What initially seemed like a relatively straight forward final vote on a bill to regulate and restrict home-sharing services like Airbnb in D.C. was derailed on Tuesday afternoon after a number of legislators said there remained unanswered questions about how the measure would work and how it would be paid for.
Council Chairman Phil Mendelson, who helped write the bill, delayed the debate and vote on the bill until the Council’s next session on Nov. 13.
A majority of the questions revolved around a relatively technical, albeit expensive interpretation by D.C. Chief Financial Officer Jeffrey Dewitt. In an analysis first completed earlier this month, DeWitt said passing the bill — which would restrict home-sharing to a person’s primary residence and impose a 90-day limit when the owner is not present — would cost D.C. $21 million in annual revenue and could ultimately “eliminate nearly all current short-term rentals.”
DeWitt based his analysis on one simple fact: under D.C.’s current zoning regulations, short-term rentals of less than 30 days at a time are already prohibited or restricted in a majority of the city’s residential areas. Had the new bill’s regulations and enforcement provisions become law, DeWitt said anywhere from 80 to 90 percent of the existing rentals could be deemed illegal and would not be able to host renters. That would mean the city would lose the revenue hosts collect in the form of hotel taxes.
In order to pass the bill, said DeWitt, the Council would have to find $104 million to account for the costs of enforcing the new rules and to make up for all the revenue he estimated the city would lose over the next four years if those short-term rental units cease to exist.
Alternately, the Zoning Commission — which operates independently of the Council — would have to amend its own regulations to permit short-term rentals in residential areas.
Throughout the day on Tuesday, Mendelson tried to have it both ways. He said he would send a letter to the Zoning Commission urging it to act, and insisted that passing the bill would push them to do so. He also agreed to delay the implementation of the bill until October 2019, to give the commission time to act and residents to prepare.
“If we get the Zoning Commission to change the regulations over the next year, then what the CFO is arguing largely goes away,” said Mendelson. “We don’t know how long that will take. To put [the bill] off would be completely irresponsible, because this area is completely unregulated.”
But a number of his colleagues blanched at the prospect of passing a potentially expensive bill with no certainty the Zoning Commission would do its part to address home-sharing. They became even more insistent that a delay was needed when Mendelson proposed a quick fix: pay for the bill using a revenue windfall the city took in over the summer.
“There are a whole mess of very important programs I’d like to see [additional] revenue go to. I don’t feel comfortable with this line,” said Council member Brianne Nadeau (D-Ward 1). “We’ve gotten all the way to the finish line, and this was just dropped on us.”
Sensing the growing dissent over the bill — and coming from legislators who earlier this month unanimously approved the bill on a first vote — Mendelson decided to pull it from Tuesday’s agenda and bump it to November’s session.
“I would rather postpone this matter for two weeks then to go forward with the unreadiness I am sensing here. That may be a way to sort it out and handle members’ uneasiness,” he said.
The delay was a disappointment for community and labor groups who say the growing popularity of home-sharing has come at the expense of affordable housing for long-term residents. But it gave home-sharing services like Airbnb two more weeks to press the Council for regulations they prefer.
In a memo delivered to Council members this week, Chris Lehane, a senior official with Airbnb, said the San Francisco-based company would rather see a 180-day cap on home-sharing when the owner is not present and for the city to set a specific number of secondary homes across the city that could be used solely for short-term rentals. The current bill has a 90-day cap and a prohibition on the use of second homes for home-sharing.
Lehane also delivered a diplomatic threat: If the Council passes its version of the bill, Airbnb would consider taking the issue directly to D.C. voters in 2020 with a ballot measure.
But Mendelson said that he doesn’t expect the heart of the bill to change, though some Council member say they will propose amendments.
“The basics of the bill don’t seem to be at issue, at least with a majority of members,” he said. “Members are concerned that enforcing the current law would cost [$20] million a year, and it’s understandable they would gulp at such a figure.”