How Local Governments View the Sharing Economy
I signed up for my first email address barely twenty-five years ago. It’s wild to imagine. The internet was young, and the ideas about what it would produce were endless. But we still did most things the old-fashioned way: we still did our own shopping, household work, and travel planning.
In those days, when we had to buy groceries we went to the store, and if we forgot something we were forced to go back. We asked friends and family for a ride to the airport and called a taxi if we couldn’t find anyone—and we hoped it didn’t come to that. And we rented homes for our vacation through a property manager (whose name we got from a friend), who said, “You’ll like this house; you can walk to everything.”
Today, the sharing economy has connected people and services around the world. People share experiences and leave ratings for the next potential user. They sell products and services, often the fruit of their own time and effort, and are able to make a little extra income or even a full salary.
We can have groceries delivered quickly and efficiently by a woman who seems to really enjoy what she’s doing. We can press a button and find a hassle-free ride to the airport from a guy who loves his Toyota Highlander and is happy to tell you about some of the new restaurants in town. And we get to cruise multiple vacation rental websites to read reviews of past users, view photos, and read lengthy commentary about all the amenities and nearby opportunities of a home to rent through vacation rental managers who take pride in providing a great experience.
Some insist that this sharing economy is better described as the new economy, app-based economy, mobile economy, or peer-to-peer economy. And a few companies are typically identified as industry leaders. Their names become ubiquitous with the activity, and their brand becomes a verb. And so the sharing economy has turned companies like Uber and Airbnb into the next Scotch Tape, ChapStick, or Kleenex, producing phrases like “I’ll just Uber to my next appointment.”
But as we Uber-ize everything, local governments are grappling with the question of how to regulate this phenomenon. And arguably, these new regulations are touching people and activities that have been occurring for decades without concern—such as vacation rentals or hiring a handyman.
Mayors and city managers are struggling with finding viable regulations or best practice models in areas like mobility innovation (Uber, drones, autonomous vehicles), short-term rentals (Airbnb), and the gig economy (TaskRabbit, Thumbtack). And these city leaders are right to be struggling; there aren’t a lot of best practice models. In fact, in 41,000 cities in the United States, both industry and government scratch their heads to point to a few small examples of what works.
Technology changes are sweeping the world, and government leaders are perplexed about how to provide levels of safety, security, and reasonable understanding for their communities. And just when they think they’ve figured out the issue, the technology changes and activity is further transformed—often making newly adopted regulations irrelevant.
What does a mayor or city manager think about how to regulate the new, Uber-ized world?
Innovative technology has companies using drones that will make deliveries to your home. How does a city address airspace and privacy concerns?
Technology also provides an immediate solution for that clogged kitchen sink: one click on an app or a webpage and a handyman will come to your house to fix it. Is he licensed? Is he paying an occupational tax? How does a mayor wrap her mind around that?
Addressing Short-Term Rentals
And what about those short-term rentals? Local policy makers often hear, “I’m happy to use a short-term rental when I go somewhere else, but I don’t want one causing loud parties next door.”
The discussion of how to regulate short-term rentals has accidentally scooped up the decades-old profession of the vacation rental manager. In some cities, vacation rental managers are the last people to know they’re now subject to significant restrictions. With little to point to as a best practice model, local policy makers are trying to grapple with the seemingly new phenomenon of the sharing economy. A flurry of questions runs through policy makers’ minds: “How do I address zoning, noise, parking, taxes, and complaints?” New practices and technologies will generate even more such questions.
Policy makers are forced to try to answer these questions while a group of angry citizens is chanting outside city hall calling for rules and enforcement. At the same time, industry leaders are moving so quickly to provide a better product that the changes they’re creating don’t get transmitted effectively to the communities where their impact is felt.
The speed of industry growth and the rapid and continuous change in technology call for rules and enforcement from the community, but the lack of best practice models leads to serious challenges for local policy makers. Their world is a confusing buzz of new information around the sharing economy.
There’s no easy answer—and there never is when it comes to creating good, effective public policy. But there is a solution. There is a path that will lead local policy makers to find answers to their questions, provide data to their constituents and their staff, and build a regulatory framework. It starts with community and stakeholder engagement: understanding the needs and concerns of the community, the demands of the users, and the constantly evolving industry.
Cities can choose to hire a professional or a team with experience in these areas—people who have been on the policy-making side, who understand the importance and the challenges of community and stakeholder engagement, and who have a long history with the industry.
To help in this process, the local stakeholders and users should be prepared to share their experiences and the experiences of those who are affected by the industry. For short-term rentals, we recommend that traditional vacation rental managers, property owners, and users prepare to submit their stories to local government. Stakeholders themselves will benefit when they inform local government about their activities to help produce the best public policy.
Governments don’t have to go it alone. With the help of engaged industry professionals, local government officials can better understand the subject they are discussing—essentially using a trained guide to help them better understand how the industry works, how to communicate to the stakeholders and the industry, and how to create regulations that will achieve compliance.
Recognizing that local governments are struggling with how to address the new sharing economy is part of the battle. Helping them understand the industry in an effort to create a best practice model is the other part of the battle.
A lot has changed since we sent our first emails. And now, as we Uber-ize everything, we can also help local government address these changes so that everyone can win.