Presenting a live 90-minute webinar with interactive Q&A Uber, Airbnb and Municipalities: Maximizing New Tax and Licensing Revenue Opportunities Navigating Emerging Legal, Regulatory and Tax Issues in the Peer-to-Peer Economy WEDNESDAY, OCTOBER 5, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Jordan E.A. Ferguson, Esq., Best Best & Krieger , Los Angeles Christy Gunvalsen, Neighborhood Preservation Manager , City of Sunnyvale , Sunnyvale, Calif. Rebecca L. Moon, Senior Assistant City Attorney, City of Sunnyvale , Sunnyvale, Calif. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Agenda • The Sharing Economy Online Vacation Rental Marketplaces Transportation Network Companies • What issues are posed by Ridesharing Technologies? • What Issues are posed by Home-Sharing Technologies? • Recent Developments • Drafting and Enforcing Regulations and Ordinances • Strategies for Recovering and Maximizing Revenue 5
The Sharing Economy 6
“Innovative Disruption” • Use of technology to create new markets and displace existing industries • Key to understanding the mindset of companies like Uber and Airbnb • Tech has moved into highly regulated areas of the economy like transportation, housing, and employment relationships • Not afraid to “disrupt” existing laws 7
The Sharing Economy • Refers to businesses that provide consumers the ability to share resources, like housing, vehicles, home-cooked meals, and more, generally through apps or websites that connect users with potential customers. • Examples: Uber, Lyft, Sidecar, Airbnb, VRBO, Mealsharing 8
The Sharing Economy • The basic principle of the sharing economy is simple: One person has resources, another person wants to rent/borrow/use them temporarily. • Businesses in the sharing economy claim that they are merely facilitators: they connect those with resources with those who want to utilize them, for a fee. 9
Short Term Rentals • Websites that enable homeowners, tenants, or occupants to rent out their living space. • May rent entire home or just a couch or spare bedroom. • Typically lasts less than 30 days. • Major players: Airbnb, Homeaway (VRBO) 10
Transportation Network Companies • Web-based applications that connect users and drivers through smartphone apps. • Allow prospective passengers to view and select from nearby available drivers, who are guided to them using the smartphone’s GPS. • Major players: Uber, Lyft 11
Exponential Growth • Uber (valued at $50B) is world’s most valuable private start-up. Worth more than FedEX ($48B) and Nissan ($47B). • Airbnb (valued at $10B) worth more than Wyndam Hotels ($9.4B) and Hyatt ($8.4B) 12
Airbnb: Exponential Growth Source: Airbnb.com 13
What Issues Are Posed By Ride-Sharing Technologies? 14
Objectives • Ensure Safety of Both Drivers and Customers. • Encourage Competition in the Market. • Ensure Fairness of Employment Practices. 15
Issues • Competition with Taxi Industry • Lack of regulations • Employee Classification 16
Issues: Competition with Taxi Industry • Controversy surrounding Uber’s effect on the taxi industry. • Taxi medallions de- valued by unregulated competitors like Uber and Lyft. • Taxis pay higher fees, must abide by more stringent regulations. 17
Why Protect the Taxi Industry? • TNC success fueled by dissatisfaction with taxi service as well as changing values/preferences of consumers • However, taxis still provide valuable service to many in the community (e.g. elderly, disabled) • Taxi ordinances require vehicle inspections, insurance, driver background checks, posting/regulation of fares and universal service/non-discrimination 18
How To Help Taxis Compete • Lobby state for appropriate laws/regulations to ensure public safety and protect consumers • Modernize taxi ordinances to make taxis more competitive • If state law limits local enforcement options of TNC’s, consider what other laws may apply (e.g., unfair competition, labor laws) • Impose business license tax on TNC drivers 19
Issues: Lack of Regulation • TNCs enter a market without permission, presume legality until told otherwise. • Uber in particular has displayed willingness to flout local laws and operate despite bans. • Lack of regulation has led to deaths, injuries, and crimes by drivers who passed less onerous background checks. 20
Issues: Employee Classification • Two ongoing lawsuits by drivers of Uber and Lyft, who allege that the companies have misclassified them as independent contractors instead of employees. • Independent contractor: Drivers set hours Drivers choose to accept or reject fares • Employee: Right to terminate drivers if customer ratings fall below threshold Uber’s “Driver Handbook” governing conduct 21
What Issues Are Posed By Home-Sharing Technologies? 22
23
Objectives of Regulation • Preserve the Community’s Residential Character • Prevent Nuisances in Single-Family Neighborhoods • Limit Conversion of Housing to Full-Time Short Term Rental. • Generate Taxes/Fees to Cover the Cost of Short Term Rental Occupancies and offset lost hotel taxes. • Ensure that Short Term Rental Users are Adequately Protected Against Fire, Hazards, Health Risks. 24
Issues • Housing Market Issues • Taxing Issues • Code Enforcement Issues • Policy Enforcement Issues 25
Issues: Housing Markets • Short-Term Rental Marketplaces can create major problems for housing markets in pricing and availability. • Owners may use Airbnb and HomeAway full- time to generate greater revenue than simply renting or selling the property. • As this practice becomes more prevalent, housing availability for residents will likely decrease, with the price likely to increase. 26
Who rents on Airbnb? Source: triplepundit.com 27
Issues: Housing Markets • In New York City, the number of short-term private rentals has increased from 2,652 in 2010 to 16,483 in the first half of 2014, including instances of people permanently renting out second bedrooms through Airbnb, people renting out their whole property, or landlords renting out multiple apartments in the same building. • One commercial host Source: Statista.com, generated $6.84 million from http://www.statista.com/statistics/339766/private- short-term-rentals-booked-through-airbnb-in-new-york- renting out their properties city/ through Airbnb between 2010 and 2014. 28
Not Just Vacation Rentals! Techie dorms Hacker homes Intern houses Not your grandma’s youth hostel! (These come with WiFi) 29
“Highly Distributed” Luxury Hotels “Geekhut’s” rentals include high -end work stations, a fridge full of groceries, 500 Mbps WiFi and free Netflix, Hulu, and HBOGo. 30
Do the Math • $3,000 per month (median rent in Silicon Valley) = $100 per day • That same apartment for $270 a day on Airbnb = $8,100 per month • 3 bedroom home = 7 bed “hacker dorm” at $35/night = $7,350 per month 31
Issues: Taxes • Most local governments tax hotel stays (usually called “Transient Occupancy Taxes”). • Tax collected from guest through hotel bill. • Hotels responsible for remitting these taxes to local governments on a monthly or quarterly basis. 32
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