Stopping apartment owners leasing properties through Airbnb is ‘discrimination’, VCAT hears

Lawyers for a short-term accommodation broker have argued it is discrimination to prevent apartment-owners from leasing their properties through Airbnb, the Victoria Civic and Administration Tribunal has heard.

http://www.theage.com.au/victoria/stopping-apartment-owners-leasing-properties-through-airbnb-is-discrimination-vcat-hears-20150520-gh5oge

If a city wants to change its approach to regulating short-term rentals, what might it do?

Elsewhere on this blog, I’ve provided an alphabetical list of jurisdictions that have taken some sort of recent regulatory action on the issue of short-term rentals (STRs). It’s gotten out of date over the last couple months as I’ve focused on my course work and because so many municipalities (and a few counties and states) are taking steps in this direction these days. I do plan to update that list, but in the meantime it struck me that it might be at least as useful to re-organize it in a way that focuses more on the types of actions being taken.

Some common regulatory elements are definitely apparent, some of which may be adaptable to Vancouver – though it’s important to keep in mind that U.S. cities, which comprise the bulk of the list, often have wider powers and bigger budgets than their Canadian counterparts of equivalent sizes. Still, if Vancouver or any other city does want to adjust its approach to regulating STRs, it doesn’t have to re-invent the wheel. Instead, it can look to, and hopefully learn from, the many other jurisdictions that are doing the same (48 as of my last count, on March 23).

Scanning the reports on local government efforts to regulate STRs, it’s clear that few are trying to stop the practice all together. It’s reasonable and predictable, however, that local governments would want to understand and manage the extent of STR activity within their boundaries and the potential effects of that activity on housing supply, demand for city services, the local tourism sector, and residents’ quality of life. So, here are some of the main ways they’re trying to do that. Most of the actions below seem to have been implemented through the creation of a new bylaw or ordinance, and/or amendments to the local zoning regulations. The zoning changes are required where, as seems to be the case in many communities, renting out accommodation for less than 30 days is considered a commercial activity and is prohibited in residential zones (except by licensed bed-and-breakfast operators).

Ten common requirements of STR regulations

  • Registering and/or obtaining a permit
  • Inspections
  • Insurance
  • Presence of host
  • Local contact person
  • Notification of neighbours
  • Limiting the number of STRs neighbourhood or building
  • Limiting the type of housing used for STRs
  • Limiting the number of rental days per year
  • Paying taxes

I’ll discuss each of these briefly below and provide links to some jurisdictions that use, or are considering using, these tools to manage STRs. The fact that a jurisdiction isn’t mentioned or listed in one of the sections below doesn’t necessarily mean that it doesn’t have that requirement; It could mean I don’t have a good link to that information or that I’m relying on a media account and it doesn’t discuss that aspect of the regulation. For now, my goal is to provide examples of where these requirements are in place, not an exhaustive list. I’m also working on putting this information into table format. As usual, please bring any errors you find to my attention via Twitter or my contact form.

I’ll be commenting on these measures, and the enforcement issues I’ve seen arising from some of them, in a separate post shortly.

Registering or obtaining a permit

Setting up some kind of registration or permit system seems to be the lowest common denominator of STR regulatory programs – what everyone does regardless of the other measures they decide to implement. And since establishing, monitoring and enforcing a permit program takes staff time and resources, there is typically a fee for obtaining an STR permit. In some cases, the permit takes the form of a specific type of tax or business certificate, to which conditions are attached. In jurisdictions where permits are required, it’s also common to require the operator to provide the permit number in all advertisements and to display it in a prominent place inside the STR unit.

Permit Costs

Permit costs vary considerably. In some cases, the fee is as low as $25 (per property), as in Palm Desert. At $50 for two years, San Francisco’s fee is also low. City staff there have said it doesn’t begin to cover costs of administering the new rules. In Austin, the annual cost is $235 (April, 2015), plus a one-time $50 fee for first-timers to cover the costs of notifying neighbours. Savannah’s fee is $150 (per property) the first year and $50 to renew. In Portland, the cost varies by type of unit. For units in detached dwellings, the initial permit costs $178. Renewal is $62. For properties in multi-unit buildings, the initial fee is $100 and $62 to renew. The higher first-time fee is meant to cover the cost of the bedroom inspection, which is not required at renewal. In late 2014, the City of Auburn was considering a fee of $57. An STR licence costs $287 in Grand Rapids, Michigan. The Province of Quebec’s “tourist home” permit costs $240. Chicago’s vacation rental licence costs $500 for two years. St. Helena charges $1,075. Applicants may also have the planning department prepare a mailing list and labels (for notification of neighbours within 300 feet) for a fee of $200. Amsterdam’s is the highest charge I’ve seen: €772 as of 2012.

