CALIFORNIA SHARING ECONOMY BILL

CALIFORNIA SHARING ECONOMY BILL

LOOMcGuireLogoKING FOR A WAY TO REGULATE SHARING SERVICES. ONLINE VACATION RENTAL LEGISLATION SB 593

The regulation issue in the general sharing economy debate is gaining more and more momentum. New disrupting services are spreading, posing the question of their categorization between personal and professional provision and related forms of regulation. If the service is not clearly ascribable to a personal or professional level can be very challenging to apply the right rules. In addition, the new peer-to-peer business models have to face existing structures of regulation designed for old services. This misalignment can impede the economic growth and discourage the development of innovative and useful solutions, but at the same time it can favor situations of tax evasion, privacy violations, and unfair competition[1].

For this reason, make a reasoning at governmental level is becoming essential and that is exactly what has been done thanks to the proposal of Senator McGuire in USA. He presented an Online Vacation Rental Legislation, SB 593, that found great support among the Senate Governance and Finance Committee and the Senate Transportation and Housing Committee[2]. This legislation covers the hospitality sector, one of the most critical area, since entire cities are experiencing one-way sharing in which online vacation rental businesses (OVRB’s) share all the benefits of a local community’s services but not the responsibilities. The case is particularly strong in California where thousands of rental units are being converted from permanent housing for residents to hotels for tourist, often in violation of local zoning laws and avoiding taxes. Online hosting platforms that manage online vacation rental, like AirBnb, currently operate with little accountability and local governments has to afford costs and expenses related to this growing industry.

rent-control-infographic-421x450In this frame many conflicts are emerging, because the short-term rental (especially in case of management companies that rent hundreds of apartments in the same neighborhood) impacts on the local life in terms of congested street, lack of parking, loss of affordable units for citizens and loss of revenue that could be invested in local services.  The bill “Thriving Communities and Sharing Economy Act” tries to stop property owners from using AirBnb and similar platforms to convert scarce permanent housing for residents into hotels for tourists while avoiding the traditional taxes that hotel have to pay. It aims to empower cities to enforce local policies, ensuring that their laws are followed. Another goal is to force short-term rental companies to make disclosures as required under local law (providing address of host rental, amount of nights stayed, and amount paid by the visitor). The Senator’s proposition simply try to reinforce local laws asking that OVRB’s follow them. The idea is very simple: where there are local ordinances that allow vacation rental the bill will assist local jurisdictions in regulating and collecting the Transient Occupancy Taxes (TOT) as for traditional hotels; where vacation rental is illegal the bill will reinforce the local ordinance prohibiting OVRB’s from making a rental. In addition, local jurisdictions may choose to have OVRBs collect the taxes and remit them, cities can opt out of their information disclosure process at their discretion and use the TOT to found critical services in the communities, such as road improvements, fire and police services, public school support, safe neighborhood.

In some cities like Portland, New York and San Francisco, Airbnb is already providing information that SB 593 required, and in the case of Portland there is an agreement to use the TOT for public utility services. The bill has been received with great enthusiasm as show by the words of Matt Cate, the Executive Director of the California State Association of Counties (CSAC): “CSAC greatly appreciates Senator McGuire’s leadership in making sure local communities have the ability to regulate on-line hosting platforms. In particular, we support the Senator’s legislation to ensure cities and counties can collect transient occupancy taxes that fund critical services in our communities.”

This bill marks an important step forward in terms of regulation of sharing economy services, at least in the field of hospitality, delegating more regulatory responsibility to the marketplaces and platforms while preserving some government oversight. It ensures that the innovations carried on by the sharing economy could really spread for the benefit of citizens, showing that government, local authorities and sharing economy platforms can truly work together to guarantee that all legal requirements are met.

LabGov is deep involved in the analysis of the sharing economy context. See: http://www.shareable.net/blog/interviewed-professor-christian-iaione-on-the-city-as-commons; http://commonstransition.org/the-city-as-commons-with-professor-christian-iaione/; http://www.labgov.it/xxi-century-cocentury/

[1] https://lawreview.uchicago.edu/page/self-regulation-and-innovation-peer-peer-sharing-economy

[2] http://sd02.senate.ca.gov/news/2015-04-08-senator-mcguire%E2%80%99s-online-vacation-rental-legislation-advances-senate-committee

________________________________

Con la diffusione sempre più massiccia dei servizi di sharing economy si pone la questione di trovare forme di regolamentazione adatte, che da un lato non soffochino e limitino il loro sviluppo, e dall’altro non li lascino completamente de-regolamentati. I settori della mobilità e dell’ospitalità sono al momento i più critici e nell’ottica di arginare contesti di illegalità o impatto eccessivo sulle comunità locali il Senatore McGuire (California) ha presentato una proposta di legge ad hoc. L’Online Vacation Rental Legislation, SB 593, mira a normare l’azione delle piattaforme di ospitalità online aiutando le giurisdizioni locali a gestirle laddove l’affitto a breve termine è consentito e rafforza le ordinanze di divieto laddove è invece proibito. La proposta di legge ha riscosso grande successo al Senato e segna un passo importante in termini di regolamentazione nell’integrazione dei nuovi servizi di sharing senza che danneggino il mercato e le comunità, ma a loro vantaggio.