Credit: Darrow Montgomery

The D.C. Council voted unanimously on Tuesday to pass the final version of a contentious home-sharing regulation that will restrict Airbnb users from listing their second homes on the website. It will also place a 90-day cap on how long homeowners may rent out space in their primary residences if they’re not personally living on the property. The earliest the law can go into effect is Oct. 1, 2019.

An amendment Ward 6 Councilmember Charles Allen introduced provides a pathway to a hardship exemption, of sorts, to those in the military or foreign service, or those facing medical crises, who have written documentation of their extenuating circumstances.

Airbnb executives lobbied the Council extensively against passing this bill. “What we see in D.C. is just a hacksaw to everyday people who are making important dollars sharing their homes,” Christopher Nulty, the head of public affairs for Airbnb, told Fox 5 at the beginning of October. “We think that there is a better solution here. We think there are better ways to regulate home sharing and to regulate Airbnb, and we are ready and willing to work with the Council to make that happen.”  

An initial version of the bill passed in October, but the Council delayed a second vote because of a disagreement over funding mechanisms for the bill. Chief Financial Officer Jeffrey DeWitt initially estimated that passing the bill would cost D.C. some $21 million annually in hotel taxes per year, for one reason: The DC Zoning Commission currently doesn’t allow any short-term housing rentals, period. If the Council passed a bill without the Commission changing its rental code, the thinking went last month, a surge of enforcements by the Department of Consumer and Regulatory Affairs against existing rentals would eliminate the collection of the 14.8 percent hotel tax levied on Airbnb guests.  

The DC Fiscal Policy Institute, a left-leaning think tank run by budget analyst and former Council candidate Ed Lazere, has roundly rejected the Council’s approach to ameliorating those concerns. The bill as amended addresses DeWitt’s projection by asking him to adjust the District’s projected annual revenue—some $47 million, as of September—by reducing it by the roughly $20 million DeWitt anticipates the city will lose via the hotel taxes. But Lazere tells City Paper that this approach “boggles the public finance imagination.”

“I’ve never seen a situation like this, and I’ve been watching the city budget for almost 20 years,” Lazere says. “Everyone knew that the cost for the bill was overestimated, and they went ahead and tried to fund it anyway. I’ve never seen this happen before—they know that ultimately it would cost a lot less [if the zoning commission amends its regulations], but said, ‘Let’s take the city’s money anyway.’” 

While the bill passed Tuesday does not appropriate additional funds to offset the anticipated loss of revenue, the Council will have to find about $3 million in the spring, during budget negotiations, to fund additional DCRA enforcements for the bill. Given that October 2019 is the soonest that the bill can go into effect, the zoning commission has just under a year to mull changes to its short term rental code.