Learning to share has always been difficult for kids. It’s proving just as hard for adults to figure out, too.
In a fresh round of bickering over how the new sharing economy should work, Airbnb, a heavyweight of the emerging industry, has slapped a federal lawsuit against Santa Monica over its regulation of short-term rentals.
The technology giant filed the suit last Friday in response to the city’s Home-Sharing Ordinance, which went into effect more than a year ago. Airbnb’s suit claims the ordinance violates several of the company’s constitutional rights, including the First Amendment.
Airbnb’s suit also accuses the city’s ordinance of running afoul of the Communications Decency Act, a federal law that ensures that internet platforms like Airbnb can’t be held responsible for content published by its users.
“The city is unwilling to make necessary improvements to its draconian law, so while this isn’t a step we wanted to take, it’s the best way to protect our community of hosts and guests,” said Airbnb spokesperson Alison Schumer.
Airbnb is a digital platform that allows users to post listings for short-term rentals available for travelers desiring an alternative to a hotel stay. While it’s not the only company doing this, Airbnb is the largest. The company is valued at more than $25 billion and covers more than 34,000 cities worldwide.
But some of those cities have started to push back against the company’s growing empire.
Santa Monica decided to act on the heels of a report issued in March, 2015 by the Los Angeles Alliance for a New Economy. That report concluded that services such as Airbnb were making a bad housing situation even worse in the Los Angeles region by taking much-needed housing units off the long-term rental market and driving up rents.
Santa Monica’s ordinance allows what the city defines as “home sharing,” where a residential unit can be rented for 30 days or less as long as the host remains on the property. The host must also pay city taxes and register as a business.
But the ordinance outlaws “vacation rentals,” defined by the ordinance as short-term leases of an entire residential unit for 30 days or less. Violators are subject to fines of up to $500 per day and possible criminal prosecution.
City officials are not commenting yet on the specifics of the Airbnb suit because they have yet to be officially served. But officials released a statement Tuesday voicing support for the ordinance.
“It is an expression of the city’s commitment to maintaining our housing stock for long-term residents and to preserving the character and quality of life in our neighborhoods,” the statement read.
The city has issued more than 900 fines for violators of the ordinance, with KPCC reporting that the bulk of those fines were issued to Airbnb.
This past July, one individual operator pled no contest to charges of illegally operating five short-term rentals and was forced to pay more than $3,500 in fines.
Santa Monica becomes the third California city to be sued by Airbnb for its short-term lease regulations, following similar legal action against Anaheim and San Francisco.
The battle between San Francisco and Airbnb is somewhat awkward, since this is the company’s hometown and where it was founded in 2008.
San Francisco tried a different approach than Santa Monica in its regulations, deciding to have Airbnb hosts register with the city. But Airbnb claimed that the city made the registration process too confusing. Perhaps most galling to the tech-savvy region was that the registration of short-term rentals could not be completed online. Hosts had to turn in actual paperwork.
When fewer than 20 percent of eligible hosts registered with the city, miffed San Francisco officials announced plans to impose fines of $1,000 against Airbnb for every unregistered user.
Airbnb fought back, suing the city in an attempt to overturn the restrictions and fines. The company took great pains to explain itself to the San Francisco community in an online statement published soon after filing the suit.
For Airbnb, a company beholden to venture capital and with an urgent need to project a rosy economic outlook to please its investors, these battles against local regulations of short-term leases are high-stakes affairs.
Meanwhile, Airbnb is facing new challenges from other prime short-term rental cities such as Los Angeles, where city officials are looking hard at developing regulations of the short-term rental industry.
With that threat looming, Airbnb reached agreement with Los Angeles officials to begin collecting lodging taxes from its users in the city, a move that could generate millions in tax revenues for Los Angeles.
