On New Year’s Day 2017, new short-term rental laws went into effect in two different Western states.
In Colorado, the Denver city government implemented regulations that require people who use services like Airbnb to obtain a short-term rental (STR) license and jump through a number of tax and regulatory hoops for the “occupational privilege” of providing goods, services or jobs in the city. Failure to comply could lead to fines of “up to $999 per incident.” As the Denver Post noted, “fines could result from something as simple as repeatedly failing to note a city license number on a listing.”
Despite the penalties, however, other cities with similar laws have found them difficult to enforce fairly or consistently.
In San Francisco, 76.6 percent of Airbnb hosts reportedly were not legally compliant a year after newly implemented registration requirements. In Portland, nearly 80 percent of listings were still noncompliant after two years. According to Willamette Week, even a manager at Airbnb headquarters offered multiple STR listings that were explicitly illegal for not being her primary residence.
Denver is likely to face a similar disconnect between laws on the books and the actual behavior of thousands of people oblivious to its regulatory web. Although a de facto policy of benign neglect might persist for a while, this situation could be untenable in the long-term.
In New York, for example, powerful hotel interests used the fact that anti-STR laws were on the books, even if poorly enforced, to push for more onerous bans on rental services—like fining people up to $7,500 for advertising Airbnb listings. Industry lobbyists looking to crack down on competition, reduce consumer options, and raise lodging prices in Denver, San Francisco or Portland could well push for New York-style “reforms” to make flawed regulations worse for economic liberty.
Lawmakers found a better way forward in the Grand Canyon State. While Denver implemented its new STR restrictions, an Arizona law prohibiting bans and excessive regulations—like primary residence requirements or rental length restrictions—on STR services went into effect. Consequently, cities that had banned the rentals now stand to gain millions in revenue from them.
If lawmakers in Colorado, California and Oregon follow Arizona instead of New York, they would empower millions of lower-income residents and local governments to profit from economic liberty. Otherwise, regulations favoring the hotel industry will make life increasingly more difficult for hardworking families.
Rek LeCounte, Communications Project Manager, Institute for Justice