Local government responses to the sharing economy (ridesharing/homesharing)

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Sharing Economy Policy Quick Facts

Last updated July 2017

States that preempt local regulations on homesharing: 3 States that preempt local regulations on ridesharing: 47 Top 100 cities allowing ridesharing: 100 Top 100 cities allowing homeshare rentals: 66 Top 100 cities banning homeshare rentals: 9 Top 100 cities with limited homeshare rentals: 12 Top 100 cities with unknown homeshare rental policies: 13

The evolution of the sharing economy in the United States has attracted a variety of responses from policymakers at the local level. The sharing economy refers to a portion of the overall economy that involves the direct exchange of services between individuals through websites or mobile phone applications. While the sharing economy encompasses many industries, ridesharing and homesharing have attracted the most attention due to larger discussions about housing and transportation in high-population cities.

Lyft and Uber are the largest companies in the ridesharing industry, while Airbnb leads in market share among homesharing companies. These companies have lobbied local and state governments across the country to allow them to use their current online platforms without adding new layers of regulation that might limit competition with existing companies in these industries. Taxi unions, hospitality associations, and other groups in the transportation and housing markets have lobbied for the application of existing or updated regulations on ridesharing and homesharing companies. This disparity in regulatory action is caused by the differences in policymaking authority for transportation and housing. States are often tasked with regulating transportation policies including licensing and insurance, while zoning and housing development policy are often handled at the local level.

Ridesharing companies hire individual drivers as contractors to provide rides on demand for customers through mobile applications. Homesharing companies connect residential property owners to travelers looking for alternative accommodations to hotels and inns. Policy responses to the growth of the sharing economy have differed for the ridesharing and homesharing industries. Ballotpedia's July 2017 review of ridesharing policies among the 100 largest cities by population in the United States determined that ridesharing companies could operate in every city on that list. This uniformity in policy is due in part to 47 states preempting local regulations on ridesharing companies as of July 2017. By contrast, Arizona, Florida, and New York were the only states to pass laws creating statewide regulations on homesharing companies by January 2017. Sixty-six of the 100 largest cities by population allow property owners to rent through homesharing companies with limited licensing and insurance requirements.

Overview

Popularity of the phrase sharing economy

Online searches for the phrase sharing economy have increased significantly since 2004, according to Google Trends. Interest in the sharing economy in the U.S. remained low until July 2014, when the trend line moved above the midway point of its popularity during the period from January 2004 to June 2017. The peak of search popularity was September 2015, and the phrase was less than half of its peak search popularity by June 2017.

Ridesharing background

• Support
• Opposition
• Research
• Driver requirements

Ballotpedia's July 2017 review of ridesharing policies in the nation's 100 largest cities by population found that every city allowed ridesharing companies to operate. Lyft operated in all 100 cities at the time of the review, while Uber operated in every city except Laredo, Texas.

Support

Lyft and Uber argue that their services provide affordable transportation options and jobs in communities where they operate. Both companies have lobbied state officials to shape proposals to regulate their operation. The lobbying efforts of Lyft and Uber have been boosted by state-level groups advocating for policies allowing ridesharing companies to operate in local communities. Floridians for Ridesharing is a partnership of Florida businesses organized by the Florida Chamber of Commerce. The organization's website says, "By welcoming innovative companies like Uber and Lyft as a way of providing safe and affordable transportation options to Floridians and visitors, our state will benefit tremendously." New Yorkers for Ridesharing was started by The Internet Association to advocate for a state law, passed in 2017, allowing ridesharing outside of New York City. This organization advocated for the law because it argued that "tech-based platforms can fill important gaps for residents where public transportation is limited or unreliable and serve as a flexible source of income for cash-strapped New Yorkers."

