Recent controversies involving the sharing economy in Austin are about to enter a new phase, as lawsuits challenging city regulations of ridesharing and short-term rentals have been filed.

Over the past year, the Austin City Council has imposed burdensome new regulations on the sharing economy. Most of the media attention has focused on ridesharing. In December, the council mandated fingerprint background checks for ridesharing drivers, a move that ultimately led the two main ridesharing companies, Uber and Lyft, to suspend operations in the city.

At the same time, the city also has started to clamp down on short-term rentals, imposing a permanent moratorium on new licenses for properties not occupied by their owners and limiting the number of people who can rent or even gather in an STR property.

Regulating the sharing economy out of existence is bad policy. It may also be illegal. On Monday, the Texas Public Policy Foundation filed a legal challenge against Austin’s STR ordinance, alleging the law violates the Equal Protection and Due Course of Law provisions of the Texas Constitution. According to TPPF General Counsel Robert Henneke, “Austin’s short-term-rental ordinance goes way beyond the lawful scope of the city’s authority and purposefully infringes upon citizens’ fundamental constitutional rights.”

Austin’s new ridesharing ordinance has also come under legal attack. Last week, Austin Councilmember Donald Zimmerman filed suit, challenging the results of the recently defeated ballot measure that would’ve prevented new restrictions on ridesharing from going into effect. The challenge claims the city government wrote ballot language was confusing and did not provide enough information about the fingerprinting issue.

These lawsuits are more evidence that opposition to Austin’s anti-sharing-economy ordinances isn’t going away. Instead of wasting time and money defending itself from these suits, the city should adopt a new course and work out a regulatory system that allows the sharing economy to thrive.

Featured Publications