Balancing Airbnbs

It’s remarkable what the Louisville Metro Council is capable of when not distracted by loose belts and bathhouses. The council is showing signs of serious, constructive governing.

Recently, an ordinance was filed that would put a three-month hold on issuing new permits to short-term rental property owners — the Airbnb entrepreneurs. This is a positive move by the council — it is right to hit the pause button while figuring out how the city wants to regulate Airbnbs. The challenge for the council now is to move quickly, while protecting the rights of property owners and neighborhoods and without harming the city’s efforts to boost tourism and development.

On the surface, this issue seems straightforward: Some people are buying homes to rent them out to visitors for a day or two at a time. This attracts people on vacation who may be looking to party on, say, a Tuesday night in the backyard.

Not very neighborly.

Councilmen Brandon Coan, David James and Bill Hollander are the sponsors of the ordinance. Hollander said in an interview that he believes these homes are “really businesses located in a residential area, and they have been the source of many complaints.”

He’s right.

If these homes are operating as a business — not residences — then they should be regulated and taxed as businesses. Cities have zoning rules and restrictions for good reasons. In 2016, Louisville adopted rules requiring short-term rentals be registered with the city. However, that is commonly ignored and loosely enforced. According to the city’s website, there were 432 registered short-term rentals as of Dec. 6. But, as Kevin Trager of WLKY recently reported, Louisville has surpassed 1,000 listings on Airbnb’s website.

If other rental properties and hotels are regulated, so too should these side-hustle operations, which is why the city is taking a new approach.

However, the council needs to consider the issue’s complexities.

So, are the problems noise, trash and parking? Are those problems that existing response from police and inspectors can manage? If so, then perhaps a portion of the taxes collected from these businesses need to go to beefing up how those agencies respond to such complaints.

Maybe there needs to be a three-strikes program, whereby if police are called to a short-term rental property three times, the owner loses their rental permit for a period of time.

Also, the council must be careful to not over-regulate short-term rentals.

One of the new proposals is to limit the number of guests in a short-term rental to 10 people. Is this just an arbitrary number that just feels more responsible? At some point, shouldn’t the property owner have an interest in setting their own rules of the house?

As “Bourbanism” attracts more visitors, do we want to limit their options for visiting? It could force groups to choose to visit elsewhere — maybe Indiana or, dare we say, Nashville — where they can rent a house and stay together.

And why should hotels get all the tourism money? Why shouldn’t individuals and entrepreneurs be able to use their property to generate income?

Certainly, this is the first of many tests that will challenge the city as new technologies and industries emerge (Bird scooters and Topgolf, for instance).

The best course of action would be to adopt a narrow, limited regulation that addresses specific problems and doesn’t box the city out of future possibilities.

The council seems to be going about this the right way: This proposal for a short-term moratorium gives them time to consider the issue, and they aren’t retroactively penalizing anyone.

Now comes the hard part: making sure it balances the rights of property owners with those of neighbors and the city’s goal of being a tourist destination.

Let’s hope the council can make this work… without losing its pants.

This article appears in December 12, 2018.