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Santa Monica, Airbnb Settle Home-Sharing Battle

Bob Kronovetrealty
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Have Extra Room for the Holidays 2019

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By Jorge Casuso

December 10, 2019 -- The City signed a major settlement agreement Tuesday with Airbnb, Inc. that is expected to "dramatically reduce" illegal listings under Santa Monica's pioneering home-sharing ordinance, City officials announced.

In addition to restricting listings to no more than two per residence, the agreement requires the homesharing platform to include a City license number on each listing and pay $2 for every night booked.

City officials say the agreement will help curb abuses that, in one case, saw more than 16 guests staying at one residence and prevent affordable housing from being converted into short-term lodgings.

“We now can better protect real permanent homes, especially our affordable rent-controlled apartments, from being used as de facto hotel rooms, displacing our neighbors,” Councilmember Kevin McKeown said in a statement.

“This hard-earned settlement is a win for affordable housing, a win for our neighborhoods, and a win for residents who welcome guests through legal home sharing.”

Tuesday's settlement ends a legal battle with Airbnb that began more than three years ago when the popular platform sued the City ("Santa Monica Sued by Airbnb," September 7, 2016).

The lawsuit charged that Santa Monica's 2015 Home-Sharing Ordinance is "clumsily written" and includes multiple violations of federal law.

The City won several rulings, culminating in a California Appeals Court decision in March ("Appeals Court Affirms Santa Monica's Right to Regulate Online Homesharing Platforms," March 13, 2019).

The ruling by the three-judge panel upheld a 2018 U.S. District Court decision dismissing the lawsuit filed by Airbnb and

The panel affirmed Santa Monica's right to penalize online platforms for booking short-term rentals of properties not licensed under the city's strict home-sharing law.

Santa Monica's law -- considered the strictest in the nation -- outlaws the rental of an entire unit for less than 30 days and makes hosts legally accountable for nuisance violations.

It also requires them to list their units on a City registry and pay a hotel tax.

Airbnb and HomeAway argued that the local ordinance was upending their business model by forcing them to remove illegal listings and poses an economic threat to the growing industry if other cities follow suit ("Challenge to Santa Monica's Home-Sharing Law Reaches Court of Appeals," October 15, 2018).

The settlement "creates a workable system that aligns with our goal of protecting the City’s housing supply,” City Attorney Lane Dilg said in a statement Tuesday.

“This agreement with Airbnb will make the City’s enforcement efforts less costly and more effective," Dilg said. "Most importantly, it will preserve housing for our residents."

Under Tuesday's settlement agreement, Airbnb will provide regular reports to the City "to ensure compliance and to support City enforcement efforts."

There are currently 351 registered home-shares in the city, with Airbnb accounting for a large majority of the listings, City officials said.

One listing of a home in an upscale North of Montana neighborhood generated headlines this year when it was rented as a quasi youth hostel ("Home Rented as Quasi Hostel Raises Concerns About Home-Sharing Law," August 13, 2019).

The Airbnb listing -- which advertised a bunk bed for $49 per night -- noted that a "maximum of 36 people in total can stay at the same time combining all rooms” in the four-bedroom, three-bath house with a converted garage.

City officials said the applicant for the home sharing license at that address listed 16 guests. Neighbors said there were at least that many checking in and out every day and more on weekends.

Constance Farrell, the City's spokesperson, said the settlement will prevent such cases from occurring by banning such listings.

"One listing cannot go to multiple people" who answer individually, she said.

While the settlement allows no more than two listings per residence, it doesn't prohibit more than one guest to stay in a room, Farrell said.

It is unclear how much revenue will be generated by the $2 fee charged for every night a room is booked, she said.

"I don't think we yet know what that will be," Farrell said.

She said the money collected would be used to "help with enforcement as well as affordable housing."

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