On January 17, Kansas City’s City Council will again consider an ordinance regulating STRs such as Airbnb and VRBO (Vacation Rentals by Owner). Some neighborhoods are fearful of change, but there are great opportunities for all homeowners. Failure to think anew could create an uneven and potentially unconstitutional patchwork of regulations that harm consumers and property owners.

STRs have been illegal in Kansas City since 2011, but the City has chosen to overlook infractions and instead work on regulations allowing for STRs. STRs themselves are nothing new. What is new is the ease of finding and booking them thanks to Internet platforms such as Airbnb and VRBO. In the view of some homeowners, STRs amount to boarding houses and would irrevocably change the character of their communities from owner-occupied neighborhoods to more transient rental tracts. But research does not support that fear.

Protecting neighborhood character may sound good, but it is too broad to be a meaningful standard for regulation. As for fear of crime, there is no research that shows a causal relationship between criminal activity and STRs. In fact, studies have found that an increase in STRs increases property values in the surrounding areas. This shouldn’t be a surprise. People who seek to make a living off their homes have every reason to maintain the property and keep it attractive—and the income they receive from STRs helps them do so.

Cities like ours have plenty of housing codes to address issues that might arise from STRs. But there appear to be few actual problems. A public records request of the City Planning and Development Department uncovered only 68 complaints going back to 2014. Fifty-four of them simply noted that the location is being used for Airbnb or a STR, as opposed to specific complaints about noise or crime.

Meanwhile, Kansas City is host to hundreds if not thousands of long-term rental properties. Those homes do not require substantially different regulation—owners are not required to get permission from neighbors or pay additional fees or taxes. What’s more, once a unit is rented, there is little incentive to maintain the property—think of the stereotypical negligent landlord. STRs have the opposite impact by maintaining an incentive to be a good host and neighbor.

Those incentives are important. It is in the interest of every STR owner and every online platform to make sure that the experience is positive for everyone. Airbnb wants happy and safe customers; owners want respectful and well-behaved guests. Neighbors should see the opportunity for better-maintained and higher-valued neighborhoods.

The big problem with an outright ban, at least according to Jamila Jefferson-Jones of the UMKC School of Law, is that it amounts to an unconstitutional restriction on an individual’s property rights. Cities may be able to regulate the industry, but they may not be able to stop it.

Some regulation may be welcomed by STR owners. Airbnb recently announced it would collect and remit state and local taxes on behalf of their owners. Perhaps a nominal registration fee is warranted as well. People living in apartments or condominiums may want assurances that common areas remain secure. But using the power of government to stamp out a new aspect of the sharing economy is unwise and likely unworkable.

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STRs are nothing new—they’ve been around forever. What is new, however, are the internet platforms that have made finding and booking them so easy. As a result, the numbers have increased dramatically and cities are considering how and whether to regulate them.

In Missouri, that regulation has ranged from outright bans in some cities around Saint Louis and in Kansas City to no regulation at all. Springfield recently debated such regulation, and in a news story about them, one proponent of regulation said, “we need to protect the character of our neighborhoods.” Such a vague standard should be of concern for property owners and property rights advocates. Cities already have criminal codes and housing codes to address public safety. But there is no research that I have been able to find that purports to show that STRs increase crime. Quite the opposite, research has demonstrated that STRs increase property values in the surrounding area.

At a recent Southern Communities neighborhood meeting, a representative of the City Planning and Development Department told attendees that they had received hundreds of complaints about STRs. But the hundreds of complaints turned out to be 68 complaints going back to 2014. Fifty-four of the complaints simply noted that the location is being used for Airbnb or a STR, as opposed to noise or safety complaints, for example. (While STRs are technically illegal in Kansas City, the city has not been enforcing the law, instead seeking to come up with regulations allowing the practice.)

Meanwhile, thousands of properties are being rented out in Kansas City for long-term rentals. They are not inspected or regulated by the city. They are not limited by zoning nor do they require that neighbors approve or even be notified of it. They are not assessed at commercial property tax rates. It’s fair to wonder why the city would treat a property that rents out for 3 days at a time differently than it treats one that rents out for 3 months at a time.

Then there are taxes. Kansas City charges a convention and tourism tax of 7.5% on hotels. It seems reasonable that STRs should pay this too. Again, long-term renters do not pay this, so the city will have to establish some sort of defensible threshold between long-term and short-term rentals. And don’t forget about bed-and-breakfasts. They are regulated differently, and maybe they shouldn’t be.