Opposition

Taxi driver unions have led opposition to ridesharing companies due to concerns about impacts on local economies and passenger safety. The New York Taxi Workers Alliance campaigned against the ridesharing bill passed in New York and stated their belief that Lyft and Uber "skimp on insurance coverage and background checks, cut fares at will, then price gouge at will, dodge taxes, and flood the streets with vehicles, making it impossible for professional drivers to keep their jobs and customers to keep their safety." The Taxicab, Limousine & Paratransit Association is a national group that has documented accidents and passenger incidents involving ridesharing companies on a website called Who's Driving You? The group argues that Uber and Lyft undermine passenger safety due to their limited background checks and vehicle insurance coverage.

Research

Impact of ridesharing on ambulance usage

Professor David Slusky of the University of Kansas and Dr. Leon Moskatel of Scripps Mercy Hospital studied the impact of Uber on ambulance usage in a report released on December 13, 2017. The report titled "Did UberX Reduce Ambulance Volume?" concluded that Uber's entry-level option called UberX reduced ambulance volume by 7 percent from 2013 to 2015. Slusky and Moskatel compared ambulance usage rates from 2013 through December 2015 in 766 cities across 43 states. The authors argued that Uber's introduction "likely caused a reduction in wait time for the remaining ambulance volume" and that "consuming substituting a cheaper alternative when possible would free up resources to be spent more efficiently."

Responses to the report focused on the limitations of Uber as an emergency services provider. Uber released a statement saying that while the report showed positive impacts of the app, customers in emergency situations should call 911. Paul Kivela, the president of the American College of Emergency Physicians, said that injured people "may not be able to differentiate between a life-threatening emergency and an innocuous medical issue." He also noted that Uber drivers are not paramedics and cannot provide care on the way to a hospital.

Driver requirements

City and state regulations of ridesharing companies vary, though Lyft and Uber list their minimum driver requirements on their websites. As shown below, both companies have similar minimum requirements, though both note that drivers may need to comply with local licensing and insurance rules.

Homesharing background

• Support
• Opposition
• Host requirements

Ballotpedia reviewed media coverage and public documents on homesharing policies for the nation's 100 largest cities by population. This review used a city's approach to short-term rentals as the main criterion for determining homesharing policy, with consideration given to long-term rental policies if that distinction was clear.

A city classified as Allowed allows homesharing rentals of 30 days or less with limited requirements for licensing, insurance, and other compliance measures. A Limited city restricts the number of licensed units or only allows rentals lasting longer than 30 days. The Prohibited category includes cities that directly prohibit homesharing or operate under existing zoning laws that prevent short-term rentals of private properties. There were 13 cities that had no discernible policy on homesharing rentals.

Have questions or dispute our findings? Please contact [email protected].

Support

Airbnb argues that its service allows travelers to cut costs by staying in private homes rather than hotels and other traditional accommodations. The company also says that its hosts are able to use excess capacity in their homes, apartments, and other properties to earn money. The company has spent money working toward more favorable regulations at the local and state level. For example, Airbnb spent $8 million campaigning against Proposition F, a ballot initiative in San Francisco that would have placed limits on short-term rentals. Proposition F was not approved by voters.

Airbnb has worked with homesharing companies HomeAway and FlipKey as well as the travel review site TripAdvisor to create the Short Term Rental Advocacy Center. This organization promotes a platform of homesharing regulations desired by hosts, including:

• Application of regulations to all types of short-term rentals no matter the booking mechanism
• Maximum one-time license cost of $100 per unit or maxmium annual renewal cost of $25 per unit
• Enforcement of existing nuisance laws and codes instead of the creation of new laws specific to rentals
• Transparent regulatory process involving property owners and community members

Airbnb also sponsors approximately 140 host clubs throughout the world, including approximately 80 clubs in the United States. The company says that these clubs are intended to "help hosts come together to advocate for fair home sharing laws in their communities."

