Regulating Disruption: the future of Airbnb in Massachusetts

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Thursday morning’s CommonWealth Newsmakers event explored “the dilemma of disruptive technology” with home sharing apps, Airbnb in particular, taking center stage. After CommonWealth’s Bruce Mohl and Jack Sullivan set the table, a panel made up of Senator Stan Rosenberg, Representative Aaron Michlewitz, Will Burns (Director of Midwest Policy and Senior Advisor at Airbnb) and Ford Cavallari (Chairman of the Alliance of Downtown Civic Organization) discussed the ways Airbnb’s impact has been felt in the Bay State and what regulations should be put in place in the future.

Here are some of the highlights.

Airbnb is disrupting more than just the hotel industry.

Airbnb was once thought of as a platform where individuals could monetize unoccupied rooms, or even their entire home, on a short-term basis. These listings still exist, but according to Ford Cavallari, they are not wholly representative of what’s going in Boston. Cavallari indicated that two-thirds of Airbnb hosts in Boston are listing multiple units and half of the hosts in downtown Boston own 10 or more units. Converting residential units into de facto hotels has resulted in displacements and is reshaping neighborhoods by trading residents for tourists.

Regulation is moving slowly, but everyone wants it.

It’s not often that Massachusetts trails its neighbors, but Will Burns indicated that Airbnb has entered hotel tax agreements with all of New England, save for the Commonwealth. Burns offered hope that this could be rectified in 2018 and indicated throughout the panel that Airbnb welcomes regulation, and in some instances, even pays for advertising to promote it.

In the latest issue of Commonwealth, Rep. Michlewitz noted that “technology moves at a quicker pace than the legislative process.” Speaking about his experiences with trying to pass regulation surrounding short term rentals, Michlewitz noted that his colleagues have required a lot of education to understand Airbnb and its impacts because it hasn’t affected all areas of Massachusetts at the same level. Senator Rosenberg added that he has been frustrated and perplexed by the timeline given the relative lack of complexity and the fact that the state legislature holds the power to settle the issue the way it did with ride sharing, by outlining rules and safety measures.

A few days after the discussion, Mayor Marty Walsh filed a proposed ordinance outlining regulations that included tiers based on listing types, with 90 day limits imposed for listings that go beyond a single room or space in an occupied unit, and restrictions on listing units with code violations. While the ordinance is subject to city council approval, it’s clear that Boston is not waiting on the State for action.

There’s no one size fits all solution.

The panel was unanimous in supporting a regional approach to Airbnb regulation. In areas like Boston where housing is in highest demand, it’s expected that regulations would be tighter than other parts of the state that might only see a few months of demand per year, or those where demand is perpetually low. Michlewitz noted that municipalities that opt for minimal regulation would be backstopped by the state’s safeguards.

Airbnb’s impact is a testament to its popularity with consumers, but also a reminder that without regulation, it stands to exacerbate the region’s housing crisis, offsetting increases to the inventory of units. Airbnb is by no means the chief culprit, but along with other home sharing apps, it merits close examination alongside other areas of housing that require legislation, such as zoning and construction, as part of a comprehensive strategy to keep Massachusetts affordable. Both Michlewitz and Rosenberg indicated they have no interest in killing the platform, so finding a balance will be essential – and the hope is they will find it in short order.

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