Agenda Packet 9-23-19 Work Session

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Legislative and administrative responses Legally and administratively, how have cities dealt with STRs and their growth? A frequently adversarial relationship has grown between participants in the industry and nonparticipants, with local governments caught in the unhappy role of a mediator who welcomes a piece of the potential rewards but must try to preserve the character of its neighborhoods and the quality of life of its permanent citizens. The platform companies are often seen as the villains, and their distance from the consequences of their policies can blot their reputation, while coalitions against them can be unstable marriages of convenience. The bete noir, Airbnb, has not been consistent itself. The company obstructs efforts to monitor it yet at other times seems cooperative and eager for cities to share in the wealth. In 2015 it created a Community Compact by which the company partners with cities by collecting and remitting taxes to them. An article by Dana Palombo, as well as providing a good introduction to the sharing economy and STRs, details two opposing approaches to Airbnb, specifically by New York City and San Francisco. Leaders in NYC have opted for a restrictive approach aimed to preserve the city’s economic stability while SF—the company’s birthplace--has chosen to work with Airbnb and accept a certain amount of volatility. NYC has legally fought Airbnb as “illegal hotels” while Airbnb—their appeals tailored to present the company as a possible abettor of social programs—has offered to collect the requisite taxes, claiming the city is missing out on up to $65 million. Much hinges on the inability of cities to glimpse Airbnb’s true earnings. It’s also felt they should be more forthcoming about the fact that they do not insure hosts or guests, though their terms do explicitly mention that the parties they “match” should make such arrangements on their own. NYC has some unique zoning laws that Airbnb runs afoul of, but at little cost, as violations are difficult to detect and enforce. An approach that would back off and acknowledge that STRs are going to operate anyway would also allow collection of taxes, a sore point for hotel operators who resent the break STR hosts are getting. The relationship between Airbnb and San Francisco has been less adversarial. With STRs legalized there after rocky beginnings, Airbnb has maintained it wants to follow the law and collect the 14% tax, allowing the city to collect (by one estimate) $274 million from STRs and--as elsewhere—soothe hotel operators by seemingly leveling the playing field. “The city is accepting home-sharing, but on its own terms through restricting regulations.” (p.313) Among other things a STR host is limited to renting 90 nights per year, and restricts renters from themselves renting out, which would violate their lease. As in Portland (p.317) Airbnb, whether as image-polishing or as a genuine effort, is trying to foster a relationship with the city’s citizens and entrepreneurs as more than mercenary, via their Shared City initiative. With the tempting financial incentives of STRs to homeowners, municipalities may not have a choice of whether to “allow” them. Listings can overwhelm an enforcement apparatus with sheer numbers even when clear rules are in place. Despite an ordinance “among the toughest in the country” which entails licensing, registration and a list of prohibited buildings, Chicago is beset with illegal rentals via Airbnb and other vendors. September 23, 2019, Work Session – Item 3