Tuesday, October 27, 2015

Vacation Rental Sites Could Go Belly-Up If Forced To Pay Like The Rest Of Us


by Denise Sullivan

It hasn't been a great month in public relations for the so-called "sharing economy," at least here at the industry's ground zero, not-so-affectionately known as San Francisco 2.0. Here, even regular citizens-- and not even particularly politicized ones-- are starting to get hip to what unfettered capitalism and unregulated business looks like in their town now that the umpteenth Uber driver was accused of threatening a female passenger with sexual violence, followed by Airbnb's appallingly tone-deaf ad campaign calling out public works and employees. The home-sharing app stirred further controversy as its misguided billboard and bus shelter ads sparked questions of the financing of the No on F measure they fiscally sponsored. Going to vote next Tuesday, if F passes, it could  result in tightening existing regulations on the books by actually enforcing them, which would mean a new dawn for vacation rentals, and a bummer for the pure profit margin of Airbnb.

The No people, meaning Airbnb, believe that registration of units and thus, regular payments into the hotel tax pool, will open the door to neighbors "spying" on neighbors. In a classic case of employing scare tactics, Airbnb's rhetoric is the kind that has long had people voting against their own best interests and contributed to the nation's slow drift to the right. Taking this matter to the ballot has fooled only some of the people, though so far it's been totally successful in another regard: At pitting neighbor against neighbor, and generally turning otherwise rational humans into stark raving monsters; Facebook friends are officially becoming frenemies and mere mention of Airbnb in town has pretty much been grounds for cooling out and winding down longstanding relations. As of today, the ballot recommendations of venture capitalist Ron Conway are making the rounds: He's voting No on F. Now if it were me, that would be enough to swing my Yes vote, but sadly, even  the most educated and engaged among us are still waffling and think No is a go.

Yes on F voters are rightly irritated and concerned: They want to limit rentals and track hosts according to the regulations on the books already in place. They see unregulated vacation rentals tying-up precious housing stock, driving rents upward, and keeping our town more friendly for tourists while it grows increasingly hostile to residents and everyday workers and people. Add to that, our normally quiet and tight-knit neighborhoods are turning into hotel zones, with faceless parades of daily newcomers wheeling suitcases in and out of units that could more effectively be put to use as permanent housing for an expanding as well as aging workforce. Last Spring the City of Santa Monica successfully voted to enforce pre-existing vacation rental regulations, and guess what: It has not destroyed the influx of tech businesses, workers, vacation renters or new residents. At all.
Santa Monica, Calif., is cracking down on Airbnb and the rest of the short-term rental industry. Tuesday night, the Santa Monica City Council adopted its home-sharing ordinance, which bans the rental of an entire unit for less than 30 days and requires those who take part in allowable home-sharing to obtain a business license from the city and pay a 14% hotel tax. The law takes effect June 15. The city says proceeds from the hotel tax will help pay for enforcement officers and an analyst to find illegal rentals online.

The ordinance makes a clear distinction between what Santa Monica officials term "home-sharing" and "vacation rentals." Home-sharing requires the primary resident of the space to live "on-site during the visitor's stay." Vacation rentals, as defined by Santa Monica are any rentals 30 days or less in which the guest "enjoys the exclusive private use of the unit." The new ordinance deems vacation rentals illegal if the property is only approved for permanent residence.

Around 100 protesters organized by Airbnb gathered outside Santa Monica City Hall Tuesday afternoon before the vote, according to the Los Angeles Times. Arlene Rosenblatt, a Santa Monica homeowner who lists her apartment on Airbnb told the paper, "It's such a blessing for us to have this money... We need to have these regulations changed."

But in an interview with NPR, Santa Monica Mayor Kevin McKeown said vacation rentals aren't good for his city. "When a landlord or other property owner takes a unit off the housing market and uses it for vacation rental, there is no permanent resident on the site, we've lost that part of the fabric of our community," McKeown said. "And the people who are coming to stay are not directly supervised, so they, being on vacation may, in total innocence, may be coming and going at two or three in the morning. They may be not aware of the noise they're making for the neighbors. The neighbors aren't sure who the people are. You end up with somebody you don't know who has the keys to the building, to the parking garage. You don't who they're going to bring in with them. And you don't have that connection."

