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FAQ About Proposal to Regulate Airbnb

UPDATE: Council President Floreen and I asked the Planning Department to review Airbnb regulations from across the country, provide additional opportunities for public input, and make a revised recommendation to the Planning Board and Council. The Planning Department has announced a public hearing on July 18. Read more about their effort or contact Planning staff here.

 

I recently introduced a legislative package to regulate Airbnb in Montgomery County. Here are some basic information about the legislation that I hope answer some of the most frequently asked questions.

What does this legislation do?

This legislative package, Zoning Text Amendment 16-03 and Bill 2-16, works together to regulate short term rentals in Montgomery County. The Zoning Text Amendment would allow a Bed and Breakfast in residential and mixed-use zones under certain circumstances.  The Bill would establish a process and standards for licensing all dwellings used as a Bed and Breakfast, modernize the licensing requirements for hotels, and delete code sections pertaining to other forms of short term rentals (hostels, tourist homes, tourist cabin parks, rooming houses, and boarding houses) that have already been disallowed in the zoning code. The legislation would apply to all short term rentals, including those arranged through sites like Airbnb and HomeAway. Renters on Airbnb and similar sites would be required to be a licensed Bed & Breakfast in Montgomery County, and obey several new rules designed to protect visitors, neighbors, and hosts. This legislation follows legislation passed in 2015 that required short-term rentals to pay hotel/motel taxes (the current rate is 7%).

 

Aren’t short-term rentals already legal?

No, rentals for less than 30 days are illegal under current law unless they are licensed as a hotel or a Bed & Breakfast. However, this prohibition is weakly enforced, and there are hundreds of Montgomery County listings on sites like Airbnb and HomeAway.

 

Does the legislation protect existing residential communities?

The legislation includes three major protections to ensure that Airbnb does not change the character of existing residential communities:

  1. All hosts will be required to get a license (through an online process) and to certify that the units they rent meet all safety, parking and other requirements in County Code. This means the County will know where these rentals are occurring, can inspect the rentals as needed, and can close down rentals that are not properly licensed.
  2. All units that are rented must be the primary residence of the host. This means that investors cannot use multiple homes for short-term rentals (unlike long-term rentals, where this is allowed). It means that legal rentals will have an owner who lives at that address and is responsible for the property and relationships with neighbors.
  3. The number of renters allowed in a rental unit is limited to the same number allowed in any residential property – no more than five unrelated persons or a family of any size.  This rule prevents any homeowner from legally turning their basement into a hostel. The parking allowances will not be greater than any other household would be allowed.

These properties also will continue to be subject to county laws that protect neighborhoods: housing and building code rules governing the safety and appearance of homes in the County, the County’s Noise Ordinance restricting noise levels, all parking restrictions, zoning rules governing the allowed uses in different zones, and many other legal protections.

Rather than stretching county enforcement resources thin attempting to shut down all short term rentals, this framework will allow the county to focus on problem actors who may violate quality of life laws, whether they are short term renters, long term renters, or homeowners.

 

Won’t this increase housing prices in the County by diverting housing supply to short-term rentals?

This has certainly been an issue in other areas with very tight housing markets and high levels of tourism like New York and San Francisco. The requirement that the housing unit be the principal residence of the host will prevent investors (or anyone) from being able to legally turn a unit into a full-time Airbnb rental and should therefore minimize the impact on housing supply and prices.

 

Will these units have to pay the same taxes as hotels?

Yes. Last year, the Council approved legislation requiring all short-term rentals to pay the County’s hotel/motel tax. Both the County and the State of Maryland are currently working to develop an arrangement with Airbnb and similar sites to have the listing company collect the tax from the host and remit it directly to the appropriate jurisdiction. Airbnb already does this in other jurisdictions. The County has also begun seeking the tax directly from hosts. This process will be aided by a licensing requirement which will require certification that all taxes have been paid.

 

What is the process for approving these changes? How can I express my views?

