City Council moves to extend moratorium on rent-bidding platforms

Fresh off a double-win in the courts, the Seattle City Council is set to extend its ban on rent-bidding platforms such as Rentberry’s while the city finishes a study on the impacts of the technology.

Last month a U.S. District Court ruled against Rentberry in its legal challenge to the moratorium that the city imposed last year on use of its platform. On the same day, the 9th Circuit Court of Appeals ruled for AirBnB in a separate lawsuit with very similar issues: whether “brokering” sites such as AirBnB and Rentberry invoke First Amendment protections, or whether they enable commerce transactions without significant expressive content and are thus “conduct.” Despite the fact that the 9th Circuit gutted the heart of Rentberry’s legal argument, the company nonetheless has appealed the district court ruling; its opening brief is due to be filed in mid-June.

In the meantime, the 12-month moratorium expires Tuesday, but the city’s Office of Housing is still studying the impacts of rent-bidding platforms; it estimates it will be finished in June. So Council member Teresa Mosqueda is introducing an extension of the moratorium for another year to allow for the study to be completed (technically, since the original ordinance will expire before Mosqueda’s legislation can be passed, she is enacting a new moratorium that is exactly the same as the original one).

The city isn’t out of the woods yet, though. In order to permanently prohibit rent-bidding sites, it will need to either show that the sites violate Seattle’s rental housing regulations, or that they cause a negative impact that forms the rational basis for the city to prohibit a form of commerce.

The challenge with the first approach lands us back in court again. The rent-bidding platforms almost certainly violate the city’s “First in Time” ordinance that requires landlords to rent to the first qualified tenant who applies, but that ordinance was found to be illegal by a King County Superior Court judge and is coming up for review by the state Supreme Court in June. If the Supreme Court affirms the lower court ruing that tossed the First in Time ordinance, then the city will lose its most straightforward argument for banning rent-bidding platforms (that they violate an existing statute). And the corollary also applies: any legal argument that defeats the First in Time ordinance will most likely also apply to a prohibition on rent-bidding platforms.

The challenge with the second approach is a lack of data. The city placed its moratorium on rent-bidding platforms at a time when they were just being introduced in Seattle and had few listings. Since there is no history to evaluate, it is impossible to say definitively what impact they will have here if their use is permitted. The Office of Housing will need to rely on studies of the effects they have had in other cities’ housing markets (if there are any), but it will be difficult to tease out rent-bidding platforms’ impact from the rest of the market activity, let alone how to apply other cities’ studies to Seattle.

Mosqueda has a full agenda for her committee meeting this week, so it may be mid- May before the moratorium extension gets a hearing. Expect it to pass through quickly though.


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