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City irons out rules as Airbnb alters rental scene

Sides divided on what should be legal for short-term lodging


Portland city commissioners appear ready to legalize Airbnb here, the popular service that connects tourists with residents willing to rent out spare bedrooms, basements or entire homes for the night.

But the City Council still faces a lot of thorny questions about what to allow, and what not to allow, in this fast-growing segment of the “sharing economy.”

Chief among them: Should someone renting an apartment or condo be allowed to rent out a bedroom or two, or their entire unit, using the web-based short-term rental service?

That’s probably the biggest of several outstanding questions the City Council needs to address before approving an ordinance taking Airbnb and similar programs out of the underground economy, says Sandra Wood, supervising planner for the Portland Bureau of Planning and Sustainability. The ordinance would enable the city to inspect the dwellings to make sure they are safe and legal, and, not incidentally, enable the city and other government entities to capture lodging tax revenue from what has grown into a multimillion-dollar industry here.

An ordinance proposed by the planning bureau, and blessed by the guiding Planning and Sustainability Commission in late-April, legalizes short-term rentals such as those pioneered by Airbnb, but doesn’t allow it in apartments, condos or mobile home parks where the residents don’t own their own land.

That’s a big hole.

“According to Airbnb,” Wood says, “about 50 percent of their clients in Portland are in multi-dwelling structures.”

A liability factor

The company reports that Portland is a popular place for its service, with about 1,600 properties listed for rent here. Those that are apartments and condos would remain illegal under the ordinance.

Airbnb mobilized dozens of its Portland hosts to testify at the City Council’s initial June 4 hearing on the ordinance, many of them offering glowing tales about how the program helps them afford to stay in their homes, take care of senior parents, and meet foreigners. Many testified that Airbnb lets them serve as goodwill ambassadors for the city, providing visitors a homey place to stay that makes them want to spend money here, come back as tourists, or even move to Portland.

Tom Melillo was one of a handful of those testifying who acknowledged they rent out condos or apartments. He urged the council to allow Airbnb rentals in such units.

There’s a good reason to treat multifamily properties separately, Wood says. Many landlords and condo associations bar short-term rentals. And they may not be set up to have the kind of fire safety features required of hotels, which also cater to short-term renters.

A longer-term tenant in an apartment or condo likely knows where the fire escapes are, and other key emergency information, Wood says. But a tourist staying only a night or two might not.

The hotel industry has to provide fire escape plans and other features to protect short-term renters, notes Steve McCoid, president of the Oregon Restaurant and Lodging Association.

“They should be meeting the same requirements that the brick-and-mortar guys do,” he says, referring to the traditional hotel and motel industry.

All the leases for Guardian Real Estate Services, which manages 12,000 apartment units in the Portland area, bar subletting of any kind, says Meghan Hill, a marketing specialist for the company.

“The biggest reason we would be concerned about allowing B&B-type rentals is the liability factor,” Hill says.

Deborah Imse, executive director of the Portland area’s leading apartment-owner trade group, Multifamily NW, suggests the city should not allow the service in rentals, at least initially.

“This expanded short-term rental proposal is a new program,” Imse says. “It should be implemented and tested in the areas that are clear — where the host is the owner — before considering adding the complexity of multifamily, even for those few leases that allow it.”

Additional questions

Another sticking point is city-required inspections of Airbnb hosts.

Airbnb and many of its hosts oppose allowing a city inspector to enter a home to make sure it meets basic safety standards and is a legal residence. Some objected to paying a $180 licensing fee every two years.

Commissioner Amanda Fritz proposed allowing hosts to fill in a form in years after the first inspection, so they could verify they haven’t made any changes to the dwelling. She also wants the Planning and Sustainability Commission to return with a report in two years documenting how the new program is working. Commissioner Steve Novick suggested there still be subsequent inspections every decade after the initial one. Commissioner Dan Saltzman proposed requiring carbon monoxide monitors as well as linked smoke detectors in Airbnb homes.

Tamara DeRidder, vice chair of the Rose City Park Neighborhood Association, was one of several neighborhood association leaders raising concerns about the widespread use of Airbnb in Portland. She worries that people will shift regular rental units into Airbnb sites, reducing the stock of rental housing and driving up rents here.

“Where is the housing and economic impact study?” DeRidder asked.

At least two university studies of the subject are underway, she said.

Robert McCulloch, chairman of the Southeast Uplift Board, said the proposed ordinance essentially eliminates a key theme in the city’s comprehensive land-use plans thats separate commercial activity from residential neighborhoods.

“This is a major change in policy,” McCulloch testified. “It’s a step toward Houston — where anything goes.”

Terry Parker, a Northeast Portland resident, said Airbnb allows people to turn their homes into motels. “Homeowners could end up with hotel row across the street, or even in their backyards,” Parker said.

Other outstanding questions facing the City Council:

• Can an outside party, such as a property manager, oversee Airbnb guests instead of the property owners? Airbnb’s data shows one out of every six Portland properties is not managed by the primary resident.

• Should people be allowed to rent out more than just one or two bedrooms at a time?

• Should companies renting out second homes, or so-called vacation rentals, be legalized as well?

• And just how much is too much?

Many of the 78 people signing up to testify at the June 4 council hearing didn’t get a chance to speak. And city commissioners wanted more time to hash out some of the issues.

So they resolved to meet again in an informal council work session, at 10 a.m. Tuesday, June 24, to discuss policy implications and proposed amendments.

Then a second public hearing will be held on July 2.

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