There will be a public hearing on the legislation at 7:30pm on March 8 at the Council offices in Rockville. Learn more and sign up to speak here. You can also provide written comments for the record at any time by emailing county.council@montgomerycountymd.gov.  After the March 8th Public Hearing, the legislation will be heard by the Planning, Housing, and Economic Development Committee, which will make a recommendation to the full County Council.

Please feel free to contact my office at any time with questions or comments at Councilmember.Riemer@montgomerycountymd.gov.

 

What about existing Bed & Breakfasts?

There have been six Bed & Breakfasts approved under the old rules in Montgomery County. All but one have had those approvals revoked by the Board of Appeals because the owner abandoned the use. Any other Bed & Breakfasts currently operating in the County are evidently operating without a license and would be required to operate under the same rules as other short-term rentals in the proposed legislation.

 

Are there any additional parking requirements?

The legislation does not impose any additional parking requirements over those that apply to residential property generally, but it does limit the number of occupants allowed at any time to the size of 1 household (5 unrelated individuals or a family of any size) and the unit must meet the existing parking requirements for their zone.

 

What about Homeowners/Condo Association Rules or Rental Agreements?

This legislation does not supersede other legal restrictions on the use of property. Rental agreements, homeowners association covenants, or condominium agreements may preclude a tenant or property owner from using their housing unit for any rental purpose.  If these restrictions on property rental are violated, it is the responsibility of the landlord, homeowner’s association or condominium association to enforce their restrictions.

 

Why is there so much about hotels in the Bill?

On the advice of the Council’s land use attorney, we took the opportunity to do some technical clean up to the hotel section of the County Code. This code had not been amended in decades. These changes are largely stylistic and have no bearing on the Airbnb issue. Hotels and Bed & Breakfasts (i.e. short-term rentals) remain separate legal categories with very different requirements for licensing, inspections, etc.

 

Why not just leave the zoning law in place that makes them illegal?

Although short term rentals are not legal, there are already hundreds of listings on these websites in our county. Our resources are limited, and enforcing a complete prohibition is not realistic. In addition, most or nearly all of these listings are posted by residents who have a reasonable and responsible use in mind. Allowing responsible rentals allows the County to focus our enforcement resources on listings that are truly disruptive to the community. There are also many ways in which responsible short term rentals can augment the County’s stock of hotel rooms to provide benefit to the community, including providing short term stays for business travelers and tourists; family and friends of medical patients at facilities like NIH; families temporarily displaced from their permanent residence by fire, flooding, or renovations; and others looking for a more “homey” experience. Not to mention, the opportunity for homeowners who have extra space to make additional income – including seniors and empty nesters. This application of internet technology is here to stay, and the best course for county government is to adapt to that reality.

 

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Taxis could be a platform for innovation

I previously wrote about the Council’s efforts to overhaul our taxi regulations to adapt to Uber. Earlier this year, the Maryland General Assembly passed legislation that allows Transportation Network Companies like Uber and Lyft to operate in Maryland and preempts local jurisdictions from regulating them. Over the past year, I have been working with the Council’s Transportation Committee, chaired by Roger Berliner, a group of taxi drivers represented by the AFL-CIO, transportation technology companies, the County’s taxi industry and MCDOT to adapt our taxi regulations to this new environment.

On July 28, the Council passed a landmark taxi reform bill, and I am very pleased that almost all of the reforms I advocated for were included. The key parts of the bill were:

  • Eliminating outdated regulatory burdens
  • Protecting taxi drivers from exploitation
  • Creating a groundbreaking new framework for taxi apps to use our taxi fleet as a platform for innovation (adapted from my Bill 55-14)
  • Providing 100 new taxi licenses, 50 of which will go to a new, driver-owned cooperative operating wheelchair accessible vehicles

I am very hopeful that these reforms will create a more balanced and high-performing taxi system in Montgomery County that works better for customers and drivers. Currently, customers must request a wheelchair accessible taxi days in advance. We hope to cut that down to minutes. Under the old system, taxi drivers were being exploited with high rents, no benefits, and long hours. With these reforms, driving a taxi will still be hard work, but there will be a more balanced relationship between drivers and companies. And with the formation of a driver-owned cooperative, drivers and customers will have more choices.

