March 10, 2014 in City

Short-term online rentals see scrutiny

By The Spokesman-Review
 
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Geoff Loftin looks out Feb. 28 from the Garland District home that he renovated and rents by the day on Airbnb.com.
(Full-size photo)

Jo and Mike Jakupcak make frequent trips to Spokane from their Montana home to visit their grandchild.

They don’t mind staying with family, but “it gets a little crowded,” Jo Jakupcak said. So the Jakupcaks found what they thought was perfect solution: About six blocks away, near Manito Park, they rented a room through Airbnb.com.

“It was a beautiful room in a cozy Arts and Crafts house,” Jo Jakupcak said. “I thought it was a lovely way for a stay-at-home mother to add a little income.”

But the family that rents out that room and many other owners of properties that have been advertised on Airbnb or other short-term rental websites have been told by the city that they are violating the law and must stop renting their space.

The city of Spokane’s code enforcement office has recently sent at least a dozen cease-and-desist orders to property owners in Spokane who advertise short-term rental property on Airbnb.com or similar websites. Those who received the notices have been threatened with $265-per-day fines if they continue booking after the end of March.

City officials say they are responding to official code enforcement complaints. At least a dozen complaints have been filed on individual properties since November by parties who have asked the city not to release their names.

The cease-and-desist orders in Spokane highlight a growing controversy around the country. Airbnb users often praise the service for giving them unique experiences at an affordable price. But hoteliers and some government officials have argued that Airbnb and similar sites make it too easy to flout hotel taxes and health and safety regulations.

City finds itself in ‘a quandary’

Jan Quintrall, the city’s business and development services director, said she has asked that all Airbnb-related cease-and-desist orders be put on hold until the end of March so officials have a chance to examine the issue and decide if rules should become more flexible. City officials say they may give property owners more time to comply.

“We find ourselves in kind of a quandary, and we want to help people come into compliance rather than punish them,” said Quintrall, who often uses Airbnb when she travels. “We just don’t want to stifle them, but we also don’t want to create unfair competition.”

In most cases, city law bans the leasing of a home for less than a month at a time in single-family residential zones. It also requires that people who rent out a room or a portion of their home while they still live in the same house get a permit or comply with the city’s bed-and-breakfast rules. Those rules say B&Bs can only be in homes on historic registries or in a historic district.

The city’s ban on short-term leasing in residential neighborhoods is meant to prevent constant turnover that could become a nuisance to neighbors.

Dale Forbes, owner of the O’Dell House, a B&B in Browne’s Addition, uses Airbnb to book one apartment in her six-apartment establishment. It complies with B&B regulations and isn’t in trouble with code enforcement. 

Forbes says she’s conflicted over the website. She said it’s a great marketing tool that users like. But it’s hard to compete pricewise against others renting rooms on Airbnb who aren’t paying the lodging tax or complying with the same strict regulations.

Airbnb handles all the money on transactions it books on its site, a popular service for homeowners who don’t want to have to deal with credit cards. The website takes about 10 percent of the listed price, Forbes said.

Forbes said she’s open to the city loosening restrictions to allow more short-term accommodations outside historic zones, as long as they are on a level playing field with people like her who must comply with other regulations and pay lodging taxes.

Sweeney stayed in former substation

Geoff Loftin co-owns a former Washington Water Power substation near the Garland District that he rents on Airbnb. He said he believes most people using Airbnb and similar websites are willing to pay lodging taxes.

“We want to make it all work for everybody,” Loftin said.

Loftin said most Airbnb properties give visitors good experiences, aren’t nuisances to surrounding neighbors and should be embraced as promoting tourism.

“They get a whole different take on Spokane,” he said.

One of the visitors to his restored power substation was author and comedian Julia Sweeney, who wrote on her blog that staying at the former substation made her weekend stay in Spokane “twice as good.”

Heather Trautman, Spokane’s director of neighborhood services and code enforcement, said in at least a couple of cases people who received notices may have homes that could qualify for the city’s historic registry. If they get on the registry, they would qualify to stay open as bed-and-breakfasts.

Mary Moltke, who owns the E.J. Roberts Mansion, another Browne’s Addition B&B, said while Airbnb touts its place in “the sharing economy,” it’s not sharing its wealth by paying proper lodging taxes.

“Airbnb says the problem is with ‘confusing city regulations’ when most cities, like Spokane, have crystal-clear regulations,” Moltke said in an email. “Airbnb seduces their ‘hosts’ with how easy it is to make money while not adequately conveying that their proposal is illegal in most communities. Yet most people involved in Airbnb are well aware it is illegal.”

Many communities dealing with issue

For Heather Shauvin, renting a room through Airbnb.com in her South Hill home near Manito Park was a way to meet interesting people and bring in a little extra money. She said she researched the law before she began renting the room last year and didn’t realize she was violating city code.

“We love doing it,” said Shauvin, who hosted the Jakupcaks. “It’s been more than just renting a room. It’s added to our lives.”

Many communities, including Portland and San Francisco, have been dealing with the same issues and debating if they should relax the rules to make it easier for Airbnb and other vacation rental sites to operate. Perhaps Airbnb’s biggest obstacles have arisen in New York. Last year, New York Attorney General Eric Schneiderman subpoenaed Airbnb to get information about properties listed in New York City, according to media reports. Airbnb is fighting the subpoena.

“We are committed to working with local officials around the world to clarify these rules, and help them better understand how Airbnb benefits communities,” the company said in an email in response to questions about the controversy in Spokane.

Property owners suspect group effort

Because Spokane’s code enforcement complaints must be specific to a certain property, those with properties who have received cease-and-desist notices from the city of Spokane believe that a person or a group of people is combing Airbnb.com and other sites like vrbo.com and comparing ads against county property records to file complaints.

Trautman, the director of neighborhood services and code enforcement, said multiple people have filed the complaints. 

City spokesman Brian Coddington said most if not all of the complainants have requested anonymity. To maintain anonymity, people who file complaints must check a box saying that the release of their name would endanger their life or their property.

In some communities, the hotel industry has pushed a crackdown on Airbnb, citing unfair competition. But Travis Tramp, president of the Spokane Hotel Motel Association, said the association has no opinion on the topic and is not involved in filing the complaints. Moltke and Forbes said they did not file complaints.

Cheryl Kilday, president and CEO of Visit Spokane, said her organization recently began to study the issue but is not involved in the filing of complaints.

Visit Spokane, which was formerly called the Spokane Convention and Visitors Bureau, gets nearly 40 percent of its budget from lodging taxes. Even so, she said, Visit Spokane is most concerned that tourists have a good experience.

“We certainly want to serve the customer and we want to make sure public safety is being served,” Kilday said.

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