Some neighborhoods want to maintain a total ban on STRs. An ordinance being considered by the Council would render about 80 percent of city residences ineligible for any kind of STR. Is that fair? Or even legal? One Constitutional law professor at UMKC says it is not.

Given the different approaches to these matters across Missouri, it seems likely that the matter will end up before the General Assembly, as was the case with ride-sharing. Rather than creating a new patchwork of regulations, taxes, and fees, legislators need to think broadly about how private property ought to be regulated. The sharing economy is blurring the lines between personal and business, residential and commercial. We should be prepared for a larger discussion.

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“…allow individuals to rent a home, apartment or even just a single bedroom for short-duration stays, usually just a few days at a time, using Web-based platforms that advertise to travelers.”

The most prominent example of this type of company is Airbnb. Much like ridesharing, short-term rental services are a prominent example of the “sharing economy,” where technology allows individuals (and not just well capitalized businesses) to make money renting out the things they already own. A major problem with the expansion of the sharing economy is local regulations, which straight-jacket industries into forms city officials and existing businesses are used to, and benefit from. The good news is that most of the cities the recent survey looked at, likely seeing an opportunity to encourage new business and attract more visitors, are making reforms to allow short-term rental services to operate easily.

                But not Kansas City. The city of fountains got an “F” for its regulations, because, as the report states:

“Kansas City has a tightly regulated short-term rental market that benefits special interests at consumers' expense. Both hosted and non-hosted stays are permissible only in commercial districts, such as a boarding house. No additional deductions are made for the city's legal framework, taxation, enforcement or licensing.”

The fact that Kansas City has made so little effort to reform its short-term rental regulations directly contradicts messaging from city officials about how they are all about attracting business and “millennials.” If creating growth and attracting young people is anything more than a rhetorical prop, city policy will have to actually create a welcoming environment for new types of services, services millennials demonstrably like to use.  Right now, it appears that city hall thinks handing out tax breaks to large companies is enough to qualify as business-friendly, and building a streetcar is the essence of cool. 

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In Missouri and elsewhere the sharing economy has faced strong resistance from the regulatory state and existing businesses. Hotels and for-hire vehicle operations are traditional revenue sources for local governments (who treat hotels especially as piggy banks for pet projects), and dominant companies are geared toward a highly regulated status quo. When residents demand access to the sharing economy, regulatory bodies downplay the extensive web of regulations and high tax rates they have created, and instead fall back on appeals to public safety. Background checks, inspections, and in Saint Louis, fingerprinting, have become the motte to which regulators have fled, no doubt hoping to retake the entire regulatory bailey once their attackers have run out of steam.

While the claims of protecting health and safety make sense on their face, on closer inspection everything seems very arbitrary. Why does a vehicle need an inspection by a taxi commission; wouldn’t any auto-body shop do? If the vehicles need to be inspected anyway, why require an additional inspection at all? Why should background checks need to go seven years? What’s wrong with five? And so on.

The core problem is that a group of regulators, not the individuals actually using the services, are deciding what is safe enough. So instead of companies differentiating themselves and letting people make their own decisions, cities give an arbitrary, one-size-fits-all solution. And it is usually a conservative solution.

It does not have to be this way. In an innovative approach, Austin’s mayor has proposed a plan called “Thumbs Up Austin” as a compromise on fingerprinting for Uber and Lyft drivers. Instead of forcing all drivers to get fingerprint checks, those who chose to do so would get a “Thumbs Up” badge. Uber users would be able to see this badge before choosing a driver, and could decide whether they required their driver to have the badge. The mayor believes this could also work for other sharing economy services, like Airbnb.

If the idea proves successful, it would open the possibility of allowing those who are providing a service and those who are using the service to decide their level of regulation. 

The post To Regulate the Sharing Economy, Let Users Choose Their Risk Level appeared first on Show-Me Institute.

I had always imagined that homeschoolers, as their name implies, stayed at home all day with little or no contact with the outside world. I thought that a homeschooler’s academic success depended solely on their mom's or dad’s ability to teach math, science, and reading at every grade level—a feat that few certified teachers could accomplish.

I was happy to learn that this couldn't be further from the truth.

I recently visited the Pillar Foundation, a private, charitable, educational foundation that functions as a resource center for homeschooling families. Some refer to the Pillar Foundation, which offers high school–level courses to homeschooling families at no cost, as a “co-op,”

What is a co-op? That’s the question I asked back in March when a parent started to explain her child’s schedule and slipped the word into our conversation.

