR  nights-­‐per-­‐year  per  household,  

6  St. Helena, Cal., Municipal Code ch. 17.134, § 17.134.060(F) (2012).  

7 Maui County, Haw., County Code ch. 19.65, § 19.65.070(A) (2012).

8 Madison, Wis., Code of Ordinances ch. 28 § 28.151 (2014). 9 Portland, Or., City Code & Charter ch. 33.207, § 33.207.060 (2014). 10 Dana Point, Cal., Municipal Code ch. 5.38, § 5.38.080(a)(8) (2013). 11 Maui County, Haw., County Code ch. 19.65, § 19.65.040(A) (2012). 12 S.F., Cal., Administrative Code ch. 41A, § 41A.5(g)(1)(F) (2015). 13 St. Helena, Cal., Municipal Code ch. 17.134, § 17.134.040(N) (2012).  14 Maui County, Haw., County Code ch. 19.65, § 19.65.040(B) (2012).

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and/or  caps  on  STR-­‐sourced  income  per  household.  As  described  in  greater  depth  below,  we  recommend  that  cities  allow  all  units  to  engage  in  a  limited  amount  of  STR  activity,  and  that  the  limit  be  customized  to  the  neighborhood,  based  on  the  interests  the  city  is  aiming  to  protect.  Austin’s  ordinance  limits  STR  density  by  capping  the  number  of  permissible  STR  units  per  census  tract.15  We  do  not  advocate  for  caps  on  the  number  of  permitted  STR  units  allowed  because  it  would  put  a  haphazard  limit  on  who  can  benefit  from  renting  to  short-­‐term  guests.  Rather,  we  recommend  that  cities  mitigate  negative  impacts  by  limiting  STR  units  to  primary  residences  and  capping  the  number  of  nights  that  any  individual  can  host  short-­‐term  guests,  or  income  that  they  can  earn  in  doing  so.  

Below,  in  Section  2,  we  describe  several  considerations  each  city  may  factor  into  the  caps  it  sets.    

D.  Protect  the  Wellbeing  of  Guests  

Health  and  Safety  Standards:  Cities  should  require  STR  hosts  to  adhere  to  basic  standards  for  health  and  safety  of  their  guests.  Basic  requirements  could  include  a  mandate  that  all  bedrooms  have  a  working  smoke  detector,  carbon  monoxide  detector,  and  an  evacuation  plan  that  identifies  all  exits.  A  city  may  also  want  to  require  that  hosts  provide  guests  with  basic  information,  including  proof  of  STR  registration,  a  list  of  the  minimum  safety  requirements,  instructions  for  lodging  a  complaint,  and  the  name  and  contact  information  for  the  host  and/or  another  responsible  party  that  could  assist  guests  with  any  problems  that  arise  during  the  stay.  

Inspections:  Municipalities  such  as  Austin,  TX,16  Tillamook  County,  OR,17  and  St.  Helena18  and  Dana  Point,19  CA  require  inspection  by  the  Fire  Department,  Planning  Department,  Bureau  of  Development  Services,  or  a  building  official.  Some  of  these  cities  provide  a  building  and  safety  self-­‐check  list  for  hosts  to  prepare  for  the  inspection.    

SELC  would  not  advocate  for  an  inspection  requirement,  but  might  urge  cities  to  

15 cite 16 cite 17 cite  18 St. Helena, Cal., Municipal Code ch. 17.134, § 17.134.040(F) (2012), and at § 17.134.080(B). 19 Dana Point, Cal., Municipal Code ch. 5.38, § 5.38.080(a)(3) (2013).  

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create  a  self-­‐inspection  checklist  that  hosts  can  submit  along  with  registration.  Inspections  would  greatly  raise  the  administrative  costs  for  the  city  and  hosts,  creating  undue  barriers  particularly  for  people  who  would  only  host  guests  during  one  to  two  weeks  per  year.  A  city  may,  however,  wish  to  require  inspections  when  guests  file  health  &  safety  complaints.  