Opposition

The American Hotel & Lodging Association (AHLA), a hotel industry group representing 54,200 hotels and inns, published a report in September 2016 titled "From Air Mattresses to Unregulated Business: An Analysis of the Other Side of Airbnb." This report highlighted the AHLA's criticisms of Airbnb practices in 14 cities, with spotlights on Phoenix, Los Angeles, Chicago, Miami, Boston, New York, Philadelphia, and San Francisco. The report's primary criticism was that a significant portion of Airbnb's revenue came from hosts engaged in commercial activities rather than rentals done on a sporadic basis. The AHLA stated that hosts renting three or more units represented 6.5 percent of the company's hosts in these cities from October 2014 to September 2015 but generated 24.6 percent of the company's $328 million in revenue. The report also found that hosts listing units for at least 360 days during this period were 3.5 percent of the company's hosts but generated 26 percent of the revenue.

State-level lodging associations have targeted Airbnb and other homesharing companies for their lack of compliance with industry regulations. The Oregon Restaurant & Lodging Association published the following explanation of their support for short-term rental regulations on its site:

“	Illegal short term rentals endanger customers’ lives, ignore existing laws and it’s unknown whether they are reporting and remitting the proper lodging taxes. The State of Oregon should pass legislation that requires short term home rental properties to register with their local taxing authority before they are marketed through online exchange sites. Additionally, for jurisdictions that have a business licensing program in place, operators should secure the proper licenses. During the business registration process, operators should also show that they have notified their insurance carrier and lending institution that a commercial transaction is occurring on the premises. In areas where there aren’t enough local resources to monitor safeguards, insurance carriers will most likely require coverage for protection and liability – beyond a customary homeowner policy. Finally, operators should report and remit their room tax collections.	”
—Oregon Restaurant & Lodging Association (2017)

Host requirements

The properties listed on Airbnb must be used solely for housing, placed in fixed locations during reservations, and represented accurately by property owners. The company offers seven hosting standards on its website—availability, communication, commitment, check-in, accuracy, cleanliness, and overall experience—designed to help hosts get higher user reviews from renters. Airbnb's platform offers a superhost designation for hosts who have received five-star reviews on 80 percent of all reviews with at least 10 stays booked and a 90 percent response rate from guests. Airbnb hosts are provided liability coverage up to $1 million per incident for property damage and bodily injury caused by guests or other parties.

Requirements for homeshare hosts differ from city to city due to variations in zoning, licensing, and hospitality regulations. A source of contention for hotels and inns opposed to homesharing is that Airbnb and other providers do not always pay the occupancy taxes required of traditional lodging. As of July 2017, Airbnb listed 32 states where the company collects occupancy taxes on behalf of hosts and pays these taxes to local and state governments. These states house 81 of the 100 largest cities by population in the United States. Another regulation employed by cities to manage homesharing rentals is short-term rental licenses and permits. For example, New Orleans requires property owners renting their homes for 30 days or less to apply for rental licenses that verify at least $500,000 in liability insurance, functioning smoke detectors, compliance with building codes, and notice provided to neighboring properties.

Ridesharing conflicts

• New York
• California
• Florida
• New York
• Texas

See also: Ridesharing preemption conflicts between state and local governments

The following case studies of ridesharing conflicts are samples of conflicts between cities, states, and ridesharing companies in the United States. This section will be updated as new conflicts emerge.

2018

New York: New York City limits Uber and Lyft vehicles

On August 14, 2018, New York City became the first city in the nation to limit ridesharing vehicles from companies like Uber and Lyft and require a $15 minimum wage for ridesharing drivers. Mayor Bill de Blasio signed a bill capping the number of new vehicle licenses for one year. The measure exempted wheelchair-accessible vehicles or vehicles in areas with demonstrated need. It also directed the Taxi and Limousine Commission (TLC) to conduct a study on the effects of ridesharing in the city. The cap went into effect immediately.

The New York City Council approved the cap August 8. Click here to read the bills and committee reports.

