Airbnb Gets A Pass From NCGA For Now | Eastern North Carolina Now

    Publisher's note: The author of this post is Barry Smith, who is an associate editor for the Carolina Journal, John Hood Publisher.

Legislative committee delays recommending new 'sharing economy' laws


    RALEIGH     Regulations on the emerging sharing economy, and how North Carolinians will embrace it, will have their next stop at the Raleigh City Council. The council will receive a report Jan. 20 on Airbnb, one of the stars of the sharing economy. Meantime, a legislative committee that recommends new tax laws to the General Assembly chose to leave sharing economy businesses alone, for now.

    Airbnb is an online application (airbnb.com) allowing providers (called "hosts") to open their homes to guests for short-term rentals of a spare room, a sofa bed, or other quarters. About 300 such accommodations are available for rent in Raleigh.

    Airbnb, along with transportation providers Uber and Lyft, have raised concerns among some regulators and elected officials — along with traditional commercial operations such as hotels or taxi services — as the sharing-economy businesses connect providers directly with customers using technology rather than real-estate agents or government-licensed taxi companies. Traditional businesses say the lack of regulations over the sharing-economy companies give the newcomers an unfair advantage and can harm consumers.

    Critics of the newcomers that were hoping for some help from the General Assembly may have been disappointed Tuesday, when the Revenue Laws Study Committee recommend no changes in laws governing the sharing economy in its report to the 2015 General Assembly.

    "We do have interest in the online reservations [providers]," said Rep. Julia Howard, R-Davie, who co-chairs the committee. "We just didn't have time to get the bill right."

    Howard said that while a member might introduce a bill aimed at collecting taxes on Airbnb transactions, she didn't expect one to pass during this year's long session. Instead, she said the General Assembly probably would ask the Revenue Laws Study Committee to gather additional information, with any new legislation vetted during the 2016 short session.

    "It's a new day," Howard said, referring to the developing sharing economy. "We're trying to do it right without doing it in a rushed manner."

    Howard said the General Assembly and the Department of Revenue would need to work out logistics, including establishing new taxpayer accounts for hosts that do not operate other businesses, collecting sales taxes, and distributing them. Occupancy taxes would provide further logistical challenges because rates differ in various counties and municipalities, she said.

    In Raleigh, a problem that has arisen between Airbnb hosts and the city relates to zoning. Specifically, hosts find themselves operating business in areas zoned for residential use.

    Airbnb supporters hosted a town hall meeting Jan. 5 at the Architect Bar & Social House in downtown Raleigh. The next night, four Airbnb hosts spoke to the city council, urging members to welcome the new venture to Raleigh.

    Justin Miller, a Raleigh entrepreneur and Airbnb host, urged the council to put the city on the cutting edge by embracing the new approach to home sharing.

    "It's imperative that we look at opportunities to make this work as a city as opposed to ways to instantly stop this," Miller said. "I think it's critical that we figure out ways to embrace this."

    Airbnb supporters at the town hall meeting and the council meeting putting a damper on emerging businesses such as Airbnb would make it difficult to attract the best companies and people to Raleigh.

    Some providers told stories of how renting a room or other quarters helps supplement their family's budget. One woman said her in-laws stayed at her home part of the time to help with her child; when they weren't in town, she used Airbnb to rent guest quarters and the money covered some of the cost of child care. Others said the money from Airbnb rent helped cover the costs of home improvements.

    The service isn't without its critics, in addition to the zoning complaint lodged against one Raleigh Airbnb host.

    Doris Jurkiewicz, owner of The Oakwood Inn Bed and Breakfast in Raleigh, said she doesn't think the Airbnb business model is a bad thing, but the playing field should be leveled between the home sharing business and other lodging businesses.

    "The concern is that they aren't following the same kind of guidelines that I have to follow as a bed and breakfast owner, Jurkiewicz said. "They're not inspected. They don't pay any sales tax, occupancy tax. There's a lot of stuff that I have to pay as a bed and breakfast owner and they're not paying those things."

    Jurkiewicz said it is difficult for her to compete given those disparities.

    Lynn Minges, president of the N.C. Restaurant and Lodging Association, acknowledged that technology often moves faster than regulators can respond. "A lot of times those business changes take place before the regulations and oversight that would normally guide them are in place," Minges said. "I think that's what we're seeing here with Airbnb."

    "The issue for us and some of our members is that there interested in a more level playing field," Minges said. In addition to taxes, issues that need to be addressed are off-street parking and insurance, she said. "It's not just Raleigh; it's in Durham, and it is also in Asheville and other communities as well."

    Max Pomeranc, public policy manager for Airbnb, said that Airbnb recently began offering $1 million in insurance for homeowners who host guests through the company.

    Jeff Tippett of Targeted Persuasion, who organized the town hall meeting, said the occupancy tax issue does need to be worked out with Raleigh, as the company has done in some other cities.

    Pomeranc said the model used by Airbnb is successful because guests and hosts continue to embrace it.

    "People trust the system," Pomeranc said. "It works." He said that Airbnb employs a "double-blind review system" where guests rate their hosts, and hosts rate their guests.

    "We do have a trust and safety team that works on any issues that may arise, and they're very infrequent," Pomeranc said.
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