In  the  case  of  STRs  arranged  through  online  portals,  it  is  also  important  to  acknowledge  that  the  safety  and  wellbeing  of  guests  is  partially  supported  by  the  guests’  access  to  information  and  reviews  of  the  hosts,  which,  in  turn,  give  hosts  incentives  to  provide  safe  and  clean  accommodations  in  order  to  maintain  a  good  reputation  in  the  review  and  rating  system.    

Insurance:  To  ensure  that  guests  have  recourse  in  the  event  that  they  are  injured  during  an  STR  stay,  cities  should  require  that  hosts  carry  general  liability  insurance  or  a  homeowners’  insurance  endorsement  that  covers  injuries  to  STR  guests  or  other  losses  or  damages  that  could  result  from  the  operation  of  an  STR.  San  Francisco  requires  that  hosts  carry  liability  insurance  for  claims  up  to  $500,000,  including  defense  and  indemnification  of  the  building  owner  and  any  tenants  in  the  building.20  Dana  Point,  CA  requires  proof  of  general  liability  insurance  with  a  minimum  of  $1,000,000  in  coverage,  along  with  an  agreement  to  indemnify  and  hold  the  city  harmless  for  any  liability  claims.21  Further,  the  city  of  Dana  Point  requires  STR  permit  holders  to  provide  current  proof  of  general  liability  insurance  during  each  annual  permit  renewal.22      

E.  Establish  Oversight,  Complaint,  and  Sanction  Procedures  

Oversight:  Enforcement  of  an  STR  ordinance  can  present  challenges,  particularly  in  enforcing  a  cap  on  nights  rented.  Without  access  to  transactional  data  from  online  STR  portals,  cities  must  rely  primarily  on  hosts’  own  self-­‐reporting,  complaints  by  neighbors,  and  investigations  of  suspected  violations.  As  such,  a  city  could  potentially  require  online  STR  intermediaries  to  release,  regularly  or  upon  the  

20 S.F., Cal., Administrative Code ch. 41A, § 41A.5(g)(1)(D) (2015).  21 Dana Point, Cal., Municipal Code ch. 5.38, § 5.38.050(d) (2013). 22  Dana Point, Cal., Municipal Code ch. 5.38, § 5.38.055 (2013).  

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city’s  request,  information  about  the  number  of  nights  per  year  that  any  listed  unit  in  their  city  was  rented  to  short-­‐term  guests  and  the  income  received  by  the  host.  The  city  could  mandate  that  intermediaries  do  all  reporting  electronically  and  in  a  standardized  format  to  make  it  easier  for  cities  to  aggregate  data  from  multiple  platforms.    

Complaints  and  Grievances:  A  city  should  establish  an  accessible  system  for  guests,  neighbors,  and  other  stakeholders  to  bring  to  the  city’s  attention  any  host  that  is  in  violation  of  the  ordinance  or  otherwise  creating  a  nuisance  or  health  and  safety  risk.  Prior  to  resulting  in  sanctions,  the  grievance  process  should  give  hosts  a  reasonable  opportunity  to  respond  to  the  city  to  demonstrate  compliance  and/or  explain  measures  the  host  will  take  to  eliminate  the  concern.  

In  addition  to  creating  such  a  grievance  process,  a  city  may  also  consider  creating  a  private  right  of  action  giving  certain  stakeholders  standing  to  bring  a  complaint  in  court.  Although  we  express  no  opinion  on  the  pros  or  cons  of  creating  a  private  right  of  action,  it  is  worth  noting  that  at  least  one  city,  San  Francisco,  has  done  so.  Following  determination  that  San  Francisco’s  STR  ordinance  has  been  violated,  either  the  city  or  an  interested  party  (defined  as  a  permanent  resident  of  the  building,  homeowners  association,  unit  owner,  the  city,  or  a  nonprofit  organization  focused  on  housing  preservation  or  improvement)  can  bring  civil  suit  against  the  host  for  monetary  and  injunctive  relief.  In  such  a  suit,  the  interested  party  is  entitled  to  attorney’s  fees  if  it  prevails  in  the  suit.23  

Sanctions:    We  recommend  that  cities  create  a  graduated  scale  of  sanctions  for  hosts  that  are  in  violation  of  the  ordinance  or  that  are  the  subject  of  multiple  complaints.  

