HomeMy WebLinkAbout01-06-2015 PH1 SchmidtSubject: FW: Vacation Rentals Redux
Attachments: vacation rental white paper.doc COUNCIL MEETING:_
ITEM NO.:
From: Richard Schmidt [mailto:slobuild(Qayahoo.com
Sent: Monday, January 05, 2015 11:54 AM ] JAN U 5 2015
i
To: Marx, ]an; Ashbaugh, John; Christianson, Carlyn; Carpenter, Dan; Rivoire, Dan
Cc: Mejia, Anthony
Subject: Vacation Rentals Redux
Dear Council Members,
In another of the great tragedies the City of San Luis Obispo is inflicting upon its remaining neighborhoods, you
are being asked by staff to approve vacation rentals with totally unenforceable provisions that will convert
workforce housing into pricey businesses that benefit the few at the expense of the many. Unfortunately, this
sort of disregard for fairness, decency and quality of life has become typical of the city under its current regime.
It will take a Council with a bit of backbone to stand up to staff once again (remember: Marijuana!!! The same
crew did the same thing to you then. How long will the Council put up with this excess by a staff that runs with
its own agenda instead of yours, which, as I recall it, was to investigate ways people could rent out a spare
ROOM in their house, not to turn our neighborhoods into tourist- commercial zones ?)
Some thoughts:
• Vacation rentals take away workforce housing. All you have to do to understand this is to look at the ads.
Whole duplexes operated as hotels rather than rented to workforce. Houses never occupied by homeowners.
Expensive pieds -a- terres owned by rich people from out of town, who use them a few nights a year and rent
them at great profit the rest of the time. Last time around, the vacation rental poster child was a single person
who had purchased a workforce triplex, converted it into a "single family home" with several unneeded
bedrooms from which she operated a very profitable hotel business, in violation of the law. IT IS TOTAL
HYPOCRISY FOR THE COUNCIL TO EVEN TALK ABOUT NEEDING WORKFORCE HOUSING IF
YOU APPROVE VACATION RENTALS.
• Homeowners signed up to live in the R -1 zone specifically because they didn't want to be surrounded by the
"vibrancy" of business. So now you're going to change the rules and allow any greedy businessperson to
profiteer off a vacation house in the R -1 zone, leaving the neighbors to cope with the strangers wandering
around, yelling, partying, and generally doing the sorts of things that don't contribute to the safety or quality of
life in a neighborhood? This on top of the 60 +% rental occupancy ratio? This is just nuts. You are signaling you
just don't care about neighborhoods if you approve this. (Of course, one of you who supports this lives in a
lawyer -rich neighborhood where CC &Rs would prohibit vacation rentals, so that makes support all the more
hypocritical — inflicting on others what one's rich neighborhood can control with some very simple litigation.)
• Are you deaf to all the problems residents of other SLO County towns with vacation rentals rail about? Why
in the world would you want to open the door to this sort of residential disruption here?
• The restriction of vacation rental houses to houses with a homeowner's exemption is a joke. There's no
validity to this. I could go out and buy another house, transfer my homeowner exemption to it (it's legal if I
sleep there the one designated night per year), and pay for my new home purchase with the exorbitant income
from vacation rentaling it (at $300+ per night I wouldn't have to rent it very many nights to equal the rental
from renting it legitimately as a house to someone who lives here and needs a place to live). The HOX is only
worth a tax break of about $70 per year, so with all the extra income from my vacation rental, I wouldn't miss it
on my actual home. The staff who dream up this sort of nice - sounding but meaningless figleaf are shameless.
• There will be no enforcement whatsoever because enforcement is impossible. Who's going to verify what's
going on inside vacation rentals? Staff already can't deal with illegal R -1 apartments and converted garage
rentals, so how will they deal with this? The Council has already directed staff to bother with the placement of
69,000 garbage cans. Is there any sense of realism about what you're doing? You adopt "rules" knowing full
well there's no way they can actually be enforced. They exist on paper only to provide the city with "cover," not
to solve problems.
• So why open this can of worms? The existing outright prohibition makes things very clear and simple.
Violators are violators — no nit - picking arguing and tank -sized loopholes allowed. Our workforce housing and
neighborhoods have enough problems without the city creating this one.
• Of course, as staff points out, there's money to be made by the city from allowing this. One has the perception
that the only thing City Hall cares about is money — for themselves. Selling neighborhoods to the greedy is just
collateral damage in the quest for city funds. For shame!
What is happening in this poorly -run previously -happy place is very sad. You could provide a hopeful gesture
by vetoing staff's scheme for turning our housing into hotels. You could vote to maintain our neighborhoods as
places for residents to live. Please do so.
Thank you.
Richard Schmidt
PS. When vacation rentals first came forth more than a year ago, I did a literature review on airbnb, which
revealed that it is a problem - plagued, largely- illegal, valueless scheme concocted by some Wall Street wizards
to provide "value" to basically a bunch of cloud -based software, the world's third largest "hotel chain" that
owns and operates no real estate, propelled by a lot of "sharing economy" propaganda and a gullible public. I'm
sure you'll hear all about its wonders from the airbnb set that will besiege you Tuesday. Since writing that, the
literature has only become richer and more incredible, and the "valuation" of airbnb has been boosted with a lot
of hot air to upwards of $14 billion, which is far more than many actual companies with actual products and real
estate can claim. I've appended my original literature review for your renewed perusal.
"OUTDATED AND UNNECESSARY!" -- THE AIRBNB ATTACK ON NIGHTLY
RENTAL PROHIBITIONS THAT THREATEN ITS CORPORATE BOTTOM LINE
"But they urged him strongly, saying, `Stay with us, for it is toward evening and the day is
now far spent. 'So he went in to stay with them. " — Luke 24:29 PS. He was their guest.
They didn't expect him pay.
"Deliver us from the hypocrisy of attempting to sound reasonable while being
unreasonable. " — U. S. Senate chaplain Barry Black, October 2013.
Executive Summary.
Airbnb is a multi - billion dollar corporation, one of the largest hotel chains in the world by
booking numbers, built on a business plan that consists of inducing third parties to
operate "pirate"' hotels often in defiance of various local laws. Airbnb's bottom line is
built on these illegal acts it facilitates. To advance its corporate interests the company
seeks confrontations with local authorities when local law enforcement takes place, and
insists it just wants to cooperate with said local authorities, provided they give the
corporate business plan every exemption the company demands. Otherwise they
actually refuse to cooperate all the while saying they want to cooperate. The corporation
runs a public relations /propaganda arm that seeks to smooth over its transgressions,
while providing its third party "pirate" operators a text with which to fight law
enforcement at the local level. The arguments put forth by SLOHosts mirror scripts
originating with Airbnb propaganda. The SLOHosts' "just us folks" Internet "petition" is
also by the Airbnb propaganda playbook.
Nightly accommodations offered through Airbnb differ from those offered by legitimate
lodging operators in that there are no safety or insurance standards to protect nightly
renters and the accommodations typically don't comply with everything from fire
inspections, to health inspections, commercial lodging building safety codes, fire
sprinkler requirements, emergency egress codes, and handicapped access. In terms of
public safety, these are second and third class accommodations, yet few "guests"
cognize the safety differences between Airbnb accommodations and legitimate
commercial accommodations.
Airbnb states its goal for "hosts" is to "monetize" their space, meaning to add
commercial monetary value to space intended for residential habitation. (That's how
they describe it in the "what we do for you" corner of their website, but in their
propaganda blogs this becomes a more folksy "helping poor folks meet the rent"
meme.) The community effect of "monetizing" space this way is complex: it raises the
cost of purchasing residential space in SLO, thereby pricing still more people out of
entry-level house ownership opportunities; it converts monthly rental workforce housing
to more lucrative nightly rentals; it promotes commercialized neighborhood
gentrification, which prices still more out of housing; and by cutting into the supply of in-
1 So called because these unlicensed operations "pirate" business from legitimate hotels.
demand rental work force housing, it raises rents for those who need to live here. What
we see already, without legalization of "pirate" accommodations, is speculative holding
of properties for Airbnb use: there are numerous operators in SLO with multiple units for
nightly rental; there are others holding whole apartments, condos, granny flats and
houses off the monthly rental market to rent by the night. On the social side, nightly
rentals disrupt by introducing nightly renters into neighborhoods, thereby blurring the
line between who belongs there and who doesn't, and thus diminish neighborhood
cohesion, safety and security. None of this is in the community's best interest.
This white paper explores these summarized issues in more detail.
2
"OUTDATED AND UNNECESSARY!" -- THE AIRBNB
ATTACK ON NIGHTLY RENTAL PROHIBITIONS THAT
THREATEN ITS CORPORATE BOTTOM LINE
Why this paper? This "white paper" was researched and written by concerned
citizens for the benefit of the San Luis Obispo City Council as they consider a
demand from SLOHosts that the city's nightly rental ordinance be altered to fit
SLOHosts' demands. This document is a contribution to the public discussion of and
city decision - making on this controversial subject, presenting facts and viewpoints
which should have appeared in the community's mainstream print media's
presentation of the issues, but which have been shut out by the bias of those
mainstream media.