Who else is doing this? Some of the other jurisdictions where a permit requirement is in place or under discussion include Aspen, Massachusetts, Madrid, Nashville, and Sonoma.

Inspections

Inspections are a fairly common requirement, but jurisdictions vary as to what type, their purpose, and which department carries them out. Maui County, Portland and St. Helena all require some kind of inspections prior to approval. Austin requires either a certificate of occupancy or an inspection carried out by a certified third-party inspector using this STR checklist.

Insurance

Proof of insurance is a common condition of permit approval, but jurisdictions differ as to what types of insurance are required and how much. Insurance requirements are complicated by the fact that many homeowner policies do not cover short-term rental activity. This fact came up recently in connection with the Calgary incident. See: Austin (proof of property insurance); Chicago (homeowner’s fire, hazard and liability, as well as commercial liability insurance with at least $1 million in coverage per occurrence); Nashville (property insurance covering $1 million per occurrence); Quebec (civil liability covering at least $2 million per claim); Savannah; and San Francisco (at least $500,000 in liability, or proof that any hosting platform used provides at least that amount).

Local contact person

The media has reported various horror stories about vandalism, theft and raucous parties in Airbnb listings, a Calgary incident resulting in $75,000 in property damage being the most recent at time of writing. These examples have highlighted how people sometimes act differently – less responsibly – when they’re on vacation than when they’re at home, where the consequences for anti-social behaviour can be more immediate. This is less of a problem with guests in a hotel that has 24-hour staff and security cameras than it is when visiting partyers let loose in a residential neighbourhood and there’s no front desk to call. It’s also much less likely to be an issue when the host of the STR is actually home than when a whole house or apartment is rented out. But listings for entire houses or apartments (i.e. when the host is not present) make up a huge percentage of Airbnb listings, at least in many cities (Los Angeles, New York and San Francisco, for example). That’s why some local governments that allow the rental of entire homes (not all do) require permit applicants to identify a local contact person who can be available onsite to troubleshoot within a designated period of time. In Maui County, for example, the manager of an STR must be available to answer calls at any time and able to be present at the property within one hour of a request from a guest, neighbour or county agency. The manager must also have an office or residence within 30 driving miles of the property. Chicago requires the owner of a vacation rental or a designated contact person to have a home or office in the city. Aspen, Palm Desert, Savannah and St. Helena have similar provisions. Some jurisdictions go even further. New York State’s multiple dwelling law prohibits rentals of less than 30 days unless the person renting out the property is present. (See also the information Airbnb provides to New York City residents).

Notification of Neighbours

Some local governments require permit applicants to notify neighbours within a certain radius of the property of their plan to offer STRs. In some cases, the notice is a courtesy only. That’s true in Portland, but on the other hand, the notice letter the city has created for applicants to use is quite detailed. It includes city contact information and a summary of the regulations. Neighbours on all sides of the property and directly across the street must be notified, as well as the relevant neighbourhood association. Elsewhere, if enough neighbours object to the application, they can quash it. The city of Auburn, in California, was considering this as as of October 2014, but was also going to allow those whose applications were denied the option of paying a $480 fee to appeal to the city’s planning commission. Maui County allows neighbours within a 500-ft radius to have input into the permit process. In St. Helena, if 30% of property owners within a 300-foot radius object, the application goes to a planning commission hearing. As of April 23, 2014, the council was considering making it easier for neighbours to reach that threshold.