Sanctions  might  include:  

• Reduction  of  the  total  number  of  nights  that  a  host  may  have  STR  guests.• Prohibiting  un-­‐hosted  nights  (particularly  where  neighbors  have  complained

that  guests  have  created  a  nuisance).• Inspection  of  the  unit  and  a  requirement  that  the  host  pay  for  costs  of

inspection.

23  S.F., Cal., Administrative Code ch. 41A §§ 41A.4; 41A.5.(d) (2015).  

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• Suspension  or  revocation  of  the  registration/permit.• Fines  that  increase  with  the  number  of  violations.  For  example,  Dana  Point,

CA  may  penalize  a  host  $250  for  a  violation.  If,  within  a  single  year,  the  hosthas  multiple  violations,  the  fines  rise  to  $500,  then  to  $1,000,  and  eventuallyresult  in  revocation  of  the  STR  permit.24

2. Regulating  STRs  to  Protect  the  Common  Good

As  regulators,  cities  have  the  opportunity  to  manage  resources  to  ensure  equitable  distribution  and  benefit  to  the  common  good.  An  STR  ordinance  can  impact  at  least  three  key  resources:  1)  housing,  2)  income  from  visitors,  and  3)  neighborhoods/public  spaces.  Below,  we  make  recommendations  that  help  to  ensure  that  a  city  can  protect  all  three  resources,  even  while  allowing  community  members  to  host  STRs.    

A.  Regulating  the  Housing  Supply  for  the  Common  Good  

Protecting  the  Supply  and  Affordability  of  Housing:  In  order  to  protect  the  supply  of  housing  for  lower-­‐  and  middle-­‐income  residents,  we  urge  most  cities  to  cap  the  number  of  nights  that  any  unit  may  be  used  for  an  STR  and/or  cap  the  amount  of  income  that  any  household  may  receive.  There  may  be  situations  where  a  city  will  want  to  refrain  from  capping  STRs  in  any  form,  such  as  in  a  city  wanting  to  encourage  tourism  and  where  housing  is  in  relatively  abundant  supply.  However,  in  the  absence  of  adequate  protections  for  housing  affordability,  STRs  will  escalate  housing  costs  and  ultimately  drive  out  lower-­‐income  and  even  middle-­‐income  residents.  

How  STRs  Escalate  Housing  Costs:  STRs  can  escalate  housing  costs  in  at  least  two  ways:  1)  each  room  or  unit  regularly  used  for  STRs  removes  from  the  market  a  room  or  unit  that  might  otherwise  have  been  offered  to  a  long-­‐term  tenant,  and  2)  the  ability  to  derive  income  from  a  housing  unit  raises  its  value,  raises  the  tenant’s  ability  to  pay  for  expensive  housing,  and  thereby  raises  prevailing  housing  prices.  

24  cite  

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San  Francisco:  a  Case  Study  

San  Francisco’s  Effort  to  Protect  the  Supply  of  Units:  It’s  helpful  to  use  San  Francisco  as  an  example  of  both  what  to  do  and  what  not  to  do.  We  believe  that  San  Francisco  has  addressed  half  of  the  first  issue  by  preventing  units,  but  not  rooms,  from  being  removed  from  the  market.  San  Francisco’s  short-­‐term  rental  ordinance,  which  went  into  effect  on  February  1,  2015,  limits  STRs  to  primary  residences  and  places  a  90-­‐night  cap  on  the  number  of  un-­‐hosted  nights  per  year  that  a  unit  may  be  rented  to  short-­‐term  guests.  In  cities  where  low-­‐income  and  middle-­‐income  households  experience  difficulty  finding  affordable  housing  units,  we  recommend  that  a  city  strictly  limit  or  even  ban  Vacation  Rentals.  San  Francisco  effectively  did  this  by  allowing  Un-­‐Hosted  Primary  Residence  STRs  only  90  nights  per  year  in  each  unit.  This  allows  residents  to  leave  home  90  nights  per  year  while  renting  their  unit  to  short-­‐term  guests.  

