Capitol Alert

California lawmakers want to regulate home-sharing businesses like Airbnb

Jane Taguchi, shown in January, was upset that the house across the street from her was being rented out regularly on Airbnb, even though short-term rentals are barred in her Silver Lake neighborhood of Los Angeles.
Jane Taguchi, shown in January, was upset that the house across the street from her was being rented out regularly on Airbnb, even though short-term rentals are barred in her Silver Lake neighborhood of Los Angeles. TNS

Setting up what could become another big fight over how much to regulate the emerging “sharing economy,” a California senator plans to introduce a bill that would make it easier for cities to collect taxes from homeowners who rent out rooms on Web-based house-sharing services such as Airbnb.

Under Senate Bill 593 by Sen. Mike McGuire, online home-sharing companies would have to make regular reports to cities and counties about which homes in their area are renting rooms, for how many nights and how much money the homeowners are collecting for the short-term rentals. That would make it easier for local governments to collect transient occupancy taxes from the homeowner.

Right now, McGuire said, the hosts who rent out rooms are supposed to register with their local governments and pay the transient occupancy tax. But many do not, says a fact sheet about his bill, creating “a severe under-registration of hosts and underpayment” of taxes. The bill also would uphold local bans on short-term vacation rentals by prohibiting online home-sharing companies from arranging agreements that violate a local ordinance.

“We have had a short meeting with Airbnb and we have welcomed a longer conversation, because the bottom line is that it’s a law in over 400 cities and 55 counties that vacation rental platforms must pay their taxes and abide by the local ordinance,” said McGuire, a Democrat from the Sonoma County city of Healdsburg.

“Unfortunately, in the vast majority of cases, that’s not happening. This simply enforces the local laws already on the books.”

Airbnb and local government officials are scheduled to discuss the issue at an Assembly hearing on Wednesday. McGuire’s is at least the second bill this session that would create statewide regulations for companies like Airbnb. Sen. Isadore Hall, D-Compton, is carrying SB 761, which has not yet been fleshed out in print but calls for “public disclosures and consumer protections” when advertising vacation rentals or temporary living spaces. Hall said it would require online home-sharing companies to inform users that a tenant who uses the service to sublet their apartment may be violating their lease and create a cause for eviction.

“A lot of times the owners of the property don’t know their tenants are subleasing the property, and the liability is transferred to the owner,” Hall said.

On Tuesday, Airbnb spokesman Nick Papas said the company is in talks with city officials around the world and already collects transient taxes in San Francisco and San Jose.

“The sharing economy is here to stay and we should be working together on progressive rules that help regular Californians pay their bills and pursue their dreams,” Papas said in a statement.

Airbnb has grown popular as a way for homeowners to make extra cash by renting out rooms on a short-term basis, and for travelers to experience a more authentic, lower-cost alternative to a hotel. Yet as its popularity has grown, so have concerns.

Cities around the country have been negotiating with Airbnb as they field complaints ranging from noise and traffic to a drop of affordable rental housing in hot markets where landlords find they can make more money renting to short-term tourists than to long-term residents.

In California, the cities of San Francisco, San Jose and Auburn have passed ordinances to regulate Airbnb in the last year. And in Los Angeles, a labor-backed advocacy group released a report this month saying more than 7,000 houses and apartments in the area have been taken off the rental market for use as short-term vacation rentals. Los Angeles already forbids short-term rentals in some residential neighborhoods, but critics say the law is not well-enforced.

McGuire said he grappled with the growth of home-sharing services as a member of the Sonoma County Board of Supervisors. He said he heard from residents complaining about late-night parties, wild behavior and public drunkenness outside short-term rentals.

“The only time, in many cases, a city or county knows that a home is a vacation rental is when there is a call to the police or the sheriff,” McGuire said. “This is an evolving issue across the sate of California right now. We need solutions to one of our growing challenges.”

McGuire’s bill has support from the California Hotel and Lodging Association as well as the labor unions that represent hotel workers.

As a fight between traditional businesses and the Internet companies that have invented new ways to compete with them, the home-sharing debate echos a fight in the Capitol last year over legislation to regulate Web-based ride-sharing companies like Uber and Lyft. Ultimately Gov. Jerry Brown signed new insurance requirements into law, but the rules were watered down after the Internet businesses launched a huge lobbying effort including drivers protesting outside the Capitol.

Call Laurel Rosenhall, Bee Capitol Bureau, (916) 321-1083. Follow her on Twitter @LaurelRosenhall.