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Lawmakers tackle regulations for short-term rentals, Airbnb

May 3, 2016

CONCORD, N.H. (AP) — Portsmouth artist Haidee Merritt is entering her third season of renting out a room in her downtown home for short stays to regular city visitors and far flung tourists, a service she says provides a social and financial benefit to herself and the city.

“The sharing economy is a big thing,” said Merritt, who rents the room through the online platform Airbnb. “The more people we can bring in, the more people will be spending money on the restaurants and stores. It’s beneficial for everybody.”

Some lawmakers, though, say it’s not that simple.

A growing concern over lost tax revenue and neighborhood complaints have state and local officials grappling with how to regulate these types of private rentals, especially in cities with a higher volume of tourism. And New Hampshire is not alone. It’s a growing challenge nationwide as apps like Airbnb and Uber allow private citizens to provide services once exclusive to traditionally regulated and taxed businesses.

Newark, New Jersey, recently announced it will tax rentals at the same rate as hotels. Last year, Philadelphia passed laws to tax and allow such rentals in residential areas, and San Francisco voters rejected an effort to crack down on rentals at the ballot box last year.

New Hampshire lawmakers are taking a cautious approach, starting with efforts to ensure operators are paying room rental taxes, something already required under state law but hard for tax collectors to track. Senators will vote Thursday on a bill that would require people to display their tax licensing number on any advertisement for a short-term rental. It would give officials better control over a now “hidden industry,” said Carollynn Ward, a tax policy analyst with the state Department of Revenue Administration.

Several years ago, a DRA audit brought in $1.5 million in additional revenue from 550 short-term rental operators that were not paying or underpaying the tax, Ward said.

But some city officials want to have more authority over how and where short-term rentals can operate. John Bohenko, Portsmouth’s city manager, said the city worries about proper safety features like smoke detectors at rented homes. Neighbors also complain about rentals in residential areas and Bohenko worries that an increase in short-term rentals could put a crunch on long-term housing options downtown.

City officials considered changing zoning laws last year to clamp down on where short-term rentals can be but decided to hold off in hopes of more guidance from the state. But they won’t get answers this year. A bill giving cities and towns power to regulate short-term rentals has been turned into a study committee.

“I know people would rather see no regulation, but in hotels and bed and breakfast, there is regulation for life safety,” Bohenko said. “It is concerning to have a whole house rented and not have it inspected.”

But Merritt, the Portsmouth operator, wants lawmakers to be careful when considering future changes that could affect rental businesses like hers.

“The regulations could be so strict that it prohibits any of us from doing it,” she said.