Illegal Airbnbs Could Take 1,500 Rentals Off Market

Illegal short-term rentals posted on Airbnb may keep more than 1,500 units out of the Portland housing market—even after the city’s much-publicized clampdown on Airbnb takes effect this winter.

The finding comes at a bad time for the 47 percent of Portlanders who rent: A recent report from Metro found the Portland metro region needs to add 48,000 affordable units to keep up with demand, and the current wait time for people wanting to live in Portland’s affordable public housing is 14.5 years.

Despite two years of behind-the-scenes negotiations between the city and Airbnb—negotiations that were intended to convince the San Francisco company and its local hosts to follow Portland’s rules regarding short-term rentals—the best available data suggests little will be done to rein in Airbnb hosts who illegally rent out entire homes for most of the year.

Airbnb opened its Portland offices in Old Town in 2014, the same year it signed a first-of-its-kind agreement with Portland that legalized short-term rental programs and required Airbnb to stick an 11.5 percent hotel tax on its reservations.

The agreement with the city did not require Airbnb to share its data on its hosts or guests, nor did it appoint city staff to actively enforce these new short-term rental rules.

In 2014, Portland also began requiring permits for Airbnb rentals—which the city called “accessory” short-term rentals—within residences containing up to five bedrooms. These permits require that hosts live in the unit they rent out via Airbnb (or any other short-term rental service) for at least 270 days of the year. That means hosts technically can’t rent out more than one residence at a time.

Currently, data from industry watchdogs indicate that as many as half of all Portland Airbnbs—conservatively, more than 1,500 units—still violate the city’s 270-day rule.

As one of the most successful Silicon Valley businesses exploiting the “sharing” economy, Airbnb’s disruption of the hotel industry has been welcomed by many. But few know the impact the service is having on housing markets; across the country, Airbnb has refused to share data on hosts and rentals. The company claims doing so would violate the privacy of its hosts—but its hoarding of data may also provide cover for illegal rentals offered through the service.

In lieu of data from Airbnb, groups like the team behind InsideAirbnb.com have begun to collect their own. The open-source site uses bots to scrape Airbnb’s site for calendar data and guest reviews.

InsideAirbnb data calculates that Portland has 4,852 total listings—2,424 of which are entire homes or apartments that have “high availability.” The group’s website says units like these “probably don’t have the owner present, could be illegal, and more importantly, are displacing residents.”

The site also determines that 1,532 units—representing 31 percent of InsideAirbnb’s Portland listings—have a host who operates more than one rental unit, which automatically violates the 270-day rule.

While Airbnb spokeswoman Laura Rillos dismissed InsideAirbnb’s data as “unreliable,” the company declined to provide data to refute it.

Another independent Airbnb analytics company, Airdna.co, shows data similar to that of InsideAirbnb: 5,185 active rentals in Portland, 43 percent of which are “available full time.” That means 2,229 could be violating Portland’s 270-day rule.

As part of negotiations that are expected to wrap up by the end of the year, Portland officials hope to get new data from Airbnb that will allow it to crack down on certain types of violations.

Sophia June, a spokesperson for Mayor Ted Wheeler’s office, says the city hopes to specifically receive data points that include the first and last name, or the business name, of the person listing the property, along with their mailing address, phone number, and email address. Also included in the proposed dataset will be the address of the rental property, its number of rooms for rent, and a signed promise by hosts that they’re complying with city codes.

In exchange for this transparency, officials say, the city will curtail its current requirement that all properties listed on Airbnb get an in-person review by a certified building inspector. June says Airbnb’s “frequent hosts,” however, will still be subject to in-person inspections.

While the proposed changes will certainly reduce overall Airbnb violations, they won’t affect the 1,573 Portland Airbnb units that appear to be breaking the 270-day rule.

That means Portland tenants could continue to be pushed out of rentals by landlords who decide to cater to the more lucrative Airbnb market, even if doing so breaks Portland law.

Last April, artist and recent Portland State University graduate Jude Boatman was evicted from her Kenton apartment when the unit was converted into an Airbnb.

It was a “great neighborhood, great house, super close to my work,” Boatman says. The unexpected eviction impacted Boatman, who has been homeless in Portland in the past.

“It’s like a trauma that lives with you forever,” she says. “Housing is always a scary thing for me, because it’s hard to find.”

In August, the Portland City Auditor’s Office used InsideAirbnb data to investigate the city’s ability to regulate its short-term rentals. The resulting audit found only 22 percent of Airbnb hosts had applied for and received the required city permits, and that “lax” enforcement of the regulations was having an “unknown” effect on the city’s housing crisis.

Local real estate experts say the short-term rental market is particularly hard to understand—not only is privately held data hard to come by, but many businesses like Airbnb are known to constantly and quickly change their practices.

Patrick Barry, whose real estate appraisal firm tracks apartment trends, calls Airbnb’s local industry a “shadow” market.

“I don’t think anyone really knows what the actual impact is,” says Barry. He believes the thousands of new apartments that are becoming available in Portland each year have a “much bigger impact” on housing affordability than Airbnb.