Supporters of the legislation said it would help decrease congestion, protect drivers, and establish a fairer market for ridesharing vehicles and the city's medallion taxi cabs. Uber criticized the measure for "threaten[ing] one of the few reliable transportation options while doing nothing to fix the subways or ease congestion." They also said it could result in higher prices and longer wait times for riders. Lyft President Joseph Okpaku said the limit could hurt low-income and minority communities.

A July 2018 study by The New School for TLC estimated that ridesharing services accounted for 80,000 vehicles in New York City and provided 17 million rides per month at the end of 2017.

2017

California: Los Angeles files lawsuit against Uber over data breach

On December 4, 2017, Los Angeles City Attorney Mike Feuer filed a lawsuit against Uber in superior court over allegations that the company failed to disclose a breach of customer data. The lawsuit filed on behalf of California residents focuses on an October 2016 breach that impacted 600,000 Uber drivers in the United States. Feuer argues in the lawsuit that Uber failed to comply with a state law that requires breaches or hacks of consumer data to be reported without delay to state officials. Uber reported the breach in November 2017 after the company paid hackers $100,000 to destroy the gathered data. The lawsuit seeks $2,500 for each violation of state law and points to a $20,000 fine paid to the state of New York for a 2014 data breach as evidence of continued mismanagement of data.

Uber Chief Executive Officer Dara Khosrowshahi responded by acknowledging the company's failure to protect driver information. Khosrowshahi also said that the company offered affected drivers free credit monitoring and identity protection. The Los Angeles Times reported that the breach only impacted driver's license numbers with no credit card, bank account, or Social Security numbers found in the hacked data.

Florida: State legislation preempts local ridesharing fees

The Florida State Legislature approved legislation in April 2017 that prohibits local governments from applying fees or requiring business permits for drivers with ridesharing companies. State requirements for rideshare employees include background checks and insurance covering up to $1 million for bodily injury and property damage. Ridesharing firms are also required to implement zero-tolerance policies on alcohol and drug use along with non-discrimination policies.

Megan Sirjane-Samples of the Florida League of Cities told The Pulse that "under this legislation, cities and counties would have zero authority to regulate or address concerns with transportation network companies." Javi Correoso of Uber Florida argued that the state's approach to ridesharing meant that "Floridians and tourists will have access to a safe, reliable and affordable transportation option."

New York: Ridesharing companies allowed to operate outside of New York City

The state budget approved by the New York State Legislature in April 2017 included a provision allowing ridesharing companies to operate outside of New York City. The city allowed ridesharing companies to operate under existing laws covering taxis and other for-hire transportation. State regulations for companies like Uber and Lyft include background checks, $1.25 million in liability insurance and $1.25 million in supplementary insurance for each vehicle, and a minimum driver age of 19 years old. State law allows counties and four cities—Buffalo, Rochester, Syracuse, and Yonkers—to decide if they want ridesharing companies to operate in their jurisdictions. If a county allows ridesharing, the towns and cities within that county cannot restrict ridesharing operation.

Ridesharing supporters like the Capital Ride Sharing Coalition and New Yorkers for Ridesharing touted the potential for Lyft, Uber, and other companies to fill in public transportation gaps. The Upstate Transportation Association opposed ridesharing, citing lower fares and potential job losses for professional drivers throughout the state.

2016

Texas: State legislators pursue legislation to overturn local ridesharing regulations

Gov. Greg Abbott (R) signed a bill on May 29, 2017, requiring ridesharing companies to operate under licenses issued by the Texas Department of Licensing and Regulation. The bill, HB 100, preempted existing rideshare regulations in cities such as Austin, Corpus Christi, and Houston.

Houston passed an ordinance in 2014 requiring fingerprint identification for drivers. Corpus Christi implemented a fingerprinting requirement in 2016, and voters in Austin upheld a similar requirement the same year. Uber, which stopped operating in Austin and Houston in response to their fingerprint requirements, and Lyft, which had ceased operations in all three cities, returned to the cities following passage of the state law.