Limiting the number of STRs in neighbourhood or building

Some jurisdictions limit where STRs can operate by neighbourhood or zone. In Savannah, a zoning amendment that took effect on January 1, 2015, allows for short-term rentals in parts of the city that currently allow for inns, as well as three other mixed- use areas. STRs are not allowed in Savannah neighbourhoods that are primarily residential. While STRs (as opposed to licensed bed and breakfasts, which the city also refers to as short-term rentals) are banned in New Orleans, a proposal under consideration would see them allowed in some areas, but not the French Quarter. Sonoma allows vacation rentals in some zones, but not in “higher-density residential districts” or within certain agricultural areas. Sonoma also doesn’t allow STRs in “second dwelling units,” “farm family,” “agricultural employee,” or “farmworker” housing units.

In other cases, the limits are quantitative. As of October 2014, Grand Rapids began issuing STR permits that allow for the rental of one room in an owner-occupied residence, but the city will issue only 200 such permits annually. As of March 2012, St. Helena was prepared to issue only 25 permits on a first-come, first-served basis. Austin has created three categories of STRs. Type 1 is an owner-occupied dwelling, whether detached, duplex, or multi-family. Types 2 and 3 are not owner-occupied, with the former being a single family dwelling or duplex, and the latter being multi-family. For types 2 and 3 (not owner-occupied) the city will issue permits for no more than 3% of the single-family detached units in each census tract and no more than 3% of the units in each building in a non-commercial zone. Nashville also limits the number of STRs by census tract to no more than 3% of single-family and two-family units. Amsterdam limits the number of permits to 10% of all units in the private sector and as a result, stopped issuing permits in early 2014.

Limiting the type of housing used for STRs

Amsterdam residents who live in subsidized (renting for less than €699.48) or public housing, which makes up almost 50% of the city’s housing stock, are not allowed to offer their homes as STRs. This helps protect the supply of affordable housing for residents. The government states, “The presence of short stay residents in the city must not be at the expense of the quality of life in neighbourhoods, nor may it impact the availability of affordable subsidised apartments.” Similarly, Aspen has a housing authority that manages housing (both owned and rented or leased) that is meant to be affordable for the local workforce. It does not allow STRs in that housing. Some regulations, such as Portland’s, limit STR rentals to property that is used as a “primary residence.” Hamburg, Germany, allows residents to “occasionally” rent out their primary residence” without seeking government permission or obtaining a licence. A licence is required, however, to use property that is owned, but not lived in, as an STR. The advocacy group Share Better San Francisco wants to see the city’s existing rules changed to ensure that below-market rate units and in-law suites are not rented to tourists. Grand Rapids and Quebec do not allow individual rooms to be used as STRs.

Limiting the number of annual days or nights of STR use

Another way local governments are trying to manage STRs is by restricting the number of nights that a property can be rented – either at all, or when the host is not present. Amsterdam residents can use their primary residence as an STR for up to 60 days a year. In San Jose, hosts are limited to 180 stays per year when they are not present. In San Francisco, hosts can rent for an unlimited number of nights per year when they are present and a maximum of 90 nights per year when not present. However, in March 2015, the planning department said the  90-night limit was “unenforceable” due to lack of data (that Airbnb won’t provide). An amendment dealing with this issue, among others, has been proposed by the mayor and Supervisor Mark Farrell. It would see a 120-day limit on all STRs, regardless of whether the host is present.

Requiring minimum stays

In order to reduce turnover and the negative impacts on the conventional tourist accommodation sector, some jurisdictions specify a minimum length of stay for STRs. In Amsterdam, it’s seven nights (and no longer than six months). It seems the Amsterdam government sees STRs mainly as a suitable option for business travellers who may be staying in the city longer than a typical tourist, but not as long as a resident. The purpose of its STR policy is “to provide sufficient housing to accommodate (mainly international) employees and to enhance Amsterdam’s appeal as a business location.”  Shorter stays are only allowed in hotels and bed-and-breakfasts. In Madrid, the minimum STR stay is five days. Palm Desert requires at least 3 days and two nights.

Paying taxes

Many local or regional governments (including Vancouver’s) levy some kind of tax on tourism accommodation, often using that revenue to offset the costs of the city services tourists use, and/or to fund tourism marketing efforts. Hotel and bed-and-breakfast operators in many cities have complained that they are put at a competitive disadvantage on pricing by the fact that Airbnb hosts (generally) don’t pay this tax. Meanwhile, local governments are concerned about the foregone revenue. In 2012, Aspen estimated that it was losing about $100,000 per year in foregone sales tax (11.3%) and licensing fees. Sonoma conducted an audit in 2014 and estimated that it was losing between $500,000 and $1.3 million in taxes on illegal short-term rentals.