"Many people believe that living on the Web grants them membership in an exalted class to
which old laws cannot possibly apply. This sort of arrogance takes your breath away, until
you realize just how brilliant a corporate strategy it is. If you stopped to reckon with every
80-year-old zoning law or tried to change the ones that you knew your customers would
violate, you'd never even open for business. But if you can create facts on the ground — and
200, 000 listings worldwide — then you have a constituency that is willing to lobby on your
behalf. Better then, to march forward with earplugs in, blindfolds on and fingers crossed. If
you hear no evil and see no evil, then you've got a fighting chance at a billion - dollar
valuation as long as the regulators don't have enough firepower to slow you down. " – Ron
Lieber 2
Common Misunderstandings about Airbnb and SLOHosts.
"For the record," pontificated the Tribune "Editorial Board" in scolding the City for being
so nasty to "home stay hosts" the Board called "enterprising, law- abiding citizens,"
"there is a huge difference between vacation rentals owned by absentee landlords and
the type of home -stay operations advertised on lodging websites such as Airbnb."
That one sentence packs so many delusions, it makes the brain swim. People
legitimately cited for breaking only one of many provisions of the law they are
simultaneously breaking are "enterprising, law- abiding citizens." Really ?! The less
obvious delusion is the one being sold by Airbnb's local faction, SLOHosts, that what
they say they do, namely what the Tribune calls "home -stay operations advertised on
lodging websites such as Airbnb," is somehow different from "vacation rentals" and what
those other folks who cause problems do.
2 http://www,nytimes.com/2012/12/01 / our -mane 1a- warnin - for- airbnb- hosts - who -ma - be- breakin -the -
law.html ?pagewanted =all& r =0
3
In point of fact, Airbnb is a vacation rental website. That's all it is. It describes what it
has to offer in this happy way: "Whether an apartment for a night, a castle for a week, or
a villa for a month, Airbnb connects people to unique travel experiences." (airbnb.com —
"about us ") That summary of offerings doesn't even mention the Tribune's vaunted
"home stays." Airbnb offers the whole range of vacation rentals — there's nothing
whatsoever that distinguishes it and its offerings from what those other folks who cause
problems do. In fact, they're knowingly party to causing problems — lots and lots of
problems, as we'll see.
So, point number 1: These so- called "home stays" ARE mere nightly rentals. In San
Luis Obispo Airbnb's nightly rentals include tent sites, single rooms, multiple rooms,
apartments, duplexes, granny units, detached secondary dwellings and entire houses,
sometimes with a single operator offering multiples of the above.
A second thing to note is that SLOHosts Internet petition (and clicking to "sign" one of
these represents a huge civic commitment, does it not ?) doesn't propose just legalizing
what the Tribune calls a "home stay;" it proposes opening up a huge enforcement
loophole to allow any owner of a SLO "Primary Residence" to offer nightly rentals. Not
only is the petition non - specific about the nature of these nightly rentals (room, suite,
apartment, house, castle), it would apparently allow anyone resident in the city to
operate any number and type of nightly rentals. It's only criterion is that the operator
own a "Primary Residence," whatever that means. It would, in short, commercialize
residential space and crowd it off the market for which it was created, namely a place
for people to live full time.
SLOHosts claims to be "a homeowner rights advocacy group." (New Times, Oct. 2,
2013) That claim is bizarre since their sole purpose is to promote the commercialization
of neighborhoods and make their serial law- breaking legal. Such commercialization and
legalization is contrary to the wishes of the vast majority of SLO's homeowners and
neighborhood advocates, who want no part of having a "pirate" hotel's nightly rentals
next door. So, to claim to be "a homeowner rights advocacy group" is just plain weird.
There is a tone of unrepentant entitled arrogance to what SLOHosts says and demands.
This, too, is bizarre since the "hosts" are self- identified serial law breakers: operating
"pirate" hotels where and when prohibited, operating them without lodging licenses, and
failing to collect and turn over to the city transient occupancy tax being at least three
serial acts of law breaking for each of which, by municipal code, they merit fines and jail
terms. Given what they've already done, do the SLOHosts really merit the entitlement
they claim as their "right "?
What is Airbnb?
Airbnb is an Internet site that books nightly rentals in homes, apartments and other
residential places. It has gone from startup to privately -held $2.5 billion apparently
profitless corporation in a handful of years. Questions have been raised about how
ethically that feat was accomplished (see below).
E
Airbnb operates as a virtual hotel chain. It takes listings for nightly rentals and takes
bookings from nightly renters; in other words, it does what a hotel chain does at its
website, rent rooms by the night, and then adds a new twist: it also collects the money
for those rooms. It charges both listee and renter a fee, reported to total from 9 to 15%
of the booking charge.3 Once the nightly rental takes place, it sends the residue of the
funds it collects to the nightly rental's lister. Airbnb's $2.5 billion value is pegged to
venture capitalists' generous monetization of the bookings and rental listings.
Airbnb claims listings in the hundreds of thousands — "500,000 +" according to the
company's website. This means that without owning or operating a single hotel room,
Airbnb is at least the world's 5th or 6th largest hotel chain by "room count" —
remembering that many of its "rooms" are actually whole houses or whole apartments
with many rooms might boost its ranking further. At 500,000+ it stands just behind
Hilton, Wyndham and Intercontinental, which jockey for the world's largest title with
about 600,000 rooms each, and well ahead of 7th place Best Western which has a mere
300,000+ rooms. (By the way, it's hard to tell who's actually world's largest -- Hilton,
Wyndham, Intercontinental -- because even rankings from the same year inexplicably
differ.)
Airbnb's business plan.
Airbnb was started by a trio of 20- somethings who wanted to get rich on the Internet.
There's an elaborate touchy -feely corporate mythology about the company's
beginnings, though there are so many varying versions of it, it's impossible to know
whether any are true. What is clear is how Airbnb operates. It goes something like this:
• Airbnb solicits "listings" for nightly rentals.
• It seeks nightly renters for those listings.
• It suffuses its operations in the PR happy talk of "community," "sharing economy,"
"trusted community marketplace," "unique travel experiences," "world -class customer
service," etc. When these claims aren't just fluffy, they may turn out to be Orwellian
inversions of truth.
• Since many if not most of its listings violate local laws of many types, the
company's business plan is built on a shaky foundation of illegality, of which it is fully
aware. In the fine print most nightly listers probably never read,5 Airbnb shoves all
responsibility for knowing about and obeying laws onto the site's users.