Two Texas state legislators introduced other bills to preempt local rideshare regulations in November 2016. SB 113, which was introduced by state Sen. Don Huffines (R), would have prohibited local rideshare ordinances. SB 176, which was proposed by state Sen. Charles Schwertner (R), would have set statewide rideshare fees and background check policies. Both bills died in committee in March 2017.

Homesharing conflicts

• Santa Monica
• New York (2018)
• San Diego
• Minnesota
• Miami
• New York (2017)
• San Francisco
• Texas

The following case studies of homesharing conflicts are samples of conflicts between cities, states, and homesharing companies in the United States. This section will be updated as new conflicts emerge.

2019

Santa Monica: 9th Circuit Court of Appeals upholds city regulations

On March 13, 2019, the United States Court of Appeals for the 9th Circuit upheld Santa Monica Ordinance 2535, a homesharing ordinance in Santa Monica, California. The ordinance, as amended in 2017, established requirements for homeowners who participate in homesharing: they must (1) obtain a license, (2) limit the homeshare to less than 31 days, and (3) stay in the home along with the visitor. The ordinance also established requirements for companies like Airbnb, including collecting occupancy taxes, disclosing listing and booking information to the city, and limiting booking to licensed property in the city registry.

Airbnb argued the ordinance conflicted with a 1996 federal statute, the Communications Decency Act (CDA). The court rejected the company's argument. Judge Jacqueline Nguyen, who delivered the opinion of the court, wrote, "While we acknowledge the Platforms’ concerns about the difficulties of complying with numerous state and local regulations, the CDA does not provide internet companies with a one-size-fits-all body of law."

The case, Homeaway.com v. City of Santa Monica 18-55806 was brought in 2017.

2018

New York: Airbnb sues city over disclosure law

On January 3, 2019, Judge Paul A. Engelmayer ruled in favor of short-term rental platforms and blocked a New York City law from going into effect. Engelmayer ruled the platforms' argument had merit. His preliminary ruling did not decide the case as a whole. Click here to read Engelmayer's ruling.

On August 24, Airbnb filed a lawsuit in the Southern District of New York challenging legislation requiring homesharing companies to disclose information about hosts. Airbnb argued the legislation violated the Fourth Amendment and asked the court to declare the law unconstitutional.

The legislation became law in August 2018. Scheduled to take effect on February 2, 2019, the law required short-term rental platforms to share a list each month on the host, location, rental type, number of days, and amount paid to the host and the platform. It also established a $1,500 fine for each listing not properly disclosed.

The city responded to the lawsuit, arguing the legislation was necessary for safety and affordability reasons. Click here to read the lawsuit.

San Diego: City Council votes to limit homesharing rentals to primary residences only

On July 16, 2018, the San Diego City Council in California voted 6 to 3 to prohibit homesharing in secondary homes. The regulation went into effect on July 1, 2019. The council decided not to exempt Mission Beach, which already paid a transient occupancy tax to the city.

According to The San Diego Union-Tribune, the decision could impact up to 80 percent of San Diego's vacation rentals.

AirBnB released a statement criticizing the decision: "Today’s vote by the San Diego City Council is an affront to thousands of responsible, hard-working San Diegans and will result in millions of dollars in lost tax revenue for the City." Gary Wonacott, Mission Beach Town Council president, supported the decision, saying it would allow young families to move into the area.

Texas: State Supreme Court rules short-term renting is not violation of neighborhood association rules

The Texas Supreme Court ruled on May 29, 2018, that a homeowner in Bexar County, Texas did not violate neighborhood association rules when he rented his home to short-term visitors. Homeowner Kenneth Tarr began renting his single-family home, located in the Timberwood Park subdivision, to short-term guests through rental sites like VRBO in 2014. The Timberwood Park Owners Association argued that Tarr's short-term rentals violated deed restrictions, which limited property use to residential and single-family purposes. They argued that allowing multiple guests to rent short-term was a commercial purpose since the house acted more as a hotel than a home. Tarr and his attorneys countered that the rentals were residential, as renters' activities (eating, sleeping, entertainment) were the same as any homeowner.

