If left unregulated, short-term home rentals facilitated by popular “sharing economy” websites such as Airbnb are unsafe for guests and unfair to licensed innkeepers in Maine, according to a group of state lawmakers and industry representatives.

They are pushing for an amendment to state law that, if enforced, would drastically reduce the number of Airbnb listings in Maine.

A co-owner of the White Cedar Inn bed-and- breakfast in Freeport says entire communities can be affected by short-term home rentals. Shawn Patrick Ouellette/Staff Photographer

conflict of interest? not if proposed law applies to all

Two co-sponsors of L.D. 436, which would sharply limit lodging-industry competition from online services such as Airbnb, are innkeepers themselves.

However, in Maine it generally is not considered a conflict of interest for a lawmaker to support legislation that pertains to his or her industry, said Jonathan Wayne, executive director of the Maine Commission on Governmental Ethics and Election Practices.

In fact, it is often encouraged, Wayne said.

“A lot of lawmakers feel that they have to bring their expertise in the field to their job as legislators,” he said.

As long as the proposed law applies to the industry as a whole, and not just to the legislator’s business specifically, it is not considered unethical to sponsor, vote for or speak out in favor of it, Wayne said.

“It’s not hands-off for people in the same career field that the law affects,” he said.

— J. Craig Anderson

Four legislators, including two who work in the lodging business, have introduced a bill that would require state residents who rent out their properties for short-term stays to follow the same rules as owners of hotels, inns, and bed-and-breakfasts.

The bill, L.D. 436, would require the vast majority of Airbnb hosts to obtain innkeeper’s licenses from the state Department of Health and Human Services’ Division of Licensing and Regulatory Services.

Airbnb spokesman Christopher Nulty did not answer specific questions about the bill, but said in a written statement that the company is “working with leaders across the globe on clear, fair laws so people can share their homes while contributing to their communities.”

“We hope lawmakers in Augusta will do the right thing and make it simpler, not harder, for Mainers to share their homes,” Nulty said.

CHILLING EFFECT ON FAST-GROWING MARKET

Maine’s existing law requires licensing for lodging facilities with at least four rooms, cottages or condominiums under the same management. The bill would expand the requirement to cover properties of all sizes.

It also would eliminate an exemption for vacation rental homes in which guests stay for short periods. Under the current law, all residential properties that are rented for “vacation, leisure or recreation purposes” are exempt from licensing requirements. The bill would preserve the exemption only for properties in which guests stay for at least a week at a time. Municipalities, however, often can impose their own restrictions on top of the state law.

Although its supporters say they are not trying to wipe out Airbnb rentals in Maine, the proposed legislation would have a deeply chilling effect on the state’s fast-growing market for the short-term rental of houses, condominiums and apartment units.

To obtain an innkeeper’s license, Airbnb hosts would have to meet state standards for lighting, ventilation, fire safety, plumbing and other infrastructure that could cost them thousands of dollars in improvements and modifications. They also would be accountable for paying state lodging taxes and following other rules such as posting the maximum room rate in bedrooms.

A similar but more restrictive bill was introduced during the previous legislative session, but it failed to gain any traction. That bill would have eliminated the licensing exemption for all vacation rentals, including long-term stays.

Airbnb and competitor sites such as Couchsurfer and HomeAway allow residents to advertise either a spare room or their entire home to short-term guests. The hosts name their price, and the company gets a percentage of the fee when a guest books a stay.

LODGING BUSINESSES AT A DISADVANTAGE

Airbnb rentals have become wildly popular in Maine, and a source of supplemental income for property owners and even some renters. As of Tuesday, there were roughly 540 Airbnb listings in Portland and about 1,570 in Maine, an increase of more than 50 percent from June 2014.

But the sponsors of L.D. 436, including Rep. Richard Malaby, a Republican from Hancock who owns Crocker House Country Inn bed and breakfast, say Airbnb hosts are benefiting from an unfair system that hurts legitimate business owners and poses a danger to consumers.

Malaby’s co-sponsors include another innkeeper, Democratic Rep. Terry Morrison of South Portland, along with Rep. Matt Peterson, a Democrat from Rumford, and lead sponsor Sen. John Patrick, a Democrat from Oxford. Neither Peterson nor Patrick is in the lodging business.

“It’s a competitive issue, I’m not going to try to hide that,” Malaby said. Still, he said consumers should be concerned about the lack of fire, water and building safety regulations for Airbnb rentals.

Malaby said many owners of small inns in Maine have suffered financially for a variety of reasons, including shifting demographics, investment losses among seniors and a surge in the vacation-home market.

“Rural inns up my way, they’re hurting,” he said. Services such as Airbnb are a reality to which traditional innkeepers must adapt, Malaby said, but they should not be allowed to exist outside the law.

Monica Kissane, co-owner of the White Cedar Inn bed-and-breakfast in Freeport, said the lack of regulation negatively affects entire communities, not just those in the lodging industry. For instance, it has encouraged investors to buy up apartment properties intended for long-term residence in some markets and convert them into de facto hotels, she said.

“That takes rental property out of the mix for people who actually need an apartment,” Kissane said.

A recent study by the New York Attorney General’s Office found that investors in some parts of that state, especially Manhattan, were buying up apartments on an institutional scale and listing them year-round on Airbnb. The largest such investor had bought up more than 270 units in the city and was raking in millions of dollars, it said.

REGULATIONS AN ISSUE IN OTHER CITIES

Across the country, elected officials have been grappling with how to regulate short-term rentals facilitated by Airbnb and its online competitors, said Steve Unger, a bed-and-breakfast owner in Portland, Oregon, who writes about Airbnb on his blog, the-air-bnb-analyst.com.

He said Airbnb has spurred two distinct businesses, only one of which he opposes. Unger supports what he referred to as “host-present” rentals, where a home’s long-term occupants allow guests to stay for short periods in spare rooms.

The problem, he said, is “entire-place” rentals, where no host is present. Those are where the vast majority of problems occur – neighborhood disturbances, property damage and the siphoning-off of permanent housing supply – because the property owners are essentially running a business in a residential area, Unger said.

Host-present rentals are a good thing and should not be subject to the same regulations as entire-place rentals, he said. Portland, Oregon, has passed an ordinance that recognizes the difference by significantly limiting the inspection requirements and registration fees for Airbnb hosts who live in the listed property at least nine months out of the year, Unger said.

Even so, very few Airbnb hosts are following the rules, he said.

“Hosts aren’t registering,” he said. “The problem is, it’s very hard to enforce this.”

EARLY STAGES OF FINDING RIGHT BALANCE

Greg Dugal, president and CEO of the Maine Innkeepers Association who was involved in drafting Maine’s Airbnb bill, said there are a variety of ways for lawmakers to address the lack of regulation, and that L.D. 436 was not intended to be the final word.

“Most of my purpose for doing this is to get people talking about this issue,” he said.

If passed, a state law creating requirements for Airbnb hosts would not change the legal status of short-term residential lodging in cities such as Portland, which prohibits home rentals for fewer than 30 days but rarely enforces its own rule.

Still, Dugal said other municipalities have been tackling the issue at the local level with ordinances that allow Airbnb rentals under certain conditions.

“There are tourism-related communities in Maine that are trying to do this,” he said. “Camden has an ordinance, and Rockland is working on one.”

L.D. 436 is scheduled for a public hearing at 9:30 a.m. Monday before the Legislature’s Joint Standing Committee on Health and Human Services.

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