AirBnB regulation ordinance is back for a final round

This morning, Council member Burgess had a hearing on his latest attempt to pass a regulatory system for short-term rental housing.

Burgess’s proposal continues to get simpler. Originally, it looked like this, with different rules based on whether the rental was at the owner’s primary residence and the total number of nights per year it was rented out:

Back in April, it had been reduced down to two boxes. The length of stay had been dropped, because it required gathering data from the “platform providers” such as AirBnB and VRBO that would not be easy to get, and because it also involved aggregating that data across multiple platforms (since many owners list their property on more than one). City staff noted today that the cities whose short-term rental regulations have the highest compliance rates are the ones that regulate units, not nights.

WIth today’s proposal, the rules are simplified even further. There is only one box, and the distinction between one’s “primary residence” and a secondary property has been discarded as well.

All owners must have a new “Short Term Rental Operator’s license,” in addition to a business license. Everyone can rent up to two properties.

Council member O’Brien pointed out that removing the “primary residence” requirement opens up a significant loophole to circumvent the limitation on large-scale short-term rental operations. Now each family member can list two short-term rentals outside their own residence. And a company could create a number of LLC’s as subsidiaries, each with its own two listings.

The proposal provides exceptions for the two-unit limitation for the Downtown, South Lake Union, Uptown, and First Hill/Capitol Hill urban centers. Council member Johnson expressed a desire today to extend that exemption to the University District and Northgate, and potentially to all of the city’s designated “urban centers”  — but not to “urban villages.”

A short-term rental operator’s license requires the holder to do several things:

  • pay an annual $75 fee;
  • sign a declaration that the unit is up to building code;
  • post basic safety information for guests in the units, and provide a local contact number to guests;
  • include the license number on all advertisements.

There is also a new Short-term Rental Platform License that will be required for AirBnB, VRBO, and the other platform operators in addition to their business license. That requires platforms to:

  • pay a quarterly license fee based on the total number of nights booked in Seattle on the platform;
  • provide information about Seattle’s regulations to rental operators;
  • only provide booking services to rental operators who have short-term rental operator licenses;
  • provide quarterly booking data to the city, including the total number of rentals listed on the platform and the total number of nights.

The Council is also considering a tax on short-term rentals, intended to be approximately the same cost as the loding taxes levied on hotel operators in the city. The city would tax operators on the total number of nights a unit is rented out. The revenues generated would be used to cover the administrative costs for the regulatory scheme first, and then potentially debt service on bonds issued for building affordable housing or for funding the Equitable Development Initiative. The Council might also decide to put the revenues in the General Fund, which would allow them to spend it on anything in the city’s budget.

Burgess expects to unveil the bill as soon as tomorrow, with a goal of passing it out of committee on September 15th (before the Council begins work on the 2018 budget and stops work on nearly everything else). He said this morning that the earliest the ordinance could go into effect is July 1, 2018, but that could be pushed out into January of 2019 depending on how quickly the city can build out the systems and staff it needs to implement it.