Chris Smith, a member of the Portland Planning and Sustainability Commission that helped create the city’s Airbnb regulations, sees Airbnb’s illegal listings differently.

During a housing crisis like Portland’s, Smith says, “even small changes in supply can make a difference.”

This isn’t Portland’s first attempt to mitigate the impact of short-term rentals in a city with a housing crisis. Earlier this year, the city assessed two new fees on short-term rentals; together, they’re projected to annually contribute more than $1 million to the city’s efforts to support affordable housing.

The pending agreement, officials say, is part of a larger overhaul that will include a citywide rental registry, the continued prioritizing of building thousands of new units of affordable housing, and collecting taxes and fees on short-term rental companies like Airbnb.

First, the city will have to improve its ability to track and respond to Airbnb violations.

Since the city adopted new short-term rental regulations in February 2017, the Bureau of Development Services (BDS) has issued 186 citations to property owners for operating without the city-required permit, for fines totaling $440,500.

None were for violating the 270-day rule, which BDS Supervisor Mark Liefeld calls “extremely difficult to enforce.”

Portland’s enforcement system is entirely complaint-driven and relies on publicly posted reviews from Airbnb guest reviews—not data provided by Airbnb or its hosts.

“Everything is set up where the burden of proof is on the city,” says Liefeld.

There is no dedicated, full-time city staffer tasked with enforcing the city’s short-term rental regulations. While such a position could locate, fine, and restrict Airbnb hosts who violate the law, such a position would cost about $70,000 annually.

City documents obtained through a public records request show that on November 8, 2016—the same day Wheeler and City Commissioner Chloe Eudaly took office—the city’s Bureau of Revenue and Financial Services threatened Airbnb with $1,663,500 in fines if it didn’t provide addresses for each of its rental locations and host contact information by the end of that month.

The city has extended that deadline twice already. Thomas Lannom, the city’s director of revenue, says the city’s threat of actually collecting those fines was “dropped pending the outcome of our negotiations.”

Meanwhile, Airbnb’s Portland lobbying team is one of the most powerful in city hall. In a January 4, 2017 email to the mayor’s office obtained by the Mercury, Airbnb lobbyist Dan Jarman requested that the city “stay” its hand—or face the consequences.

“While we work to find a legislative solution,” Jarman wrote, “we ask that your office commit to a stay of enforcement, which could terminate discussions before they begin.”

Marshall Runkel, Eudaly’s chief of staff, claims the city has the upper hand in negotiations with Airbnb.

“I don’t think that we’ve stayed enforcement,” says Runkel. “I believe that we are holding [Airbnb’s] feet to the fire.”

Nationwide, Airbnb aggressively lobbies local governments—and when that hasn’t worked, the business has also gone to court to battle much larger cities, including San Francisco and New York City. In New York, Airbnb is currently fighting a new city ordinance that requires the company to hand over data that includes some tenancy information.

In the three years since Portland City Council declared a “housing state of emergency,” the city’s seen more than 15,000 new apartments pop up across town.

Yet despite new tenant protections, tenant strikes, and lawsuits, rents in Portland have fallen for the rich and risen for the poor. According to some, Airbnb’s growing reach isn’t helping.

“We believe it is critical that local policies ensure that affordable housing is available for local residents,” says Katrina Holland, the executive director of the Community Alliance of Tenants. “Lax enforcement, both in the short-term and long-term rental market, encourages landlords to skirt safety and livability standards and puts tenants at risk.”

Airbnb says its business model has minimal impact on the Portland housing crisis but offers little data to support the claim.

In the past, the company cited a 2016 study by ECONorthwest as evidence that its model doesn’t adversely impact Portland’s long-term rental market. Paid for by Airbnb, the study found only 83 Airbnb listings in Portland at the time were breaking the 270-day rule—a sharp difference from the thousands found by InsideAirbnb and Airdna.co.

An official inside city hall who asked to remain anonymous tells the Mercury that an Airbnb lobbyist privately confirmed the company’s illegal hosting operations have swiped at least 1,300 units from the housing market.

In a prepared statement to the Mercury, Airbnb spokeswoman Molly Weedn noted the company has removed 500 Portland listings found to be in violation with its “One Host, One Home” policy.

“Airbnb is an economic lifeline for Portland families and in fact, 58 percent of Portland hosts say they use Airbnb to help afford staying in their homes,” writes Weedn.

And from the mayor’s office, Wheeler emphasizes that consensus is the best approach to regulating short-term rentals.

“My first choice going forward would be for [Airbnb] to see that we have a mutual benefit in getting it right,” Wheeler tells the Mercury. “I’m not taking any strategy off the table, just to be crystal clear.”

Short-term rentals are “very lucrative, and desirable for people who come here,” adds Wheeler. “What we don’t want to do is have a significant portion of our housing stock taken up by people from Palm Springs when we have people in our own community who are struggling to keep a roof over their head.”