According to one homeschooling mom, “co-ops are groups of homeschooling families who join together to enrich their homeschooling experience by learning from and with one another. Often these groups will participate in field trips, sports, classes, etc.” Parents involved in co-ops usually teach coursework they have a background in. So the mother with a biology degree teaches science, the history buff teaches history, and the artist teaches art. No one makes money, but every parent benefits from the academic expertise of another parent.

In short, co-ops are to education as Uber is to the taxi industry. It's education’s take on the sharing economy.

The Pillar Foundation is different from a traditional co-op in that volunteers, not parents, teach the courses. This semester, for example, state Representative Kurt Bahr is teaching a US Government & Constitution class. For day 1 of the 4-month course, Bahr provided about twenty 10th- to 12th-graders with a walk-through of the Declaration of Independence, using his personal experiences in the Missouri House to explain dense material.

To give students some context for the line in the Declaration of Independence that reads “He has called together legislative bodies at places unusual, uncomfortable, and distant…” Bahr explained that sometimes, “politics simply is you get your way, because you are willing to outwork or outwait the other side.” What a great opportunity for kids to learn about a founding document from an elected official!

Co-ops and resource centers like the Pillar Foundation aren't well known outside of the homeschooling community, but if more people knew about the resources out there, they would see that homeschooling is a viable option for their children. I hope that more families with young kids who are thinking about how best to educate their children look into the exciting opportunities available to them in the homeschooling world. As a parent to a soon-to-be four-year-old, I know I will be. 

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HopSkipDrive, one of the newest additions to the sharing economy, has a solution.

The recently launched app is a mix between a ridesharing service like Uber and a child-care service provider like Care.com. Parents can schedule rides for their kids for about $20 or purchase trips in bulk for as low as $12. All drivers have a minimum of five years of child-care experience.

To ensure safety, drivers are put through a vetting process and receive vehicle safety and background checks. The orange-shirt-wearing-child-care professionals must repeat a code word to the child before the ride begins.

HopSkipDrive is currently operating only in Los Angeles with 100 drivers, but the concept has growth potential. More than anything, it is a great example of how entrepreneurs (in this case, three moms) can help improve child care and education. Rather than try and tackle huge problems, entrepreneurs look to the little “pain points” in people’s lives and try to fix them. Their creativity is channeled through the marketplace, and everyone is better off as a result.

Time will tell if the kid-friendly ridesharing app will operate in other cities and states. I hope more and more entrepreneurs will look to the issues of families, children, and schools and try to solve more of the little problems that all three face.

The post New Ridesharing App is Geared Toward Busy Parents appeared first on Show-Me Institute.

Arthur C. Brooks, president of the American Enterprise Institute, recently argued that significant amounts of such dead capital could be brought to productive life if only local governments would stop protecting vested interests and allow entrepreneurs to invigorate their local economies.

How? There are new, exciting companies that empower individuals to improve their economic condition and, at the same time, improve the productivity of capital. One example is the ridesharing service Uber. Uber brings together those with empty passenger seats and those needing a ride across town. My experience (unfortunately, not in Saint Louis) is that Uber rides showed up faster than traditional taxis and that the drivers were more attentive to my needs. Because Uber drivers are rated by riders even in transit, poor drivers can lose business for inadequate service. Competition drives out poor performers.

Airbnb is a market solution to the problem of underutilized housing capital. With excess bedrooms in the United States, why not allow the owners of those empty rooms to satisfy the needs of individuals seeking a place to stay for a night or two? The needs of those willing and able to pay for a room are served and the owner is rewarded with, especially in these still-difficult times, an extra bit of income.

Unfortunately, a maze of state and local regulations block Uber and Airbnb from operating in many locales. “Governments have their own golden opportunity,” Brooks writes, “to exercise creativity in service of the common good, whether that entails rethinking anachronistic zoning laws or adjusting tax policies that treat someone’s spare bedroom the same as a Marriott suite.”

If bringing dead capital to life is good for the economy, isn’t it time for politicians and regulators to awaken to the potential benefits that such services can provide?

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Carpooling is the second most popular method of commuting in Missouri. In 2013, around 9 percent of Missourians carpooled to get to work, more than five times the number that used transit. Carpooling and ridesharing are undeniably efficient. More people per car mean lower pollution per person and less congestion on highways, all utilizing the existing resource that more than 90 percent of Missouri households own: a personal vehicle.