• When the accumulating illegalities mount to an actual threat to its bottom line
Airbnb's "legal department" comes alive — to challenge local laws as out of date and
unnecessary and to assert that the company would love to obey all the laws if
http: //www.businessinsider.com /airbnb- money - transmission- act - taxes - 2012- 7 #ixzz2i5G6UThD
4 http: / /www.businessinsider.com /ebay- wishes -it- could - buy - airbnb- 2013- 7 #ixzz2i8DPwplp
5 Ron Lieber of the New York Times points out Airbnb's 12,000 -word terms of service is accessible only
by hyperlink, and that most Airbnb users probably never see it, or if they do, probably don't take the time
to read such a huge document with much care. Other similar sites, he says, put terms of service up front
as part of the sign -up process. http://bucks.blogs.nytimes.com/ 2012 /11/30 /airbnb- responds -to- questions-
about- hosts - breaking - local - laws / ?_r =1
6
only ... ° At the moment Airbnb and its nightly listers are engaged in numerous legal
confrontations throughout the land, the most sensational of which are in New York
where in October the state Attorney General subpoenaed Airbnb's listing histories
after the company stonewalled him for months (while, according to press accounts,
other unnamed Internet nightly rental services cooperated), and then Airbnb refused
to comply with the subpoena. Instead of complying, it began firing its propaganda
blunderbuss and induced its "friends" to start an on -line petition of entitled outrage
demanding the state's laws be changed to suit their illegal operations. (More below)
• Both those who list nightly rentals and those who pay for them are committing
criminal acts in San Luis Obispo and many other localities. While those who list are
surely aware of this, how many of those who rent nightly are aware they could end
up in jail for their "hosts" misdeeds? For those who list, the crimes include operating
an illegal hotel, zoning code violations, failure to get proper hotel permits, and, in
SLO, failure to collect and turn over to the city transient occupancy tax (TOT), which
is due whether they have proper permits or not -- crimes which in SLO carry fines
and up to 6 months in jail. For nightly renters, the unpaid TOT tax is a misdemeanor
(the renter owes it to SLO, and if the lister does not collect it and turn it over, the
nightly renter must pay it herself), subject to fine and up to 6 months in jail. Airbnb
fails to adequately inform both parties to its transactions of these sorts of facts. 'Airy
talk in tech start -up circles of `collaborative consumption' and `the sharing economy'
couldn't hide that Airbnb was hiding from its responsibilities to be up front with its
listers about legal prohibitions on their rentals," wrote Ron Lieber, the New York
Times consumer fix -it guy.' Why does a multi - billion dollar corporation put its
customers at such huge legal risk without clearly informing them? Commentators
have said it's because Airbnb doesn't want to interrupt the flow of happy talk they
use to lure customers by allowing into its "conversation" any dark clouds that might
turn customers away and thus diminish its bottom line. (More below)
• Those who list nightly rentals they themselves rent from a landlord face an
additional peril, of which Airbnb also doesn't provide much notice upfront. Most
rental agreements prohibit any sort of sublet. Violating a rental agreement is grounds
for eviction. As one critic put it, "If you choose to rent out your extra bedroom, your
landlord sees it, and you get yours, then according to the [Airbnb] terms of service,
that's your problem." In SLO, it is clear some Airbnb listings involve rentals
(including a listing in a prominent mobile home park) whose listers may be clueless
about the huge risk they are taking. Imagine being ordered to get out of a mobile
home park, and to take your mobile home with you!$
6 A perfect example of this hypocritical approach to law and order is Airbnb's activity in New York City,
where most, but not all, of its operation is illegal. "In a blog post today," reported tech site The Verge on
Oct. 3, 2013, "Airbnb CEO Brian Chesky says that he supports formal rental taxes, like those charged for
hotels, as long as local regulators are willing to work on a law that makes Airbnb's business legal." Oh,
and he wanted tax collecting exemptions for Airbnb listers below a threshold of his choosing. Our way or
the highway. http://www.theverge.com/ 2013 /10/3/ 4798680 /airbnb- says- new -york- renters - should -pay-
occupancy -tax
http: / /www.nZ mes.com /2012/12/01/ your - money /a- warning - €or- airbnb- hosts - who - may- be- breakinc t� he-
law, html ?pagewanted =all
':' http: / /www.digitaltrends .corn /social- media /why- the - house- that - airbnb - built - stands- on- shakv- legal-
ground / #ixzz2ii3r6FZO
Airbnb's business plan thus appears on numerous grounds to rest on shaky ethical
foundations. As one wag put it, "This is Napster applied to the hotel market. "9 It's all
about money.
Is Airbnb an ethical company?
Aside from ethical issues inherent in its business plan's bottom line depending upon
inducing unlawful acts by Airbnb listers and nightly renters, some have questioned how
the unremarkable start-up experienced a remarkably fast upsurge in listings, so that in
the blink of an eye Airbnb soared to the top of its field of competitors.
One small -time Midwest competitor, who knows how long it takes to build such a
business from scratch, thought something about Airbnb's rapid accumulation of tens of
thousands of listings smelled fishy, and suspected Airbnb had a "black hat supply -side
growth strategy." He also had a hunch where the fish came from: Craigslist. So he
devised an experiment to test his hypothesis. First he spammed nightly rental listings on
Craigslist, offering listings on his own "free" listing service, and in about a day had more
than a thousand responses. That proved the hypothetical method of stealing listings
was feasible, but not that this is how Airbnb worked. (For what it's worth, he listed for
those who responded to his bait for free — on Craigslist.)
To test the rest of the hypothesis, over time he salted Craigslist with some listings of his
own, a few at a time. Every one of them got an identical email response that purported
to be from a "female" (with a personal email address at a free email service) who loved
his listing so much ( "you have one of the nicest listings in..." fill in the blank) and
suggested he list it with Airbnb. If Airbnb was behind this, the practice not only involved
improper spamming of Craigslist's listers, but also violates Craigslist terms of service,
as well as the listers' preference to not be contacted by commercial solicitors. Also, why
the subterfuge of the "female" intermediary shilling for business unless Airbnb was
trying, through this subterfuge, to avoid being identified for violating Craigslist terms of
service? The fellow who conducted this experiment admitted it still wasn't proof positive,
but it was consistent with Airbnb's rapid accumulation of a huge pot of listings.10
In San Francisco, the apartment owners association takes a no BS stand on this: get caught, you get
evicted. The association minces no words about Airbnb's failure to inform renters they can't do nightly
rentals. "I believe that any company that claims that sort of worth should have the social responsibility to
disclose what the laws are in the jurisdiction that they're in," said Janan New, executive director of the
San Francisco Apartment Association. "And if they're not capable of that, then their worth isn't that high."
htt : / /www.n imes.com /2012/12/01/ our -mong /a- warnin -for - airbnb - hosts- who -ma - be- breakin -the -
Iaw.html ?pagewanted =all& r -t]
N Aster, the Internet "sharing" site which enabled download of copyright - protected material without
paying the copyright owner royalties. One of its arguments why this was OK was they merely provided the
platform, while others committed the illegal acts.
http : / /techcrunch.com /2011/05/30 /airbnb- has - arrived - raising -mega- round- at -a -1- billion- valuation/
10 httr):Hdavegooden.com /2011/05/ how - airbnb - became -a- billion - dollar - company /
httr):Hgawker.com/ 5807189/ did - airbnb- scam - its - way -to -1- billion
7
Another fellow followed up on this, and published a how- to -do -it of techniques needed
for such a scheme to have been used by Airbnb. His conclusion: Working the numbers
shows it is possible Craigslist is where most of Airbnb's early astonishingly large
number of listings came from." Why this matters? Those large numbers enabled Airbnb
to capture the attention of venture capitalists, whose infusions of cash have both kept
the company going and have enriched its founders.
"Self- dealing and shady." Since Airbnb is privately -held, much is unknown about its
internal workings, including things like how much money it takes in, and how much its
founders take out. An interesting insight into the latter came to light in October when a
venture capitalist's scathing email to 32- year -old CEO Brian Chesky, in response to a
hat -in -hand plea for more venture investment, went viral. Former Facebook exec
Chamath Palihapitiya, now turned venture capitalist, wrote Chesky "I've never seen a
deal like this over —60 investments I've done and I'm pretty concerned." He declined to
invest in Airbnb's $112 million venture solicitation, saying the fact the three founders
intended to pocket $21 million of the venture capital for themselves made them look
"self- dealing and shady." "I'm passing on this financing because I strongly disagree with
what's going on," Palihapitiya wrote. "I am really uncomfortable with this and don't think
it's in the spirit of building a good, long term business. 02
Why not just tell customers the legal facts? The matter of Airbnb's shorting its
customers, both listers and renters, on legal information, has boiled up several times
over the past year. Ron Lieber at the New York Times (who likes to stay in Airbnb
places when he travels! so he's hardly a foe) wrote a scathing column in November
2012 after, as he put it, "I asked the company why it didn't provide more clear
information when hosts register with addresses" in cities where vacation rentals are
illegal. "I also inquired as to whether it wants every user now breaking the law (or the
terms of their lease or their condominium's house rules) to take down their listings
immediately," he wrote. 13
Instead of answering these legitimate questions from a consumer reporter at the
nation's newspaper of record, Airbnb tried to change the subject or buffalo him with PR
nonsense, framing their entire response in bookends of their helping- poor - folks -meet-
the -rent meme. This corporate BS included, in sequence, references to empowering
people "to help make ends meet," "the responsible nature of our community," "work[ing]
diligently to address" problems when they arise, providing a "variety of tools to help
hosts understand their obligations under local laws, regulations or contracts, and they
commit to us that they will comply with those rules and regulations when they sign up,"
"our goals are the same as the goals of the communities in which we have hosts ...
many of whom depend on our site to make ends meet."
" http: / /stickaforkin.me/ how -to- build -a- billion- dollar- company - with - black- hat - tactics/
http: / /allthingsd.com /20111001 /vcs- unite - chamath - palihapitiya- decries - airbnbs- recent -112m- funding-
for- excessive - founder - control- and - cashout -in- email/
13 http://bucks.blogs.nytimes.com/ 2012 /11 /30 /airbnb- responds -to- questions- about - hosts - breaking- local-
laws/
What part of that froth responds to either of Lieber's questions? After presenting the text
of the response from Airbnb, intertwined with his comments on each section, he quips:
"There's that 'make ends meet' meme again, echoing the same language from the
beginning of the statement." Lieber concludes, sarcastically, of this corporate brush -off,
'7 admire the company's partial success in turning the conversation about following
the rules into one about sad or struggling people just trying to get by. Some of the
struggling people using the site, however, are breaking the law and don't know it.
And they'll struggle more if they face five - figure fines or eviction by landlords who
eventually figure out what they're up to."
