Home – Cities, Towns Weigh Vacation Home Rentals Against Housing Needs For Locals

Cities, Towns Weigh Vacation Home Rentals Against Housing Needs For Locals

 Andy Morris didn’t set out to upend the hotel industry.  Or to get involved in a huge fight with the city of Seattle.

 

He and his wife just happened to have a tenant move out of the one rental property they owned a few years ago, just as companies like Airbnb were taking off, providing an online method for homeowners to rent their homes out as lodging.

 

Morris and his wife Lynne, passionate travelers themselves, thought they’d try out the short-term vacation rental market, thinking it would be a fun way to help travelers have a cool experience in Seattle, a city they love and enjoy showing off.

 

“We were really keen on providing visitors to Seattle with an exceptional experience,” Morris said. “It was something we’re both passionate about as travelers.”

 

Still, it might have been something they did just while waiting for the right long-term tenant. “It was very much just a side hobby,” Morris said in a recent interview with the State Net Capitol Journal.

 

But renting the home out to tourists proved more successful than expected – and enjoyable. It occurred to Morris that if they had more properties they might be able to make a living doing something they enjoyed that allowed them more time with their young child. They dipped into savings and found some partners to invest in a few more properties. Soon, Morris quit his old job.

 

The couple now own, partly own or manage 32 properties, rented out to tourists through sites like Airbnb, HomeAway and Expedia.

 

“It became a full-time job for me, and subsequently a full-time job for my wife,” Morris said. He’s also proud that he’s providing high wage contracts to housekeepers and maintenance workers.

 

But to some in Seattle – and in cities and towns across the country – Morris and his wife are part of a problem, not a solution.

 

The complaints against home share operators nationwide range from how their properties affect the character of neighborhoods, to whether they’re adequately regulated. Some say they’re a nuisance, and even when not they’re essentially businesses, which people didn’t expect to live next to when they bought their residential homes.

 

In some places the debate goes beyond annoyance with noisy strangers who may not clean up. The fight in many places is fundamentally about housing supply: if too many homes are bought only to be rented to travelers, can regular residents, particularly those with limited incomes, find places to live?

 

Though it’s playing out around the nation, few states have waded into the battle – leaving it to be fought out on city and town councils coast to coast.

 

In Seattle, which has seen an influx of tech employees and Amazon workers, the shortage of affordable housing – not necessarily for the poorest of residents, but for the middle class – drove the city council to put new limits on short-term vacation rentals that go into effect next January. If it stands, the law will limit hosts to just a couple of properties in addition to the home they live in. There are some areas with carve outs for more, but not in the attractive neighborhood where Andy Morris rents homes.

 

The law would put Morris out of the vacation rental business, which is why he’s the plaintiff in a lawsuit seeking to overturn it, backed by the libertarian Goldwater Institute.

 

Airbnb has also pushed back against efforts to regulate home shares by touting its local economic impact. It claims that in in Seattle it puts more than $175 million into the economy and supports 1,700 jobs.

 

A similarly intense battle is waging in California’s world famous Lake Tahoe resort community, where voters this November will decide whether to limit rental properties to a concentrated tourist area. The issue dominates local conversation. 

 

“It really has ripped the town apart,” said Carl Ribaudo, the owner of a tourism consulting firm, who also writes a column in the local Tahoe Daily Tribune. Many locals resent the way rentals have crowded out long-term residents, he said.

 

“It’s intertwined with the overall lack of housing in California,” Ribaudo said in an interview. “We’re undersupplied… And there appears to be a lot of housing units that were long-term rentals that now have been taken out of the market.”

 

The debate has been going on in the region for decades, but has ramped up since home share companies have made it easy to rent out a home. 

 

“There’s no question that Airbnb was a catalyst for this,” Ribaudo said.

 

In 2016 a Seattle-based local advocacy group called Puget Sound Sage published an analysis that claimed that by 2019, without some sort of control like the one going into effect next year, the city would lose more than 1,600 rental properties that residents would normally occupy. At the time, about 6,500 short-term rentals were listed in Seattle, just on the Airbnb site.

 

Andy Morris agrees Seattle has an affordable housing shortage. But he argues short-term rentals are a tiny percentage of the overall rental market. Moreover, the homes many Airbnb hosts rent out are higher-end homes that likely wouldn’t help with the affordable housing problem much anyway. Morris said he is also perfectly happy to pay more taxes to help tackle the overall housing shortage, and he even asked the city council to consider upping the tax on rentals (which the new law does.)

 

The free-market advocacy group R Street Institute, which opposes heavy regulations on short-term rentals, shares Morris’ view of the effect of short-term rentals on the overall housing market.

 

“There’s little evidence the current or near-term-future scale of short-term rentals is sufficiently large to have a significant impact on housing affordability,” R Street wrote in a March 2016 policy study. “To take one example, Airbnb units comprise just 0.6 percent of Los Angeles’ total number of housing units and just 1 percent of its rental market.”

 

Morris argues the affordability issue has overshadowed what he believes much of the fight is really about: competition. The hotel industry was in the background during the debate over the home share law in Seattle, but “they were definitely present,” he said.

 

The hotel industry argues that home shares do the same thing as hotels, but sometimes don’t have to play by the same rules. Short-term rentals frequently don’t have the same regulations, and may not pay the same heavy bed taxes, giving home sharers an unfair leg up, the industry says.

 

“We believe if it walks like a duck and quacks like a duck, it is one,” says Carol Dover, president and CEO of the Florida Restaurant and Lodging Association, which represents thousands of hotels. “You’re a public lodging establishment and you should be regulated the same way we are.”

 

Florida’s hotel industry has supported regulating home shares, but lawmakers so far have declined. Dover said the industry wants basic regulations on big vacation home renters who buy up multiple properties, not individuals renting out their place from time to time.

 

“This association has never said we’re after the independent homeowner whose husband is deployed who is renting a bedroom to make ends meet,” Dover said. “But when you own three, four, five units and you’re advertising availability on a weekly basis, you’re a lodging establishment.”

 

Many jurisdictions are fastidious about collecting rental taxes from vacation rental homes, but in Florida, the right amount of local taxes are sometimes paid, sometimes not.

 

“They remit their taxes to the local government with a ‘Trust me, this is what I rented and this is what I owe,’” Dover says. “Don’t you wish you could pay your taxes like that?”

 

Morris says hotels are reacting to having been upended by innovation.

 

“They’ve been outfoxed by a very disruptive industry,” he said. “Someone figured out a way to use technology to provide better service to consumers for less.”

 

The third pillar of the debate is the most obvious: complaints about what transient “neighbors,” do to locals’ quality of life. Some local regulations aren’t aimed at fixing the housing market – but dealing with issues that come with vacationers spending time in otherwise residential neighborhoods.

 

“There have been a lot of complaints about crowding, late-night noise, traffic,” Ribaudo said of South Lake Tahoe. “And trash.” The tourists leave it out. “And bears come and strew it all over the place.”

 

Matt Miller, an attorney for the Goldwater Institute working on lawsuits challenging home share restrictions, argues those problems aren’t that common and should be addressed separately.

 

“Nobody wants to live next door to a nuisance,” Miller said in a statement. “But cities across the country are unfairly penalizing responsible home-sharers to eliminate the problem of a few bad actors. If they are genuinely concerned with nuisances, city officials should focus on enforcing reasonable rules that protect quiet, clean, and safe neighborhoods, instead of limiting choices, hindering the city’s tourism industry, and depriving people of their rights.”

 

By David Royse