INDIANAPOLIS – Cities and towns in the state wouldn’t be allowed to ban short-term rentals found on websites like Airbnb under a bill heard by state lawmakers Tuesday.
Rep. Matt Lehman, R-Berne, said he is trying to find the balance between protecting home rule and the rights of Hoosiers to use their property as they see fit.
"This is an attempt to thread that needle," he said. "We want to allow this emerging technology to continue."
Lehman said House Bill 1133 doesn’t strip local control from local governments, though those who testified on the bill said it’s a basic preemption bill.
It has language saying cities and towns could still enforce laws regulating public safety and sanitation, for instance. But only if "enforcement does not prohibit the use of a property as a short term rental."
The bill does allow homeowners associations to have limits on rental units.
The House Government and Regulatory Reform Committee added an amendment requiring a $1 million liability insurance policy for these rentals. The coverage could be a separate policy or an endorsement or rider to the traditional homeowners’ policy for when people are renting the space.
Airbnb and other online sites allow homeowners to rent out their homes or rooms within their homes.
Matthew Kiessling, representing Travel Tech – a trade association for such sites – said one in three travelers have now used these accommodations.
"Increasingly this is how people want to stay when they travel," he said – noting the flexibility, value and unique venues that are available.
Fort Wayne has 56 rentals currently available on Airbnb.
A number of cities in other states have banned short-term leasing while some have added inspection and permit fees. Indianapolis has taken a permissive approach but recently Bloomington considered an ordinance cracking down on short-term rentals.
Lawmakers suggested several times during the meeting that this is about allowing people to rent their homes for the Super Bowl or the Final Four, but a Carmel couple told of a different side of the technology.
Shannon and David Minac said owners three doors down from them specifically bought the house to use year-round as online rental lodging. The homeowners don’t live there and people are continuously coming and going.
They expressed concern about there not being background checks and sex offenders being able to rent.
Committee Chair Kevin Mahan, R-Hartford City, said hotels don’t do background checks either.
The Minacs expressed concern that they are running a business in a residential neighborhood setting and said the city of Carmel is issuing cease-and-desist letters this week to some homeowners.
Katie Maddox of the Indiana Restaurant & Lodging Association supported the insurance amendment but is concerned about the bill as a whole.
She said the group supports property owners’ rights to occasionally rent space but said some are doing it year-round and "basically running illegal hotels out of their houses."
Both Accelerate Indiana Municipalities and the Association of Indiana Counties testified against the limiting of local government power on the issue.
And David Bottorff of the counties group said it’s hard for state lawmakers to craft a piece of legislation that will meet the needs of various parts of the state – from Indianapolis where owners might want to rent their home for a race weekend to Indiana’s northern lake communities.
He also said county assessors might be able to remove partial or full homestead benefits – i.e., the 1 percent property tax cap – if the home is being used to generate commercial revenue.
The committee could vote on the bill next week.