Lieber's questions had been prompted by just such a case, that of "Nigel Warren, who
rented out his bedroom in a two - bedroom apartment via Airbnb [for three nights at $100
each] only to get threatened with over $40,000 in fines for various violations... Mr.
Warren wondered, as did I, why Airbnb didn't tell its users exactly what the law says."
"Mr. Warren," Lieber wrote, "like many if not most Airbnb users, had not read the terms
and conditions on Airbnb's Web site telling him not to break any laws (while also wiping
the company's hands clean of responsibility for hosts' compliance with those laws ).,,14
What was striking about Warren's case is the citations went to his landlord, who was
understandably furious. Warren told his landlord he would take responsibility, reimburse
his costs, and pay any fines levied against the landlord. So, when Airbnb tossed at
Lieber the statement "The responsible nature of our community results in very few
complaints like this, but when they do occur we work diligently to address them," he
responded with the facts as he saw them.
'Actually, when Mr. Warren wrote to Airbnb's customer service questioning the
company's motives, it did not respond with an offer to pay his $415 an hour in legal
bills. Instead he got a note saying that he should have known better. `I am sorry to
hear that you are gong through a stressful situation and i home (sic) that a prompt
resolution can be reached,' said Maria C., the customer service representative who
responded."
That certainly doesn't sound like Airbnb "working diligently" to address the problem, nor
does it sound like the "world class customer service" Airbnb crows about on its website.
The story's actually a lot worse. When Warren went to his initial hearing with his own
pricey attorney, he found he had won by a technicality: the authorities flubbed their
paperwork, and charges were dismissed. Then charges were revived, and there was
another hearing. Arriving at that one with his attorney he found "to his great surprise,
that an Airbnb team was there too, including outside counsel it had retained. The
company intended to intervene on his behalf, but it hadn't let him know that it would
appear at the hearing. 05 He was fined $2,400. He appealed on a technicality, and won
14 http://www.nytimes.com/ 2012 /12/01 /your- money /a- warning- for - airbnb- hosts - who - may -be- breaking -the-
law.htmPpagewanted =all& r =0
15 htto://bucks.blo-gs.ngmjs.com/2013/05/21 /a-2400-fi n e-for-a n-a i rbn b-host/?s mid =tw-s hare& r=O
9
on appeal. Why, after first shining him on with insincere sympathy for "a stressful
situation," had Airbnb, which wasn't party to the legal action, intervened so late in this
bizarre way? Warren's fine would have been precedent- setting; it involved the
"innocent" hardcore of Airbnb's claim to legitimate business, the "home stay" meme
SLOHosts is promoting locally as "different" from vacation rentals. If the fine stood it
would devastate Airbnb's business in New York City. This is consistent with the
company's other actions: only a bottom -line crisis seems to get its full attention. This
strange "help" nonetheless earned Airbnb bragging rights on its website:
"Nigel was fined by an administrative law judge for violating New York's short -term
rental laws. We believed that this was not the correct decision, so we joined in
Nigel's defense."
Zero shame in that corporate propaganda machine.16 For Airbnb, however, this was
"great news from New York," worthy of more breathless website bragging by CEO
Chesky.17
More of the same. Lieber is hardly the only person asking why Airbnb doesn't level with
its users that what they're doing may be illegal. Web entrepreneur Jason Clampet on
Huffington Post has raised similar issues — with a twist: his personal relationship with
Airbnb CEO Brian Chesky enabled him to put questions in a personal email to the chief
— and has gotten an even more incredible runaround: complete silence from Airbnb.
"Since May of 2011," Clampet wrote on HP, "the vacation rental website Airbnb has
been openly flouting a New York City law stating that it is illegal to rent full apartments
for less than 30 days." He asked David Hantman, Airbnb's Global Head of Public
Policy,'$ face -to -face why Airbnb still takes listings, knowing they're illegal. Replied
Hantman: "We can't possibly keep up with the law in all the cities."
"That's insane," retorts Clampet.19 "Businesses big or small -- and I started a small
business with big ambitions this summer -- have a responsibility to be good neighbors
or, failing that, at least understand the law of the land. And you'd think Airbnb would
understand how important it is to be a good neighbor.
"Anything else is plain arrogance, even if you consider yourself `disruptive' and have a
`.com' at the end of your name.
18 http: / /blog.airbnb.com /good- news - airbnbs- new -york- community/
17 http: / /blog.airbnb.com /who -we -are/
18 Hantman was hired by Airbnb in late 2012 to head up its push to overcome laws that stand in the way
of Airbnb's bottom line. At the time, there was considerable buzz in the tech press about this high -
powered hire as a "smart move" — hiring Yahoo's man on the spot in DC to break through the legal logjam
that stood in Airbnb's way. Hantman writes a "public policy blog" which is home to much of the
propaganda used by SLOHosts and other Airbnb apologists.
9 Can anyone imagine Hilton, Wyndham, or Intercontinental Hotels giving such a lame, stupid, lazy and
arrogant response to such a question?
10
" Airbnb says the law in New York is complicated, but it's not. It just doesn't fit with their
business model."
Clampet says Airbnb knows about its illegal listings in New York, but does nothing to
remove them from its site. "Following a meeting CEO Brian Chesky had with me and a
few colleagues at my old company about a possible partnership, I emailed him about
the dubious listings I found on the site and asked why they let them remain. I got
silence. Those listings stayed live..."
Ditto: Silence as a Strategic Tool. When a San Luis Obispo resident contacted Airbnb
about the fact all of its listings in the city are illegal, and asking they all be removed,
Airbnb's freeze - them - with - silence machine kicked in. The resident's letter asked Airbnb
to "IMMEDIATELY REMOVE ALL LISTINGS FOR SAN LUIS OBISPO CALIFORNIA as
they are all illegal (vacation rentals in all forms are prohibited by the municipal code)
and in conflict with your host policies," specifically their policy that says listings must "be
in compliance with all applicable laws, Tax requirements, and rules and regulations that
may apply to your Accommodations, including, but not limited to, zoning laws and laws
governing rentals of residential and other properties." The Airbnb policy also says
listings not in compliance may be removed from the website by Airbnb. So the writer
concluded, "If your company is ethical, you will promptly remove ALL San Luis Obispo
listings, and block future listings." This request was sent to a "contact us" address.
There was no reply whatsoever, not even the typical website robo -reply "we received
your message — it is so important to us, and one of our skilled ever - caring customer
service representatives will get back to you just as soon as possible." After a reasonable
period of silence, the message was sent again — kicked up a notch to a "corporate"
address. Again, zero response. And the SLO ads remained.
We understand the SLO City Attorney has also been in touch with them. Perhaps she
got more attention, perhaps she didn't.
Why Illegal Listings Remain: Do the Math. Airbnb's fine print says illegal nightly rental
listings can be taken down by Airbnb. But when asked to take some down by us, writing
to the corporate entity; by Jason Clampet, in a personal email to Airbnb CEO Brian
Chesky; or by the New York Attorney General, the company does nothing. Why?
Perhaps because of the math. Airbnb is a $2.5 billion corporation whose value
presumably is related to the number of its nightly rental listings, about 500,000. With
each listing thus valued at about $5,000, and potentially around half Airbnb's listings not
entirely legal, the company's bottom line "problem" becomes clear. Pity the poor
millionaire Airbnb founders if all those illegal listings went away!
Perils of Being an Airbnb Nightly Rental Lister.
Safety is a subject Airbnb wishes would go away — simply raising it interferes with the
warm propaganda soup they bathe their operation in, so it does little to warn its nightly
rental listers of the perils they face, both personal and legal. When the subject does
arise, they resort to statistics that purport to show this matter is insignificant.
Nonetheless, like waiting for the next earthquake, some nightmare will come sooner of
11
later. We wonder how many hosts give serious thought to this issue before placing their
listings?
Listers know little about those they bring into their "pirate" hotels. Sure, they have a
purported name and address and whatever story the nightly renters care to give them
about their background. Lately, in response to criticism on this point, Airbnb has begun
verifying nightly renters — by checking their Facebook page! Sooner or later, that
Facebook- vetted nightly renter is going to turn out to be an axe murderer. Or a thief. Or
a vandal. Or something else pretty unpleasant.
Oh, wait — that story's already happened. "I returned home from an exhausting week
of business travel to an apartment that I no longer recognized. To an apartment that had
been ransacked... My home had been burglarized, vandalized and thoroughly trashed
by a 'traveler' I connected with via the online rental agency, airbnb.com." With those
words in June 2011, a San Francisco blogger who goes by the moniker EJ, broke
silence on a subject Airbnb wishes would go away — the risks nightly rental listers
actually assume by renting out their places. This was "Home" that was violated, not an
anonymous hotel room.20
EJ had rented to one "Dj Pattrson" through Airbnb. "With an entire week living in my
apartment, Dj and friends had more than enough time to search through literally
everything inside, to rifle through every document, every photo, every drawer, every
storage container and every piece of clothing I own, essentially turning my world inside
out, and leaving a disgusting mess behind.
