Government Micromanagement (Not the Way It’s Supposed to Be)


This story out of Santa Monica might sound familiar to Rhode Islanders, given the vacation-related parts of Governor Raimondo’s proposed budget:

Home-sharing websites like Airbnb allow homeowners and apartment dwellers to rent their home and spare bedrooms to vacationers for a fraction of the cost of a hotel stay.

But on May 12, the Santa Monica City Council passed a new ordinance that will impose regulations that make that opportunity much harder to come by. …

The ordinance imposes strict restrictions on who can rent out their spare bedrooms for less than 30 days, including requiring those who wish to rent out their spare bedroom or apartment to apply for a business license and to remain on the property during the guest’s stay. The ordinance also imposes a 14 percent hotel tax on hosts.

A free society is supposed to work by allowing us maximum latitude to make arrangements with each other, with government providing security and an understanding that contracts can be reinforced.  There’s some room around the edges for government to take some of the risk out of the equation by (essentially) doing a portion of customers’ due diligence for them through regulation, but we’re way beyond that, at this point, and drifting farther out to sea.

  • Mike678

    Why do I think the whole purpose of the ordinance was to tax? Cynic or realist?

    • Warrington Faust

      I suspect it has more to do with protecting property values, the riff raff who can’t afford their homes without renting will have to leave.

      I am trying to imagine the effect of such a rule in places like Martha’s Vineyard. Unless things have changed, about 40% of the “year round”
      population moves to public camp grounds and rent out their houses for the summer. There is no other way they could afford to keep them. Not sure if it passed, but they were attempting a zoning ordinance which would permit “natives” to build on lots half the size allowed to new comers. I sympathize and am reminded of the old days when condo complexes were 80% owned by “investors” who cared nothing for the needs of the 20% “owner occupants”. FNMA created rules to reverse the proportions allowed so there could be only 20% investors.

      • Mike678

        You are an optimist. Could lawmakers not have denied usage and driven out the ‘riff raff’ (who could be older people on fixed incomes trying to maintain their homes)? They already prohibit vacation rentals….

        No…people started using airb&b to get better priced accommodations and the city was losing the tax money from the hotels. The city doesn’t care where you sleep…but they are going to get their tax dollars.

        • Warrington Faust

          link has a Q&A which includes ” Why did the Council adopt the Home-Sharing Ordinance?”
          . I am not sure I am buying the explanation, as stated, but the tax burden is so
          small that I doubt that is the underlying reason. (underlining unintentional)

          • Mike678

            You consider a 14% tax to be a “small” burden? Do you perhaps work for a public sector union and lobby the RI General Assembly? :)

            Me thinks you misread the Q&A page… People in Santa Monica who wish to rent out rooms get to pay both a Business license tax AND 14%. Sweet!

            If tax monies are not the underlying reason, please inform us what you think it is? If property values, please explain your logic.