Tuesday, November 25, 2014

AirBnB Regulation: New Technologies, Once Again, Challenge Traditional Land Use Law

The following is a guest post from John R. Nolon, Pace Distinguished Professor and Counsel to the Land Use Law Center at Pace Law School.

One of the clinical activities of the Land Use Law Center at Pace Law School is hosting a bimonthly meeting of the corporation counsel of twelve cities, whose mayors we gather quarterly to discuss and resolve issues pertaining to urban redevelopment. We call the latter the Mayors’ Redevelopment Roundtable and the former the Corporation Counsels’ Roundtable and we serve both as adjunct counsel, along with our students. 

At a recent meeting of the Corporation Counsels’ Roundtable, the municipal attorneys asked us to help them think through whether and how to regulate AirBnB rentals. Some of their mayors think it is a good initiative and others were worried about the adverse effect that AirBnB might have on buildings and neighborhoods.  The lawyers wanted some guidance, so we wrote the following draft memorandum. It is a work in progress, submitted to the Land Use Law Profs Blog with the hope of generating some additional advice on the options local governments can consider as they encounter problems with AirBnB. I am happy to take such suggestions off-line at jnolon@law.pace.edu.

Draft Memorandum

AirBnB, part of the sharing economy, describes itself as a pioneering home rental service that allows homeowners to list their residences for short-term occupancy by visitors who stay for typically short durations. Owners of apartments and condos, even commercial buildings, are allowed to list their space as well. Occupancy is arranged through the internet, fees paid, and the parties connected. So far, AirBnB occupancies have largely escaped local land use regulation.

The occupancy of space for short-term rentals is a land use that is contemplated in bed and breakfast, transitory housing, and hotel and lodging regulations under traditional zoning codes. Such occupancy in single-family homes, condos, apartments, and commercial building raise legal issues.  Are they illegal? Should violations be enforced? How? Should they be legalized? If so, how?

Single-family and multi-family dwellings, under zoning, are regulated as permanent housing where each unit is occupied by a single family. Such dwelling units may be rented, but for permanent occupancy by individual households. Zoning, generally, does not concern itself with whether units are occupied by fee owners or renters for a term.  It does, however, concern itself with whether occupancy is permanent, and hence more stable, or temporary, which can create adverse impacts in single-family neighborhoods and apartment buildings.

In the definition section of a typical zoning code, a dwelling unit will be defined, setting the stage for regulating occupancy. One code that we work with regularly defines a dwelling unit as a unit “containing complete housekeeping facilities for only one family (emphasis added).” That same definition states, “The rental units/rooms in a boardinghouse, dormitory, motel, inn, nursing home or other similar building shall not be deemed to constitute ‘dwelling units’”. Separately, a “family” is defined “as any number of persons related by blood, marriage or adoption, or any number of persons who are not so related living together as a single nonprofit housekeeping unit, using all rooms and housekeeping facilities in common and having such meals together as they may eat at home….” These definitions point toward permanent occupancy of a dwelling unit by a single family, not the rental of rooms to unrelated persons who come and go over short periods. 

In New York, the Multiple Residence Law, which applies to cities under 325,000 in population, makes clear that residential occupancy is divided between permanent and transient occupancy; it divides dwellings between Class A, for permanent residence, and Class B for temporary or transient residence and regulates them accordingly. A recent report from the Attorney General in New York indicates that over 70% of recent AirBnB rentals in New York City involved the rental of an entire home or apartment for less than 30 days in Class A multiple dwellings or in non-residential buildings. These are deemed by the Attorney General as illegal under the Multiple Dwelling Law, applicable to cities over 325,000 in size, and the New York City Administrative Code.

One likely analogue for regulating short-term, transient rentals of the type fostered by AirBnB is how zoning treats bed and breakfast operations.  Bed and breakfast lodgings are a land use often permitted by local zoning codes as a conditional use, subject to various standards and fees, which vary greatly depending on the type of community or neighborhood involved. Zoning may require a certain lot size, limit the number of guest rooms allowed, subject operations to periodic inspections, and require that only a certain percentage of a building be used for the B&B operations, among other requirements.

The New Rochelle zoning code defines bed and breakfast operations as follows: “The renting of not more than three rooms in an owner-occupied dwelling for lodging and serving of breakfast to not more than six casual and transient roomers, provided that the renting of such rooms for such purpose is clearly incidental and subordinate to the principal use of the dwelling.”

Since the AirBnB model does not fit easily into this type of definition, municipalities are struggling to figure out new types of regulations that fit.  Under proposed rules in Portland, residents who wish to rent one or two rooms of their primary, single-family residences would be required to obtain a two-year permit, pay a fee of $180 and undergo a home inspection and notify adjacent property owners.  Short term rentals of apartments, condos, and commercial spaces are not included in this proposal.

San Francisco’s Board of Supervisors recently voted to adopt regulations that require permanent residents to secure a business license from the city, to show that they have occupied their homes for 275 days out of the last year, with a limit of 90 days of occupancy permitted by AirBnB customers. Landlords are prevented from evicting current tenants to create makeshift hotels. The regulations are being challenged in court and do not take effect until February.

The regulation of AirBnB rentals joins wind turbines, various types of solar energy facilities, geothermal heating and cooling, distributed energy systems, urban farming, xeriscaping, and a host of other new technologies that raise zoning issues. Since, in most cases, they were not contemplated when municipal zoning ordinances were adopted, municipal attorneys and those who represent affected stakeholders are being challenged to reconsider, rethink, and redraft the rules that regulate these emerging technologies. Zoning, now nearing its 100th year, while showing its age, is being rejuvenated as these matters are taken up and resolved.

In each case, it is strategic to figure out how to define the innovative land use involved and then to decide how to regulate it as a principal, accessory, specially permitted, secondary, or prohibited use under the code.  How should AirBnB rentals be defined? Is an AirBnB rental a single use, subject to a single definition, or does its insinuation into commercial, multifamily, hotel, and other spaces call for multiple definitions and multiple treatments under zoning regulations?


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