By Mike Dunn

PHILADELPHIA (CBS) — City Council today took a first step toward regulating a growing part of the so-called “sharing” economy: residents who rent out their homes or a room in their homes through web sites such as Airbnb.

Rental of rooms or entire homes through web sites like Airbnb is currently illegal in Philadelphia, because the zoning code doesn’t allow it and because few if any of the hosts charge the 8.5-percent hotel tax.

Now, the Rules Committee of City Council has approved a measure to revise the zoning code to make the rentals legal, and to impose specific standards for those rentals.

At today’s hearing, Ed Grose, of the Greater Philadelphia Hotel Association, said it’s only fair.

“It seems reasonable to at least mandate the hotel tax for Airbnb-operated rooms,” he said.  “Otherwise they are being granted an enormous operating advantage: no taxes and no regulation, while directly competing with one of the most heavily taxed and regulated industries in our city.”

Under this bill, any host who rents more than 90 days a year must apply for a permit with the city, and no host could rent out a room or house for than 180 days a year.  But some Airbnb hosts told councilmembers that renting out rooms in a home is simply not the same as a fully staffed hotel operation.

“The difference between restriction and regulation is really important to us.  That sort of cap and seems unnecessary and detrimental,” said Rachel Hewitt, of the city’s Fairmount section, who held her rambunctious toddler daughter in her lap while she testified.

(Rachel Hewitt, an Airbnb "host," testifies before a City Council committee.  Image from City of Phila. TV)

(Rachel Hewitt, an Airbnb “host,” holds her daughter while testifying before a City Council committee. Image from City of Phila. TV)

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But the measure’s sponsor, councilman Bill Greenlee, told Hewitt and other hosts who came to testify that this type of regulation can only help them.

“I think it should make things easier,” he said.  “And there won’t be any concern later that the city could come after you.  We’ve tried to find reasonable regulations on what was an unregulated industry.”

 

(Councilman WIlliam Greenlee.  Image from City of Phila. TV)

(Councilman WIlliam Greenlee. Image from City of Phila. TV)

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Airbnb’s public policy director, Max Pomeranc, testified at the hearing and later told reporters the web company is general pleased with the bill.

“This bill is not just about Airbnb.  It’s about everyone in the city, the sharing economy, doing short-term rentals, renting out their homes, trying to make ends meet.  And so this is a process that goes beyond just one platform and for everybody in this economy,” he said.

 

(Max Pomeranc.  Image from City of Phila. TV)

(Max Pomeranc. Image from City of Phila. TV)

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Pomeranc, as well as some of the local Airbnb operators, did voice concern about the 180-days-per-year limit in the measure.  He also said a separate agreement between Airbnb and the city to have the web site automatically deduct the hotel tax has not been finalized.

Officials with the city’s Revenue Department did not have a specific estimate on the amount to tax revenue likely to be brought in through these types of rentals, but they do not expect it to be large.