SOUTHERN INDIANA — Ruth Floyd has big plans for her historic New Albany home.
She dreams of replacing some of her gray shingles with copper and painting the spindles that line her porch.
To do that, though, she needs money. Thankfully, she has a reliable way to earn extra cash.
Floyd rents out an extra room in her home to strangers that she met on the internet — and she’s far from the only one in the area.
Last year, 60 residents in Clark and Floyd counties, including Ruth Floyd, used a website called Airbnb to temporarily rent out their home, said Ben Breit, a spokesperson for the website. Collectively, local hosts earned over $400,000.
That would please Indiana Rep. Matt Lehman, who lives in Adams County. To him, Airbnb users and other Indiana citizens who rent out their homes for short periods of time are exercising their property rights in a way that benefits them.
“We heard story after story after story of people who said look, I was in a position where I needed the extra income, you know, grandma was going to be forced to sell her house but she was able to rent out a room and make a little extra money,” Lehman said.
That’s part of the reason why he co-authored legislation that would prohibit local governments in Indiana from banning Airbnbs and other short-term rentals. The bill, which was sent on March 6 to Gov. Eric Holcomb’s office to be signed, also provided rules for how municipalities could regulate short-term rentals and set up permitting registries for them. Holcomb’s press secretary, Stephanie Wilson, said in an email that the governor has nothing planned for the bill at this point.
In addition to the stories of constituents, Lehman was also prompted to address Airbnbs by other Indiana communities discussing the regulation of Airbnbs.
In January, Carmel, passed an ordinance that prohibited homeowners from renting out their property for short periods of time if it wasn’t their primary residence. They also made short-term renters register their property for $100 — a permit that would have to be renewed annually for $50.
Lehman’s law would prohibit Airbnb users from “unreasonably” restricting homeowners of additional residences from renting out their property, although the local government could require the homeowner to apply for a zoning variance or exception. The law also restricts municipalities from charging an annual permit renewal and caps out the possible permit price at $150.
Other communities, Bloomington and West Lafayette, have also considered, and even passed, local short-term rental ordinances. Even New Albany has gotten in on the conversation — and might be affected by this possible law.
Local regulations
Dr. Al Knable, New Albany city council president, started thinking about Airbnbs when residents who lived near short-term rentals started calling. They were concerned about the short-term rentals next to them.
In October, Knable proposed that the city council look into addressing the rentals.
"I think the concern is, 'I live in an area that is zoned 100 percent residential. Why are people having guests in and out for three or four days when nobody's there supervising,' so to speak," he said at the time.
Knable was interested in the possibility of taxing the rentals, defining them in the city’s zoning code and setting up a permitting registry for them.
Floyd remembers hearing about the discussions at the time. The part about taxes concerned her.
Airbnb has 360 total tax agreements in the United States, including statewide taxes in Illinois, Michigan and Kentucky, Breit said. When local governments tax Airbnbs, it goes through the tech company, not the host, but the price for guests is still higher.
Floyd charges $40 per night for her New Albany rental — a price that she thinks is perfect for her and her guests.
“What worries me is that in order to keep my level of people coming in, that if they add this on, I have to lower my price, and I just don’t feel like I should go that much lower than what I am,” she said.
Instead, she thinks she contributes to the local economy by encouraging her guests to shop local.
Knable decided to drop the short-term rental issue in October for two reasons: the city’s planning department was working on adding short-term rentals to its zoning ordinance and the state legislature was still developing a bill to address the rentals.
Now that one of those has been completed, he’s interested in bringing up regulating New Albany short-term rentals again, and he’s still for the same things: permits and taxes.
“I was never against banning them, but if they’re going to exist, I think that, just like if somebody is going to run a taco stand out of their garage, you’ve got to make sure it’s done right,” he said.
New Albany Director of Planning and Zoning Scott Wood said in a statement that the city’s new zoning ordinance, to be brought before the council “soon,” would define short-term rentals and allow them in residential districts with “certain restrictions.”
Lehman’s law does let cities regulate short-term rentals for “specified purposes,” which include fire and building safety, sanitation and transportation reasons, among others. Short-term rentals can also be prohibited for sex offenders, and they can’t operate as sober living homes, adult entertainment businesses or as manufacturers of illegal drugs, alcohol or obscene material.
As for taxes on short-term rentals, there’s the possibility of another bill being introduced next session. It’s currently slated to be studied over the summer in committee.
Knable likes the idea of taxing Airbnbs because the money goes back into the tourism bureau and, from there, to the city. Clark and Floyd county’s hotels and bed and breakfasts are already taxed.
“We recently got quite a bit of money out of that to go toward projects like green space improvements,” Knable said. “Improvement of sidewalks downtown. Improvement of railing — that wrought iron fence down there at the Culbertson Mansion.”
Lehman also supports the taxing of short-term rentals.
New Albany might be the only local municipality considering regulating Airbnbs. Jeffersonville’s city council has not discussed the subject as far as Councilman Dustin White knows. White is also the president of the Jeffersonville Plan Commission.
Host reaction
Floyd doesn’t mind the idea of registering her Airbnb with the city.
“I think things should be watched over,” she said.
Maggie Deuser, another Airbnb host in New Albany, is lukewarm on the idea.
She rents out one room in her house, which she uses to fund her own travel habit.
Like Floyd, Deuser believes she’s positively contributing to the local economy by encouraging her guests to explore the area.
Regulations by the city would just be OK, she said. “Obviously I would prefer if they didn’t, but you know, what are you going to do?”