San  Francisco’s  Failure  to  Protect  the  Supply  of  Rooms:  San  Francisco  does  not,  however,  limit  the  number  of  Hosted  Primary  Residence  STRs,  and  we  believe  that  this  is  a  significant  flaw  in  the  ordinance.  Bedrooms  for  rent  within  a  unit  are  a  key  source  of  affordable  housing  for  single  individuals,  couples,  students,  and  others  who  cannot  afford  to  rent  entire  units.  To  ensure  that  STRs  do  not  remove  bedrooms  from  the  market,  we  recommend  that  cities  limit  the  number  of  nights  or  income  earned  from  the  short-­‐term  rental  of  extra  bedrooms  while  the  host  is  present.  If  a  city  does  not  limit  Hosted  Primary  Residence  STRs,  people  who  might  otherwise  seek  a  housemate  might  opt  to  earn  more  income  by  using  a  room  primarily  for  STRs,  thereby  removing  a  bedroom  from  the  housing  market.  

San  Francisco’s  Failure  to  Address  Housing  Affordability  by  Limiting  STR-­‐Sourced  Income:  In  addition  to  failing  to  secure  the  supply  of  rooms  for  rent,  San  Francisco  may  have  also  failed  to  adequately  address  the  problem  that  any  income  earned  from  STRs  can  raise  the  cost  of  housing.  In  rapidly  gentrifying  neighborhoods,  STRs  can  fuel  a  vicious  cycle  where  relatively  high-­‐income  residents  earn  even  more  from  STRs  than  hosts  in  less  expensive  neighborhoods,  raising  the  cost  of  housing  far  beyond  what  lower-­‐  and  

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middle-­‐income  residents  can  afford.  

Capping  STR  Use  and  Granting  Exemptions  on  a  Neighborhood-­‐by-­‐Neighborhood  Basis  Allowing  high-­‐income  residents  to  earn  more  income  from  STRs  might  cause  gentrification,  but  allowing  low-­‐income  residents  to  earn  income  from  STRs  has  the  potential  to  protect  people  who  might  otherwise  be  displaced  by  gentrification.  

We  recommend  that  cities  set  a  baseline  cap  on  Un-­‐Hosted  and  Hosted  nights  alike,  giving  all  households  in  the  city  a  basic  ability  to  host  the  occasional  paying  visitor.  In  cities  where  housing  supply  and  affordability  is  a  concern,  this  cap  could  be  relatively  low,  for  example,  30  nights  per  year.    

As  described  in  greater  depth  below,  a  city  could  then  selectively  grant  exemptions  to  the  STR  caps  based  on  the  neighborhood  housing  market  and/or  on  the  basis  on  neighborhood  unemployment  rates.  Setting  caps  based  on  financial  need  lowers  the  potential  for  STRs  to  automatically  drive  up  the  value  and  cost  of  all  housing  in  a  neighborhood,  since  it  would  be  hard  for  speculators  to  bank  on  the  possibility  of  STR  income.    

B.  Ensuring  that  Travelers’  Dollars  Benefit  the  Common  Good  

Both  cities  and  their  diverse  inhabitants  play  important  roles  in  creating  a  welcoming  environment  for  visitors,  and  in  providing  the  infrastructure  to  facilitate  travel.  Income  brought  by  travelers  should  reward  both  the  tangible  and  intangible  contributions  made  by  residents  and  public  infrastructure.  By  taxing  hotels  and  businesses,  the  city  recoups  some  of  this  income  and  uses  it  to  support  certain  social  services.  Through  regulation  of  businesses,  the  city  is  also  highly  influential  in  determining  who  can  generate  income  through  the  hospitality  industry.  We  believe  that  cities  should  regulate  STRs  both  to  ensure  that  income  flows  toward  city  residents  who  need  it  and  to  ensure  that  the  city  can  sustain  its  own  efforts  to  make  the  environment  attractive  to  visitors.    

