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Baltimore City Council to consider strict limits on Airbnb-type rentals

Baltimore City Councilman Eric Costello explains his bill regulating and taxing Airbnb and similar properties in Baltimore. (Kenneth K. Lam, Baltimore Sun video)

The Baltimore City Council is set to take up a bill imposing strict rules on short-term rentals made through Airbnb and other sites, sharply limiting people’s ability to rent out anything other than their homes.

The proposed legislation also would impose the city’s 9.5 percent hotel tax on such rentals.

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The bill was introduced Monday by Council President Bernard C. “Jack” Young and Councilman Eric Costello.

Costello said at a working lunch for council members that the measure could bring in about $800,000 a year, give the city a way to quickly shut down hosts who cause problems and help make residential areas more stable.

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“Short-term rentals are essentially transient hotels that exist in residential neighborhoods,” he said. “We have strong neighborhoods in the city, we have neighborhoods on the cusp in the city and we have weak neighborhoods that we’re trying to bring up. The last thing I think any of us want to do is create an extremely transient environment in neighborhoods that fit in any of those categories.”

Airbnb and other platforms emerged as a way for people to rent out spare rooms in their homes but also have become a thriving market for vacation apartment rentals, creating a new industry of people who own property solely to rent through the sites.

That has irked the hotel and bed-and-breakfast industries, which argue that Airbnb hosts are skirting regulations and gaining an unfair advantage, but the proposed bill likely would upend the businesses of some of the hundreds of Airbnb hosts in Baltimore if it passes.

Amy Rohrer, the president of the Maryland Hotel Lodging Association, said reining in commercial Airbnb operators is a top priority for the industry. Costello said at the lunch meeting that the group was involved in discussions as the bill was being drafted.

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“The Maryland Hotel Lodging Association supports a homeowner’s right to use Airbnb, but commercial real estate investors should not be allowed to make significant returns buying up single- and multi-family homes and renting them year-round on sites like Airbnb without proper oversight,” Roher said in a statement.

The Baltimore City Council was all set to consider sweeping new regulations on online rental sites like Airbnb next week. That plan changed abruptly late Friday.

Airbnb spokeswoman Crystal Davis said that online rentals should be regulated but described the Baltimore proposal as largely beneficial to established hotels.

“The hotel industry’s proposed regulations are designed with one thing in mind: protecting historic hotel profits and the ability of big hotels to price-gouge during popular weekends in Baltimore,” she said.

San Francisco-based Airbnb says its 1,200 hosts in Baltimore earned $11.3 million in 2017. Baltimore brings in nearly $30 million annually from its hotel tax, splitting the money between the general operating budget and the city’s tourism agency.

Airbnb itself says it is happy with local jurisdictions’ imposing taxes as long as they do so in a way that it doesn’t think is too much of a burden to hosts. Airbnb rentals in Montgomery County are already subject to a hotel tax. But a 2016 effort to impose the hotel tax in Baltimore faced opposition from some hosts.

In addition to levying the tax, the new bill would require hosts to register with the city and pay an annual $100 fee. Hosts would be required to keep records of their guests and share them with city authorities if requested, as would the online platforms. City authorities would have the ability to yank the license of a host who fails to comply with city building, fire, health and zoning rules.

Cities around the country have been wrestling with how to regulate Airbnb and its competitors. In some cities, such as New York and Los Angeles, short-term rentals are largely banned and the question is how to enforce existing laws. Others are seeking to write new laws. Seattle and Washington have taken up measures very similar to the one being considered in Baltimore.

The council was on the verge of taking up even stricter rules last year — banning people from renting out anything but their own home — but the council president’s office withdrew the bill before it was formally introduced.

The revised measure would allow people to rent out a single house or apartment that’s not their permanent residence for 60 days out of the year. On its face, that seems more lenient than the previous proposal, but Michael Sung, a Seattle investor who rents out a property in Baltimore using Airbnb, said that under the proposed rules he wouldn’t be able to stay in business.

To hoteliers pushing Annapolis lawmakers last week to tax and regulate home and room rentals, the target was clear: Airbnb, a multi-billion dollar corporation, whose growth they believe has been unfairly helped by its ability to operate outside the law.

“I can’t see anyone making a business out of 60 nights a year,” he said.

It’s not clear precisely how many people are renting space in their own homes compared to those operating the rentals strictly as a business.

Airbnb points to internal data showing that more than half of listings in Baltimore are for individual rooms, and that 83 percent of those listing an entire house or apartment list only a single property. But hotel groups point to numbers from a third-party firm, Airdna.co, that indicate about a quarter of hosts are responsible for 60 percent of the properties listed on Airbnb in Baltimore.

Sung has a built a list of 75 hosts who plan to lobby council members for amendments to the bill. Stripping out the 60-night limit is their top priority but he said he thinks many hosts would be willing to accept paying a license fee and the hotel tax.

Rachel Indek owns several properties in Baltimore that she rents online and manages more owned by other people. She says Airbnb has opened a way for people to buy and rehabilitate properties in the city.

“The city needs more people buying properties and renovating rather than less,” she said. “This bill is going to prevent people from purchasing properties.”

Young, the city council president, brushed off concerns about how the proposal might affect hosts’ business.

“I don’t think that argument holds up,” he said. “They’re making tons of money.”

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