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Unintended Consequences

IMG_7579I remember debating a community development consultant on the Sharing Economy about five years ago. I argued for the need for regulation to level the playing field; that people who played by the rules (taxi drivers) faced losing their jobs (or worse) in the face of a free-for-all of "cabbies" that simply had to sign up on an online platform to compete. She chided me for being "old-school" and not realizing where the economy was headed.

That's the point. I did.

Fast forward to the present and home-sharing plays like Airbnb. Today, it's not so much that we can all be innkeepers without health inspections and, in some cases, not paying the appropriate taxes. The lodging community seems to have absorbed most of the hit in most communities. But, the unintended consequence is far more insidious.

Here in Madison, there was an initial move to limit the number of Airbnbs in a block as on-street parking downtown is already notoriously difficult for residents. Add three couples (with three cars) renting a house on a game-day weekend times 5 houses on a block and you've got a problem. Once again, those who play by the rules (hotels) must provide parking. Those who don't, don't. Of course, the State of Wisconsin swooped in and made that conscious consideration mute with a "hey, whatever" law that would supersede ours.

Which is kinda what has happened in Arizona, where a State law now prevents communities from effectively regulating home-sharing. And, particularly hard hit has been Sedona, as 20% of the housing stock there has been taken over by short-term rentals. That means residential housing is becoming scarce...and scarcity drives price.

Many people who work in the area can no longer afford to live in the area.

Sold to the public as a way for homeowners to make extra money, one legislator now says "We never anticipated that somebody would go into a neighborhood, purchase a home and turn it into a mini-hotel." And, that's because no one ever anticipates unintended consequences...until it's too late.

Which is why (as much as it is a creative buzz kill) we should all seriously consider the "what could go wrong" factor for every new initiative that sounds so right.

Bill Geist

Bill GeistBill Geist

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