Sacramento's Careful Approach to Legitimizing Airbnb

As Allen Young reports, the growing popularity of Airbnb in destination cities has "pitted landlords and other online home-sharing services against hotel unions, housing advocates and community groups." Anticipating a crackdown across the state, Airbnb reportedly approached Sacramento about reconsidering the legal terms surrounding short-term housing rentals. As in most cities, it is currently illegal in Sacramento to provide short-term lodging without a permit and without paying the same transient-occupancy taxes that conventional hotels pay. There are currently approximately 170 properties listed within the city, and more are expected as the sharing economy grows in popularity.

City officials first began considering writing rules around Airbnb use after the San Francisco-based company approached Sacramento to help legitimize its service," Young reports. The city's proposed cap on nightly stays was initially 30 days per year, relatively strict compared to cities like San Francisco and San Jose, with 90-day and 180-day caps, respectively. The purpose of a cap is to prevent landlords and homeowners from operating full-time hotels. Supporters of a cap argue that the proliferation of Airbnb rentals is reducing the availability of affordable housing in cities that are already struggling with soaring housing costs.

The proposal would likely include a transient-occupancy tax. Supporters argue that short-term renters should be required to pay the same taxes as other visitors who stay in hotels. According to their website, Airbnb collects local hotel taxes from renters in a limited number of cities that require it. In California, these include Oakland, San Francisco, Malibu, Palo Alto, San Diego, and San Jose. The local hotel tax in Sacramento is currently 12 percent.