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Airbnb Closing on Deal With Portland To Collect Lodging Tax on Sharing Rentals

Mar 27, 2014 7:30 am

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Portland, OR is among the easiest and most predisposed cities to start with for Airbnb, to play out its grand vision of the sharing economy. It will be a lot more difficult to replicate elsewhere, even in its hometown of San Francisco.

— Rafat Ali

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Redfishingboat  / Flickr

Portland, OR is the going to give Airbnb is first city lodging taxes deal. Redfishingboat / Flickr


Online vacation-rental service Airbnb, which has been operating in Portland outside of the land-use rules that govern other short-term lodging, says it’s near a deal with the city to collect taxes on those rentals.

Portland, meanwhile, has released a revised set of proposed rules that would explicitly authorize such short-term rentals — provided they meet city code in other ways. The deal follows Airbnb’s confirmation earlier this month that it plans a large customer service center downtown and hire 160.

The San Francisco company had triggered concerns among homeowners, neighborhood associations and hoteliers who were concerned it wasn’t playing by the same rules as others. Portland has been enforcing violations on a case-by-case basis, when neighbors complained.

The tax deal under discussion, first reported online by Fortune, would require Airbnb to collect an 11.5 percent tax on rentals in Portland, covering the city’s 6 percent lodging tax and a 5.5 percent Multnomah County tax.

In a blog post, Airbnb said the arrangement could be a precedent for cities across the country that are wrestling with how to regulate short-term rentals and other “sharing economy” services.

“We’re offering to cut red tape and to collect and remit taxes to the city of Portland on behalf of our hosts,” it wrote. “This is new for us, and if it works well for our community and cities, we may replicate this project in other U.S. cities.”

Airbnb said it wants every rental it lists to have a smoke and carbon monoxide detector by the end of 2014 — and it said it will make them available, free, to hosts in Portland.

Separately, modifications to the city’s zoning code would authorize short-term rentals in just about every residential area of the city. The changes, reported Wednesday by Willamette Week, replace existing zoning rules governing bed and breakfasts with a new category, “accessory short-term rentals.”

Other changes, according to city planner Morgan Tracy, would create an over-the-counter permit for up to two bedrooms in a homeowner’s primary residence, which would need to be renewed every two years. The city would permit up to five bedrooms in a primary residence subject to a conditional use review.

The Planning and Sustainability Commission will hold a public hearing on those proposals April 22.

The Rose City Park Neighborhood Association had been among those concerned, writing to the city last month to oppose zoning changes then under review. The association objected to authorizing short-term rentals in low-density residential areas, and to providing them less oversight to ensure they were meeting city rules.

On Wednesday, Tamara DeRidder, Rose City Park’s land use and planning committee co-chair, said the city “did a pretty good job” with the fresh set of proposals issued Friday.

“They threaded the needle pretty well, but they didn’t really address how they’re going to define legal bedrooms and what that means,” DeRidder said. And she said the current rules allow short-term rentals in high-rise apartments — potentially turning those into hotels.

Further refinements, DeRidder said, should check that short-term rentals meet building codes and are subject to some kind of inspection process — the same way other kinds of rentals are.

“It wouldn’t be equitable if they didn’t ensure people had a legal bedroom, conforming to building standards,” she said.

Also Wednesday, Airbnb declared Portland its first “Shared City,” a designation it says reflects a commitment to support the communities where it has rental listings.

Among other things, Airbnb said it will facilitate donations from those who list rentals to local community groups and contribute to campaigns that promote Portland as a tourism destination.

“Portland has a history of being a leader when it comes to urban innovation,” the company wrote. “Portland has long been a great home for entrepreneurs and has led the way in promoting green tech, conservation, and co-working spaces.”

Note: This article has been updated with additional details on the zoning and land-use changes.

– Mike Rogoway; twitter: @rogoway; phone: 503-294-7699 ___

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