But of course, none of that matters if taxis cannot compete with Uber. That’s why I am especially excited about the development of a framework for universal taxi dispatch apps in the County. Under my proposal, which the Council adopted, companies can submit taxi dispatch apps to DOT, which will approve them as “universal dispatch apps” if they meet certain requirements. Drivers can choose among approved apps, but will be required to use at least one. The most important requirement is that each approved app must allow all other approved apps to see and dispatch their drivers through an open data feed, and must dispatch the drivers using other approved apps. This means that no matter which app a customer is using they will get sent the closest licensed cab, regardless of which company or app it is affiliated with.

Right now, the push toward universal dispatch apps is about catching up to the user experience and technology pioneered by Uber and Lyft. But over time, if other jurisdictions adopt this approach, taxis themselves could become a platform for fast-moving innovation. Any entrepreneur that can think up an idea and develop an app could have a nationwide fleet of regulated, safe vehicles and drivers at their disposal.

If you’d like to learn more about this idea, here is a White Paper I wrote to explain why I think this development is so important. The White Paper also includes model legislation that other jurisdictions can adapt to implement this approach.

Learn More about Bill 53-14 – Taxicabs:

– Staff Analysis prepared for Council action

Final text of Bill 53-14

White Paper on Universal Digital Dispatch

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A Future for Taxis

Das letzte Taxi

On July 21st, the County Council is scheduled to consider a package of groundbreaking reforms to Montgomery County’s taxi regulations.

I truly value Transportation Network Companies (TNC’s) such as Uber and Lyft, but I am compelled to find ways to help taxis compete with TNC’s because taxis are governed by public service mandates such as universal coverage and service to vulnerable populations.

In order to compete, taxis must provide consumers with the features and convenience of a TNC, coupled with the regulated reliability of a taxi. To meet these goals I introduced a bill [pdf] which would have our Department of Transportation develop a centralized, universal dispatch app for all taxis. Councilmembers Berliner and Floreen also introduced bills that changed different aspects of our taxi regulations.

As the Council’s Transportation and Environment (T&E) Committee, led by Committee Chair Roger Berliner, began a review of these three bills, the Council also heard from the Montgomery County Professional Taxi Drivers Union (MCPTU). MCPTU proposed a package of reforms they dubbed the “Taxi Driver’s Bill of Rights.”

As I began to closely examine the taxi industry in Montgomery County and talk to drivers from different companies and different circumstances, I was disturbed to learn that many drivers have to work 12 to 16 hours a day just to break even on the rents they pay on their vehicles. Because taxi drivers are employed as independent contractors, they cannot form a union or bargain collectively, and the companies have no responsibility to provide even basic benefits workers comp or ensure drivers make minimum wage. I always figured that driving a cab was hard work, but I came to learn that the drivers, many of whom are recent immigrants, are often making less than minimum wage and have almost no voice in their working conditions. I have talked with drivers in other jurisdictions who refer to some of our Montgomery County-based drivers as operating under “wage slavery” conditions.

So in February, I sent a letter [pdf] and draft language [pdf] to the T&E Committee proposing a package of legislative changes that would remake Montgomery’s taxi industry to be a better deal for drivers — and thereby hope to preserve the industry, which is rapidly losing drivers to the TNC’s.

Then in April, the Maryland General Assembly passed legislation that creates a framework for TNCs to operate in Maryland and preempts local governments from regulating them, removing that issue from our consideration.