Using  STR  Regulation  as  a  Lever  to  Create  Income  Opportunities:  From  the  growth  of  STRs,  there  have  emerged  many  anecdotes  of  families,  senior  

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citizens,  and  other  individuals  who  avoided  foreclosure  or  eviction  as  a  result  of  income  generated  by  hosting  short-­‐term  guests.  Ideally,  this  potential  would  not  be  entirely  lost  along  with  limits  set  on  STR  activity.  STR  regulation  could,  in  fact,  offer  cities  a  lever  to  create  income  opportunities  for  populations  most  impacted  by  unemployment  and  underemployment.  Cities  can  operate  this  lever  by  selectively  raising  annual  caps  on  STR-­‐sourced  income  or  STR  nights  per  year  in  neighborhoods  of  high  unemployment  and/or  for  households  that  meet  objective  financial  need  criteria.    

Granting  exemptions  to  STR  caps  on  a  unit-­‐by-­‐unit  basis  challenges  cities  to  develop  clear  objective  criteria  on  which  to  review  applications,  and  makes  the  granting  of  exemptions  somewhat  more  akin  to  a  form  of  public  benefit,  like  unemployment  benefits.  An  application  process  might  require  the  applicant  to  show  that  he  or  she  has  recently  become  unemployed,  recently  lost  unemployment  payments  or  other  public  benefits,  or  recently  had  a  substantial  increase  in  monthly  rent.  A  cap  exemption  could  also  be  time-­‐limited,  recognizing  that  the  exemption  acts  as  a  temporary  bridge  for  a  household  seeking  to  get  back  on  its  feet  after  a  financial  blow.  Any  strategy  for  raising  caps  on  a  unit-­‐by-­‐unit  basis  should  be  carefully  reviewed  for  compliance  with  constitutional  due  process  provisions.  

Selectively  raising  caps  on  a  unit-­‐by-­‐unit  basis  would  substantially  raise  the  administrative  costs  for  the  city,  but  some  or  all  of  those  costs  could  be  passed  through  to  residents  through  added  taxes  or  higher  application  fees  for  residents  applying  for  special  exemptions.  

Raising  caps  on  a  neighborhood-­‐by-­‐neighborhood  basis  may  bring  fewer  administrative  hassles  and  fewer  concerns  about  due  process,  but  a  neighborhood-­‐by-­‐neighborhood  method  also  does  not  allow  a  city  to  target  STR  cap  exemptions  to  those  most  in  need.  Nevertheless,  cities  might  use  Bureau  of  Labor  Statistics  data  or  existing  inclusionary  zoning  maps  to  decide  on  how  to  set  the  boundaries  of  caps.  

Preventing  Speculation:  In  order  to  prevent  people  from  buying  or  renting  units  with  the  goal  of  earning  STR  income,  a  city  could  require  that  a  resident  have  occupied  the  unit  for  at  least  one  year  before  hosting  STR  guests  or  before  the  cap  can  be  raised.  San  Francisco  only  requires  residents  to  have  occupied  their  unit  for  60  days  prior  to  hosting  STR  guests,  which  is  an  insufficient  attempt  to  deter  speculation.  Requiring  at  least  one  year  of  prior  occupancy  will  also  help  to  ensure  that  STR  

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income  benefits  long-­‐standing  neighborhood  residents.  

