🔒Municipalities and state eye regulation for Airbnb, growing home-sharing industry

Airbnb has lauded Connecticut in recent years for its light touch when it comes to regulating the burgeoning short-term, home-rental industry.

That, however, could be slowly changing. In the absence of state regulation, some cities and towns across Connecticut have begun to adopt policies that better control Airbnb rentals, following in the footsteps of other U.S. municipalities and states.

The town of Simsbury has banned Airbnb, while the city of Hartford was the state’s first municipality to adopt regulations on short-term vacation rentals that require permitting and limit stays.

And now at least one state lawmaker is pushing for tighter restrictions on the industry, though legislative changes likely won’t happen this year.

A lobbying fight, however, has already been set off in Hartford.

Airbnb earlier this year opposed the state’s first attempt to reel in the short-term rental industry, arguing the proposed legislation would threaten the economic lifeline of home sharing for 3,700 local hosts and curb profits for small business owners running bed and breakfasts.

House Bill 7177, which failed to draw a vote in the Appropriations Committee, required new administrative tasks for short-term rental hosts, including licensing with the state, informing neighbors about guest stays and imposing additional taxes on transactions.

Airbnb has spent recent years battling regulatory efforts in other states and cities looking to ban or prevent Airbnb operators in commercial zones. Those regulatory efforts come amid home-sharing’s rising popularity among travelers who may think twice about staying in a traditional hotel.

Ginny Kozlowski, executive director of the Connecticut Lodging Association, said her trade group supports regulation of home-rental activity because it would put certain platforms like Airbnb on the same playing field as the local hotel industry.

However, more research is needed on how the state should work with municipalities, which often lack regulations on short-term rentals, before sweeping changes can be made, she said.

“There is a need for regulation, I just don’t know that we are ready to take this step at this time,” said Kozlowski, noting that hotels are held to much higher property and casualty insurance, training and transparency standards.

Other opponents of the Connecticut proposal say creating red tape for short-term rental hosts could raise prices and avert tourists from visiting Connecticut, potentially jeopardizing the state’s tax collections. Airbnb has delivered more than $5.2 million to the state in tax revenue since it began collecting Connecticut’s 15-percent hotel tax in 2016.

But proponents say regulation and its added costs are needed to ensure hosts are notifying their neighbors about incoming guests and mandating they are properly insured.

“The sharing economy is great, but we need to make sure it’s great for everyone,” said state Rep. Sean Scanlon (D-Guilford), who introduced the bill this year to regulate the short-term rental industry. “These rentals shouldn’t come at the expense of neighbors and safety. Neighbors need to know what’s going on.”

Starting the conversation

Although the first attempt to regulate short-term rental properties in Connecticut was recently foiled, Scanlon said he’s poised to pursue similar legislation in 2020.

Scanlon, a 32-year-old who often opts for Airbnb rentals during his travels, said the bill he introduced mirrors legislation adopted in Massachusetts — which became the first state this year to pass sweeping regulations on short-term rentals — as a guide to improve the safety, tax collections and transparency surrounding the industry. States like New York, Vermont and Pennsylvania are also eyeing regulation.

Scanlon, who also led the state’s effort to regulate ride-sharing network Uber in 2017, said his latest attempt to monitor the sharing economy is more about improving neighborhood safety rather than an attack on the Silicon Valley-based company, which launched in 2008.

Airbnb, the top player in the short-term rental industry, represents about 70 percent of Connecticut’s market, meaning any regulation on short-term rental operators in the state falls mainly on their hosts, who receive 97 percent of revenue generated by guests stays.

The company supports “common-sense” regulation of short-term rentals, but not if that means discouraging people from sharing their homes, according to Liz DeBold Fusco, a senior communications manager for Airbnb, who said some of the requirements in Scanlon’s bill threatened to curtail business.

However, Connecticut’s first regulatory attempt wasn’t necessarily more restrictive compared to what other states have proposed, she said, although an early version of Scanlon’s bill sought to limit the number of days a guest could occupy a rental space.

“Generally, we are not opposed to regulation, it’s about working with states and cities, finding a regulatory path forward,” she said. “We’ve seen pieces of this bill proposed in other states at some point.”

Hartford out front

While states work out the logistics of how to address the emerging short-term rental industry, Connecticut’s Capital City has already adopted a host of requirements.

Hartford’s zoning regulations require residents to receive a special permit to operate a short-term rental and limit the number of occupants in a single-family unit, in addition to requiring property owners to reside on-site during guest visits, a particularly restrictive measure.

After adopting the changes in 2016, Sara Bronin, chair of the city’s planning and zoning commission, said the city is now devoting additional resources to enforce and track compliance.

“Short-term rentals can help people supplement their income, age in place and make better use of large homes,” she said. “Our zoning rules are intended to protect the residential character of our neighborhoods against the potential negative effects of short-term rentals.”