Anaheim, Calif., the home of Disneyland, has had to revise its original plan to ban Airbnb and other home-sharing platforms from operating in the city over concerns of the negative impact on its residents.

In July, the city passed a law that would essentially ban short-term rentals over an 18-month period. For the next year-and-a-half, current short-term regulations are being changed and hosts who operate short-term rentals without a permit can have their water and power shut off. Hosts without permits who use sites like Airbnb and HomeAway can also be fined by the city for violating the new law.

As of July, there were 363 hosts in Anaheim operating with permits. The city began requiring permits for short-term rentals in 2014, which also included a 15-percent lodging tax, and those hosts who currently have those permits have 18 months to conform to the new law.

Additionally, housed within that new ordinance, however, was a clause that included fines for hosting platforms that advertised listings that violated the new law.

It was this section of the law that prompted Airbnb to file a lawsuit against Anaheim, as it has done in other cities, like San Francisco, that have proposed similar legislation.

Using the argument of freedom of speech and the federal Communications Decency Act (CDA), Airbnb argued that fines levied against the home-sharing platforms would be illegal. The CDA essentially says online platforms or sites like Airbnb are not responsible or liable for whatever activity their users engage in.

And on Aug. 10, the day before the new ordinances would go into effect, Anaheim’s acting city attorney, Kristin A. Pelletier, informed Airbnb’s lawyers that, after reviewing the law, the city will not fine Airbnb or other platforms.

As a result, Airbnb withdrew its lawsuit against the city on Aug. 22. Airbnb spokesperson Nick Papas said, “”We appreciate that Anaheim shares our view that the existing ordinance conflicted with federal law. We need new rules for home sharing, and we want to work in a collaborative fashion with city leaders to craft rules that work.”

However, the platforms aren’t completely out of the woods entirely. In the letter, Pelletier added: “… this should not be construed to estop or otherwise prohibit the city from subsequently adopting a different ordinance that is determined to be consistent with the Communications Decency Act and any other laws deemed to be applicable to hosting platforms.”

And as the city of Santa Monica, Calif., has shown, it’s still possible for cities to fine the Airbnb and HomeAway hosts who are operating illegal short-term rentals. This is also a strategy being pursued by a law that’s up for the governor’s approval in New York. Instead of fining the platforms themselves, a new law in New York would heavily fine the hosts who advertise illegal short-term rentals on those sites.

Just because the city of Anaheim won’t fine Airbnb or its peers, it’s not necessarily backing down on its stance against short-term rentals. The original ordinance still includes fines of up to $2,500 for people who violate the new law by operating without a permit or not complying to its restrictions regarding noise, occupancy, fire safety, accessibility, and parking. It went into effect on Aug. 11.

Mike Lyster, a spokesperson for the city of Anaheim, told the Los Angeles Times, “The city will continue to identify and take action against un-permitted short-term rentals operating in Anaheim. We’ll also continue to work to ensure that permitted short-term rentals are responsibly managed and don’t disrupt our neighborhoods.”

Photo Credit: Airbnb has dropped its lawsuit against the city of Anaheim, but that doesn't mean the city won't continue to enact stricter legislation on short-term rentals. Airbnb / Facebook