"They smashed a hole through a locked closet door, and found the passport, cash,
credit card and grandmother's jewelry I had hidden inside. They took my camera, my
Pod, an old laptop, and my external backup drive filled with photos, journals... my entire
life. They found my birth certificate and social security card, which I believe they
photocopied - using the printer /copier I kindly left out for my guests' use. They rifled
through all my drawers, wore my shoes and clothes, and left my clothing crumpled up in
a pile of wet, mildewing towels on the closet floor. They found my coupons for Bed Bath
& Beyond and used the discount, along with my Mastercard, to shop online.
"All the while, Dj Pattrson was sending me friendly emails, thanking me for being such a
great host, for respecting his /her privacy.... telling me how much he /she was enjoying
my beautiful apartment bathed in sunlight, how much he /she particularly loved the "little
loft area" upstairs... with an "lol" closing one sentence, just for good measure."
In her initial blog about the episode, EJ raised questions about how safe Airbnb is. She
had previously used Craigslist, for free (where "I am warned loudly and repeatedly that
use of the site is at my own risk" and to research her renters), but had switched to fee -
for- service Airbnb because of its buzz and "the promise of our site is that it is entirely
transparent." She found that transparency not to be true. "Airbnb.com tightly controls the
20 htti): / /emroundtheworld.blogspot.com/ 2011 /06 /violated - travelers -lost- faith- difficult.htmi
http:/ /eiroLindtthheworld,blagspot.com /2011 /07fairbnb -n i q htmare -no- end- in- sig ht. lit mi
12
communication between host and traveler," she wrote, "disallowing the exchange of
personal contact information until the point in which a reservation is already confirmed
and paid for. By hindering my ability to research the person who will rent my home,
there is an implication that airbnb.com has already done the research for me, and has
eliminated the investigative work that Craigslist requires."
Initially, EJ was also displeased with Airbnb's lack of response to her home's having
been ransacked. "I tried their `urgent' line, their email address, their general customer
support line. I heard nothing - no response whatsoever - until the following day, 14
sleepless hours later, and only after a desperate call to an airbnb.com freelancer I
happen to know helped my case get some attention." Once they did contact her, EJ
wrote that "They have called often, expressing empathy, support, and genuine concern
for my welfare."
A most amazing thing on EJ's blog post is a response that turned up on the discussion
forum, one from "brianchesky" which began "Hey everyone - we were shocked when we
heard about this unsettling event. We have been working closely with the authorities . .
" blah, blah, then got to the point with a big dose of Airbnb propaganda: 'We ve created
a marketplace built on trust, transparency and authenticity within our community, and
we hold the safety of our community members as our highest priority. We will continue
to work with our users to stamp out those who would put that community at risk in any
way. The vast majority of our community members genuinely respect and protect each
other. . ." No crisis need be let go to PR waste!
But that's not the end of the online story of EJ's violation by her Airbnb nightly renter. A
month later, she posted a second blog on the episode. "I have not written anything new
on the subject in the past month for one simple reason: fear," she wrote. She recounts
fear of "psychotic criminals and identity thieves" who "know much too much about me,"
fear of saying something that might jeopardize the criminal investigation. "And I was -
but no longer am - scared of Airbnb's reaction, the pressure and the veiled threat I have
received from them since I initially blogged this story." Why this outrage at Airbnb?
It turns out that Chesky did an interview with TechCrunch claiming a culprit was in
custody thanks to Airbnb's help and that "We have been in close contact with her [the
victim] ever since" the episode.
EJ blogged that Chesky's claims seem unsubstantiated: as far as she knew, nobody
was in custody for the crime spree, and Airbnb certainly had not been in "contact with
her ever since." "During the first week of my nightmare, the customer service team at
Airbnb was ... helpful, caring and supportive. In particular, one customer service
manager - and the company's freelance photographer - were wonderfully kind to me,
and both should know how grateful I am."
All that ended, however, after she published her initial blog. "I blogged my story, and all
these kind and supportive people just ... disappeared."
13
The day after her blog appeared, she received a personal call from one of Airbnb's
founders who expressed "his concerns about my blog post, and the potentially negative
impact it could have on his company's growth and current round of funding. During this
call and in messages thereafter, he requested that I shut down the blog altogether or
limit its access, and a few weeks later, suggested that I update the blog with a `twist' of
good news so as to 'complete[s] the story'."
Just before her second blog appeared, EJ said "a second co- founder did email me for
the first time around 2am yesterday, suggesting we meet for coffee as he 'would enjoy
meeting' me. He made no inquiry into my current emotional state, my safety or my well
being."
"I understand why Airbnb called me and asked me to bring this story to an end; it is in
their best profitable interest to do so. Unfortunately, for me — 5 weeks and counting —
there is no end in sight."
Insurance Nightmare for Nightly Rentals. Another peril for those who list their places
on Airbnb is insurance. Most homeowner or apartment insurance excludes coverage for
commercial use of the insured premises. To be covered, one needs special insurance.
How many Airbnb listers understand this ?21
The need for property damage insurance for Airbnb listers should be obvious from EJ's
story. Less obvious is the need for a large liability policy that's applicable to the
commercial use. How much is enough? How many millions of liability dollars would a
nightly rental owner be on the hook for if a nightly renter died due to a tree falling on her
bed, or her asphyxiation due to a smoldering fire, or her inability to escape due to
inadequate fire exits? What if the renter is bitten by a visiting rattlesnake, or by the
owner's dog or a neighbor's dog? What if she trips on the stairs and breaks her neck?
These are not hypotheticals; such things happen.
Liability insurance is for the benefit of both nightly rental lister and nightly renter. Without
it, both are likely to be harmed.
(If a city licenses nightly rentals that lack the safety protections of hotels, would the city
also be in the sights of a personal damage attorney? Deep municipal pockets, shallow
nightly rental owner pockets, -- this might encourage an attorney to involve a city if a
double standard of safety requirements were knowingly permitted by a city. It might be
in a city's interest to require a very large liability policy for "pirate" hotel operators.)
"So it comes down to this," writes Ron Lieber. "How much risk are you willing to
shoulder of a legal judgment adding to your money woes ?" The hazards of nightly
renting differ from those of home occupancy. A home occupant knows where things are,
but "when people are in an unfamiliar place with unfamiliar systems, bad things can
happen."
21 http: / /blog.agrawals.org/ 2011 /08/01 /answers -on- insurance - airbnb/
14
Will Airbnb come to the rescue if one of its nightly rental listers encounters a huge
liability claim? No, says Lieber. "Airbnb is crystal clear on its Web site, albeit in its terms
and conditions where many people won't read it. There, it states that 'Airbnb is not
responsible for and disclaims any and all liability related to any and all listings and
accommodation.' So there you have it. If someone gets hurt, don't go crying to Airbnb."
"It makes perfect sense that home rental middlemen would try to dodge the whole
insurance discussion," says Lieber. "The last thing any company wants to do when
trying to get people to post listings is remind them how much risk they're taking on. „ 22
Perils of Being an Airbnb Nightly Renter.
Just as there are perils for nightly rental listers, so are there perils for those who stay in
unlicensed nightly rentals. Quality issues are an obvious one; in SLO, there was a listing
last summer, apparently a student apartment, from which arriving Airbnb nightly renters
fled upon arrival, leaving behind only some disgustingly amusing comments on the
site's comment page.
The insurance issue is also present; a nightly renter's insurance may not pay for
damage to or loss of one's things in an unlicensed nightly rental unless the renter has
renter's insurance.23
And if the nightly rental lister has inadequate or non - existent liability insurance? Good
luck. You may be out of pocket for injury, and totally uncovered for more serious liability
issues.
At its most sensational, risks to nightly renters could include the possibility of renting in
a lonely location from a psychopathic sadist or killer. Don't laugh. What if Rex Krebs had
listed his country cottage in See Canyon on Airbnb? As with earthquakes, it's only a
question of when.
Burnt alive. More commonplace risks, however, revolve around safety. Michael Byrne
begins a serious discussion of the safety double standard between Airbnb nightly
rentals and those of hotels humorously: "My home doesn't have fire sprinklers or, I think,
even a working smoke detector. I have no idea where the key to the front door is,” and
those mouse droppings you find in funny places ?24 Hotels have to meet rigorous safety,
health and other standards, and have to conform to a whole range of laws and
permitting regulations Airbnb nightly rentals aren't subject to.
Yet how many nightly renters cognize the differences? Ron Lieber, who discussed the
perils of a "white hot" old- fashioned heater in the bathroom of a nightly rental where he
22 http: / /www.n) times.com /2012 /04 /211your- moneylhome- insurance/ home - sharing -dont- overlook -your-
liability- your- money.html ?pagewanted =print
23 http: /Iblog.agrawals.org/2011 /08/01 /answers -on- insurance - airbnb/
24 http : / /motherboard.vice.com /blog /lets- stop - pretending - hotels - and - airbnb- exist -on- different - planets
15
stayed in his article on liability, is more aware than most, but still stayed in an unsafe
place.
