The ruling Wednesday by a three-judge panel of the Ninth Circuit is a setback for the home-sharing platforms in their effort to avoid regulation by cities that blame the rapid proliferation of short-term rentals for a shortage of affordable housing and a disintegration of residential communities.
“Airbnb has seen setbacks like this over the years,” Bloomberg Intelligence analyst Mandeep Singh said. “They will continue to work with the regulators on tax collection and other fees but it should not have much of an impact on its IPO.” Airbnb and HomeAway argued that the Santa Monica ordinance makes it impossible for them to operate, particularly if other municipalities adopt similar laws, because it would require them to monitor and remove listings for unregistered residences. If they don’t, users would be stuck looking at listings that they won’t be able to book, according to the companies.
Airbnb said in a statement that the Santa Monica case doesn’t reflect the progress it has made working with local governments across the country.
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