Indiana considers prohibiting cities from banning Airbnb

Indiana cities and towns wouldn’t be allowed to restrict companies such as Airbnb under a proposal state lawmakers are considering as they wade into the parochial matters of property rights and zoning disputes.

Online home-rental services such as Airbnb are considered by some to be an innovative way to make extra cash, but neighbors aren’t always as enthused. As the emerging “short-term rental” market has grown, so too have local restrictions in cities including New Orleans, Chicago, New York and Nashville, not to mention several places in Indiana.

Similar to a law enacted in Arizona, House Bill 1133  is the latest example of the Indiana Legislature’s Republican majority — a party that often extolls the virtue of local control — considering a measure that would tie the hands of local government. The House has already approved it, and it cleared a Senate committee on Wednesday.

Bill author Rep. Matt Lehman, R-Berne, said it’s important to stop knee-jerk government regulation that would restrict anyone's ability to “use our private property for what we want to use it for.”

“We are simply saying that if you own one of these, a local government cannot prohibit a short-term rental,” said Lehman, who added that local authorities can crack down on problem renters through other means, such as building, noise and pollution ordinances.

While the bill restricts what local government can do, it does include a yearly 180-day cap on rentals. Homeowners associations are exempt and could still ban or limit members’ abilities to rent out their homes.

A litany of people opposing the bill, including outraged neighbors and small town officials, voiced their distaste during a hearing Wednesday.

“Imagine having a resort or hotel placed right in the middle of your neighborhood,” said James Reeder, police chief of the Lake Michigan beach town, Ogden Dunes.

He described a nightmare scenario of “loud drunken parties, fireworks all night” and even a group of “intoxicated” bachelorette partygoers wielding “blown up adult toys.” These types of incidents were commonplace at short-term rentals until local officials stepped in, he said.

While small-government Republican orthodoxy suggests many public policy issues are best addressed at the local level, Indiana’s GOP majorities have a track record that can run counter to that.

Last year, as Bloomington debated a ban on plastic shopping bags, the Legislature passed a bill prohibiting local governments from instituting such a ban. Property tax caps, which were implemented in recent years, also have a similar affect, taking away a source of local source revenue often counted on for school funding. Even Indiana’s religious objections law, which was changed after it ignited a firestorm of national criticism, was initially intended to circumvent local governments such as Indianapolis that passed anti-discrimination ordinances protecting gay people.
But supporters of the short-term rental measure say many opponents’ fears are overblown. Catherine Lacrosse, of Indianapolis, said she’s never had a problem with guests who stay at three properties she rents on Airbnb.

“We can turn down guests, we can monitor them and we can ding them if there is a violation,” said Lacrosse. “I’ve rented 577 nights to date and I haven’t had a single problem.”

Republican Rep. Jerry Torr, an outspoken opponent of the bill, represents the wealthy Indianapolis suburb of Carmel, which has tried to crack down on short-term rentals.

“It’s one thing to rent to somebody the week of the (Indianapolis) 500, or some kind of special event,” Torr said, but cities should have recourse if an absentee owner rents out their property a good portion of the year.

“Things like zoning, which includes renting restrictions, for the most part should be left up to local control.”

Still, in Carmel, a city of almost 90,000, only 30 properties are up for rent on Airbnb, according to the company.

“I think it’s ‘stranger danger,’” said Lacrosse, who has a neighbor who doesn’t like her renting out. “People want to know that their neighbors are similar to them and if somebody is coming in who is not similar, maybe it gets them anxious.”

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