In an effort to even the playing field as well as capture revenue, many local governments are now requiring STR hosts to agree to collect and remit these taxes as a condition of obtaining a permit. Beyond that, in a handful of cities the process has been streamlined through formal agreements between Airbnb and the local government. In those cases, Airbnb is automating the collection and remission of tourist taxes on behalf of registered hosts. Such arrangements are now in place in Portland (as of July 1, 2014); San Francisco (as of October 1, 2014); Amsterdam and San Jose (as of Feb. 1, 2015); Chicago and Washington, D.C. (as of February 15, 2015); and most recently, Malibu (April 20, 2015). Malibu’s tax collection deal with Airbnb follows the city’s issuing of subpoenas to about 60 short-term rental sites in May 2014. At the time, STRs were already legal, as long as owners registered with the city and paid the 12% transient occupancy tax. But the city had found there were about 400 online ads for STRs in Malibu, while only 50 properties were registered. The city sent the subpoenas to determine the true number of STRs within its boundaries, and to help it follow up on unregistered properties and collect transient occupancy taxes from those hosts.

However, even in cases where Airbnb is cooperating, at least to some extent, on the tax issue, local governments are finding that imposing taxes on STRs and actually collecting what they’re legally entitled to are two different things – and that Airbnb’s cooperation has some very critical limits. In Amsterdam, Airbnb is collecting tourist taxes from visitors, but the city doesn’t have access to information on who’s paid, and so can’t know the rate of compliance. Under Portland’s new rules, Airbnb began collecting the transient lodging tax on bookings as of July 1, 2014 and remittng that revenue to the city monthly. Here again, though, it is difficult for the city to verify because so far only a small portion of city hosts have actually registered, and Airbnb does not want to provide the city’s Bureau of Development Services, which runs the permit program, with hosts’ names and addresses. According to this news account, Airbnb’s public policy director, David Owen, suggested the city’s pursuit of that info was similar to “the National Security Agency mining personal data on Americans from phones and the Internet,” and that “the city shouldn’t get ‘unfettered access’ to its hosts’ personal information without getting a court subpoena.” In January 2015, council responded by empowering its Bureau of Revenue to demand that all STR brokers provide it with the names and addresses of their Portland hosts. “The industry has made it clear they do not intend to play ball with us on the enforcement side,” said City Commissioner Nick Fish. “What we have been told by the industry is ‘butt out.’” As of early May 2015, the bureau’s new powers seemed to be going unexercised.

As mentioned above, I’ll comment on these measures and some enforcement issues that have arisen from them in a separate post, soon.

Getting my head around Airbnb….what I’m reading

Here’s a preliminary list of some articles I’ve found useful and relevant to conceptualizing Airbnb, and its role and impact in relation to rental housing in Vancouver – sort of a preview lit review bibliography. This has a bit of a Canadian, and a Vancouver, slant to it, because that’s my context. Some of these I have a better handle on than others (to make a massive understatement). Definitely a work in progress…Will add more about the “sharing economy” and Vancouver’s economy at a later date.

Regarding access to the full text of journal articles…I am fortunate to be able to access to a smorgasbord of stuff right now by dint of the fact that I’m paying tuition to SFU (thanks SFU library). If you don’t have that same access, try searching through your own public library, such as the VPL. There’s a good chance that will work for you. Perhaps an interlibrary loan? If not, you might want to check out the external access programs offered by your local post-secondary institution – I think most have some version of that by now. Info on SFU’s program is here. There’s also Google Scholar…or google the article author/s – sometimes they post their own published articles or similar versions.

On housing as a right

Bratt, Rachel G., Michael E. Stone, and Chester Hartman. “Why a Right to Housing Is Needed and Makes Sense.” In The Affordable Housing Reader, edited by Rosie Tighe and Elizabeth Mueller, 53–72. London ; New York: Routledge, 2012.

Carver, Humphrey. “The Ultimate Housing Problem.” In Houses for Canadians: A Study of Housing Problems in the Toronto Area, 1948. Toronto: University of Toronto Press.

United Nations General Assembly. “The Universal Declaration of Human Rights.” United Nations, December 10, 1948.