Taxing  STRs:  Cities  attract  visitors  by  investing  in  and  cultivating  welcoming  public  spaces,  tourist  attractions,  and  basic  infrastructure.  Cities’  efforts  to  create  welcoming  environments  for  visitors  provide  substantial  private  benefit  to  hotels,  B&Bs,  and  STR  hosts.  By  charging  a  Transient  Occupancy  Tax  (TOT)  or  “hotel  tax,”  cities  can  recoup  part  of  this  benefit  and  invest  travelers’  dollars  back  into  the  city.  The  tax  can  be  a  substantial  source  of  income  for  cities,  generating  approximately  $250  million  in  annual  revenue  for  the  city  in  recent  years.25  

Most  cities  with  new  STR  ordinances  require  hosts  to  pay  a  Transient  Occupancy  Tax.  Due  to  the  adverse  effects  of  STRs  on  housing  affordability,  cities  should  designate  all  or  a  portion  of  TOT  collected  from  short-­‐term  rental  revenues  toward  affordable  housing  initiatives  and  related  support  services.    

Collecting  Taxes  Through  Intermediaries:  To  ensure  payment  of  taxes,  cities  may  want  to  require  that  third  party  facilitators  of  STRs  collect  and  remit  the  TOT,  or,  at  the  very  least,  report  residents’  STR  activity  to  cities.  Such  platforms  are  in  the  best  position  to  know  who  is  hosting  and  how  much  revenue  was  earned.  Additionally,  because  these  platforms  transfer  payments  from  guests  to  hosts,  the  platforms  are  in  a  good  position  to  withhold  and  remit  the  tax.  San  Francisco’s  ordinance  is  the  first  to  require  STR  platforms  and  services  to  collect  the  14%  TOT  from  guest  fees  and  remit  the  tax  to  the  city.26  The  City  of  Portland  and  Multnomah  County  have  also  required  STR  intermediaries  to  collect  the  11.5%  TOT.27  

C.  Neighborhoods  for  the  Common  Good  

Cities  play  an  important  role  in  shaping  the  livability  of  neighborhoods,  and  STRs  have  the  potential  to  both  positively  and  negatively  affect  neighborhoods.  On  the  

25  cite  26  cite  27  cite  

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positive  side,  visitors  bring  income  to  a  neighborhood,  both  through  payments  to  STR  hosts  and  by  potentially  patronizing  neighborhood  businesses.  However,  many  residential  areas  are  zoned  with  the  goal  of  preserving  a  quiet  "neighborhood  feeling”  and  promoting  social  cohesion  among  neighbors.  A  constant  stream  of  STR  guests  can  undermine  both  neighborhood  character  and  simple  infrastructure,  such  as  an  adequate  supply  of  street  parking.  

Limiting  Crowding  and  Noise:  The  above  concerns  may,  again,  be  a  good  reason  for  cities  to  cap  STR  nights  on  a  neighborhood-­‐by-­‐neighborhood  basis.  In  addition,  cities  may  want  to  limit  the  purposes  for  which  residents  may  host  guests.  For  example,  Dana  Point,  CA,28  Anaheim,  CA,29  and  Maui  County,  HI30  all  limit  or  prohibit  hosting  of  weddings,  parties  and  other  similar  events.  St.  Helena,  CA  further  specifies  that  a  party  may  be  no  larger  than  twice  the  number  of  guests,  with  a  maximum  of  20  party  guests.31  Both  Maui  County  and  St.  Helena  also  impose  quiet  hours  at  night.32  

Managing  Parking:    In  an  effort  to  address  parking  concerns,  Maui  County,  HI33,  Dana  Point34  and  Anaheim35,  CA,  and  Tillamook  County,  OR36,  have  all  required  hosts  to  provide  additional  off-­‐street  parking  for  STR  units.  In  dense  cities  where  street  parking  requires  a  permit,  we  would  also  recommend  that  cities  create  an  option  for  hosts  to  purchase  on-­‐street  parking  permits  for  guests.  In  this  way,  potential  hosts  who  do  not  have  off-­‐street  parking  will  not  be  completely  blocked  from  hosting  STRs.    

28 Dana Point, Cal., Municipal Code ch. 5.38, § 5.38.080(a)(7) (2013). 29 Anaheim, Cal., Municipal Code ch. 4.05, § 4.05.100.0107 (2014).