An intimate of ours is probably more typical. This person described a nightly rental she'd
found through Airbnb, starting with a description of how to get into it. It was night when
she arrived, and one entered through the garage, which first meant trying to figure out
how to open the garage door, then negotiating a pathway through the dark garage with
its cars and junk to another door which was the entry to the nightly rental, "under the
house," so this was the only way in and out. The garage was dark because this person
couldn't find a light. I asked if she was worried about emergency exit if there were a fire,
like a fire in the garage, and she said that had not occurred to her till I brought it up.
Then she understood!
This place was a firetrap. No licensed hotel could have operated with exit conditions like
that. Yet it's probably fairly typical of safety conditions offered by Airbnb listings. No fire
safety equipment required, no regulation fire exits to outside, no fire - resistant stairwell
enclosures, no fire extinguishers, no sprinklers or emergency exit lighting, no maps in
each room showing the multiple ways out in case of emergency, and on and on and on.
There are Airbnb listings in SLO in houses that weren't even built with the benefit of
building permits. These nightly rentals are third rate in terms of safety, while charging
hefty lodging fees to nightly renters.
Legal- Attack Bazooka Corps.
As we've seen, Airbnb's business is built on a shaky legal foundation such that the
whole edifice could tumble down were it not for the company's inducing its patrons, the
generators of its bottom line, to ignore laws, then when caught launch a populist
uprising against laws Airbnb feels stand in the way of its advancing bottom line. So,
Airbnb foments front groups, like SLOHosts, to engage its local battles, providing them
with a rationale for getting rid of all those "outdated and unnecessary" rules that hinder
the advance of the Airbnb "community" — er, we mean, bottom line. As a result, the
"battle" against "outdated and unnecessary" rules looks pretty similar wherever it pops
up (and it pops up all over the country and the world) — the arguments are much the
same, the click -to -sign online petitions are too. Ron Lieber's description (at the top of
this white paper) sums it up.
A year ago, Airbnb realized its growth prospects were severely limited absent a more
frontal assault on the "outdated and unnecessary," so they hired public policy guru
David Hantman, who had been Yahoo's man on the spot in DC. For the true believers,
his "public policy blog" is red meat; to anyone else, it looks like bunch of self - serving
and silly propaganda.
One of Hantman's initial emails to colleagues laid out what would become the guts of
the anti - "outdated- and - unnecessary" PR blitz:
They [Airbnb] have some huge challenges with a few antiquated laws in their
biggest markets, so my job will be to help them convince governments that allowing
fi[
people to rent out their own homes or apartments should not be a problem,
and that in fact it is great for the economy and for the tons of people that can only
pay their mortgage or rent through the extra income they get from Airbnb. For
hundreds of years families have been taking in boarders or renting out extra space,
and this service is just bringing that process into the 21st century, at a time
when it is more needed than ever.25
The emphasis is ours, for it lays out the set of arguments which Airbnb, and its fronts
like SLOHosts, voice over and over and over again. All of these points are nonsense.
• The laws aren't antiquated — they still serve all the purposes for which they were
enacted in the first place. Some of them are pretty new — a couple or three years old!
• Allowing people to rent out their homes or apartments by the night certainly is a
problem: for neighbors, for a community that needs housing, for neighborhood
safety, for having a viable regulated tourist accommodation industry that's not
undercut by "pirate" operators who don't have to follow the rules.
• There's no evidence Airbnb is "great for the economy." There's only so much
money in the tourist economy, and that amount isn't magically going to go up due to
"pirate" hotel operations. (One of Airbnb's more bizarre arguments is the self -
contradictory one that it provides cheaper accommodations for those who can't
afford hotels, yet those who use its accommodations magically spend more in total
on their tourism than those who stay in hotels. Go figure, it's just PR.)
• The just - helping - poor - folks -pay- the -rent meme we've met before. They like that
one, just repeat it every chance they get. In fact, there are lots of legal ways one can
meet the rent, and there are safer ways than turning one's place into a "pirate" hotel.
• And then the great progressive argument: they're just trying to bring things into the
21 st century. Ah, yes, we certainly need their help to do that, to reshape our laws to
fit the demands of the entitled Internet entrepreneurial set.
Sorry for the sarcasm, but after you've read as much of this nonsense as we have, it is
truly tiresome.
What's monstrous, yet typical of Airbnb's twsting things, is the slick distortion in
Hantman's last sentence. "For hundreds of years families have been taking in boarders
or renting out extra space," which is true, but that's not what Airbnb is about. "Boarders"
are members of the local community. They live, work, and study there.
What Airbnb brings into our neighborhoods is strangers, who don't live, work or study in
the community where they are strangers.
Boarders are a way to build up a community's cohesive social fabric; nightly renters are
a way to tear it down.
The Future! So how does this bring things into the 21St century? Well, it does if you
believe the delusional stuff Brian Chesky has said about his vision for the future. This
news snippet is illustrative:
25 http 11www .businessinsider.com /airbnb- hires- vahoo -d avid- hantman- 2012- 10 #ixzz26DovZuR
IN
Chesky argued that mobile trends and the sharing economy will end "travel," as we
know it, because millions of people will be constantly mobile.
"Travel is going to go away in the future," Chesky said. "People won't travel, they will
be mobile," staying in one place for a night, and perhaps moving on to another locale
for four months.
"When you are actually connecting and meeting in the real world, that is what travel
is going to be," Chesky said.
In this scenario, Chesky derided the inefficiencies of apartment leases, contending
they will become relics as people will move around, living in one place for a few
weeks or months, and residing elsewhere for another period.26
So, in his future, none of us "travel," and none of us have a "home" either, because
we're always on the move. We're as mobile as a cell phone. With no umbilicus to place.
The thing he doesn't explain, however, is that in such a future, who will list nightly
rentals on Airbnb? He'll have to come up with a new rationale for what Airbnb does
since nobody will have a home or apartment they need to rent nightly in order to pay the
rent or mortgage.
Doing Airbnb for a Living. While Airbnb would love for the world to believe their story
that helping the guy just trying to pay the rent or mortgage is what their multi - billion
dollar corporation is about, the secret's out that's becoming not so true. Five - figure
incomes from Airbnb operations, even by "little guys," seem commonplace. In early
November 2013, the New York Times reported on a "little guy" claiming a take of
$90,000 per year from renting rooms in a single house by the night.27 "The top 40
Airbnb hosts in New York have each grossed at least $400,000 over the past three
years," the Times also reported, "a collective total of over $35 million." Throughout the
land, the latest trend in news stories about Airbnb is about people who are buying
property or renting property solely for the purpose of making big bucks by listing those
places on Airbnb. '7 Bought An Apartment To Rent Out On Airbnb" headlined one young
guy who reports paying $40,000 for the apartment in Las Vegas, and grossing nearly
half that his first year of renting it by the night on Airbnb.28 (This guy, who "describes
himself as a struggling entrepreneur," sold his Internet startup to Airbnb.) Fast Company
ran a story titled "Secrets Of Running A Six - Figure Airbnb Business" about a fellow who
leases six apartments in San Francisco for the express purpose of living in none of
them and renting all on Airbnb, for an anticipated profit each year of about $140,000.29
Sure these people are paying the mortgage or paying the rent with their earnings from
Airbnb, but not exactly the way Airbnb's story line would lead us to believe. Airbnb
26 http://skift.com/ 2012 /11/16 /airbnb -ceo- has -a- vision -of -a- future - where - everyone- shares - and- airbnb-
col lects -a- modest -fee/
27 http. / /www.nytimes.com /2013 /11 /05 /nyregion/ the - airbnb - economy -in- new - York- €ucrative- but - often
unlawful.html? r =0
http://needwant.com/r)lbuying-apartment-airbnb/
29 http: / /www.fasteompany.com /3021179 /secrets- of- running-a- six- figure_airbnb- business
im
listings suggest this is already happening in SLO. Is this sort of activity socially
desirable, even without it's often being illegal and likely being in violation of the terms of
lease?
New Politico -Legal Belligerence. What's happening in NYC with Airbnb is a great
example of their newfound belligerence towards those "antiquated laws." What's
interesting is the "antiquated" law that currently drives Airbnb bananas was passed in
2010, so it is indeed terribly antiquated. What's happening in SLO is merely a scaled
down version of NYC. NYC, in turn, mirrors what's happening around the world in what
one news item headlined a "global crackdown on Airbnb. ,30 In response to which,
Airbnb is coming out with fists swinging.
