Airbnb crackdown? Cleveland lawmakers want to limit, license short-term rentals

Cleveland is trying, yet again, to crack down on short-term rentals.

Legislation introduced late Monday at Cleveland City Council would require annual licensing of the properties – and allow the city to revoke those licenses if there’s a problem. The proposal also would limit the number of short-term rentals allowed in residential areas.

Council members have been struggling to get their arms around short-term rentals since 2018. They’ve threatened moratoriums and considered complicated changes to the city’s zoning code. They've also introduced – and dropped – several regulatory proposals.

Now Councilman Kerry McCormack says he’s serious about moving forward.

“My residents want this passed yesterday. Big time,” he said, citing neighborhood complaints about traffic, noise and big gatherings.

McCormack represents much of downtown and neighboring Ohio City and Tremont. He’s co-sponsoring the legislation with Councilwoman Jenny Spencer, whose ward spans Cudell, Detroit Shoreway and Edgewater. Those are popular areas for real estate investors and visitors.

Short-term rentals are properties where guests typically stay for 30 or fewer days. An alternative to hotels, they’re a growing slice of the lodging business. Owners and managers often advertise their properties on booking websites, including Airbnb and Vrbo.

'We've had limited resources'

Cleveland started regulating and taxing short-term rentals in 2016 when the city hosted the Republican National Convention. But council members have been saying for years that the city’s rules don’t help much when a property becomes a neighborhood nuisance.

“I can’t tell you how frequently we hear about this in our office,” McCormack said. “And … it has been so frustrating that we’ve had limited resources and abilities to deal with that issue.”

The new legislation would require owners and operators to get an annual license at a cost of $150 a year.

As part of the licensing process, landlords would have to provide proof that they have at least $300,000 in liability insurance. And they would need to list a local contact person – someone who could be available on-site within an hour.

The city could withhold or revoke licenses for properties that don’t meet health, fire, safety and building codes.

Unlicensed owners and operators would be barred from advertising or renting out their properties. And they - along with companies like San Francisco-based Airbnb, which handles reservations and collects payments - could be fined anywhere from $150 to $1,000 a day if they violate the rules.

The legislation also seeks to stop the spread of short-term rentals. It proposes a cap of 15% of the homes on any residential block – or 15% of the units in a multifamily building.

Existing short-term rentals will be exempt from those limits if they’ve been operating for at least a year and complying with city laws. New landlords would be able to ask for exceptions to the caps by appearing before the Cleveland Board of Zoning Appeals.

Andrew Benesch/News 5

'We want to bring people to Cleveland'

“Oh my goodness, this is a lot,” said Mackenzie Marx, an Airbnb host in Tremont.

She was still parsing the 12-page ordinance on Tuesday.

“We’re doing this because we want to bring people to Cleveland,” said Marx, who has been hosting for about a year. “We want to bring people an opportunity to stay right where those that live here stay. And experience things. And be in the neighborhoods.”

But, she said, “it almost feels like the legislation wants us to not be here and to kind of push us out a little bit by making it more difficult to run our businesses the way that we do – and by over-complicating it. Which is unfortunate.”

Airbnb says most of its hosts in Cleveland only rent out one property. Last year, they reported median earnings of $11,800. A third of them used the money to offset higher expenses.

“Home sharing has been an important part of the fabric of Cleveland for decades, enabling the city to welcome visitors whose spending supports local businesses and creates economic opportunity for residents,” an Airbnb spokesman wrote in an email Tuesday.

“We welcome the opportunity to work with the city of Cleveland on fair, balanced rules that provide certainty and clarity for hosts and continue to bolster the local tourism economy," the spokesman added.

'A good balance'

McCormack said he’s not trying to prevent Cleveland residents from earning extra cash. But he's worried about the quantity - and caliber - of short-term rentals in his ward.

“If you get your license and you are running a quality business and you’re not having problems, God bless you,” he said. “But if you … are throwing huge parties and not addressing them, if there are nuisance problems at your property, if your grass is three feet tall on your rental property, if your house is a mess, the city will have the ability to revoke your license and prevent you from doing business.”

The legislation also would bar short-term rental properties from receiving property-tax abatement – an incentive the city offers to spur home construction and renovations.

McCormack hopes council will approve the legislation this summer. If that happens, the new rules will take effect in the fall.

“There will be time for folks to read it, understand it, get used to it and adapt to it,” he said.

A public hearing on the proposal hasn’t been scheduled yet.

“Will everyone be happy with this? No,” McCormack said. “But I think we found a good balance.”