Chair Berliner, also clearly moved by the dis-empowered state of taxi drivers, embraced the need to create a fairer environment for the County’s taxi drivers. After several worksessions, the Committee, with Chair Berliner and Councilmember Hucker in support, recommended amended versions of many of my proposals, along with text to create a universal dispatch in the County, in a new omnibus bill.

Taxi Meeting
Councilmember Riemer meets with taxi drivers representing the new taxi drivers’ union.

Following are several key elements of the bill:

Universal Digital Dispatch for Taxis

As taxi companies, drivers, and regulators take a fresh look at taxi regulation in light of Uber and Lyft, one emerging theme is improving taxi service by importing the features that made the new entrants so successful – smartphone apps, GPS tracking, seamless payment, consumer-friendly rating systems, and even dynamic pricing. Taxi fleets are developing or buying branded apps and upgrading their dispatch systems. In Boston, taxi companies are banding together offer a new app. A number of app startups have attempted to create “Uber for Taxis.” These include mytaxi, Curb (formerly TaxiMagic), HailO (no longer operating in the US), Easy Taxi, Flywheel, and Zoro (Canada). “Aggregation” apps have also started to appear, which provide access to a number of taxi services. ek is one recent example.

But even with great design and features, the success of any transportation service is dependent on how quickly, cheaply, and reliably a customer can get to their destination. For car services like Uber or taxis, speed is dependent on the number of cars on the road. The more cars available, the sooner a car is able to pick up a customer, on average. The challenge facing taxis is that when apps are fragmented by fleets, the customer will not get the same level of service as the fleets could provide if they were all combined on one app. To address this fragmentation, governments have begun to pursue “universal” taxi apps that would make all taxis in a jurisdiction available on one app. Chicago, Washington DC, New York City, and Los Angeles are all pursuing, in different ways, the development of a government-sanctioned universal taxi app which all taxi drivers in the jurisdiction would be required to use. This was the original idea that I proposed in my bill in October 2014, modeled after Chicago’s law.

But as I talked with stakeholders and explored this concept, I found that having the government develop one universal app was an unsatisfactory solution. It would solve the fragmentation problem within Montgomery County, but could still require a customer to download a new app each time he or she crosses a jurisdictional boundary. Especially in a region like DC, something like Uber provides a much more seamless experience.

The best result would be the development of a universal taxi protocol – a uniform specification that would allow taxi apps to share driver, passenger and fare information with each other. This could function similarly to the open source General Transit Feed Specification (GTFS) and GTFS-realtime, developed by Google, which now helps many different apps, websites, and services provide information on trains and buses from hundreds of jurisdictions.

If all taxi apps could talk to each other, no matter which app a driver or customer uses, all passengers would have access to all taxis within each jurisdiction, and all drivers could receive requests from all passengers within the jurisdiction. Government bodies, rather than developing and running their own apps, would be in the more comfortable regulatory role of approving apps and requiring that all drivers use an app that makes its data available.

So I developed an alternative proposal (see pages 10-12 and 599-600 of the linked memo), which the T&E Committee accepted. The new language allows MCDOT to approve universal apps on the condition that they provide an Application Programming Interface (API) that allows other approved apps to see and dispatch the drivers using each app. All drivers would be required to use an approved app. If other jurisdictions adopt similar legislation, a standard protocol could emerge and be adopted for national, or even global, use.

Fairness for Drivers

Among other things, I am very pleased that the Committee’s bill:

  • requires DOT to create uniform model leases and affiliation agreements that cap the rents and other charges that companies can use to get payments from drivers
  • caps the credit card charge and allows drivers to choose their own credit card processing provider
  • requires that companies use a dispute resolution process culminating in binding arbitration when taking any adverse action against a driver

Reduced Operational Expenses

Councilmember Floreen’s legislation allows fleets to operate older vehicles, which is cheaper for the fleets; reduces requirements for markings; and potentially reduces insurance coverage and expenses, depending on action by the Maryland Public Service Commission (the state law requires the PSC to rule on insurance issues for TNC’s). These changes make the industry more cost competitive with TNC’s.

