Bill could halt Airbnb, vacation rentals in some CA cities

airbnbTravel has never been easier or more affordable — thanks to the proliferation of online accommodation marketplaces.

Whether you’re planning a weekend trip to Napa Valley or the family’s spring getaway to Disneyland, non-traditional accommodation services, such as Airbnb, provide travelers with a range of lodging options — from small studio apartments to luxury cabins. The service is widely popular with solo travelers that can use a person’s spare bedroom and families that can rent an entire home, rather than multiple hotel rooms.

“Airbnb hosts share their spaces in 190 countries and more than 34,000 cities,” the company, which was founded in 2008, explains on its website. “All you have to do is enter your destination and travel dates into the search bar to discover distinctive places to stay, anywhere in the world.”

But it won’t be that easy if one state lawmakers gets his way. State Sen. Mike McGuire, D-Healdsburg, plans to introduce legislation that would require Airbnb hosts to abide by a complicated maze of outdated local ordinances and mimic big corporate hotel chains in collecting transient occupancy taxes.

In some cities, Airbnb and other short-term rental services would be halted altogether, costing consumers more for accommodation and benefiting the bottom line of corporate hotel chains.

Local government revenue grab

McGuire has yet to put the specifics of his proposal into the text of Senate Bill 593, which currently references the Motor Vehicle Fuel Tax Law. However, he says that a new state law “will empower communities to protect the quality of life of their residents by upholding local ordinances that protect against the degradation of neighborhoods, or in some cases, not allowing vacation rentals based off of local Online Vacation Rental Businesses (OVRB) ordinances.”

“Where vacation rentals are legal, this legislation will provide cities and counties the tools they need to collect bed taxes which help build stronger neighborhoods,” McGuire said in a recent press release. “Where vacation rentals are illegal — the bill prohibits the online platforms from making the rental.”

He’s already lined up a long list of supporters from local governments that would see a boost in tax revenue.

“The California State Association of Counties (CSAC) greatly appreciates Senator McGuire’s leadership in making sure local communities have the ability to regulate on-line hosting platforms,” said CSAC Executive Director Matt Cate. “In particular, we support the Senator’s legislation to ensure cities and counties can collect transient occupancy taxes that fund critical services in our communities.”

Transient occupancy taxes are imposed by local governments for “the privilege of occupying” a lodging for 30 days or less. In some jurisdictions, this “invisible tax” is spent in ways that benefit big hotel chains and tourism-based businesses, such as infrastructure improvements near the hotels. Individual hosts with just one property are unlikely to see any benefit from the tax revenue.

Outdated local ordinances written before Airbnb

Many local ordinances governing short-term rentals, originally drafted to combat seedy motels, establish unreasonable or impractical burdens on hosts who are just trying to make ends meet. In San Diego, the city’s current regulations require hosts to obtain hard-to-get permits and secure additional parking in order to rent a spare bedroom.

“Hosts who rent rooms in their homes on a short-term basis would need either a neighborhood use permit or a conditional use permit, depending on the neighborhood in which they live,” explained Voice of San Diego’s Andrew Keatts. “The city’s own data, however, shows a resident can plan on waiting about a year to get one of those permits.”

Hosts that refuse to comply face threats and intimidation from local government officials. That’s what happened to a 70-year-old Burlingame woman who, according to the Voice of San Diego, was ordered to stop renting rooms in her home or face a daily fine of $2,500.

Bill would give local governments personal information

McGuire’s proposal also could put hosts in jeopardy of identity theft or home burglaries. His proposal would require hosts to disclose personal information, including their address, number of nights with visitors and amount paid by the guest to cities and counties in a manner that is “similar to the way hotels” do it. Such disclosure of personal information to city and county employees on insecure local government computer systems could put hosts at risk of identity theft.

Even secure state and federal government systems are vulnerable to attack by hackers. Last March, the California Department of Motor Vehicles announced it was investigating a possible data breach for credit card payments from Aug. 2, 2013 to Jan. 31, 2014. According to KPCC, the responsibility for the data breach rested with an “outside vendor they (DMV) use to process online credit card payments or from the credit card companies themselves.”

Earlier this month, the online security experts at KrebsOnSecurity shared a horror story of a taxpayer who had his tax refund stolen due to vulnerabilities at the federal government’s online tax system at IRS.gov.

“The IRS’s process for verifying people requesting transcripts is vulnerable to exploitation by fraudsters because it relies on static identifiers and so-called ‘knowledge-based authentication’ (KBA) — i.e., challenge questions that can be easily defeated with information widely available for sale in the cybercrime underground and/or with a small amount of searching online,” the security firm warned taxpayers.

In addition to online vulnerabilities, local government employees would have access to a list of unoccupied homes, a list of easy prey for burglars.

A December 2014 report by State Auditor Elaine Howle detailed numerous cases of “theft of state funds, waste of public resources, improper headquarters designation and improper travel expenses, dishonesty, incompatible activities, and other violations of state law.”

The legislation regulating Airbnb and other services also sets up another battle between California’s new high-tech companies and local governments similar to that involving Uber, Lyft and other ridesharing companies.

The state, which remains the global center of such start-ups, is being forced to work out compromises. Gov. Jerry Brown brokered one last September between the ridesharing companies and local governments influenced by powerful cab companies.

2 comments

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  1. Queeg
    Queeg 1 April, 2015, 20:39

    Research the pro’s put forth…..the most telling: Airbnb is taking scarce housing off the market further creating housing shortages in urban centers.

    Remember highest and best affords owners the market rent/value given transparency and informed, knowledgeable consumers. Short term rentals is the future for quality urban centers.

    Reply this comment
  2. Dan
    Dan 26 April, 2015, 15:42

    Why do I have to give out my email address to make a comment? In my opinion Senate Bill 593, is an unwanted and unconstitutional government intrusion favoring a few but imposing virtually unrepresented taxes on many less fortunate others.

    Reply this comment

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John Hrabe

John Hrabe

John Hrabe spends his time traveling the world as a freelance journalist. When he isn’t on an international flight, John writes about California politics for CalWatchdog.com and CalNewsroom.com.

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