Philly City Council considers whether to tighten or ease Airbnb regulations

The short-term rental industry, embodied by Airbnb, proved a polarizing subject at a Wednesday City Council hearing. Both hosts and neighborhood groups testified passionately, if at cross purposes, about the industry’s effect on Philadelphia’s neighborhoods.

The hearing was held at the behest of Councilmember Isaiah Thomas, whom industry groups have been lobbying to ease regulations that were passed two years ago and went into effect in January.

Thomas’ spokesperson described the hearing as a first step and said his office is open to amending the regulations.

“We talk all the time about what it means to make Philadelphia more business-friendly, to address issues like poverty and lack of entrepreneurship,” Thomas said. “This is one of those industries that is new, innovative, and constantly changing. As government, we’re trying our best to keep up with where we’re going.”

Like other Silicon Valley tech companies that sought to disrupt existing industries, short-term rental companies caught Philadelphia government off guard when they burst on the scene over a decade ago. Regulations were issued in 2015 requiring a hotel license for rentals operated out of a primary residence, but the rules went largely unenforced.

During the pandemic, complaints about nuisance short-term rental properties skyrocketed. Councilmember Mark Squilla introduced legislation requiring short-term rental owners operating out of their homes to register with the city too.

He also required hosts to provide a license number to online rental brokers, such as Airbnb, as confirmation that they have received either hotel permits — for those operating outside their primary residence — or a lodging operator license for those who rent out portions of their home. The idea is to bring the industry and its operators out of the shadows and make it more of a mainstream business.

The regulations that went into effect in January have sent the industry into a panic, especially for those who have to go to the sluggish Zoning Board of Adjustment to secure the required permits if their houses are not in areas zoned for hotel uses.

Many neighborhood advocates argued at Wednesday’s City Council hearing that the city had not gone far enough. Joseph Baker of the Franklin Bridge North Neighbors Association, which covers part of Old City, said that even with the regulations, short-term rentals are out of control.

“There are 50 short-term rental locations within a block of where I am right now,” Baker said. “I only see our problem getting worse unless this industry is regulated and policed.”

Baker ticked off issues ranging from annoyances — such as trash put out any day of the week — to disruptive problems with unruly guests. He described late-night parties raging out of control, people jumping on parked cars, and repeated instances of gunfire.

“We were optimistic this January when we saw the new ordinance take effect. So far, we’ve been disappointed that problems continue,” Baker said. “I understand some people feel the modified ordinance is too restrictive. I have to say it’s not restrictive enough.”

Short-term rental hosts strove to distance themselves from problem actors, acknowledging the issues created by the unregulated market but describing themselves as responsible hosts.

Industry advocates described the positive economic benefits of short-term renting, such as bolstering retirement savings or providing customers for neighborhood businesses.

Retired teacher Joyce James said the regulations have been difficult for her to understand and follow online. Three trips to the Municipal Services Building had not proven clarifying, especially because she kept being steered back to the city website that baffled her to begin with.

She said the burdens should be eased for those renting out a portion of their home, as opposed to those who have bought investment properties they do not live close to.

“I’m not here to defend Airbnb,” she said. “I’m not even sure that the way they operate now is something I would support.” But the new regulations have “crippled my attempts to augment my retirement income and improve my quality of life and maintain my home in good repair.”

Industry critics at the hearing also cited concerns about the effect short-term rentals have on housing prices.

A University of Pennsylvania study found that short-term rentals tend to be concentrated in neighborhoods where rental housing dominates and that the emergence of companies such as Airbnb resulted in units being shifted away from the standard market. The study found that each 1% increase in Airbnb listings in a zip code creates a small increase in rents and house prices as the number of long-term rentals is decreased.

“There’s a major concern that it also hurts affordability because of a reduction in rentals,” said Squilla, who introduced the legislation to regulate the industry in early 2021. “That inflates property values and reduces more-affordable rental units. Maybe they [owners] could just rent their units to a person who rents monthly.”

Thomas’ hearing was held to give supporters and opponents of the short-term rental industry a chance to air their views on the regulations and the enforcement thus far. No new policies are actively under consideration. Thomas’ spokesperson said his office had not yet had time to consider new legislation because of ongoing budget hearings and negotiations.

Squilla said he is trying to get the zoning board to add at least one more meeting per month to help ease the backlog of cases. An Inquirer analysis found that wait times for a hearing before the ZBA have ballooned since the pandemic, with an average wait of six months last year. The pace of the process has substantially burdened small businesses, from Airbnb hosts to would-be cafe owners.

“The zoning board needs to do quicker turnarounds. That’s something we really need to address,” said Squilla.

As for what he heard at the hearing, Squilla said he didn’t understand why hosts hadn’t tried to comply with the new law earlier.

“I feel bad for the [short-term rental hosts] who have challenges, but we introduced these changes almost two years ago,” he said. “If people had begun applying even a year ago, it would have been done by now.”