AirBnB Made D.C. Affordable for Tourists. The City Council Just Voted to Rein It In.

Short-term rental hosts in D.C. will be required to get a license, report their activities, and only rent properties where they reside.

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Lara Hawketts and her husband, Alex Fuentes-Gonzales, live with their kids in a two-story house in the Forest Hills neighborhood of Washington, D.C. In 2009, Hawketts lost her job working for a British consulting firm. Looking for ways to pick up extra income, Hawketts discovered that she could host short-term guests for a modest fee through a new service called Airbnb.

"They would stay in our basement," Hawketts says. "One person will be on the sofa or two people would be in the queen bed. We'd have a pullout couch and a day bed and the whole family would just squish up and they didn't care."

When Hawketts' friends and neighbors took an interest in Airbnb but shied away from all the work involved, she saw a business opportunity. Along with her husband, she started Home Sweet City, a business managing Airbnb rentals for other hosts. Today they oversee more than 60 properties.

"We just hear these amazing stories of folks that would come to the city, save for sometimes their entire lives, bring their family and it would be their one trip of a lifetime to D.C.," Hawketts says. "There was no way they could afford to stay in a hotel."

Today, a mid-scale hotel room in Washington D.C. runs on average $237 per night. For the about the same price you can rent this centrally located four-bedroom historic townhouse, or for $110 this modern basement apartment near Capitol Hill. Or, for travelers on a budget, there's this twin bed in a shared room near Dulles airport for $16.

On November 13, with the support of the hotel Worker's Union and the hotel industry's trade group, the D.C. City Council passed a bill that could have a devastating impact on the district's short-term rental market.

Airbnb hosts can no longer rent out properties in which they don't reside. Those renting out their own spare rooms and couches will be required to obtain a license, report their activities to the city on a monthly basis, and be present during a stay, with the exception of up to 90 days a year.

City Council Chairman Phil Mendelson (D) says the intent of the bill is to eliminate competition from Airbnb rentals, and make it cheaper for permanent residents to live in Washington, D.C.

"We limit the short-term rentals to a person's primary residence and prohibited to a second or third property," Mendelson says. "We think that that correlates to improving the housing supply in terms of affordability."

"You know we created a company out of necessity and out of sheer determination and blood, sweat and tears," Hawketts says. "We built it from nothing in a new market.

"Someone's pulling the rug out from under our feet and that that to me is, it's really sad. Just doesn't seem fair or just."

Produced by Mark McDaniel. Cameras by Todd Krainin and McDaniel.

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