As we now know, Airbnb takes no responsibility for the failure of those who use its
listings to follow the law; that's their problem, not Airbnb's. In NYC the Internet nightly
rental business quickly got out of hand, with "pirate" hotels all over town, depriving
people who needed housing of places to rent or buy, driving neighbors nuts with the
noise, rudeness, or just the elevators and stairwells of their buildings being filled with
ever - changing strangers. Several large property owners conducted massive evictions of
tenants so they could convert their properties to more lucrative nightly rentals.31 And
Airbnb facilitated this by listing those nightly rentals. Even after a crackdown thanks to
the 2010 law, it is estimated about half of NYC's Airbnb nightly rentals remain illegal.sz
The "crackdown" in NYC wasn't that large in terms of total numbers of nightly rentals
cited. It was driven both by public demand, and by a city looking out for its housing
stock. "It's not the bargain that somebody who bought or rented an apartment struck,
that their neighbors could change by the day," John Feinblatt, the chief adviser to Mayor
Michael R. Bloomberg for policy and strategic planning, told the Times' Ron Lieber. The
city, Lieber added, is also concerned with fire safety and with maintaining availability of
rental inventory for city residents.33
The crackdown scared the heck out of Airbnb. It views a big place like NYC as key to
the prosperity of its nightly rental franchise. So, today Airbnb has set its sights on
30 htti): / /www.businessinsider.com /whv- hotel- industrv- lobbvists- want- a- aioba1- crackdown -on- airbnb -2013-
5 #ixzz2i8GpVNv2
This story reoccurs all over the land. Here is a description, from an Airbnb defender no less, of what
happened in San Francisco, Airbnb's home town. "Some people are buying up properties for the sole
purpose of renting them out in popular tourism locations. This means that places people are desperately
trying to find affordable apartments to rent in are being consumed by Airbnb properties, which are more
valuable assets to the owner as short -term units. These ad -hoc hotels are taking up units in popular
residential areas where finding a rental is already incredibly difficult." By the way, such activity is illegal in
San Francisco, but the illegalities continue nonetheless. How does a "half -way" legalization in SLO make
enforcement more effective given the difficulty in enforcing a total ban? See
http:l/www,digitaltrends.com/socia1- media /why -the -house -that- airbnb - built - stands -on- shaky- legal-
ground121#ixzz2ii57cg1 t
http:l /www.good . is /posts /shari ny -is- hard -a irbnb -is- awesome- but - often - illegal -i n- new -york-
city#ixzz2j8lX5i3z
:"3 htt :Ilwww.n imes.com/2012/12/011 our -mone la- warnin - for - airbnb - hosts- who -ma - be- breakin -the -
law.htmRpagewanted =all& r =0
19
eliminating laws that limit its business in NYC (and elsewhere, like SLO). How? This is
classic Airbnb: we'll tell our nightly rental listers to pay hotel taxes, or at least partial
hotel taxes, if you make our illegal business legal .34 What is it about law- breaking this
outfit doesn't seem to get? Since when do the crooks get to tell lawmakers how to do
things? The chutzpah of it makes one's head spin. (But now we know where SLOHosts
got the idea to behave in the same righteous way here.)
Never one to let a good opportunity for propaganda pass, Chesky outlined his plan for
"reasonableness" under the rubric of "how Airbnb and New York can work together to
make this great city even stronger." He continues: "At Airbnb, we are creating a door to
an open world —where everyone's at home and can belong, anywhere... We all agree
that illegal hotels are bad for New York, but that is not our community. Our community
is made up of thousands of amazing people with kind hearts... On behalf of our New
York City community, we want to work for sensible laws that allow New Yorkers to share
their space, earn extra income, and pursue their American Dream." Note: not a single
mention of the bigger agenda: increasing Airbnb's bottom line. Horrors that he should
mention so crass a thing amidst this flood of smarmy sentimentality. Listening to this
tripe, one is put in the mind of the chaplain of the U.S. Senate who prayed during the
recent debt ceiling standoff: "Deliver us from the hypocrisy of attempting to sound
reasonable while being unreasonable."
Hantman to the barricades. The "heavy lifting" in the propaganda war against NYC,
however, fell to David Hantman, Airbnb's public policy guru. "I've spent a lot of time in
New York over the past few weeks," he wrote on his "policy blog" in late October, "and it
has been truly inspiring. I've met with dozens of Airbnb hosts, and again and again
have heard amazing stories about how hosting has made it possible for them to get
back on their feet..." After that sentimentality, he launches into a disquisition about the
"positive economic... force [Airbnb has become] in New York," complete with alleged
dollar documentation Airbnb "gathered." And if you aren't impressed by being told that
Airbnb magically added $632 million "in one year" to NYC's economy, you can read
more at the linked press release.ss
The "most inspiring part" of Hanman's previous week had found him on a webinar with
"so many thoughtful, responsible hosts" anxious to know how Attorney General Eric
Schneiderman's subpoena for Airbnb host identities might affect them. "The bottom line
remains the same," Hantman says, " –we are going to fight this overly broad subpoena
with everything we've got. And in the end, we believe that we can find common ground
with New York because we all agree that we should stop bad actors from abusing the
Airbnb platform or evading taxes." Deconstructing that "bottom line" reveals a lot of
nonsense. The Attorney General had asked Airbnb for information that might identify
those "bad actors" that Hantman claims Airbnb finds so offensive so the AG could get
on with dealing with them; Airbnb, unlike other nightly rental websites contacted,
refused to cooperate, so the AG issued a subpoena for the information, which Airbnb
refused to honor. Of course, Airbnb itself could do a bit of screening for "bad actors" and
34 http: / /www.theverge.com/ 2013 /10/3/ 4798680 /airbnb- says- new -york- renters - should -pay- occupancy -tax
35 http: / /Publicpolicy.airbnb.com/ See Oct. 22 entry.
20
remove their listings – and that might actually be a way to solve the problem it says
needs solving. As for "evading taxes," that's what Airbnb "hosts" do, Airbnb knows this,
and Airbnb does nothing about it. If "evading taxes" really bothers Airbnb so much,
there's an obvious solution: Airbnb does the booking and collects the nightly rents, so it
could add taxes to the booking charges. End of story. No need to "find common ground
with New York." Just obey the law. Again, quote the chaplain: "Deliver us from the
hypocrisy of attempting to sound reasonable while being unreasonable."
And here's the Attorney General's response to Hantman. "We began this process in the
hopes of collaborating with Airbnb to recover millions of dollars in unpaid taxes and to
stop the abuse of Airbnb's site by operators of illegal hotels," Matt Mittenthal, a
spokesman for Mr. Schneiderman, said in an email to the a Times reporter. "Airbnb isn't
standing up for average New Yorkers who rent out their apartments from time to time —
Airbnb is standing up for highly profitable, illegal businesses that make up a huge chunk
of its corporate revenue." 36 And he reminded us about that $35 million in nightly rental
income grossed over the past three years by the top 40 NYC Airbnb listers – the very
folks Hantman calls "bad actors ... abusing the Airbnb platform or evading taxes,"
whose identities Airbnb refuses to reveal to the AG, and whose ads it likewise leaves up
and running.
Petitioning the State Legislature. No campaign on behalf of an Internet business in
trouble would be complete without an Internet petition. So, Airbnb saw to it one was
propagated against the "unreasonable" and "antiquated" NY state law Airbnb saw would
limit Airbnb's bottom line from NYC nightly rentals. "On Monday [Oct. 13]," wrote Emily
Brennan in the Times, "Airbnb endorsed the "Legalize Sharing" petition. In an e-mail to
New York users, Douglas Atkin, Airbnb's global head of community, wrote, `only if you
make your voice heard will policy makers finally realize that overbroad 3-, laws are
hurting you and hurting New York. "' It is interesting, just as SLOHosts complains of
"outdated and unnecessary" regulations that hurt our local economy, Airbnb is quick to
cast aspersion upon laws that get in its bottom line's way. Are the NY laws "overbroad"
or difficult to understand, as Airbnb and its supporters have repeatedly alleged ?" Not
according to people who've read them. And the law's author, State Senator Liz Krueger,
says the majority of NYC Airbnb nightly rentals remain "unambiguously illegal" under the
law. She cautions further, in a city of renters, that "Irrespective of state law or city codes,
these short-term rentals are almost always illegal under the terms of residential leases
and co -op or condo bylaws, and can result in eviction from one's home. "39
36 httr):/ /www nZimes.com/2013/ 11105 /nyregion /the - airbnb - economy -in- new -york- lucrative- but - often-
unlawful.html? r =0
Note how often "overly broad," "overbroad" and the like turn up as descriptors for laws Airbnb finds
inconvenient to its bottom line. This is a familiar meme.