On affordable and rental housing policy

Eberle, Margaret, and Don Driedger. “Missing the Bus: Transportation and Housing Affordability.” PowerPoint presented at the BC Nonprofit Housing Association Annual Conference, Richmond, BC, November 17, 2014.

Hulchanski, David. Canada’s Dual Housing Policy: Assisting Owners, Neglecting Renters. Toronto: Centre for Urban and Community Studies, University of Toronto, September 2007.

Sewell, John. Houses and Homes: Housing for Canadians. Toronto: J. Lorimer, 1994.

On financialization, particularly of housing

Aalbers, Manuel B. “The Financialization of Home and the Mortgage Market Crisis.” Competition & Change 12, no. 2 (June 2008): 148–66. doi:10.1179/102452908X289802.

———. “The Great Moderation, the Great Excess and the Global Housing Crisis.” International Journal of Housing Policy 0, no. 0 (2015): 1–18. doi:10.1080/14616718.2014.997431.

Fields, Desiree, and Sabina Uffer. “The Financialisation of Rental Housing: A Comparative Analysis of New York City and Berlin.” Urban Studies, July 31, 2014, 0042098014543704. doi:10.1177/0042098014543704.

Harris, Douglas C. “The Condominium and the City: The Rise of Property in Vancouver.” Law & Social Inquiry 36, no. 3 (June 1, 2011): 694–726. doi:10.1111/j.1747-4469.2011.01247.x.

Lapavitsas, Costas. “The Financialisation of Everyday Life Must Be Confronted.” New Statesman, November 1, 2013.

Martin, Randy. Financialization Of Daily Life. Philadelphia: Temple University Press, 2002.

Sawyer, Malcolm. “What Is Financialization?” International Journal of Political Economy 42, no. 4 (December 1, 2013): 5–18. doi:10.2753/IJP0891-1916420401.

Smith, Susan J. “Owner Occupation: At Home in a Spatial, Financial Paradox.” International Journal of Housing Policy 0, no. 0 (2015): 1–23. doi:10.1080/14616718.2014.997432.

Shiller, Robert J. Irrational Exuberance. 2nd edition. New York: Crown Business, 2006.

On urban inequality and justice

Fainstein, Susan S. The Just City. Ithaca, NY: Cornell University Press, 2010.

Hulchanksi, David. The Three Cities Within Toronto: Income Polarization Among Toronto’s Neighbourhoods, 1970-2005. (2010). Toronto: Cities Centre, University of Toronto.

Ley, David, and Nicholas Lynch. Divisions and Disparities in Lotus-Land: Socio-Spatial Income Polarization in Greater Vancouver, 1970-2005. Research. Toronto: Cities Centre, University of Toronto, August 2012.

On regulating short-term rentals

Gottlieb, Charles. “Residential Short-Term Rentals: Should Local Governments Regulate the ‘Industry’? Planning & Environmental Law. 65, no. 2 (2013): 4–9. doi:10.1080/15480755.2013.766496.

Pindell, Ngai. “” Home Sweet Home: The Efficacy of Rental Restrictions to Promote Neighborhood Stability”. Saint Louis University Public Law Review 29 (2010 2009): 41-84.

Wyatt, Anne. “When Vacancies Are an Asset: Empty Units Could Be Converted to Affordable Rental Housing.” Planning 80, no. 9 (2014): 29–32.

On urban tourism, “new urban tourism” and “authenticity”

Ashworth, Gregory, and Stephen J. Page. “Urban Tourism Research: Recent Progress and Current Paradoxes.” Tourism Management 32, no. 1 (February 2011): 1–15. doi:10.1016/j.tourman.2010.02.002.

Füller, Henning, and Boris Michel. “‘Stop Being a Tourist!’ New Dynamics of Urban Tourism in Berlin-Kreuzberg.” International Journal of Urban and Regional Research 38, no. 4 (July 1, 2014): 1304–18. doi:10.1111/1468-2427.12124.

Zukin, Sharon. Naked City: The Death and Life of Authentic Urban Places. Reprint edition. Oxford; New York: Oxford University Press, 2011.

