Long Term Solutions for Short Term Rentals

By Patrick Connelly & Joselyn Varghese

Short term vacation rentals are one of the fastest growing businesses in the country today. They are a part of rising trend of startup companies facilitating individuals to share what one person already owns. It started with ride-sharing that continues to achieve massive success. However, the attention is now shifting to short term vacation rentals as cities and municipalities attempt to regulate.

The purpose behind companies like Airbnb is to fill the gaps for rooms or even homes people do not occupy year-round. This gives homeowners the opportunity to bring in additional income and allows travelers to find low cost accommodations. While this concept has been more or less accepted in major American cities, its expansion has created some anxiety. As municipalities continue to create regulations for short term vacation rentals within their boundaries, Airbnb is fighting back both in the courts and through increased lobbying efforts. Their success has varied. 
 
The 9^th Circuit Court of Appeals recently issued a major blow to short term vacation rentals when it sided with the City of Santa Monica in their long standing dispute with Airbnb and HomeAway,^[1] which it claims violated the Communications Decency Act. The Santa Monica ordinance allows “home sharing” where residents can rent space in their homes to visitors so long as the homeowner is present. Further, the Santa Monica ordinance places liability directly on the companies like Airbnb for removing any ads that do not comply with Santa Monica’s ordinances. Airbnb argued in part that Santa Monica’s ordinance violated the Communications Decency Act as it holds the company liable for the actions of their users. The 9th Circuit did not agree finding that the ordinance was a proper use of local authority and that “like their brick and mortar counterparts, internet companies must also comply with any number of local regulations concerning for example, employment, tax, or zoning.”
 
In Illinois, a new bill, HB 2919^[2], attempts to limit municipalities’ authority to regulate short term rentals. If passed, any short-term vacation rental ordinance must be for the purpose of protecting, “public health, safety, sanitation, traffic control, solid or hazardous waste control, pollution control, and other specified circumstances.” Notably missing in this definition is a mention of preserving a municipalities’ housing stock and preserving the quality and nature of residential neighborhoods. Illinois municipalities should be monitoring the effect of short term vacation rentals for public health, safety, sanitation, and traffic control within their boundaries, and be ready to provide factual justifications to support any short term vacation rental regulation.

Leaders in the field, such as Airbnb, have shown a willingness to challenge local regulations in court and are lobbying to restrict local authorities through state legislation. Municipalities must be prepared to justify their regulations upon proper grounds or risk later attack. 

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