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Santa Monica Sued by Airbnb HOME ad for NO on LV Initiative link

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Kutcher & Kozal, LLP

Convention and Visitors Bureau Santa Monica

By Niki Cervantes
Staff Writer

September 7, 2016 -- Nearly 15 months after imposing some of the nation’s toughest limits on booming short-term vacation rentals, City of Santa Monica officials were served Tuesday with litigation by Airbnb alleging multiple violations of federal law.

The suit was filed in U.S. District Court on Friday, and the City was formally served after the long Labor Day weekend, said Alison Schumer, an Airbnb spokesperson.

Schumer said the industry giant first “tried to have a dialogue with city officials” regarding Santa Monica’s short-term rental ordinance, which became effective in June 2015.

But the City is “unwilling to make necessary improvements to its draconian law,” she said, “so while this isn’t a step we wanted to take, it’s the best way to protect our community of hosts and guests.”

Santa Monica Officials said the City’s legal staff has not yet thoroughly reviewed the complaint. But the suit was anticipated, given the fight Airbnb is waging against other cities trying to regulate short-term vacation rentals.

“All I can say is it's not a surprise that Airbnb would pursue legal action,” said Council Member Ted Winterer.

Meanwhile, Council Member Kevin McKeown questioned the timing of Airbnb’s lawsuit.

“This lawsuit comes as Los Angeles is about to enact its own vacation rental law, and that timing may or may not be coincidental,” he said.

An ordinance that caps short-term rental stay at 180 days in Los Angeles was approved by planning commissioners in June. A final vote is now headed to the City Council.

Santa Monica is the third California city sued by Airbnb in about as many months in the escalating battle. San Francisco -- Airbnb’s home town -- was sued in June. Anaheim was sued by Airbnb the next month, and a short time later stopped fining violators.

Airbnb subsequently withdrew its lawsuit, although Anaheim is still set to impose a total ban on short-term vacation rentals in 2018.

But McKeown said Airbnb’s legal attack on Santa Monica “appears to attempt resurrection of issues settled when we passed our ordinance.”

“There’s nothing onerous about complying with city fire and building codes, or reporting taxable business transactions,” McKeown said. “We never asked for guest identities, so privacy is not an issue.”

Santa Monica’s “home sharing” law became effective in June of 2015. It prohibits rentals for fewer than 30 days, requires licenses, payment of the City’s 14 percent hotel tax and big fines and potential court action for repeat offenders.

City regulation is also meant to ensure basic safety codes are met by such "hosts" ("Santa Monica Rolls Out Strict New Law on Short-term Vacation Rentals," June 17, 2015).

But in its 22-page lawsuit against Santa Monica, Airbnb alleges the ordinance tramples on the Communications Decency Act, the Stored Communications Act, and the First, Fourth, and Fourteenth Amendments to the U.S. Constitution.

The ordinance fails to make "the important distinction between individual hosts who share the home in which they live and unwelcome commercial activity," Schumer said.

Santa Monica is a prime example of how financially painful Santa Monica's regulations can be, she added.

It is home to some of nation's highest hotel rates. This August hotel rates reached an average of $271 for even the most affordable double room, she said, citing findings from Smith Travel Research. Not even Beverly Hills matches that cost, the group said.

Luxury hotels charged as much as $580 a night last month. Costs for those using Airbnb rentals averaged $144 a night for a similar summer weekend, she said, this time citing TripAdvisor as a source.

"Santa Monica's clumsily-written law punishes hosts who depend on home sharing to make ends meet and travelers looking for low-cost accommodations near the beach," Schumer said.

Santa Monica is also a national test case for enforcing the law -– a goal critics said could never be achieved. Such rentals initially dropped sharply after a crackdown, from an estimated 1,700 units to 962, according the City team in charge of dealing with the issue.

In March, more than 600 illegal listings reportedly had been removed and about 100 cases closed after violators agreed to comply. Lawsuits are pending against recalcitrant violators ("Santa Monica Enforcers Crack Down on Short-Term Rentals," March 22, 2016).

New revenue generated by hotel taxes is offsetting part of the more than $400,000 cost of enforcement, the City says.

Santa Monica dusted off a mostly ignored existing ordinance banning short-term rentals last year after neighbors complained quiet neighborhoods were overwhelmed with congestion, noise and other problems due an explosion in popularity of online platforms like Airbnb ("Santa Monica City Council Bans Short-Term Rentals Despite Protests," May 14, 2015).

The City also said its existing housing crunch was exacerbated by landlords removing regular rental units –- even entire apartment complexes -- from the market to make way for more profitable short-term rentals for tourists.

A pro-labor group found that Airbnb was making the entire region’s housing shortage worse, although Santa Monica was especially hard hit because housing -- even for those in the $100,000-a-year earnings bracket -- is so scarce.

The Los Angeles Alliance for a New Economy found Santa Monica is one the area’s Top Ten generators of revenue for Airbnb, hauling in about $9.3 million a year.

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