Airbnb and Booking.com Apps Photo: BigTunaOnline/Shutterstock.com

With its recent ruling in Slice of Life v. Hamilton Township Zoning Hearing Board that short-term home rentals are inherently incompatible with single-family residential zoning districts, the Pennsylvania Supreme Court gave municipal governments breathing room to decide how to deal with the rise of the home-sharing industry.

Now, municipal attorneys say they anticipate being frequently enlisted to help their clients make those decisions.

“You’re going to see a lot of municipal solicitors asking their clients, ‘Hey, what do you want us to do with short-term rentals?’” said Harlan Stone, a shareholder at Dickie, McCamey & Chilcote in Pittsburgh and chair of the firm’s municipal practice. “You may get different answers based on the specifics of the municipality. Some may be much more inclined to want the rentals and not as concerned about a party house being in the middle of a subdivision plan.”

In Slice of Life, the Supreme Court reversed a Commonwealth Court ruling that had found a Monroe County township’s ordinance to be ambiguous and open to interpretation with regard to whether “transient lodging businesses,” like those popularized by Airbnb, HomeAway and Booking.com, could be located in a single-family residential zoning district.

Hamilton Township’s ordinance limits residential zoning districts to single-family homes and defines “family” as a “single housekeeping unit”—common terminology used in many zoning regulations. It does not, however, specifically exclude short-term rental properties from residential districts.

Val Kleyman, who runs a short-term rental business called Slice of Life, had argued that the ordinance’s silence with regard to home-sharing had to be interpreted in favor of the property owner. The Commonwealth Court agreed.

But the Supreme Court unanimously ruled in its April 26 opinion that Pennsylvania case law is clear that ”the purely transient use of a house is not a permitted use in a residential zoning district limiting use to single-family homes by ‘a single housekeeping unit.’”

The high court pointed to two of its own rulings, Albert v. Zoning Hearing Board of North Abington Township from 2004 and In re Appeal of Miller from 1986.

“Our holding in Albert could not be clearer: a purely transient use of a property is incompatible with the definition of a ‘family’ defined as ‘a single housekeeping unit,’” Justice Christine Donohue wrote for the court.

She added, “The use in the case at bar is purely transient. Individuals rent the premises for a minimum of two nights and up to one week at a time. Kleyman estimated that the property was rented 25 separate times over a one-year period. As Kleyman acknowledged during his testimony, this fits squarely within the common usage of the word ‘transient.’ The use is not as a single-family dwelling, i.e., use by a single housekeeping unit, and therefore, is not a permitted use in Zoning District A.”

Stone said the Supreme Court ruling is significant because it reverses course from a string of Commonwealth Court rulings and closes a perceived loophole in those zoning ordinances that have yet to catch up to the home-sharing boom, of which there are many in Pennsylvania.

The justices used “very clear language taking the Commonwealth Court to task for essentially creating the ambiguity and then ignoring past Supreme Court precedents,” he said.

Now, unless a municipal ordinance that defines “family” as “a single housekeeping unit” expressly allows for short-term rentals in single-family residential districts, the default position is that they are barred, Stone explained.

“The overall significance beyond this particular case was to say to the municipalities, ‘You can put whatever you want in your ordinance but in the absence of anything specific we’re going to interpret your ordinance as not allowing a short-term rental business to take place in your single-family residential districts,’” he said, though he added that ordinances will still need to be reviewed on a case-by-case basis to determine how they define single-family dwellings.

Katherine Janocsko, an associate at Tucker Arensberg in Pittsburgh whose article, “Short Term Rental, Long Term Impact: Municipal Regulation of AirBnb and Homesharing,” was cited by the Supreme Court in its Slice of Life opinion, agreed that the ruling is a favorable one for municipalities because it puts potentially nonconforming property owners on notice and gives local governments more control over where home-sharing businesses can operate.

“Obviously, it’s not preventing short-term rentals across the board,” she said, “They could still potentially be in a different district that has more mixed-use properties, apartment buildings or townhomes.”

And for those local governments that do want to allow short-term rentals to operate within their single-family residential districts, they’re still able to amend their ordinances ”to be as crystal clear as they want to be based on public opinion in their municipality,” Janocsko added.

Stone said he has “at least one client that might want to have short-term rentals in their residential neighborhoods.”

Now, he said, municipal governments and their counsel can set about establishing plans to deal with home-sharing in their communities, including defining what constitutes a “short-term rental.”

Stone’s fellow shareholder at Dickie McCamey, Christopher Lovato, said the Slice of Life ruling also gives municipalities time to develop orderly systems to collecting permitting fees and taxes from home-sharing businesses.

“They can be a revenue-maker for the municipality,” Stone agreed.

Of course, while the Slice of Life decision was favorable for local governments, it’s an undeniable setback for the home-sharing industry in Pennsylvania.

So will we now see the home-sharing industry pumping millions of dollars into lobbying local governments across the state, similar to the $8.5 million push Airbnb made in 2015 to successfully defeat a San Francisco ballot initiative that sought to place restrictions on home-sharing in the city?

Probably not to that level, attorneys said.

But Lovato said it’s conceivable that short-term rental companies will start to get more involved in the municipal process in the wake of Slice of Life, now that fewer Pennsylvania ordinances will be interpreted in their favor by default.

“They now have to have an affirmative ordinance in their favor,” he said.