The city is finally making good on its threat to sue short-term vacation rental companies that don’t follow the rules.
The Portland Revenue Division on Tuesday filed a $2.5 million lawsuit naming HomeAway.com and VRBO.com as defendants and demanding the companies immediately stop listing short term rentals in the city.
The lawsuit alleges the companies failed to collect Multnomah County hotel/motel taxes from its hosts and pay that money to the city. It also alleges the companies failed to provide the names and addresses of its hosts, failed to comply with an ordinance that requires hosts “prominently display” a short-term rental permit at their residences, and failed to register with the Revenue Division within the required amount of time.
“We will not stand by while short term rental websites flout basic consumer protection and tax laws,” says Revenue Division Director Thomas Lannom. “We offered to work with, and later repeatedly warned HomeAway.com about its obligations under Portland City Code. We now find ourselves in the position of needing to take more forceful action,”
READ MORE AFTER THE JUMP
According to documents filed in US District Court, the Revenue Division in January began warning HomeAway and VRBO that it needed to come in compliance with a recently-passed city ordinance. Failure to comply with the requirements of the ordinance “could result in the assessment of civil penalties up to $500 per violation, per Portland Short-Term Rental location.”
The city sent the companies letters again in March, May, and June. Here’s the revised penalties assessment from the June notice of noncompliance:
Housing advocates have long been accusing the city of neglecting to ding short-term rental companies and their hosts for non-compliance of city ordinances, to which the city has generally replied that it doesn’t have the manpower to address each violation. Revenue Department Director Thomas Lannom told the Mercury that his department responds to complaints, but hasn’t received many.
Lannom’s news release about suing VRBO and HomeAway says the city has assessed fines and sent “warnings totaling over $1 million to eight other short term rental websites,” and has “warned over 130 hosts,” and indicates its planning on taking more enforcement action.
The news release didn’t say which companies (Airbnb? It does have 1,000s of listings in Portland right now, which could generate a sizable chunk of cash.) are being fined, and a call to Lannom hasn’t been returned. I’ll update the story as I learn more information.
UPDATE, 1 pm: Lannom just called and said the city has sent Airbnb a warning letter with fines totaling $930,500. He says that of the short-term rental hosting sites the city is looking at, Airbnb has been “the most cooperative with the city” in terms of coming in to compliance with code.
He says Airbnb has:
• Continued to work with the City to increase host compliance
• Submitted a written plan to the City
• Hired a local, dedicated outreach person specifically to educate and encourage hosts to come into compliance with Portland’s permit requirements
• Created a specific place in its listing database for Portland hosts to enter their permit numbers
• Began collecting Portland’s hotel taxes on July 1, 2014—the first such agreement in the nation
• Provided the City hundreds of local host addresses for tax audit purposes
Lannom says that if Airbnb “fails to meaningfully increase compliance within a reasonable timeframe” the city may pursue legal action. No word yet on what the words “meaningful” and “reasonable” indicate.
If the companies do pony up the $2.5 million, the funds would typically be funneled into the city’s general fund. Though Lannom said that City Council could choose to earmark that revenue for creating affordable housing, an idea that’s been gaining traction with the city since Mayor Charlie Hales last month declared a housing state of emergency.
UPDATE, 1:40 pm
Matt Curtis, director of government relations for HomeAway issued this statement about the pending litigation:
“As a matter of policy we do not comment on pending litigation. However, our goal in Portland, and all other municipalities for that matter, has always been to work collaboratively with lawmakers to introduce fair regulation that balances the needs of the community with the rights of property owners, residents and travelers. HomeAway has repeatedly offered to assist the city of Portland, and other cities, in collecting taxes that have been properly assessed and is disappointed that the city has chosen not to engage us to find a solution.”
Lannom wouldn’t speculate on whether the city would drop the lawsuit if HomeAway came into compliance with the city ordinance.
Over two hundred Portlanders have signed our petition calling on the City Council to direct the City Attorney, Finance Bureau and Bureau of Development Services to take firm enforcement action against Airbnb and Airbnb hosts.
https://www.change.org/p/portland-city-council-tell-portland-city-council-to-enforce-short-term-rental-rules-267183d0-8b0e-4d1f-acdf-1c5da3213626?recruiter=2690998&utm_source=share_petition&utm_medium=copylink
It is no secret that the City of Portland is acting in a biased fashion by selectively enforcing the Short Term Rental Ordinance on only two companies while Airbnb and its hosts are the largest offender.
We have heard from neighbors across the city that their complaints about non-compliant Airbnb hosts have fell on deaf ears at City Hall.
Good! City actually doing something right for once.