30 Maui County, Haw., County Code ch. 19.65, § 19.65.030(Q)(4) (2012).

31 St. Helena, Cal., Municipal Code ch. 17.134, § 17.134.040(J)(4) (2012). 32 See Maui County, Haw., County Code ch. 19.65, § 19.65.030(Q)(1) (2012), and St. Helena, Cal., Municipal Code ch. 17.134, § 17.134.040(J)(1) (2012). 33 Maui County, Haw., County Code ch. 19.65, § 19.65.030(Q)(3) (2012). 34 Dana Point, Cal., Municipal Code ch. 5.38, § 5.38.080(a)(5) (2013). 35 Anaheim, Cal., Municipal Code ch. 4.05, § 4.05.100.0105 (2014). 36 cite

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Providing  Neighbors  with  a  Mechanisms  for  Addressing  Concerns:  As  described  above,  cities  should  create  channels  for  neighbors  to  file  complaints  about  nuisance  or  STRs  believed  to  be  in  violation  of  rental  caps.  To  make  neighbors  aware  of  area  STRs,  an  STR  ordinance  could  require  that  residents  registering  their  unit  as  an  STR  give  notice  of  registration  to  adjacent  neighbors,  or  the  city  could,  at  the  very  least  make  available  a  list  of  addresses  where  there  are  registered  STR  hosts.  

For  cases  where  neighbors  are  disgruntled  about  STR  activity,  but  a  host  is  neither  in  violation  of  an  ordinance  nor  creating  an  objective  nuisance,  we  also  recommend  that  cities  help  fund  community  mediation  services,  to  give  neighbors  low-­‐cost  conflict  resolution  mechanisms.  

3. Some  Creative  Approaches

A.  Municipally-­‐Managed  STR  Booking  Platforms  

Some  cities  might  want  to  consider  the  creation  of  a  municipally  managed  platform  for  registration,  listing,  booking,  reporting,  tax  remittance,  and  license  renewal  for  STRs.  Cities  could  then  require  that  residents  use  the  municipal  platform  to  book  STR  guests.  There  are  many  benefits  to  this,  but  one  key  benefit  is  that  the  10%  to  20%  fee  paid  to  platforms  like  Airbnb  would  be  redirected  to  cities.  This  would  direct  billions  of  traveler  dollars  back  into  cities,  instead  of  toward  corporations  owned  by  wealthy  shareholders.  Additionally,  such  a  platform  could  increase  the  city’s  access  to  information  about  STRs,  simplify  the  STR  registration  process,  assist  with  compliance,  and  address  many  of  the  challenges  that  come  with  enforcing  a  short-­‐term  rental  ordinance.    

Creating  a  City-­‐Owned  Software  Cooperative:  A  single  city  or  group  of  cities  could  finance  the  development  of  STR  booking  software  with  all  of  the  functionality  of  Airbnb.com.  This  software  would  be  owned  by  a  cooperative,  the  only  members  of  which  could  be  city  governments.  Assuming  that  multiple  cities  will  eventually  want  to  use  the  platform  and  pay  a  fee  for  such  use,  the  cities  that  created  the  platform  could  recoup  the  funds  they  invested  to  develop  the  software.  To  cover  ongoing  administrative  costs,  cities  could  either  pay  a  flat  fee  for  the  use  of  the  platform  or  the  cooperative  could  keep  a  small  percentage  of  

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each  transaction.  As  a  cooperative,  it  would  distribute  any  surplus  income  back  to  each  city  on  the  basis  of  each  city’s  patronage.    

B.  Sharing  Economy  Trust  

Another  unique  solution  is  for  a  city  to  create  a  permanent  trust  for  the  collection,  investment,  and  distribution  of  revenue  from  STR  bookings,  much  in  the  same  way  that  the  Alaska  Permanent  Fund  pays  all  Alaska  residents  annual  dividends  from  mineral,  gas,  and  oil  revenues.  Such  a  trust  would  ensure  that  all  city  residents  benefit  from  the  economic  wealth  brought  by  tourism  and  travel,  and  the  trust  could  also  align  residents  around  the  goal  of  ensuring  an  adequate  supply  of  housing.  We  were  inspired  to  include  this  idea  after  reading  Peter  Barnes’  book  With  Liberty  and  Dividends  for  All,  which  describes  strategies  for  creating  trusts  that  distribute  dividends  and  create  sources  of  universal  income.  

