City Council Adopts Amended Short-Term Rental Ordinance:Eliminates Investor Units, Leeway on Owner-Occupants

The Boston City Council voted late Wednesday afternoon to adopt Mayor Martin Walsh’s amended short-term rental ordinance by a vote of 11-2, eliminating the controversial investor units that have been described as “de facto hotels,” but also giving some new leeway to owner-occupants to rent out their units for short-term platforms.

“We have eliminated the investor units that are putting pressure on our housing market, and we’re also allowing this industry to operate and grow,” said Councilor Michael Flaherty, who chaired the committee that looked at the new effort. “Next year will be a learning experience. The members of the City Council can come back and revisit any part of this if we need to. Not everyone is going to be completely pleased, but I believe we’ve found the middle ground.”

Mayor Martin Walsh introduced his second effort earlier in the year, and the most important part of that ordinance – which was preserved on Wednesday – was eliminating the investor short-term rentals. Those units were described as putting pressure on the housing stock due to anecdotes about corporations and entities buying up apartment buildings and evicting the tenants to provide short-term rentals for tourists and visitors.

This was particularly a problem in the downtown neighborhoods such as Chinatown, the South End, Back Bay and South Boston.

With those eliminated, the discussion shifted to what to allow, and the consensus was to allow owner-occupants to rent out empty bedrooms in their own units for short-term up to 365 days a year, and also to be able to rent out short-term an adjacent unit for 365 days per year.

That was the new twist, and it was controversial because many believe that the new ordinance will protect the downtown neighborhoods, but transfer the problem to two-families and three-family homes in the outer neighborhoods.

Councilor Matt O’Malley introduced an amendment that would have capped the adjacent unit at 120 days, but it was shot down on a 6-7 vote.

“I am a fan of the game Jenga,” he said. “I reference that because I think it’s analogous to crafting legislation; if you pull the wrong block, it all collapses. I think this new draft is in jeopardy of pulling the wrong block and making this all collapse. I say that because we are removing the 120-day cap and allowing the 365 days.”

Councilor Michelle Wu reversed her previous thinking on the matter, which was to allow the 365 day provision. She said corporations and companies are moving faster than government to upend the protections.

“I am going to be voting to err on the side of the more restrictive legislation,” she said.

Those voting for the 120-day cap on adjacent units were Councilors Annissa Essaibi-George, O’Malley, Ayanna Pressley, Wu and Josh Zakim. Councilor Ed Flynn initially voted against the cap, but later changed his vote – making it a 6-7 vote.

Many other amendments and configurations were proposed by councilors, but in the end only three passed.

O’Malley was able to get an amendment to collect data for an annual report on short-term rental activity.

Councillor Wu passed an amendment on an 8-5 vote that would require the homeowner to be present in the home to rent out their unit and the adjacent unit. She said she didn’t want someone leaving town for 90-days and turning their units into a “de facto hotel.”

She and Councilor Frank Baker also passed an amendment that allowed for sunsetting of existing units until September so that those renting out units now prohibited could finish out existing bookings. That passed 11-2.

Councilor Kim Janey said she was happy with the final product.

“We’ve eliminated the investor units, and that’s important to me,” she said.

Councilor Flynn said he supported the regulation of short-term rentals, and recalled taking a walk last year through Chinatown to see buildings that had been purchased by investors for short-term rentals – effectively displacing longtime working-class residents.

“I support the regulation of short-term rental so we aren’t displacing people like in Chinatown and investors aren’t pushing out long-time working class residents,” he said. “Regulation of short-term rentals is not anti-innovation.”

In the end, the vote for the ordinance went through easily 11-2, with only Councilors Baker and Mark Ciommo voting against it.

The reaction from Airbnb was one of disappointment.

“For two years Airbnb and our Boston hosts have worked closely with the Mayor and members of the City Council to share helpful data and collaborate on fair home sharing policy,” read their statement Wednesday afternoon. “Today’s disappointing vote is proof that our community’s feedback and concerns were not heard. The new ordinance unfortunately creates a system that violates the privacy of our hosts, and prevents Boston families from making much-needed extra income in one of the country’s most expensive cities. We’re hopeful there will be an ongoing discussion on these topics so that our community can continue to fight for their ability to share their homes and make ends meet.”

On the flip side, the Massachusetts Lodging Association CEO Paul Sacco said the new ordinance showed true leadership.

“Today, Mayor Walsh and the Boston City Council demonstrated true leadership by acting to protect Boston from exploitation at the hands of wealthy, out-of-town interests who have been buying up thousands of housing units in order to turn them into illegal hotels,” he said. “Today’s action preserves the rights of real home-sharers while reining in the bad actors who are contributing to Boston’s skyrocketing housing costs and wreaking havoc on many of our neighborhoods.”

ADCO, the alliance of downtown neighborhood associations, did support the revised ordinance in a statement last week.

Many observers pointed out, however, that the next step will be in the State Legislature where frameworks for taxing short-term rentals is still lingering – as well as regulations for health, safety and non-discrimination rules.

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