Airbnb is alerting hosts about subpoenas from the City of Philadelphia. Here’s what’s going on.

Angela Romero received an email last week from Airbnb alerting her to a subpoena the company had received from the City of Philadelphia about her short-term rental properties.

Romero lives in a triplex she owns in East Kensington and depends on income from the Airbnb rentals of the other two units. New municipal regulations caused her to pause her business in January until she can get the permits required.

Even though she knew about the new rules, the company’s missive caused her distress.

“Airbnb Inc. has received a subpoena from the City of Philadelphia to provide certain records associated with your account,” the email read. “Airbnb must respond to this demand and provide responsive documents on March 30, 2023.”

The email also gave hosts a week to let the company know if they were going to challenge the city’s legal demand. The email did not note that the subpoenas are being sent out because the company would not turn over data about host addresses to the city without a formal request. Airbnb’s website also directs hosts to links from the city with more information about the updated regulations.

Similar subpoena notices have gone out to short-term rental business people across the city, sending the industry into panic mode.

“We’re all freaking out. No one knows what’s happening,” said Romero, after checking in on Facebook pages and group chats where hosts gather. “We have no context. We don’t know anything about it. Everyone’s in the dark.”

But the City of Philadelphia’s message for short-term rental landlords is: Don’t freak out.

The word subpoena is unnerving, but that’s just the way municipal authorities are trying to get basic data about rental properties from companies like Airbnb.

“I get it. If you see that you’re getting subpoenaed by the City of Philadelphia, that’s scary for folks,” said Mark Squilla, the Council member who introduced the new regulations. “But you aren’t being subpoenaed like you’re going to court.”

When users try to book a room on Airbnb, they are given the precise address only if the transaction is accepted by the host. That also means the city cannot just pull the local addresses of rental properties from the website.

To access that data, the company told municipal authorities they needed to formally request the information.

“Without the address, there’s no way to know who has what licenses,” Squilla said. “This was part of Airbnb’s request so that they’re not liable for giving the city the addresses.”

Once the city can compare Airbnb’s data with its permit database, the city can see who has the necessary permits and who is operating illegally. Those who are still renting without a license will first receive a warning, Squilla said, and if they do not desist, will face a fine.

“Airbnb values its users’ privacy, and when we receive a valid legal subpoena, we use reasonable efforts to notify affected users,” the company said in a statement.

In 2015, Philadelphia began requiring that short-term rental hosts obtain zoning permits if they are going to operate such a business out of their home for more than 90 days a year. To operate Airbnb rentals outside of a primary residence — whether in the second unit of a duplex or in a house across town — would require a hotel license.

But in neither case had the law been enforced, and the short-term rental business flourished in a gray economy. That changed during the pandemic, when complaints about nuisance short-term rental properties surged.

In 2021, City Council passed a bill requiring short-term rental owners operating out of their homes to get a “limited lodging operator” license. It also reinforced the hotel permitting required for those who operate short-term rentals out of units where they don’t live.

Squilla’s bill required that hosts provide a license number to online rental brokers, like Airbnb or VRBO, to confirm that they have received their permits. The new regulations went into effect in January of this year.

To comply with the new regulations, 409 people have received limited lodging operator licenses, with 138 issued since the beginning of the new regulations, and 91 permits have been issued for hotel licenses of one or two units, according to the Department of Licenses and Inspections. The city doesn’t have a clear number of hosts, but industry advocates estimate about 3,000, and most do not have permits.

The subpoenas are meant to ensure that those using the rental platform have actually applied for their proper permits. The “certain records associated with your account” simply means confirming that the addresses and names included on the permits match what the short-term rental companies have in their systems.

Making that information publicly available gives Romero pause because her units are attached to her home.

“I live here, you know, and I’m not a business,” Romero said. “I don’t want all my personal information out there for Licenses and Inspections to be able to look at.”

But for city authorities, the short-term rentals are a business — with owners like Romero making their whole livelihoods off of it. And the industry has been operating with little regulation and less oversight for a long time.

The bill tightening short-term rental regulations passed City Council in February of 2021, was signed by Mayor Jim Kenney in June of that year, and was meant to go into effect in April 2022. After owners struggled to meet the requirements, policymakers eventually agreed to delay implementation until the beginning of this year.

The industry group Sharing Philadelphia has been trying to build alliances on City Council to tweak the legislation. Councilmember Isaiah Thomas has set informational hearings for Wednesday to review the impact of the new short-term rental regulations.

Sharing Philadelphia, a short-term rental advocacy group, also tried to message that the subpoena alert is not cause for alarm.

“We knew they were going to start enforcing, and this is the mechanism for doing it,” said Theron Lewis, founder of Sharing Philadelphia.

A huge part of the challenge facing hosts like Romero is that the wait time for hearings at the Zoning Board of Adjustment has ballooned during the pandemic. Many Airbnb hosts need to get a zoning variance to receive a hotel license, because hotels are allowed only in high-density districts that are mostly found in areas such as Center City or University City — not the rowhouse neighborhoods where the short-term rental industry has thrived.

An Inquirer analysis found scheduling times for a hearing at the zoning board have doubled since the pandemic, with an average wait of six months between application and hearing.

Romero applied in January and will not have her hearing until late September. She’s no longer making money off of her short-term rental business and is looking for a job.

“It’s been a nightmare trying to get the zoning permit,” Romero said. “They shut down my business, and that’s what I’ve lived off of. I mean, it’s rough. It’s really rough.”

For some Airbnb critics, the idea that homes could be pushed out of the short-term rental market and back into the regular rental or home ownership market would be a boon for sale prices because the industry has been found to increase housing costs.

Romero said she is considering doing exactly that.

“Maybe I’ll just sell [the triplex] and move to Florida, where I can do business without the government being insane,” said Romero.