George Mason Law School

Virginia senate goes on vacation: Airbnb bill allows localities to regulate short-term rentals

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March 13, 2017

11:51 PM

March 13, Virginia Senate Bill 1578 was sent to Governor Terry McAuliffe to await his signature. If signed, this bill would authorize localities, like the City of Williamsburg, to require people using their property for short-term rentals to register themselves or pay fines of up to $500 for failing to comply. For Williamsburg, this would mean that similar zoning regulations would be placed on people renting through Airbnb or similar sites as on owners of bed and breakfasts.

The bill, introduced by Senator Tommy Norment (R-Williamsburg) passed in the Senate Feb. 7 and passed in the Virginia House of Delegates Feb. 22. McAuliffe now has until March 27 to take action on the bill. Norment did not respond to a request for comment on his bill.

According to Senator Monty Mason ’89 (D-Williamsburg), this bill will allow localities like Williamsburg to have control over internet-based economic activity. It applies to properties rented out for periods of 30 days or less.

“I’ll tell you what is of critical importance is that we protect the character of neighborhoods of course, but if you are going to engage in Airbnb activities, that you are properly accounting for and collecting the rooms tax and the appropriate sales tax,” Mason said. “Because you know, I live on the other side of Lake Matoaka, so if I decide to do this for a week at my house when we’re out of town, let’s say, and then a half mile up the road there’s a bed and breakfast, and they’re collecting the rooms, the overnight occupancy tax and sales tax, we need a mechanism to make darn sure I am doing so as well. I think this balances the registration need.”

City Mayor Paul Freiling ’83 said that he thought this bill would be beneficial to traditional business owners, because it would even the playing field. He said that he believes traditional businesses are at a disadvantage because they often lose business to internet-based businesses like Airbnb, Uber and Lyft, but have more regulations placed on them.

Freiling compared SB 1578 to a bill introduced last year that was passed in the House and Senate but was shot down by McAuliffe. That bill would have effectively legalized short-term rentals like Airbnb, and gave lawmakers in Richmond the ability to override decisions made by localities. Freiling said that he believes SB 1578 is more so in the best interest of localities than HB 812.

“This leaves the decision up to the localities,” Freiling said. “No matter their wisdom, lawmakers in Richmond can’t know the specific needs of communities, a blanket exception of zoning regulations or exception from local control through zoning would be unhealthy for many communities would give unfair advantages to internet-based businesses in a market where they already dominate.”

Freiling said that he has seen issues with internet-based businesses like Uber in Williamsburg. He cited an example of a cab driver he spoke with recently who said he has lost 60 percent of his business. Freiling said that he does not believe it is fair that this man has to go through regulatory procedures such as having all of his cars inspected while internet-based services like Uber and Lyft do not have to, and may be putting this man at risk of going out of business.

“I think that both the state and local governments are interested in resolving this,” Freiling said. “It’s not a simple thing. I don’t know the future, but we are going to see more and more applications of internet-based businesses. It’s these traditional businesses that have built our tax base, we have to figure out a way for our economy to migrate there efficiently while not abandoning the traditional businesses that impact our communities. We’re not going to stop it, but we’re going to make sure that we aren’t allowing the internet-based businesses to crush these other business models without creating fairness. With our current regulations, they regulate the traditional, like those who own bed and breakfasts, across all business activities.”

Mason said that he thinks this bill speaks to a greater trend of learning to regulate technological services that is relevant nationally and globally.

He cited his experiences working for Visa, a job he held for 13 years, where he said he saw the impact of Uber, Lyft and Airbnb from the standpoint of a payment network.

“These modern and new technologies are absolutely changing the ground rules and the game for the economies that we do business with,” Mason said. “And so, in fact, I spoke to the public policy graduates last year, and I told them, I said ‘You Know, there’s an element to everyone of having to work your way up, of having to start somewhere and learn and move up, but you have a unique advantage in that you’ve grown up with technology, and we need your help right now, whether that’s from a governmental standpoint in determining how we regulate new businesses in these new economies or whether it’s a business that’s existed for some time trying to determine how they participate, what impact it’s going to have on them, or whether it’s just you getting involved in a new way to do business.’ So these disruptor economies are aptly named, but they’re coming, and in fact, they’re here, so there’s no reason to resist them. It’s just trying to figure out ways to do business with them to compete with them and to properly regulate them.”

Representatives from Cedars Bed and Breakfast, A Williamsburg White House Bed and Breakfast and Colonial Gardens Bed and Breakfast did not respond to requests for comment on how they think this bill would affect them.

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Sarah Smith

News Editor Sarah Smith '19 is an international relations and gender, sexuality, and women's studies major from Ashburn, VA. She formerly served as Associate News Editor.