Roger and Cecilia Eberlin played by the rules, and they suffered for it.
They formerly owned the Blue Door on Baltimore bed and breakfast in Butcher’s Hill. For a dozen years, they were certified as a “lifestyle” B&B, meaning they lived there and had been inspected and certified by the city to meet standards for fire, health and food and beverage. But when it was time to sell, they couldn’t find a buyer for a bed and breakfast even as the online home-sharing craze took off. Why? Because nobody wanted a regulated property where the owners paid their taxes and kept up certification. They wanted an unregulated one. Under current law, home-sharing properties on websites like Airbnb get away with flying beneath the government’s radar.
The couple sold the house this summer but as a residence, not an inn — which meant losing about 20 percent of its value. “You play by the rules, and you’re the loser,” Roger says.
The Eberlins aren’t the only ones who resent Baltimore’s two-tiered system for short-term accommodations. The lodging industry has been up in arms for years. Their biggest complaint should be the easiest fix — Airbnb guests ought to be required to pay the same taxes on lodgings that everyone else pays, the 6 percent Maryland sales tax and the 9.5 percent hotel tax. That adds up to a 15.5 percent penalty for booking guests directly instead of through an online platform like Airbnb.
This week, the Baltimore City Council is scheduled to take up legislation to make sure such short-term rentals are properly taxed and not entirely exempted from regulations. It’s proven a difficult subject. Not on the matter of taxes. Other jurisdictions have successfully collected various forms of taxes from Airbnb and its ilk elsewhere, including Montgomery County. But how to regulate such rentals has proven a trickier business.
Where the City Council appears headed is a 60-day annual rental cap on properties where the host does not live and to allow for only one additional property, also with a 60-day cap. The apparent goal is to prevent landlords from creating veritable Airbnb empires — not because encouraging short-term rentals is a bad idea but because any entrepreneur invested to that degree deserves to have his or her business regulated like a hotel rather than like someone who is renting out a spare room on a part-time basis.
Again, the council’s goal should not be to discourage online home-sharing. The point must be to create a reasonably level playing field. It’s especially galling to witness Baltimore pass up significant amounts of tax revenue at a time when there is no shortage of needs, from low-income housing to public safety to school construction. The city’s financial experts think the pending legislation could generate as much as $1 million in tax revenue annually (with a big chunk going toward promoting city tourism).
Airbnb isn’t likely to take a robust approach to regulating short-term rentals lying down. In similar disputes elsewhere, the San Francisco-based company has generally been open to collecting taxes but has fought efforts to cap rentals. Yet without such a cap — and an opportunity for government to audit tax records against rental agreements — what chance is there to make sure the properties are in compliance and that innkeepers like the Eberlins aren’t being unfairly undercut?
Under such circumstances, a compromise is surely possible — albeit one that will probably leave both sides grumbling. It may be too late to help the Eberlins, but it’s not too late to make sure those who remain in Baltimore’s lodging industry are treated fairly. And there’s also the matter of protecting the health and safety of future guests. In cities such as Miami Beach, doubts have been raised about whether large-scale operators of Airbnb properties have done a very good job at that and whether some neighborhoods have suffered as a result. If the Baltimore City Council can address these types of concerns amicably, so much the better. Charm City has taken enough hits to its public image in recent years without an ugly, drawn-out dispute over when and where visitors can stay ending up lodged in a local courtroom.
