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Short Term Rentals A Regulatory Headache

Short-term rentals—those small, furnished apartments, or even single rooms rented by the day or week--are becoming increasingly popular, as internet services such as Airbnb and Vrbo make them competitive with hotels. But they are also becoming a regulatory headache for cities across the country.

In the last year, there have been battles over short term rental regulations in cities as far apart as Jersey City, New Jersey and Orinda, California. And property owners just down the road in Washington, DC,  say they are frustratned and confused by that city’s new short term rental law.

In Maryland, Baltimore’s City Council voted for short term rental regulations last December. The 9.5 percent hotel tax in the bill has gone into effect and other regulations are being rolled out at the end of this month.

Meanwhile, Annapolis is struggling to find its own solution.

The Baltimore law requires that a host--someone offering a short-term rental--register with the city and pay a $200 fee.  The host has to live on the property and the space being rented must comply with the city code.   The city’s Department of Housing and Community Development will run the program.

Jason Hessler, the department’s deputy commissioner, estimates the new law could apply to some 4,000 units. He says he is looking to internet brokers, such as Airbnb, to help the city implement the law.

“They are providing us with direct contact people for when we do have issues with all licensed units or any kind of fraud that we think might be going on and then they’re also adjusting their sites for Baltimore,” he said. “And they won’t accept any properties that don’t have the license number.”

Reaction to the new law has been guarded, but cautiously optimistic. Linda Smith, who runs Rachel’s Dowry BNB on Washington Blvd, just a long home run from Camden Yards, says she’s in favor of the law.

“It helps to level the playing field between legitimate bed and breakfast and businesses and those people that are pretending that they are not real businesses,” she said.

Meanwhile in Annapolis, city aldermen, innkeepers and residents have been struggling to create regulations for short-term rentals. There have been two public hearings and numerous committee meetings since June, and an amended bill will come up for discussion and probably a vote at the city council’s January 13 meeting.

In spite of the lengthy review, there’s frustration on all sides.

Bill Kardash, chairman of the board of the preservation group Historic Annapolis, insists that  Baltimore’s requirement that hosts live in the properties they rent—what he calls the “primary residence mandate”—be included in the law.

He worries, he says, about the “saturation” of neighborhoods with short-term rentals.

In some neighborhoods, more than half the houses on the street are short term rentals, he complains, saying the “neighborhood character is diminished and they basically become streets that are for transients.”

“We don’t want to turn Annapolis into simply a visitors’ haven.”

But that’s just one issue. Dr. Susan Marguilies, a math professor with a home in the downtown historic district, says that the proposed system in Annapolis gives a cold shoulder to house-poor professionals who might rent out a room just to make the mortgage.

She says she prefers the Baltimore system.

Cleverly, the Annapolis legislation would exempt owners who rent out their entire houses during the annual boat shows and the Naval Academy’s Commissioning Week for as much as $12,000 and go on vacation is some far-away place like Tuscany, maybe.

Property managers such as Megan Moore, who grew up in the city’s historic district, think that there’s a need for regulation, just not the proposed law.

“Personally I would grandfather anybody that has an existing license but hasn’t had any infractions,” she said. “Going forward, I would consider putting some kind of a hold on any new licenses while they figure out the density problems.”

Back in Baltimore, Linda Smith says Annapolis “needs to look beyond just the taxes at all of the other repercussions of these small term rentals.”

“There are issues with trafficking, with zoning, with proper insurances, proper liability, and also ruining neighborhoods,” she warned.

The Annapolis bill comes up for a third hearing and possible final vote next month. Meanwhile, city officials there will see how much help Airbnb gives Baltimore in implementing its regulations.