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Most Cities Still Aren't Regulating Home-Sharing Services

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Louisville is among a small but growing number of cities considering new laws aimed at regulating home-sharing services such as Airbnb.

According to a survey conducted by the National League of Cities, nearly 60 percent of U.S. cities still have no laws on the books for short-term rentals.

Brooks Rainwater with NLC said about 35 percent of cities enacted regulations for rental services such as Airbnb, whose usage has exploded in recent years. This is new territory for officials, so different cities are trying different policies — which Rainwater said is a good thing.

“What’s great about cities is innovation percolates from the ground up, and where a city like Louisville or any other city can really work best would be to look to their peer models that are out there,” Rainwater said.

So far, that’s exactly what Louisville officials have been doing.

Last week, the Metro Council’s public safety committee held a video conference with officials from Nashville, which recently started regulating short-term rentals. Under that city's law, hosts are required to obtain permits and must pay certain taxes on each rental. That's similar in theory to the proposal Metro Council members in Louisville are considering.

During the conference with Nashville officials, committee chair David Yates said he was grateful to have that city as a resource.

“Hopefully we can learn from some of things you’ve done as we move forward on this ordinance,” he said.

Rainwater said about 13 percent of cities have implemented some light regulations meant specifically for short-term rentals. Other cities are regulating rentals through Airbnb and Vacation Rentals By Owner the same as they do hotels and bed and breakfasts.

Louisville’s proposed ordinance, which was introduced by Councilman James Peden, would require a license and taxation for people operating these short-term rentals.

Airbnb and similar home-sharing sites have grown in popularity in Louisville over the past year. As of this story, there were more than 700 rentals available on Airbnb in Louisville.

Even though there isn’t a large number of cities for local officials to draw examples from right now, Rainwater said 41 percent of cities in his survey reported that it will be important to have some policies in place in the future. He said that’s why cities are keeping an eye on what others are up to.

“They are looking to models that are starting to grow throughout the country where cities are either looking at restricting the number of days a year that home shares can be rented or they are looking at kind of zoning restrictions dependent on the types of neighborhoods,” he said.

According to the same survey, about 5 percent of cities have all-out bans on home-sharing.

Local hotel and bed and breakfast industry representatives have told Metro Council members they prefer that the city require the same rules and regulations for short term rentals as they do for their industries.

An Airbnb spokesperson did not respond to questions about proposed regulations by press time.