In a move that took both supporters and opponents of the effort by surprise, D.C. Council Chairman Phil Mendelson on Tuesday postponed a second and final vote by lawmakers on sweeping regulations for the city’s short-term rentals and the platforms that promote them.
Mendelson has in recent weeks led the charge to pass the rules, but delayed further action on them until Nov. 13—when the Council will hold another legislative meeting—after several councilmembers said they were concerned about the estimated price tag of the regulations and the logistics of enforcing them. An analysis published on Monday by the District’s Chief Financial Officer (CFO) had found that the bill at issue would cost the D.C. government more than $104 million in bureaucratic expenses and lost tax revenue over the next four years. Of that amount, $96 million came from an anticipated decrease in “transient lodging” revenue.
Booking companies like Airbnb and HomeAway currently collect such taxes and remit them to the District. Under the legislation, which the Council unanimously approved in the first of two necessary votes earlier this month, hosts would be required to obtain special business licenses for short-term rentals. Hosts would also be limited to renting out only their primary residences, and to doing so for no more than 90 days a year when they are absent. The idea is to allow for “legitimate home-sharing” and to reduce commercial operations where whole homes are taken off the market to be used as short-term rentals, proponents of the measure say, citing the rising cost of housing in the District. Critics say the proposal is too restrictive.
In fact, current zoning laws already prohibit short-term rentals (meaning those that last less than 30 days at a time) in D.C.’s residential zones. While the laws are rarely, if ever, enforced, the CFO’s analysis assumed that they would be if the legislation passed, and concluded that the bill would “eliminate nearly all current short-term rentals.” About 80 to 90 percent of the District’s roughly 9,000 short-term rentals occur in residential zones, according to the CFO.
Hence the projected multimillion-dollar price tag of the legislation. That figure gave several councilmembers pause on Tuesday, even though they had supported the overall attempt to regulate short-term rental units before. Given the CFO’s analysis, lawmakers would arguably have to find the money to fund the rules in the District’s next budget—money that could go toward other city programs. Mendelson, the Council chairman, initially tried to persuade his colleagues that the analysis was inflated, but ultimately decided to punt the vote on the bill.
“I would rather postpone this matter for two weeks then to go forward with the unreadiness I am sensing here,” he said. Mendelson added that he was preparing a letter to send to D.C.’s Zoning Commission—the quasi-judicial body that sets zoning policy—urging its members to update zoning statutes and permit short-term rentals in line with the Council’s bill. Still, the commissioners would not be legally obligated to fulfill such a request, a Council staffer tells Curbed DC. Other jurisdictions, including neighboring Montgomery and Arlington counties, have approved legislation and amended zoning statutes around short-term rentals at once.
“The negative fiscal impacts of this proposal—for taxpayers, families who share homes, and neighborhood businesses—are real and so we are glad cooler minds prevailed and this vote was delayed,” Airbnb said in a statement after Mendelson’s choice to push back final action.
Lawmakers hope to address the zoning and cost issues with the bill over the coming weeks. On Tuesday, they also agreed to delay the eventual implementation of the bill (presuming it becomes law) until October 2019, so regulators and homeowners could make preparations.