What does it mean to own property? Are app-based lodging and transportation services showing the way toward an enlightened age of the Sharing Economy or simply enabling a kindler, gentler gentrification? Can I crash at your parents’ house in Boca for 70 bucks a night?
As Airbnb expands its presence in Florida, such are the stakes in the looming fracas over short term rentals.
Since 2008 Airbnb has hosted listings for individuals with spare rooms — or even, controversially, spare residences — to rent them out to travelers and vacationers looking for a less expensive, off-the-beaten path alternative to traditional forms of lodging. This innovation has gained the company great acclaim from consumers and the business press as well as some tenacious detractors.
“We’re creating efficiencies in the marketplace, and that’s exciting,” says St. Petersburg state Senator Jeff Brandes, who has taken an interest in the issue. “I think people are going to start making their car payments and paying their mortgages with the funds with Airbnb and Lyft, and that’s a good thing. It creates new opportunities for people to essentially find money in their couch. These things that were once dormant liabilities are now turning into earning assets.”
There’s no doubt that plenty of money is being made off of Airbnb rentals. The company has been valued at $13 billion and takes a 6-12% commission off of millions of rental nights a year. Thousands of people have weathered a difficult economy by renting out their spare bedrooms. Why should landlords, or medallion owners for that matter, have all the fun?
As John Rothchild explains in his classic work of Floridiature Up for Grabs: A Trip Through Space and Time in the Sunshine State, it was here in Florida that nature’s dual limitations on real estate production were conquered: Space was defeated by stacking Floridians dozens of stories high and as wide as a city block in South Florida, America’s ground zero of condominium culture, and eventually by just dredging up muck from the ocean floor and minting new land from scratch. Time, for its part, was overcome by an innovation now known as the timeshare — why go in on a beach house mortgage with friends when you can enjoy all the leisurely three-day weekends you want without the liabilities and upkeep? Proponents will argue that Airbnb is simply taking this logic to its conclusion.
It’s not that simple, says Madeira Beach City Commissioner Elaine Poe.
“It’s turned into a free-for-all for the State of Florida. They’re not paying the tourist development tax, they’re not paying the sales tax. The hosts are pocketing that money and Tallahassee has taken away most cities’ ability to do anything about it. It’s changing the residential character of our neighborhoods,” Poe told SaintPetersBlog. But she doesn’t intend to take it lying down, on the beach or elsewhere.
“I’ve brought it to the attention of our boards and to our city manager. They’re [monitoring unlicensed rental activity] full-time basically, watching for these people. We’re busting everyone we can bust. I’ve reported myself probably upwards of 250 to the Tourist Development Tax board.”
Poe isn’t the only one who thinks that the market efficiencies Airbnb creates are a little too efficient.
“In Florida, we’ve worked hard to ensure our millions of visitors receive a world-class experience. We welcome businesses that build on the success of our industry but it is imperative they maintain the highest of standards by following the same rules and laws applied to public lodging establishments,” said Carol Dover, President and CEO of the Florida Restaurant and Lodging Association, not sounding particularly enthusiastic about changing those rules and laws.
Yet the practice continues apace. Right now, prospective vacationers can choose from hundreds of locations on no fewer than 41 different short term rental sites — HomeAway, VRBO, FlipKey, the list of Airbnb copycats goes on — in Madeira Beach alone. Though in many cases the rentals are strictly speaking illegal or, at the very least, occupying a legal grey area, the prospects of anyone cracking down enough to depress demand seem vanishingly slim.
Plus, as Brandes explains, “Visitors expect these kinds of products in the third-largest state in the country, where tourism is one of our pillars.” He makes a connection between real-time ridesharing, as the industry is formally known, and short-term rentals that many others see as well. “The fact that in Tampa and Orlando you can’t get a black car that’s connected to Uber or Lyft in a major tourist state is pretty amazing,” he said, referring to the oft-ignored prohibitions against the services in both cities.
So the question becomes, where do we go from here?
The legislative destinies of both endeavors may be bound together. Brandes, along with Tampa state Representative Jamie Grant, took on the ridesharing issue last year and plans to do so again during the 2015 session. The lawmakers found themselves tussling with an idiosyncratic situation when they faced opposition from their hometown Hillsborough Public Transportation Commission. Hillsborough, represented in part by both legislators, is the only county in Florida to have such a legislatively-designated special district. The commission sided heavily with the cab companies, though Brandes believes a compromise is possible and that attitudes are shifting in his direction.
But there’s also a learning curve.
“For many people it was a brand new concept. A lot of folks didn’t know how to spell Uber last session, so we spent 2014 session introducing legislators to the issue, and they now understand the overriding concerns. Often these issues have to marinate for a few years before they make sense to folks. We think that now is the right time to bring this back up and that the battle lines are pretty clear,” said Brandes.
Assuming they are successful, proponents of Airbnb will most likely get the chance to make their case during the 2016 session, when lawmakers including Grant and Brandes hope to introduce legislation establishing a statewide framework for the regulation and collection of taxes associated with short-term rentals.
“I honestly think Airbnb faces a more difficult challenge than Uber and Lyft in the long term. Uber and Lyft aren’t dealing with zoning regulations, homeowners’ associations, condos and so on. Its argument is more straightforward, so I think the conversation with regard to Airbnb will be much longer.”
Such a challenging issue is likely to require some substantial muscle in terms of lobbying. So far Ballard Partners, Fiorentino Group, Floridian Partners, Liberty Partners of Tallahassee, and RSA Consulting have all lent a hand on the influence side on behalf of Uber, and may be well positioned to help Airbnb in 2016 as well.
On the other hand, particularly if the ridesharing legislation passes, there will likely be a great deal of competition for retainers from short-term rental companies. Becker & Poliakoff, with its extensive history of dealing with land-use and HOA & condo law legislation — and employment of technology-forward litigator Rep. Greg Steube of Sarasota — might also be in contention, depending on where the condo commandos and homeowners’ groups land on the issue. Or perhaps Ron Book may be the guy for such a high-profile issue?
Airbnb itself is also getting aggressive with its in-house influence efforts, bringing on former advisor to the Obama White House David Plouffe back in August. Since then, the firm has had some luck in its regulatory battles, securing passage of a San Francisco ordinance allowing year-round residents to legally rent out space for fewer than 30 days, a standard benchmark for rentals nationwide.
The internecine tension between Brandes and Sen. Jack Latvala of Clearwater may come into play as well.
Commissioner Poe says that while she has consulted with both lawmakers on the issue, Latvala is the more sympathetic to municipal officials who fear such legislation may damage home rule, an interest that has been on the ropes for some time now in Tallahassee. Many leaders of local governments, hamstrung by legislation that prevents certain changes to their charters, are having difficulty penalizing unlicensed renters and would like to score a coup against the legislature by keeping this issue in the state of limbo it has been in until now.
Ultimately, as Brandes says, in the battle between emerging technologies and regulatory frameworks, “The score is innovation 100, old technology 0. The reason that Uber and Airbnb are so popular is that people want it.”
Whether a majority of Legislature will want it is another question, but for the next two sessions at least, interest in these issues will certainly share the hockey-stick trajectory of the revenues for the companies that created them.