Until now, local governments, which are partially dependent on tax revenue generated by tourists who sleep in hotels, have been at a loss on how to rein in the disruption behemoth that is Airbnb.
Efforts to license short-term rental operators have failed, largely for lack of an effective means of tracking those who fail to become compliant. Enforcement costs have proved staggering to cash-strapped governments.
Despite warnings of hedge fund operators gobbling up homes at top dollar and forcing residents out of the home buying market, the City of Henderson voted Tuesday night to license short-term rentals. Property owners will be required to pay $820 a year for the privilege.
“In my mind, this has nothing to do with money for the city, but everything to do with enforcing,” said Councilman Dan Stewart, who noted that 70 to 75 percent of properties in Henderson are governed under rules established by homeowners’ associations. “This will help the HOAs identify STRs in their communities. And we’ll have enforcement go in and cease.”
But one gated community resident, John Alderfer, told council members his neighborhood “had already been through this nightmare,” noting his HOA rules were ineffective in running off unruly renters.
Henderson officials are hoping to tame the lodging disruption beast via a licensing and regulatory scheme. The city hopes to succeed where other municipalities have failed. Officials intend to hire a compliance vendor to ensure unlicensed operators are identified and sanctioned.
“The vendors have software, they can scrape data and get down to the specific address and location,” Henderson Planning manager Eddie Dichter told the Current. “There’s one that has a couple hundred cities they are working with.”
One potential vendor, Host Compliance, says it identified 613 web listings for 422 short-term rental properties in Henderson that are advertised on-line.
The city is promising a robust enforcement effort with hefty fines designed to offset the cost.
Under the new ordinance, each operator of an unregistered property will be assessed $500 a day it is rented. Holding prohibited events such as parties or weddings will bring a $500 a day penalty. Operating after a license has been suspended is also punishable by $500 a day.
But is compliance software successful in tracking down offenders?
AirDNA, a data service that analyzes Airbnb listings, wrote in November 2017 that 365 cities around the world have some form of licensing. Yet only three cities have managed to license the majority of properties in their jurisdictions
According to AirDNA, Denver budgeted more than $70,000 a year toward host compliance software, which “has failed to deliver” on the promise of identifying unlicensed operators.
Airbnb’s growth has slowed, but not stalled, in the face of increased regulation. In April, Forbes reported Airbnb valued itself at $38 billion in preparation for its initial public offering.