A Driver Co-Op

As the conversation has evolved, many drivers have expressed a desire to form a cooperative – a driver-owned taxi company. They feel that, with a sufficient number of drivers participating and universal digital dispatch, a non-profit co-op could provide competitive service at lower cost. I am excited about this idea and I have been working closely with the drivers to help connect them with available resources and to ensure that our laws support this vision.

With this goal in mind, I proposed issuing 200 new Professional Vehicle Licenses or PVL’s to individual drivers. The Committee has recommended issuing 50 new PVL’s for individual drivers in the first year followed by 50 more the second year, split between drivers and fleets (potentially including a co-op). I feel strongly that we need to allow enough new taxis to form a viable co-op in Montgomery County, and certainly if the co-op works then it will attract more drivers over time from other fleets and even from TNCs.

A Representative Commission

The T&E recommendation also includes the creation of a new Taxicab Services Commission, which would have representatives of companies, drivers, and the public, and would provide the Executive and Council with advice on setting the lease rates and other charges, and generally review the taxi industry and recommend regulatory changes every two years. Given that it has been about ten years since we last reviewed the taxi code, we will benefit from having the commission recommend changes more regularly as the industry changes rapidly around us.

Ensuring a Voice for Drivers

One crucial aspect of my proposal, for which I will seek support at full council, is the development of a system to allow drivers to voluntarily pay dues to an association or fund. Because drivers are independent contractors rather than employees they cannot collectively bargain or have mandatory dues collection for a union. Their history of exploitation, however, demonstrates that taxi drivers need a voice in their working conditions. I think that our own deliberations demonstrate that drivers are much more powerful when they have the ability to participate in the process as a collective entity, and a digital dispatch app provides a reasonable tool to accomplish that goal, using the integrated payment system.

A mechanism to pay dues could allow drivers to have ongoing representation and protection from abuse by taxi companies, pool resources to help with dispute resolution, possibly create a common benefit fund to finance retirement, life insurance and disability benefits, and enjoy a host of other benefits that are usually associated with a union.

I hope that the full County Council will agree with me that taxi drivers deserve these benefits too. Providing a mechanism for voluntary contributions would enable drivers to be more successful with their efforts.

 

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Victories for Child Care

Hans Riemer speaks at a rally for child care

Councilmember Hans Riemer speaks at a rally in support of his bill to expand the County’s child care services

Having two young children at home, I talk with a lot of parents about the challenge of securing good child care. I also see how early childhood programs can affect educational outcomes years later in our schools.  These are issues that challenge all of our families, whether working poor or upwardly mobile.

Recognizing the importance of child care and early education, the County Council voted yesterday to unanimously approve legislation that I hope will push us in a new direction for how our county government approaches this issue.

The legislation, which represents a combination of ideas proposed by myself and Councilmember Nancy Navarro, creates a new policy officer for Child Care, Early Care and Education in our HHS department and tasks the officer with developing a “Strategic Plan” for getting to universal early care as well as a “Quality Enhancement Initiative” to strengthen home-based child care services, a vital part of our child care market.

I hope that the successful passage of this legislation will be a turning point in our drive to get to universal early care. At times over the years, Montgomery County has been a national leader in developing innovative ideas to support child care service delivery. With focused leadership and a process for bringing together stakeholders I hope that we can once again break new ground.

There are no easy answers, and fundamental change for this public need will only come when all levels of government are working towards the goal. As President Barack Obama said in his 2015 State of the Union, “It’s time we stop treating child care as a side issue, or a women’s issue, and treat it like the national economic priority that it is for all of us.”

I couldn’t agree more.

Thanks to strong advocacy in the community and support from my colleagues on the County Council, including HHS Committee Chair and Council President George Leventhal whose support really helped move this bill, we are now moving forward with new initiatives here in Montgomery County.