Santa Monica isn't the only city to push back against Airbnb and others in the short-term rental industry. We previously reported that New York's attorney general found that almost three-quarters of New York City bookings break the law, and that the state is owed $33 million in hotel taxes. An increasing number of cities across the country are starting to institute hotel taxes on Airbnb rentals. The pushback has even gone international, with Spain fining Airbnb $40,000 and threatening to block its website.
Opponents would have you believe they need to rent out their rooms and in-law apartments to supplement their incomes in an increasingly expensive San Francisco which is of course a point well-taken, BUT: If they aren't already registered and reporting, they are likely among the one in 10 hosts presently operating illegally. Only a fraction of San Francisco's approximately 10,000 rentals are currently registered with the City and yet Airbnb claims a share from those rentals-- without penalty. The fact that they have poured more than a reported $8- $10 million into the No on F campaign should again be enough to make doubters understand: a No vote on F stands to further benefit Airbnb-- a company with a $10 billion valuation-- while robbing city coffers and services of income. If that's not enough to persuade people to vote Yes, there's really no reasoning with anyone. Check back with us next Wednesday for results on this and other matters pending in San Francisco where the style of "sharing" is likely coming to a charming and beloved city in your state or country soon-- if it hasn't already.

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At 3:17 AM, Anonymous Anonymous said...

Believe me, I am NO fan of AirBnB.

I am only accustomed to its fraud from the "front end," i.e., the consumer website. There one can observe posting 4-5 different prices for a property within a minute of viewing. And the highest of those prices is invariably raised if one makes the mistake of actually booking.

You seem to suggest that AirBnB should be responsible for the property owners' (lack of) registration of their rentals, which system pre-dates AirBnB? I hardly disagree with that but how would THAT be enforced given that Measure F exists precisely because the existing rental registration law is not enforced?

Your analysis would be more cogent if the money spent by AirBnB against the measure were compared with an estimate of taxes it currently avoids, annually, by "claiming a share" of the rental fees of the unregistered 10% of the properties.

Another statistic floating in space: the state of New York "is owed $33 million in hotel taxes."
What fraction is due to NY City rentals? Is that an annual figure? For the last ten years? How much is attributable to AirBnB? (Note $33 million is about 0.02% of the New York state's $142 billion annual budget.)

Wake up Santa Monica. Any corporation worth its smug, arrogant, cowboy, thuggish entitlement attitude is measured by how effectively it can destroy "part (or all) of the fabric of (y)our community."

John Puma

At 12:09 AM, Anonymous Anonymous said...

Both this Blog article and John Puma are so wrong that it's almost laughable except that some stupid fuck who is too damn lazy to actually read the current regulations versus the Prop F Ballot Initiative would go ahead and vote Yes for Prop F based on the assumptions of a wanna be political journalist spewing more lies and inaccuracies about what is really going on in San Francisco . But just in case, we have a few rare, enlightened, open minded individuals out there who really wants to explore the facts, here goes. For one thing Airbnb is collecting the TOT and paying the San Francisco Treasury Dept this transient tax each month. That is the reason when one looks at a listing that shows is renting, say for $100 a night, but after the taxes are added and any security deposit or cleaning fees are applied, the total amount is why the charges are much higher than the price quoted on a listing. For those that think or believe that Prop F is going to force Airbnb to pay up the transient taxes, they are so off-based as this is already being done right now (before Prop F is even voted on or enacted). Airbnb might be a funding the campaign to beat Prop F but there are many individuals in San Francisco who are independent thinkers and understand that that Prop F is authored by some very NIMBY minded individuals, Dale Carlson and his buddy Doug Eggmann who worked in the Pacific Stock Exchange before it closed its doors in 2001. if you google Doug Eggmann you will see that he sold a residence in San Francisco in 2012 in the tune of $35 million!! In addition, the New York Hotel Industry in cahoots with the San Francisco Hotel Union workers who are also backing Prop F has a stake in this fight because they see short term rentals (regardless of which hosting platform is being used) could hurt their profits in the long run. Senator Dianne Feinstein whose husband is a huge investor and owns a stake in the Claremont Hotel has endorsed Prop F. Why? Prop F will not bring Airbnb down nor will it slow down short term renting in San Francisco. If it passes, hosts will return to the Black Market era of short term renting when it was totally illegal and do short term renting regardless. Today there are close to 100 short term rental websites with new ones being created each day. Nothing has stopped short term renting in the past and nothing will in the future.

At 5:45 AM, Anonymous Anonymous said...

I'm not impressed with your ability to follow the argument made in the blog and give an on-point reply. Yes, AirBnB is now paying taxes (after being called out as a scofflaw for years). You got that one, but the rest of your reply is a series of ad hominem attacks on Prop F supporters rather than a rebuttal of the Proposal or the blog's argument.


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