Bill that would restrict bans on short-term rentals stalls in House

A proposal in the Indiana House that would restrict local governments from banning short-term rentals—such as Carmel’s recent move to stop owners from sharing their homes on Airbnb—failed to garner enough support to advance Monday night.

The failure appears to be a victory for cities that say they should be able to control what happens in their municipalities, but a setback for homeowners in those communities who wish to use services like Airbnb and VRBO.com to rent out their properties for short-term stays.

The bill comes on the heels of Carmel's recent decision to send letters to 28 residents who rent out their homes on Airbnb, stating that they are in violation of city zoning laws. The letter demanded the owners cease operations within 10 days or file a request for a zoning variance.

The 49-44 vote on the proposal wasn’t enough to advance the bill since 49 votes isn’t a majority of the 100-member chamber, but it doesn’t kill it outright. The House could vote again on the bill if a member petitions to hear it again.

Supporters of the bill, including the author, Rep. Matt Lehman, R-Berne, said the bill was about individual rights.

“I look at this as a property-rights bill … what a person can rightfully do with the property they own,” Lehman said.

Rep. Sean Eberhart, R-Shelbyville, said the state should want to embrace new entrepreneurial ideas that are part of the sharing economy.

But Rep. Jerry Torr, R-Carmel, opposed the bill, stating that he believes homes rented too frequently on Airbnb become commercial enterprises.

“I don’t think anybody minds a neighbor renting their house [while] on vacation or taking in people to sleep in bedrooms during events. When you do it frequently, you become a business. Some of them, (such as the house) bought specifically to put on Airbnb so it could be rented 365 days a year. That’s not residential use.”

Rep. Scott Pelath, D-Michigan City, opposed the bill, stating that it was an example of the Legislature stepping on local governments’ toes.

“They also are capable of dwelling on complex issues about property rights,” Pelath said. “These decisions, to the maximum extent possible, should be left at the local level and not decided in here in a part-time Legislature.”