How does all this fit together? Sorta like this, maybe….. Also, if you are interested in more of this type of reading, see my list of housing, urban studies and urban planning articles (not directly related to Airbnb, posted on my other blog). Just the ones that catch my attention as I scroll through my various table-of-contents alerts on academic journals…

Airbnb and Housing in a Venn Diagram

In planning the literature review section of my thesis I’ve been advised to ensure I make the links between all the various concepts and bodies of literature I want to draw on and reference. That seems easy enough, since to me all the concepts actually are connected – it’s not like I have to make the connections up. But having something in one’s head and articulating it on paper are two different things. So, I made this diagram to help me show/talk about the connections.

I see Airbnb as being the product of, and at the intersection of, all these concepts, trends, inventions, etc. The names of these three broad areas came after grouping the individual list items in what seemed like a logical way. I don’t see this as a perfect or finished conceptualization…some things could easily go in more than one category and I’m probably missing some stuff. Ideas could perhaps be named or identified in better ways…Still, it’s been helpful to me so far (click to enlarge).

Airbnb instersections and ingredients

This is also somewhat particular to Vancouver – at least the “condomania” part and the Strata Titles Act of 1966, because equivalent legislation was passed at different times elsewhere. For more on that fascinating topic (I’m serious), see The Condominium and the City: The Rise of Property in Vancouver, by Douglas Harris in Law and Social Inquiry (Summer 2011). It’s very readable.

Other literature I’ve (so far) found relevant to the concepts in this diagram is here.

Forty-five cities (and counting) taking steps to regulate short-term rentals

Here is a list of jurisdictions that have either recently taken steps to regulate short-term rentals or are more proactively enforcing their existing regulations. In most instances, the steps have been taken in response to the increasing popularity of Airbnb, but the changes affect or will affect other short-term rental services as well. Some cities are trying to make it easier for their residents to offer short-term rentals, but in most cases the intention seems to be to create more precise definitions of “short-term rental,” to implement oversight measures, such as inspections, registries or complaint mechanisms, and/or to find ways of collecting sales or lodging taxes on transactions that have so far escaped the taxes that hotels and bed-and-breakfast operators pay. I’m not in a position to judge the efficacy or fairness of these various regulatory actions; I just think it’s useful to have some kind of list and summaries of steps taken. Some politicians and city officials have specifically mentioned being motivated to act by the desire to preserve affordable housing stock for residents (as is the case in New York, San Francisco, Portland, Amsterdam, Paris and Berlin), which I think is an important and valid concern.

I’ve referred to “cities” in the title because that’s typically the level of government involved, but in a minority of cases it’s county, state or provinces that have taken action.

The list is not comprehensive, but it’s more complete than most others I’ve found so far. Many jurisdictions have taken some kind of regulatory action just in the last few months. Things are changing rapidly, so I may not be able to keep the list up to date. The summaries I’ve provided don’t necessarily mention every aspect of the regulatory steps a given jurisdiction has taken. They are paraphrased from the linked media stories and should be taken as a starting place for further research and verification by those interested. I’m happy to receive corrections and suggested additions.

Please also see my timeline for similar info in a different format.

U.S. (Alphabetically by city)

1. Ashland: Ashland hired an inspector/enforcement officer in late 2013 to crack down on illegal short-term rentals. As of April 2014, he had been in touch with about 200 properties. The officer explains the rules, and in some cases issues 10-day cease and desist letters or imposes fines. He finds some illegal properties by searching website and is notified of others by local residents.

2. Aspen: As of March 2012, the city estimated it was losing about $100,000 per year in foregone sales tax (11.3%) and licensing fees. It legalized short-term rentals for those willing to buy a licence and pay taxes. It also required hosts to designate a local person to respond to any complaints or property-related issues. Aspen also has a housing authority that provides deed-restricted housing that is meant to be affordable for those in the city’s workforce. Short-term rentals are not allowed in the deed-restricted housing.

3. Auburn: As of October 2014, the city was at work on an ordinance that would require a $57 licensing fee. Homeowners who want to operate a legal short-term rental would need their neighbours’ approval, though if denied approval, the prospective host could appeal to the city’s planning commission (at a cost of $481).

4. Austin: The city has required registration of STRs since October 1, 2012. Amendments to Austin’s STR program took effect on January 1, 2014. See the ordinance here. The city created three different types of short-term rentals (1, 2 and 3). The fee is $235, plus a $50 fee for first-time registrants, which is to cover notifying neighbours. Prospective hosts must provide a certificate of occupancy or certified inspection, as well as proof of insurance and payment of hotel occupancy tax, if applicable.The city limits the number of type 2 and 3 properties by census tract and in each building (no more than 3% of units in a building).

