Innkeeper Class Action Lawsuit?

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notAgrandma's picture
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07/07/2017

In the city where I'm located, a dozen B&B owners have been asking city officials for years to regulate Short-Term Rentals. Right now, STRs aren't required to have business licenses, aren't inspected by the city, and aren't collecting city sales & tourism taxes. Last year, my city lost over $1 million in tax revenue from just Airbnbs alone, based on the earnings data that Airbnb openly shares on its website (it's helpful that they even break their earnings down by state and individual cities!) When Airbnb first took root in my city 3 years ago, there were about 300. Now there are over 1000 and 60% are not owner occupied (a stat provided by the website AirDNA). City officials recently met with Airbnb, held town hall meetings, and met privately with B&B owners to discuss the development of STR regulations. As of today, nothing has been done and the deadline for proposing new city regulations in 2018 is quickly approaching. The deadline for B&Bs to pay the renewal fees for our city business licenses is June 1 and many B&Bs are stating that they're not going to pay.

My point in bringing up all of this information is that several B&B owners are considering filing a class action lawsuit against our city. We are unfairly subjected to regulations, fees, and taxes that are not imposed on STRs. Has anyone heard of any B&Bs taking this sort of legal action against their city? If not, do you think it's something that might be considered in your area?

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Arks's picture
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Along a similar line, I just returned from a visit to NYC, and used Uber for the first time. I noticed all the Uber drivers we rode with had a city license posted in the car, with their photo and license number. So looks like NYC has taken some steps to regulate this sort of thing.

These non-traditional businesses like Air and Uber aren't new anymore, and it time for government to stop ignoring them and come up with licensing policies to match what they require of traditional businesses.

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Generic's picture
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02/24/2011

One of our neighbours came by and asked me what to do, because their entire condo is up in arms over Air. And she says, the rental tenant who is doing it has straight out lied to Air that they are owner (because tenants aren't allowed to do it at all... and even if they do, they can't go beyond the fair share of the rent or their lease is broken.)

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11/21/2017

I would start by thoroughly reviewing your city ordinances and your state statutes.  All townships, cities and county's in our State have ordinances requiring either a Conditional Use Permit or an Interim Use Permit for a bed and breakfast.  However, they are not being enforced for short term rentals in most of the State.  Basically, they are looking the other way and choosing not to enforce the ordinances.

But...the cities, counties and townships have legal obligations to fairly and impartially enforce their code. So you may have some leverage with that.

Also, when a portion of a home is used for rental, that portion of the home gets classified differently for tax purposes than the rest of the home.  When people find out their property tax may increase due to renting the place out they may think twice.

What I've been doing is sending the address of the airBNB and a print-out of their advertising to the County Assessor (who is legally obligated to follow up) and to Zoning.

You can also send letters to the airBNB educating them on things like the fact their home owner's insurance won't pay if a renter burns the place down.

Another potential issue is places that rent out the entire home that have a lot of beds.  At a certain level, state law may require those properties meet fire code with emergency lighting and fire extinguishers, etc.

Again...I believe there is a ton of ammo you can use.

 

PhineasSwann's picture
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MidwestBB wrote:

Another potential issue is places that rent out the entire home that have a lot of beds.  At a certain level, state law may require those properties meet fire code with emergency lighting and fire extinguishers, etc.

In Vermont, the tipping point is 3 or more rooms that triggers Health Department enforcement. If you're in that state, and a competitor is renting 3 or more rooms (or suites, or cabins on the same property) then a simple letter to your local health inspector cc'ing the state office should get them on the list for regular annual inspections and licensing. I'm constantly checking Air and sending them the mailing address of faux B&B's in my area that meet that criteria.

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Morticia's picture
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05/22/2008

I think it is 3 rooms here also. Unfortunately, most people are only doing one. But, there are over 100 of them.

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Innkeep's picture
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06/04/2008

Here in non-tourist land Air has been adopted much more slowly but it’s now here. This year for the first time unoccupied apartments are showing up on the listings. 

At my age and stage of life I am not taking advantage of any of the OTA’s and probably have less reason to complain bitterly but my bookings have fallen off significantly.  The majority of Air’s listings are $65 or less and seem to be doing a brisk business. 

I have to admit that I still get a little depressed when I remember how very difficult it was for me to open due to antagonism by the city fathers and in spite of multiple obstacles I developed an excellent product. Realistically this place will never sell as a B&B. 

I think I might just close next year from December to April or May and travel. Not sure yet. I still have my cadre of return visitors and am enriched in so many ways by having guests to take care of, but I am not tolerating day after day of no business. 

For newer Innmates, I celebrated 10 years in November and run a 4 room place by myself. The house has been in the family since 1960 and I have decided to cast my lot with this town forever... when I’m not driving cross country

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05/13/2018

B&B owners have the same issue in our town.  In our state, Airbnb does pay the lodging tax, but that began just a few months ago.  There are strong operating regulations on the legitimate B&B's vs. short term rentals.  The playing field is not even.  Short term rentals do not have to comply with any safety regulations, which cost tens of thousands in most cases; pay for required permits; or have their property taxed and assessed as "commercial"; or have get approval from their neighborhood to operate, like B&B's in our town do.  Many of the larger towns and cities in the state are enforcing tighter regulations and some outright are not allowing short term rentals.  In some cases, they have disrupted the neighborhood when the owner is not present and parties are held or the rental was used for illegal activities. 

We are discussing how best we can work with our town leaders to address and hopefully, remedy the situation.  It will be interesting to see how others have or are approaching the issue. 

Generic's picture
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02/24/2011

Just the fact of filing should move things forward. There should be a doctrine of fairness in place. In some places, AirBnB has agreed to require the posting of licence information on the listings.

PhineasSwann's picture
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09/25/2012

Keep us informed. We have discussed doing this in Vermont, but up to now our state B&B/Inns Association has been trying to work with the state legislature to get equitable regulations in place. Should we fail, this is one option that has been discussed. 

gillumhouse's picture
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05/22/2008

Unfortunately, I am the only B & B in my County, but I would definitely pony up a share of legal fees and join this lawsuit if I was in your shoes.

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