Bill to limit online vacation rentals including Airbnb, VRBO clears hurdle

SACRAMENTO - A California Senate finance committee on Wednesday approved a North Coast senator’s controversial bill to more closely track online vacation rentals, over objections from industry representatives who decried the bill as an unprecedented intrusion on privacy.

The bill by state Sen. Mike McGuire, D-Healdsburg, now heads to the full Senate and into what is expected to be an increasingly pitched battled centered around the so-called sharing economy and traditional methods of tax collection to fund services ranging from road maintenance to firefighting.

Wednesday’s hearing also was closely watched because of the potential for California to establish the most comprehensive online vacation rental regulations in the nation. That includes a provision in McGuire’s bill requiring companies such as Airbnb and VRBO to disclose the addresses of rentals to local government taxing authorities.

“This business of home sharing has evolved from its roots of couch surfing,” McGuire told members of the Senate’s Governance and Finance Committee on Wednesday. “This is ?a multibillion-dollar business. Our bill is simple. All it does is make online vacation rental businesses follow local laws, just like the rest of us.”

But David Owen, regional head of public policy at Airbnb, called the bill an “unprecedented” privacy intrusion that he said would require Internet companies to hand over “large swaths of data to local bureaucrats” so that they could search for violations of zoning regulations.

Airbnb has steadily ramped up its opposition to the proposed legislation, including turning out about 20 homeowners for Wednesday’s hearing to share stories about how they’ve saved their homes or gained extra income by using the online service.

“If it wasn’t for home sharing over the past two years, I would have lost my home. I’m out of work,” one woman told the committee.

But a parade of representatives for labor unions, local governments and firefighters argued that not being able to collect the full amount of bed taxes generated through online vacation rentals hurts local economies.

Liza Graves, co-founder of BeautifulPlaces, a vacation rental booking company in Sonoma, said the company has remitted about $1.5 million in bed taxes to Sonoma County since the company’s inception in 2003.

“We want a level playing field,” Graves said.

The divisions were apparent among committee members, who voted 4-2 to approve the bill. The committee’s chairman, Sen. Robert Hertzberg, D-Van Nuys, abstained from the vote, after he raised concerns about proposed amendments to the bill arriving too late for the group to fully vet them.

Sen. John Moorlach, R-Costa Mesa, voted against the bill, saying he was concerned the bill amounted to a “patchwork of solutions when what we need is a good, broad view of what we’re doing.”

The implications of McGuire’s bill are potentially far-reaching. More than 1 million people worldwide use Airbnb to rent out their properties, generating an estimated $450 million in economic activity last year just in the city of San Francisco, according to Owen, the company’s representative.

But supporters of the bill say local economies are losing out on potentially millions of dollars in uncollected bed taxes under the current system. McGuire also cited frustrations with some rentals becoming the equivalent of a “new hotel” in some neighborhoods.

His bill would require online rental companies to disclose to local taxing authorities the addresses of rentals, the number of nights stayed and total amount in rental fees paid per quarter. Cities and counties could require the companies to remit the proper amount of payment.

A Capitol staffer who attended Wednesday’s hearing and asked not to be identified said Airbnb’s main privacy concern is that the company’s competitors could use the information required to be disclosed under McGuire’s bill to the company’s disadvantage.

Airbnb representatives, reached later Wednesday, said that characterization is inaccurate.

Bowing to industry concerns, McGuire has agreed to amend his bill to state that the information to be collected is confidential and not subject to disclosure, including under California’s Public Records Act. The local jurisdiction also would be limited to using the information for tax and zoning administration purposes.

That means people who want to know the locations of vacation rentals in their neighborhoods may be out of luck.

Jason Liles, a former Sonoma County planning commissioner and McGuire’s chief of staff, said after Wednesday’s hearing that online vacation rental companies made a “fair case” that disclosing such information could harm the businesses.

“It would be unfair to disclose information about clients that someone else could go after,” he said.

He said some places in California, including Sonoma County, require people who rent out their properties as vacation rentals to obtain a business license, and that such information is available to the public.

You can reach Staff Writer ?Derek Moore at 521-5336 or derek.moore@pressdemocrat.com. ?On Twitter @deadlinederek.