While hosts have to shell out the permit fee, it's sites like Airbnb who stand to lose more, at least for now, from hosts' unwillingness to comply as these sites face fines unless they force hosts to obey local laws.
Short-term rental sites operating in Portland, Oregon had until Friday, February 20 to get their hosts to apply for permits and comply with the city’s new short-term rentals ordinance, which includes sites handing over lodging taxes to the city.
Sites, which include Airbnb, HomeAway, FlipKey, and others, could face steep fines for non-compliance.
As of the deadline less than 10% of all short-term rental hosts in Portland had applied for permits and complied with the ordinance passed on January 21, which also requires hosts to have a safety inspection done for their property.
“I’m one of the [90 percent who haven’t gotten permits yet],” said an Airbnb Portland host who Skift spoke to about the ordinance. “Honestly, it’s been on my to-do list but I haven’t done it. It’s another barrier.”
The city estimates 1,600 short-term rental hosts list their properties on sites such as Airbnb, HomeAway and FlipKey and only 166 permit applications have been received so far. That represents the number of total applications received since August 30 when the city’s transient lodging tax (11.5%) went into effect requiring hotels and other properties to collect this tax and since last month’s ordinance was passed, which expanded the permit requirement from hotels to “multi-dwellings” hosts, only 34 applications have been received.
Airbnb and other sites face a fine of $500-per-violation beginning tomorrow for every host who hasn’t complied with the ordinance. Thomas Lannom, director of the city’s revenue department, which collects the permit fees, said that fine “could be applied as frequently as daily.” Although Airbnb didn’t specify the number of hosts and rentals it has in Portland and the city couldn’t comment on that, the city’s estimate of 1,600 total hosts spells out the potentially multi-million dollar fines the sites will pay.
“I can say that a number of short-term rental platform [hosts] (generally) have contacted us and are indicating a willingness to come into compliance,” said Lannom.
A One-Way Street
Hosts must pay $178.08 for the city permit which includes a safety inspection conducted by the city — pocket change compared to fines Airbnb and other short-term rental sites’ face if hosts don’t comply and get permits, which must be renewed every two years.
“Airbnb is the platform communicating most regularly with city staff to get [hosts to comply with the ordinance],” said Michael Liefeld, the interim commercial inspections section manager for Portland’s building code department which receives and reviews permit applications. “We’ve shared suggestions with how [Airbnb] can get their [hosts to comply]. They’ve made some changes, but not all of the ones the city recommended.”
“For example, we had put down the idea of locking the [host’s listing] which would have frozen the listing, which Airbnb didn’t do. We proposed several things that we thought were feasible from a technological perspective on their end that have not been done to the best of my knowledge. Airbnb did do outreach to its hosts and let them know how to apply for permits. The changes they did make include when a host gets his or her permit number they have to enter it on the listing, and it will show up on host’s listing even though the city didn’t make this a requirement.”
Both sides gathered feedback from hosts but are reluctant to share their thoughts.
“We’ve started hearing from hosts about their experiences registering, and we want to make sure we can be as helpful as possible as this process unfolds,” Airbnb told Portland hosts in a letter. “We’re asking hosts ‘If you have begun the registration process, please share your experience with us so we can help provide additional feedback to the city.'”
Christopher Nulty, an Airbnb spokesperson, couldn’t comment on exactly what “provide additional feedback to the city” means and also couldn’t share any individual responses Airbnb’s received from Portland hosts and the city said questions have come in on its end too.
“We’ve received some questions, but I wouldn’t say we’ve received enough to open a hotline just for these permits,” said Liefeld.
Up until the passing of January’s law that cracked down on law-breaking hosts, Portland had been held up by Airbnb as a model city because of the collaboration between the short-term rental site and the city to draft the law that legalized many previously illegal rental properties. It served, for instance, as a model for San Francisco’s law that went into effect this month.
But Portland leaders quickly grew disappointed as few hosts failed to register as required, and Airbnb and its peers refused to assist, instead shifting the cost of compliance to the city rather than implementing changes on their websites.
In April 2014, Airbnb released results of its own study which found its short-term rentals generated $61 million in economic activity in Portland between February 2013 and January 2014. Airbnb Portland generates more economic activity than Airbnb Boston, a larger city, for example.
Photo credit: An Airbnb rental in New York City on October 12, 2014. Alan Teo / Flickr