5. Boston: Mayor Martin Walsh has instructed city inspectors not to fine local Airbnb hosts, but city councillor Sal LaMattina has put forward a motion asking for a hearing on short-term rental regulations. The public meeting is scheduled for January 26, 2014.

6. Boulder: In early January, the city’s zoning enforcement office responded to complaints by warning 20 property owners who were illegally renting their properties on a short-term basis. The city had received numerous complaints about the zoning breaches from one resident. Staff are to propose options, including sticking with the status quo, to council in the first quarter of 2015.

7. Chicago: In November 2014, the city’s budget director proposed a new initiative to collect the city’s 4.5 percent hotel tax on short-term rentals that don’t currently pay it. In January, the Washington Post reported that Airbnb would begin collecting taxes on nightly stays in Chicago as of Feb. 15.

8. Grand Rapids: The city began licensing single-room short-term rentals, subject to various restrictions, in October 2014. According to a November 13 media report, the city had received only four licence applications at that time, although there were about 70 Grand Rapids listings on Airbnb.

9. Greenport, Suffolk County (New York) Greenport’s code committee discussed short-term rental regulations in January 2015, but decided to consult the public before drafting any new rules, which it hopes to begin in April.

10. Los Angeles: In December 2014, council directed staff to research the city’s regulatory options by looking at the Portland and San Francisco models and to come back to it with recommendations. Earlier in the year, council directed staff to contact the city’s Airbnb hosts and inform them of their obligation to collect the state’s 14 percent transient occupancy tax, which applies to rentals of less than one month.

11. Madison: Council voted to regulate short-term rentals in October 2013. The ordinance states that only homeowners can legally offer short-term rentals and that short-term rentals should not be closer than 500 feet. Hosts who obtain a permit can rent out their primary residence for as many as 30 days a year while they are not present. The limit doesn’t apply if the host is present. The city is generally adopting the same approach for short-term rentals as applies to “tourist rooming houses” at the state level. This means an inspection is required before a permit can be approved. Ordinance here. (pdf)

12. Malibu: In an effort to ensure that short-term rentals pay the city the 12 percent transient occupancy tax, in May 2014, Malibu council agreed to subpoena information from various short-term rental services. ““The main purpose of this is to be able to control and make sure that people who rent out their homes are not adversely affecting our neighborhoods,’ says Laura Rosenthal, Malibu council member.”

13. Massachusetts: In January 2015, two Democratic congress reps for Boston (Aaron Michlewitz and RoseLee Vincent) introduced legislation to regulate short-term rentals at the state, rather than city, level. The details of the proposal are similar to legislation recently passed by the City of San Francisco. Hosts would have to register with the Department of Housing and Community Development and pay the same 5% tax that hotels are subject to, which funds tourism activities.

The bill would also allow cities and towns to collect additional excise taxes beyond the State’s 5% requirement, similar to the Boston hotel tax. Cities would also obtain the power to limit short-term rentals to an owner’s primary residence, thus prohibiting renters from sub-leasing to short-term rental services. Fines for non-compliance with the proposed regulations could be as high as $1,000 per day.

Continue reading

Academics on Airbnb

While many well-researched and written news articles about Airbnb and its impact on housing have been published (some of them linked on my Airbnb timeline), so far there seems to be a bit of a dearth of scholarly writing on the topic. That’s not surprising since academia moves at a much slower pace than media and pop culture (and fittingly so). Below is what I’ve found so far in the way of academic research on Airbnb specifically. I will try to update this list or write more posts as I come across work that is relevant to Airbnb’s impact on rental housing.

*Note: You might need to access some of these articles through a public or university library.

Defining the Price of Hospitality: Networked Hospitality Exchange via Airbnb, by Tapio Ikkala and Airi Lampinen (Poster at the 17th ACM conference on computer supported cooperative work & social computing) Feb 15-19, 2014.

These two Finnish researchers with the Helsinki Institute of Information are interested in social exchange theory. They interviewed 11 Airbnb hosts with the goal of “shed[ding] light on the behaviors and norms in play in a socio-technical system that fosters monetary transactions as a part of exchanges that require coordination and trust between the exchange partners.”

