Santa Ana, California Lawmakers Allow Airbnb Ban to Expire

Published December 5, 2015

By allowing a temporary ban on Airbnb transactions to expire, Santa Ana, California lawmakers have legalized the peer-to-peer economy company, as well as others like it, in the city.

The Santa Ana City Council voted unanimously to reject the Santa Ana Planning and Building Agency’s recommendation of extending the city’s ban on short-term housing rentals until formal rules could be drafted. Under California law, expired moratoriums cannot be later re-enacted.

The local hospitality service workers union, Unite Here Local 11, was one of several special-interest groups supporting the Airbnb ban.

Battling for Markets

Peter Klein, professor of entrepreneurship at Baylor University, says Santa Ana is just one battlefront in the larger ongoing war between established companies and new businesses.

“What we’re seeing with Airbnb is not unique to room-sharing,” said Klein. “It fits into the larger pattern of disruptive innovation that comes from the outside and attempts from the dominant incumbents to prevent themselves from being disrupted. Incumbents use market-based means, trying to convince consumers that the new product is the inferior one, and legal means like lawsuits.”

‘Naked Self-Interest’

Klein says established players in a market often use the law to protect themselves from competition and innovation.

“It’s very common for established companies to hide behind some public-spirited rationale for something that’s really in their own naked self-interest,” Klein said. “They make it sound like they’re concerned for the well-being of society, when it’s really a kind of protectionism, protecting themselves against competition.”

Klein says most complaints about Airbnb are already addressed by existing laws restricting public nuisance behavior.

“My suggestion is that this should be handled like any other neighborhood problem,” Klein said. “If your neighbor is playing music too loud, you might handle it one-on-one, you might go through the neighborhood association, you might file a police report for disturbing the peace, … but almost no one would say that Congress or the state or the city needs to pass legislation or appoint a commission about loud music. It’s just a local nuisance, and you already have means to handle that.”

Solutions Seeking Problems

Sheldon Richman, a fellow with Independent Institute, says anti-Airbnb regulations unnecessarily restrict citizens’ right to engage in voluntary exchanges.

“I do not believe that regulations on short-term rentals in residential neighborhoods are consistent with individual liberty, property rights, and free exchange,” Richman said. “I presume that ordinances regarding specific nuisances—excessive noise at unreasonable hours, for instance—are already in place.”

Richman says Airbnb users do not represent a threat to anyone’s liberty or rights, and lawmakers should leave them alone.

“Ordinances against specific nuisances and tort law already protect neighbors,” Richman said. “No rights are violated by a short-term renter, per se. The mere fact that a renter pays for a short-term stay presents no nuisance. Therefore, no reason exists for government action.”

Michael Bates ([email protected]) writes from Tulsa, Oklahoma.