Despite advantages, carpooling is an increasingly less popular form of commuting. As recently as 1980, one in five workers carpooled. That percentage fell quickly between 1980 and 1990, and has continued to slowly decline.

The culprits of carpool decline are mostly market-based: more people own cars, population and work centers are more diverse, work schedules are more variable than in the past. Declining carpooling rates in the United States also may be due to structural changes to the U.S. economy (carpooling is far more prevalent for those in the manufacturing sector). However, government policies may be preventing the rebound.

If increasing wealth of Missourians and an increasingly diverse economic environment have led to the decline of ridesharing, new technology that matches potential drivers with riders represents a market-based opportunity for carpooling to rebound. Far from encouraging the rise of a car-sharing economy, Saint Louis and Kansas City have attacked companies that make use of this new technology to protect vested taxicab interests.

If cities in Missouri are serious about reducing congestion and pollution, they should focus more on encouraging carpooling and ridesharing, not just expanding transit. And like many other cases, the best policies are for the city to reduce regulation, stop trying to plan the economy, and let the market operate.

The post The Decline of Carpooling in Missouri: Time for a Rebound? appeared first on Show-Me Institute.

Not long ago, stores such as Blockbuster rented out movies across the nation. Where are they now? Gone, “unwept, unhonored, and unsung,” as former customers stream “House of Cards” on Netflix. But imagine 10 years ago that Kansas City had regulations controlling the supply of video stores and setting rental prices. Imagine that regulations blocked Netflix from streaming in Kansas City, with the city claiming it flouted the law and was not competing on a level playing field.

That story may seem preposterous, but we are dealing with a very similar situation today as Lyft, a new ride-sharing app (smart-phone based application), has upset the highly regulated Kansas City taxicab market.

Lyft, Uber, and other companies like them allow users to schedule a ride from any registered driver in a geographical area. Lyft drivers need not be full-time cab drivers; they can be anyone with virtually any type of car that passes certain background and safety tests. After using Lyft, riders make an optional donation — not regulated fare — to the driver via electronic payment. No cash is needed. Drivers and riders rate each other, incentivizing both elevated service from drivers and generous rider donations. Lyft and other apps are rapidly expanding across the country and have many happy customers where they exist.

Not everyone is happy, however. Chief among the protesters is the Kansas City’s Regulated Industries Division, which regulates all for-hire vehicles in Kansas City. Under the argument of protecting rider safety and maintaining a balance between cab supply and demand, Kansas City controls the number of taxis in the city, how they can conduct business, and what prices they charge. Kansas City has threatened fines for Lyft drivers and has written to the company claiming its actions are illegal.

In the past, one could have argued that potential taxi users had too little information to avoid being ripped off and no way to know which company was safe, so regulation was necessary. Today, the ease of checking fares and cab company records over the Internet and smart phones has solved those problems, but Kansas City officials have not gotten the memo. City ordinances set fares, require potential cab owners to start with a fleet of 10 cabs, limit cabs to less than 600 city-wide, and require cab companies to provide 24-hour service.

These policies ensure that individuals cannot rent out their cars for hire. They also create high barriers for entry into the market, protecting the existing cab companies from entrepreneurial Kansas Citians. These barriers reduce the total amount of taxis available for Kansas City residents and can create especially large gaps between supply and demand during peak demand times, with no flexibility in cab supply and weak incentives for cab drivers to provide more service.

Lyft and other ride-sharing apps allow for a massive increase in for-hire vehicle supply in Kansas City. City residents and visitors would be able to use some of the excess capacity of the cars already owned to greatly increase mobility. That increased on-hire vehicle capacity is likely to contribute to higher taxi demand because prices may fall as service levels increase.

As for regulation, states such as California have already brought services such as Lyft into an established legal framework, called a Transportation Network Company. Companies such as Lyft can operate as long as they ensure that drivers have adequate insurance, clean records (in driving and otherwise), and safe vehicles. That seems like a fair set of regulations for Lyft’s operations in Kansas City. In fact, it seems like a fair set of regulations for anyone who wants to give people rides in Kansas City.

New business models relegate some regulations and regulatory bodies to the dustbin of history. It is time for Kansas City’s antiquated taxi regulations, and not Lyft, to cease operating in Kansas City.

Joseph Miller is a policy researcher at the Show-Me Institute, which promotes market solutions for Missouri public policy.

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