Swimply Fight Highlights Hurdles Facing Innovators

Nevada Policy recently brought to light the ongoing battle between Swimply and the city of Henderson. Swimply is a relatively new, innovative company helping Nevadans unlock hidden capital in their homes. It’s similar to Airbnb, except instead of renting your whole home out you can rent out your private pool hourly.

While this has been well received by homeowners who have found a new source of income to help alleviate the uncertainty of stagnant wages and rising inflation, the NIMBYs at the city of Henderson have been hard at work to find a way to shut it down.

As we noted in the last piece, there seems to be no authority for the city of Henderson to deny residents the right to rent out their private pools.

In our communications with Swimply, they have assured us they followed up multiple times with the city of Henderson but have only received ambiguous and inconclusive responses.

Despite these challenges, Swimply remains resolute. In pursuit of clarity and fair application of the law Swimply, with assistance from Nevada Policy, reached out to the Southern Nevada Health Board, or SNHD.

After some delays, a breakthrough was achieved thanks to SNHD board-member and city of North Las Vegas Mayor Pro Tempore Scott Black (major kudos), who facilitated contact with Chris Saxton, the director of Environmental Health at SNHD.

However, the response from the SNHD only muddied the waters. The health district claims authority over private pools by referencing laws designed for hotels and public accommodations, a clear misinterpretation and overextension of state regulations outlined in NRS Chapter 651 and NRS Chapter 447.

These laws, in their essence, do not concern private residences and their amenities but are instead focused on ‘innkeepers’ and public accommodations.

The district’s attempt to apply these rules to home amenity rentals is shaky since these rentals don’t provide sleeping accommodations and therefore don’t fit the hotel or innkeeper definitions.

The ongoing conflict between Swimply and the city of Henderson underscores a broader issue stifling innovation in the economy overall: rigid regulatory regimes.

The default setting is for regulatory frameworks to hinder, rather than accommodate, technological and business model advancements. Nevada is no different.

However, it doesn’t have to be this way. There is a way forward where regulators can work collaboratively with innovators rather than the adversarial status quo that is notoriously hostile to new ideas.

Our recent publication State Permissions vs. Market Possibilities: Regulatory Sandboxes in Nevada introduces a framework that would change the relationship between the state and the market.

A regulatory sandbox is a legal framework that provides a structured environment where businesses can test innovative products, services, business models, and delivery mechanisms in a live setting with real consumers, while working collaboratively with potential regulators to identify laws and regulations holding back progress.

This approach not only allows regulators to ensure consumer protection but also fosters an adaptive legal environment that accommodates innovation.

The concept of regulatory sandboxes has gained traction in various sectors globally, notably in financial services and technology. They offer a pragmatic solution, ensuring that regulations keep pace with advancements, thereby preventing the stifling of innovation while simultaneously safeguarding public interest.

In the context of Nevada’s sharing economy – from the battles of Uber and Lyft to the current struggles of Swimply and short-term rentals – regulatory sandboxes could’ve provided invaluable benefits. It would allow services like Swimply to operate within a flexible legal framework while the state observes and understands this new business model and its implications. From there, Nevada could develop informed, appropriate regulations that ensure public safety and health without unnecessarily impeding entrepreneurial initiatives.

The Southern Nevada Health Board and the city of Henderson’s current approach – applying hotel and public accommodation laws to private residences sharing amenities – is akin to fitting a square peg in a round hole. It’s not only impractical but also discourages innovation by imposing irrelevant and onerous requirements.

A regulatory sandbox would facilitate a more nuanced, adaptive approach, enabling all parties to work collaboratively in the promotion of light-touch regulation that works for consumers and entrepreneurs alike.

By allowing innovative business models to be tested and understood, Nevada can foster a more welcoming business environment, benefiting not just the economy but also providing residents and consumers with more choices and opportunities.