The researchers reached two main conclusions: It’s common for hosts to increase the price of their listing as they accumulate positive reviews, and hosts may choose to offer their listing at a lower price so as to allow them a wider choice of guests. No surprises there, and these patterns seem consistent with landlords in the long-term rental market act.

The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry, by Georgios Zervas, Davide Proserpio and John W. Byers (January 22, 2014)

This study from the Boston University School of Management looks at the one question that many in the hospitality industry are burning to know the answer to: How is Airbnb affecting their sector’s revenues? The authors (including two computer scientists) created a dataset of all Texas Airbnb listings between 2008 and 2013 (22,000 stays) and compared that to a panel of quarterly tax revenues for ten years. Based on their results, they estimate that “a 1% increase in Airbnb listings in Texas results in a 0.05% decrease in quarterly hotel revenues” and that lower-end hotels and those that don’t cater to business travellers were most adversely affected.

Our work is among the first to provide empirical evidence that the sharing economy is significantly changing consumption patterns, as opposed to generating purely incremental activity, as argued in prior work. Studying the case of Airbnb…we identify that its entry into the Texas market has had a quantifiable negative impact on local hotel revenues.

The authors include a lot of technical detail on their methodology in the paper.

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Are Online Vacation Renters Displacing Vancouverites?

My story on how short-term rentals, as facilitated Airbnb and similar web tools, affect the supply of long-term rental housing in Vancouver appeared in The Tyee on June 27. Read all about it here: Are Online Vacation Renters Displacing Vancouverites?

I was pleased to see follow-up coverage by CBC Radio and TV. BC Almanac did a segment July 5, which covered much of the same ground as my story, though focused more on the lack of lodging taxes paid in these transactions.

Then on July 6, CBC TV did a 2-minute news segment. It’s great to see this, though I note that they interviewed a Yaletown resident who rents out the second bedroom in his condo. From a safety and security point of view, that sort of short-term rental is not really the issue, since the host will often be present when the guest is there and that does a lot to mitigate concerns and risks.

More to my point, I would argue that renting out a spare room (or an entire apartment or home while the usual resident is away) has a fairly minimal effect on the supply of rental housing that’s available to actual Vancouver residents. It’s true that that second bedroom could be housing a local resident instead of a tourist and we certainly need all the affordable housing we can get in Vancouver. But I think policy-makers should be much more concerned about the many entire apartments, condos and secondary suites and houses that are being rented to tourists (at higher rates and without the oversight of the Residential Tenancy Act) instead of adding to the city’s woefully inadequate and aging rental housing stock.

I also don’t know, but would like to, where CBC TV got the figure of 3,000 rooms available for short-term rental to tourists.

Elsewhere, Vancouver councillor Geoff Meggs elaborated on the comments of his I included in my story on his own blog. And a Gabriola blogger chipped in here.

Have Airbnb evictions arrived in Vancouver?

While researching my story on short-term rentals for The Tyee back in the spring, I asked the Tenants Resource and Advisory Centre whether staff there had heard of any Vancouver tenants being evicted to make way for short-term rentals. The answer was no, but that was before Plan A Real Estate bought 1168 Pendrell (Hoffmann Manor), a low-rise apartment building in Vancouver’s West End, in August and promptly began issuing eviction notices to tenants.

Wanting to make a property available for short-term rental is not legal grounds for eviction, so no sane landlord would ever state that as a cause. However, based on what I’ve gathered from media reports, Twitter, and the Greedevictions blog set up by Hoffman Manor tenants, Plan A was illegally renting out apartments in that building on a short-term basis through Airbnb. It’s hardly a logical leap to conclude that the company’s desire to increase its profits through short-term rentals was one of the factors driving the eviction notices it sent. That said, Plan A has stated that it issued the eviction notices because after taking possession of Hoffman Manor on August 5, it found that tenants were not complying with the terms of their existing leases, and that it had no intention of converting the entire building to short-term rentals. If bringing tenants into compliance with their leases was really the only goal, issuing 11 eviction notices within a month of taking over is an inept and draconian way to go about it. For a professional property management company to make that claim strains credulity, but that is nevertheless what Plan A has said. Continue reading