To  illustrate  how  this  might  work  with  STRs:  Imagine  that  the  City  of  San  Francisco  charters  a  corporation  called  the  "San  Francisco  Sharing  Economy  Trust."  The  stated  purpose  of  the  Trust  is  to  support  the  long-­‐term  creation  and  preservation  of  an  adequate  housing  supply  for  a  socio-­‐economically  diverse  city.  Separate  from  the  14%  hotel  tax  already  collected  by  the  City,  the  Trust  would  be  empowered  to  collect  an  additional  percentage  of  all  revenue  from  STRs.  The  City  would  need  to  mandate  that  all  bookings  be  made  through  a  nonprofit  or  cooperative  booking  platform,  rather  than  a  for-­‐profit  platform  like  Airbnb.  As  such,  the  10%  to  20%  fee,  normally  collected  by  companies  like  Airbnb,  could  go  to  the  Trust.  The  Trust  could  then  raise  and  lower  the  fee  based  on  the  Trust’s  assessment  of  housing  unit  supply  in  the  city.  When  housing  is  in  short  supply,  the  Trust  might  raise  the  fee  as  high  as  30%  of  40%,  thereby  giving  STR  hosts  an  incentive  to  put  a  room  back  on  the  market  for  a  long-­‐term  renter.  Since  higher  fees  could  ultimately  bring  higher  dividends  to  City  residents,  residents  will  directly  benefit  from  the  Trusts  efforts  to  preserve  the  housing  supply.    

There  are  at  least  three  options  for  the  management  of  the  Trust  funds:  

1. The  Trust  could  then  retain  all  STR  booking  income  and  invest  it  (in  theform  of  loans)  in  affordable  housing  developments  in  the  City.  When  theloans  begin  to  pay  a  return,  that  income  will  be  divided  equally  among  allCity  residents  and  direct-­‐deposited  into  their  bank  accounts.

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2. The  Trust  could  distribute  STR  booking  income  as  dividends  to  residents,without  the  intermediate  step  of  investing  it  in  affordable  housingdevelopment.

3. The  Trust  could  strike  a  balance  between  the  two  options  above,  investingsome  STR  booking  income  and  making  direct  distributions  of  the  rest.

Like  Alaska,  the  Trust  could  create  an  online  system  enabling  City  residents  to  register  to  receive  the  dividend  deposit,  and  could  set  similar  eligibility  requirements,  such  as  requiring  that  someone  have  lived  in  the  city  for  at  least  one  year  prior  to  receiving  a  divided.  

Similar  to  the  municipal  platform  described  in  section  A,  above,  this  approach  would  also  rely  on  cities  collaborating  to  develop  a  software  platform  to  use  across  cities.  

VI. Summary

The  above  recommendations  are  aimed  at  helping  cities  adopt  regulations  that  balance  the  interests  and  concerns  associated  with  STRs.  When  crafting  a  local  ordinance,  each  city  must  consider  its  own  needs  for  housing  affordability,  tax  revenue,  economic  opportunity,  and  neighborhood  cohesion.  Cities  may,  in  fact,  vary  widely  in  how  they  ultimately  adopt  such  regulations,  depending  on  the  unique  needs  and  concerns  of  the  city.  We  urge  all  cities,  however,  to  think  of  an  STR  ordinance  as  an  opportunity  to  create  inclusive  opportunities  for  local  wealth-­‐creation,  and  balance  the  needs  of  all  members  of  the  community.  If  regulated  reasonably,  we  believe  that  the  overall  impact  of  STRs  can  be  greater  economic  stability  for  city  residents,  greater  variety  of  local  tourism  and  travel  options,  and  more  inclusive  local  economies.