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New Idaho law on vacation rentals seeks middle ground

BOISE – Idaho has a new law to govern how short-term vacation rentals, like those marketed on Airbnb and other services, are regulated and taxed, and it may bring peace in a long-simmering fight over the growing industry.

The bill, which Gov. Butch Otter signed into law earlier this month, forbids cities or counties in Idaho from banning short-term vacation rentals, which are home rentals for 30 days or less. But it does allow local governments to regulate them with regard to health, safety and welfare; requires zoning ordinances to recognize them as a residential use; and also requires collection of state sales and lodging taxes.

“We don’t want to ban them in Idaho, because we have a very different setup than a lot of states do,” said Pam Eaton, president of the Idaho Lodging and Restaurant Association. “For example, we want to bring big, huge conventions to Sun Valley, but there’s not enough hotels up there. … So we need the vacation rental homes. … And there are a lot of other areas around the state that are like that. So these vacation rental homes actually help with tourism and economic development.”

Eaton spearheaded the bill, working with stakeholders including the state’s cities and counties; the real estate industry, for which her husband, John, is the lobbyist; and Expedia, which is developing its own vacation rental platform. The measure passed the Idaho Senate unanimously and the House 63-5.

The new law passed while Coeur d’Alene is in the middle of developing its own city ordinance regarding short-term vacation rentals.

“We’ve been working on it a little more than a year,” city planner Sean Holm said. “We’ve been adjusting our ordinance to meet the requirements.”

Holm said recent estimates suggest there are 300 to 400 short-term vacation rentals in Coeur d’Alene.

“We’re seeing an exponential growth in this type of use,” he said.

Cheryl Lantz, who’s owned Vacation Rental Authority in Coeur d’Alene for five years, said the supply of vacation rentals has roughly doubled in the past few years.

“So there’s definitely a lot more people that are getting in on the vacation rental investment,” she said. “But there’s also corresponding demand – there’s more tourism going on as well, and people that are looking for vacation rentals in our area to rent.”

Her firm has about 60 properties, most of them have three to five bedrooms. Some are waterfront homes.

“It’s been terrific – we’ve grown quite a bit,” she said, “and we’ve been able to help a lot of owners take care of guests that are coming into town.”

Much of the friction over short-term vacation rentals stems from fears that they’ll disrupt neighborhoods by bringing different big groups in each night for wild parties. Holm said the Coeur d’Alene ordinance attempts to head that off by requiring a minimum two-night stay. Research shows roughly 92 percent of those who come to Coeur d’Alene by car stay for two days or more, he said.

“So we didn’t really feel like we would be losing much business by restricting that to two days,” he said. “What it helps prevent is the one-night stays where someone wants to throw a bachelor party or something like that – it hopefully will help thwart those party people.”

Idaho’s new law, which doesn’t take effect until Jan. 1, has drawn praise from Airbnb, whose spokeswoman, Jasmine Mora, said it “means even more middle-class families across the state can benefit from the sharing economy.”

“This legislation takes a balanced approach to ensuring families continue to have a variety of travel options while enabling cities to adopt reasonable regulations,” she said. Airbnb has about 2,000 hosts in Idaho.

The company reports that in 2016, its vacation rental hosts earned $11.6 million in supplemental income and hosted 95,000 guests. The annual earnings for a typical host in Idaho are $4,800; 62 percent of Airbnb hosts in Idaho are women, and 44 percent are over age 50.

Eaton, whose group represents hoteliers, said in other states, hotels typically have supported banning short-term vacation rentals out of concerns that they’re not subject to the same taxes and regulations as hotels, while real-estate interests have opposed bans on property-rights grounds.

“This fight is going on across the nation,” she said. “We had been working for the last couple years with the state Tax Commission, trying to figure out how to collect these taxes.”

Idaho charges both its 6 percent sales tax and a statewide 2 percent lodging tax on vacation rentals and hotel rooms. Some communities in the state also have local sales or lodging taxes.

“But these owners didn’t necessarily know that, and no one was really paying it,” Eaton said.

That’s changed now. Airbnb was ahead of the new law and signed an agreement with the state Tax Commission on Dec. 1 to start collecting and remitting state taxes from its Idaho operators. As of April 5, Airbnb had already collected and remitted $350,000 in Idaho taxes. The San Francisco-based company signed a similar agreement with the state of Washington in 2015.

The new law requires any “short-term rental marketplace” organization like Airbnb to register with the state Tax Commission and collect and remit the taxes. Airbnb also collects and remits taxes for the Greater Boise Auditorium District.

Sen. Jim Rice, R-Caldwell, was the Senate sponsor of the bill.

“It gives us uniformity for tax purposes so they do get taxed appropriately,” he said, “but you don’t end up with something where you end up with a patchwork regulation that invades people’s property rights.”

Rice dismissed concerns about neighborhood disruption.

“You don’t always get along with the neighbors,” he said. “And sometimes you do things that annoy a neighbor or multiple neighbors. And we have laws of general application for that, like noise ordinances.”

Eaton said she’s been getting inquiries from other states about the Idaho law. It differs from a “model” law proposed by the American Legislative Exchange Council that is more focused on prohibiting any local regulation. That bill actually was introduced in the Idaho Legislature this year but didn’t advance.

According to the National Conference of State Legislatures, 24 states considered short-term rental legislation in 2016; six of those passed, and more have been proposed this year. Approaches have varied widely, including a ban on advertising certain types of apartments in New York City for short-term rental and an Arizona law forbidding any local regulations.

“People are saying that they want to use ours as a model,” she said. “It works for Idaho – it’s a solid piece of legislation that works for Idaho.”


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