Airbnb sues Boston to halt regs

Company claims new rules violate constitutional rights

AIRBNB FILED SUIT against the city of Boston Tuesday seeking to block officials from implementing new regulations on short-term rentals set to take effect January 1, claiming the rules illegally require the company to turn over private host information and to bar investors from listing multiple units.

In its lawsuit, Airbnb portrays itself as merely a matchmaker, a company connecting willing hosts and renters for a fee based on the rental price. The suit claims Airbnb’s free speech rights are violated by the city’s regulations requiring the company to turn over information about hosts and to enforce limits on who can rent a unit and how often. The city’s regulations would assess a $300 fine per day per infraction by short-term rental platforms.

“This is a case about a city trying to conscript home-sharing platforms into enforcing regulations on the city’s behalf, in a manner that would thwart both federal and Massachusetts law,” according to the complaint, which was filed in federal court by Howard Cooper, a well-known First Amendment attorney. “Airbnb believes that home-sharing may be lawfully regulated, and it has worked with dozens of cities to develop the tools they need to do so without violating federal or state law. Boston’s heavy-handed approach, however, crosses several clear legal lines and must be invalidated.”

City Councilor Michelle Wu, who led the effort to redraft the short-term rental regulations originally crafted by Mayor Marty Walsh, said she and other officials expected Airbnb to sue.

March 15, 2018

Boston City Councilor Michelle Wu.

“I’m not surprised that Airbnb is challenging our regulations in court after they failed in the court of public opinion,” said Wu. “Boston had a sense that Airbnb was not going to be fully cooperative. They’re a corporation and their profits will be affected by our legislation.”

The Boston City Council passed Walsh’s amended proposal in June as elected officials and advocates fretted that the proliferation of short-term rentals through platforms such as Airbnb and Home Away was drying up the supply of housing units in neighborhoods and putting upward pressure on rents for the remaining units. There are a number of incidents of investors scooping up whole buildings in places such as Chinatown and the Back Bay and turning all of the units into short-term rentals. City officials claim the regulations would return some 2,000 units to the housing market.

Under the Boston regulations, only owner-occupied single-family, two-family, and three-family homes would be allowed to rent out their primary units or adjacent units for up to 120 days a year. The regulations bar investor-owned units or tenants from renting out their homes. The ordinance also requires hosts to register with the city and pay a $200 fee, information that would be cross-checked against data provided by platforms such as Airbnb.

The suit challenges the regulations on privacy and constitutional grounds, saying the onus should not be on the company to collect and turn over sensitive data to regulators. The suit says releasing the information would violate a host’s privacy and give competitors access to the company’s proprietary information.

“Airbnb is one of a number of competitors that offer platforms for potential hosts to list properties for rent,” the suit says. “As a competitor in this marketplace, Airbnb considers that its confidential business information is extremely important for Airbnb’s ability to maintain its business success, and therefore takes various measures to guard its business information from unwanted disclosure.”

While the suit does not challenge the city’s ban on investor-owned units, it seeks an injunction that, if not lifted, would have the same effect. In its legal filing, the company said it lists 6,300 units in Boston, the vast majority from homeowners who make an average of $8,600 a year in rental income – income that helps them afford to stay in their homes. However, the Alliance of Downtown Civic Organizations, which pushed the city to enact the regulations, has offered data and reports showing multi-million dollar investors dominate the Boston market, with many having dozens of units rented out 365 days a year on the various platforms.

A spokeswoman for Walsh said he would have no comment. An Airbnb spokeswoman declined comment. An official with the lodging industry, which has been vocal about its opposition to Airbnb and the need to regulate the company, said the regulations bring the firm in line with what hotels and motels are required to do and called on state lawmakers to revive a stalled bill on Beacon Hill.

“The notion that Airbnb should not be accountable for illegal activity on their platform is absurd,” said Paul Sacco, president of the Massachusetts Lodging Association. “This lawsuit should be a catalyst for Beacon Hill to move beyond minor disagreements and establish a statewide framework that protects the rights of cities and towns to take action on behalf of their residents who continue to be burdened as Airbnb snubs its nose at their local rules.”

Wu said she is confident the regulations will survive the legal challenge. But, she said, had Gov. Charlie Baker not amended and sent back a bill passed by the Legislature, the legislation “would have supported the city’s ability to enforce these type of regulations.”

The state bill would have imposed taxes on short-term rentals, which Airbnb and other platforms say they support. But the bill also placed limits on how long the units could be taxed. Baker’s amendment would exempt those who rent their units for less than 14 days from registering.

The state bill would require hosts to register with the state and provide data about themselves and their rental units, all of which would be available publicly. Baker amended the measure to bar the names and street addresses of property owners from being released publicly. Only the property’s street name and its hometown would be available to the public under the governor’s amendment.

The Legislature took no action on the amended bill and it is unlikely to be taken up before the end of the year, effectively killing it for this term.