The Texas Supreme Court agreed with Tarr. Justice Jeff Brown wrote, "So long as the occupants to whom Tarr rents his single-family residence use the home for a ‘residential purpose,’ no matter how short-lived, neither their on-property use nor Tarr’s off- property use violates the restrictive covenants in the Timberwood deeds." The Supreme Court's ruling broke with other courts' decisions: a Bexar County district judge ruled in favor of the association in 2015, as did the Texas Fourth District Court of Appeals in 2016.

2017

Minnesota: Twin Cities approve regulations on short-term rentals

In October 2017, Minneapolis and St. Paul approved ordinances creating new regulations for homesharing companies. The Minneapolis City Council approved regulations on October 20, 2017, requiring annual licenses ranging from $630 for small homesharing businesses to $5,000 for national operators like Airbnb. Minneapolis residents who share their homes while living on premises are not regulated under the ordinance. The St. Paul City Council approved regulations on October 25, 2017, requiring national homesharing companies to pay a $10,000 annual fee to operate in the city. St. Paul residents renting space in their homes pay $40 per year under the ordinance. Homesharing was technically illegal in both cities prior to the ordinances, though neither city regulated participants. City officials pursued homesharing regulations in anticipation of an influx of travelers for the Super Bowl in February 2018. Airbnb announced its intention to seek legal action against Minneapolis and St. Paul following passage of both ordinances.

San Francisco: Airbnb reaches settlement with city over host registration

On May 1, 2017, Airbnb reached a settlement with San Francisco on a lawsuit filed by the company and HomeAway in June 2016. The settlement requires Airbnb and HomeAway to report host information to the city to expedite the registration and review of host properties. San Francisco's code enforcement officials retain the ability to fine the company up to $1,000 per day for unregistered hosts. The San Francisco Board of Supervisors approved an ordinance in 2014 requiring in-person registration for homesharing hosts. The registration requirements were used by a small portion of hosts listed on Airbnb and other sites, leading the board to approve fines in 2016. City officials and Airbnb had battled over homesharing in San Francisco, with officials attempting to limit short-term rentals in the country's most expensive rental market in 2015.

Miami: Airbnb, local hosts file lawsuit over city's short-term rental ban

Airbnb and five local hosts filed a lawsuit against the city in April 2017 challenging the city's ban on short-term rentals. On April 19, 2017, Judge Beatrice Butchko issued a temporary restraining order against the city's enforcement of the ban. The city attorney's office issued an opinion in 2015 concluding that existing zoning codes prohibited residential rentals of 30 days or less. Butchko ruled that a 2011 state law preventing local restrictions on vacation rentals preempted the 2015 opinion. Mayor Tomás Regalado has opposed Airbnb's operation in the city, citing complaints by homeowners adjacent to rental units.

2016

New York: Airbnb drops lawsuit over rental regulations

Airbnb ended a lawsuit against the state of New York over homesharing regulations signed into state law in October 2016. The state law included fines of up to $7,500 for hosts who do not comply with local rental regulations. A 2010 state law made it illegal to rent whole apartments for 30 days or less. Airbnb dropped the lawsuit in an agreement with New York City officials to keep the company's biggest rental market in operation. The agreement requires Airbnb to block multi-unit listings by hosts and shifts the application of fines from the company to its hosts. Airbnb faced scrutiny from city officials concerned about the company's impact on housing affordability.

See also

Local Politics	2019 Election Analysis
Municipal government Local courts School boards Local ballot measures Local recalls	Municipal elections, 2019 Local court elections, 2019 School board elections, 2019 Local ballot measure elections, 2019 Political recall efforts, 2019