39 http://intransit.blogs.nytimes.com/ 2013 /10/18 /airbnb- hosts - campaign- against- new -york-
subpoena / ?_r =0
39 htto: / /www.nytimes.com /2013 /10 /01inyregion /tenants- fine -for- renting -to- tourist -is-
overturned. html ?ref= anncarrns
One Airbnb NYC nightly rental lister discovered the landlord issues to his dismay. "On Wednesday Oct. 9,
after a months long and adversarial process, my landlord will attempt to evict me at a hearing in NYC
housing court.... [A]irbnb has not been as supportive as I would have liked since I was first served with
21
As this is being written, the Airbnb "war" in NYC continues, with new volleys by the day,
and no indication how it will turn out, though indications are it will not be exactly as
Airbnb would like because while they may be able to make a lot of noise, lawmakers
there understand that what Airbnb says isn't exactly the way things are. On the other
hand, maybe things will turn out just fine for Airbnb; news is the three Airbnb founders,
who live in California, each donated the maximum amount allowed to the campaign of
just - elected NYC mayor Bill de Blasio, who had previously said he didn't think nightly
rentals were such a good idea.ao
SLO and SLOHosts.
When enforcement of the ban on nightly rentals in neighborhoods began, the City found
itself targeted with the same type of Airbnb- inspired attack as NYC. (Being country
rubes, however, instead of Big Apples with a good newspaper to put the story into
perspective, we might not have understood this absent further research.) The
arguments and techniques of the SLO attack look like standard Airbnb issue, and they
parallel arguments available on Airbnb web pages.
First comes an appeal of a cease and desist order, managed to maximize publicity and
foment an astroturf uprising, then the Internet petition and a lot of organizing around
Airbnb talking points about "community," "sharing economy," and the like.
The petition: "San Luis Obispo City Council: Pass Fair and Reasonable 41 Short-term
Rental Regulation. "42 In order, its points are:
"• A unique experience for a variety of travelers who might not otherwise stay in
traditional lodging choices." This one is interesting. Since SLO Airbnb listers, including
some in SLOHosts, offer for nightly rental everything from tent space in the yard to
rooms to apartments to condos to cottages to granny flats to whole houses, what
exactly is the petition getting at? They don't say. But the key seems to be "who might
not otherwise stay in traditional lodging choices." This is a familiar Airbnb meme — that
there are some people who just will not come to your town if they are limited to hotels,
motels, legitimate rental condos (Avila Valley, for example), b & bs, hostels, camping in
a state or county park, or parking their motorhome at the Elks lodge. Aside from the
mind - boggling insanity of such an argument, there is zero evidence to back it up, nor do
they offer the slightest evidence why this might be the case. Maybe somewhere on
earth there is someone who will refuse to come to SLO if he can't stay with a SLOHost,
a "Notice to Cure" in late August 2013. 1 notified airbnb after being served with the notice and was
informed that airbnb does not get involved in disputes between tenants and landlords."
http: / /blog.airbnb.com /who -we -are/
40 http: / /www.nytimes.com/ 2013 /11/01 /nyregion /de- blasio- attracts - silicon - valley - donors.html? r =0
41 Note the use of the "reasonable" canard, as in attempting to sound reasonable while being
unreasonable.
42 http: / /www. change .org /petitions /san- luis- obispo- city - council -pass- fair - and - reasonable- short- term- rental-
regulations ?share_id= UhDLcFnmWV &utm_ campaign= mailto_link &utm_ medium= email &utm_ source =sha
repetition
11%
but really, is this remote possibility anything worth shaping public policy to
accommodate?
"• Economic benefit to our local economy through increased tax and tourism revenue
(estimated at $7.6 million)." This is typical nonsense about benefits to the local economy
allegedly provided by myfavoriteenterprise.com. There's zero evidence for its validity. In
all likelihood, close to 100% of alleged SLOHost benefits would have occurred if the
visitor had been here by any overnight means, and a bit of it's merely cannibalized by
"pirate" hotels from legitimate licensed places to stay the night. These sorts of statistics
— about how much our particular operation adds to the local economy -- are famous for
being nonsense.
"• Supplemental income to make home ownership in the city more affordable."
Supplemental income, for sure (stolen, by the way from people who have licenses and
regulated facilities to provide nightly rentals), but "to make home ownership in the city
more affordable" not at all. This argument displays economic ignorance. Airbnb's web
propaganda about "what we do for you" states Airbnb "monetizes" your space. In plain
English, that means it adds commercial nightly rental value to space intended for
residential habitation. The nightly rental value far exceeds monthly rental value. For
example, a house on North Broad that might rent for $2,400 per month was advertised
on Airbnb at $400 per night. Any owner would be a fool to rent it to a family for $2,400 a
month if the house had a potential of $12,000 per month as a nightly rental. When the
owner goes to sell it, with paperwork in hand showing its nightly rental value, he can
command a much higher price for the now commercialized house than if it were merely
a home. What legalizing nightly rentals does to SLO home ownership is to make it even
less affordable by raising the value of a house by its real or speculative "monetized"
value as nightly rentals.
We already have an example of how this works with the city's limited legalization of
second units, provided the owner lives on the premises. This was sold to the Council as
a way to make home ownership more affordable. But it hasn't. It's done the opposite.
First of all, in terms of enforcement, the city has found it impossible to enforce this
ordinance now blasted wide open with its difficult -to- enforce owner - occupancy loophole;
for every legal second unit with owner occupancy, there are likely a dozen illegal ones,
but the city finds it difficult to distinguish between the two. In the real estate market, the
effect on home - buying cost becomes abundantly apparent: a second unit added to a
house adds about $200,000 to the cost of buying that house. As more and more
speculators and "investors" add second units, the supply of affordable owner - occupiable
housing goes down, not up. And the effect on neighborhoods of having multiple units on
an R -1 lot rented out by speculators has been devastating. It breaks apart what's left of
neighborhood social fabric. Legalizing nightly rentals will have precisely the same
housing cost escalating and neighborhood fabric destroying effects. This is a recipe for
killing off our neighborhoods, our homeownership -based social fabric, and turning the
city into a speculative haven for bottom - liners, not a decent place to live or own a home.
23
"• Enrichment of the local neighborhood and the community through the exchange of
ideas and cultures introduced by worldwide travelers." This argument is perhaps the
silliest of all. How does it "enrich" our neighborhood to have strangers wandering around
at all hours of the day and night, 24/7? When we bought our homes, we didn't sign on to
having a hotel next door. We thought we were buying a house, in a neighborhood of
houses occupied by other permanent residents like ourselves, with whom we could
have neighborly exchanges and help look out for our mutual safety. To say having a
"pirate" hotel next door somehow enriches our neighborhood experience is just plain
daft. Neighborhood nuisance is more like it.
"• Ensure the quality of our neighborhoods." Ditto above item. This is just meaningless
propaganda that is the mirror -image of the truth. Nightly rentals certainly do not promote
neighborhood quality in any way whatsoever. This is as bizarre as the SLOHost claim it
is a "homeowner rights advocacy group, ,43 a claim with zero credibility unless one
assumes that what every "homeowner" wants is to run a hotel. Why can't they just be
honest and say they represent people who want turn our neighborhoods into profit
zones instead of decent places to live?
Nightly Rentals and the Sharing Economy.
Part of the Airbnb meme is being a part of this thing they call the new "sharing
economy" in which everybody "shares" everything from housing to cars to whatever else
some online entrepreneur will think of next. This is supposed to be cool and
progressive, but it's actually just plain old petty capitalism at work: the "sharing" only
takes place with the exchange of money.
Not that there's anything wrong with sharing — it's a good thing, for our souls, for our
humaneness — but nightly rentals are a weird form of alleged sharing. If one wants to
share one's home, there are organized ways to do so, with interesting people from all
over the planet. Servas, for example, is a well - established actual not - for - profit sharing
organization. One can register as a guest, or as a host, and both are screened in ways
Airbnb doesn't bother to screen its customers. Sharing arrangements are worked out
between the parties. And it's all for free. This is about welcoming actual guests into
one's home. Airbnb and SLOHosts are not; they're about money, about "monetizing"
your space.
Or, if you prefer something less formal and more downscale, there's always
couchsurfing.org, which is exactly what the name suggests — which prohibits payment
for spending the night — hosts are not to ask for it, and guests are not to offer it — that's
the organization's cardinal rule. There is indeed a "sharing economy" in which people
barter or trade favors with one another. It is based on decency and respect, it is based
on genuineness, it is based on actual sharing of resources with the friend or the
"stranger." Alas, Airbnb and SLOHosts are about commercialism called "sharing," not
about generosity, caring and genuine not - for - profit sharing.
43 New Times (Oct. 2, 2013)
24
Airbnb's Cheap Prices Allow More People to Travel, but in SLO?
The Airbnb is "cheap" meme is extremely popular in Airbnb circles, and there are people
who swear it's true, and that the only (mind you ONLY!) way they could afford to go to
Hawaii was by the wondrous cheapness of Airbnb. We'll leave them with their faith, for it
is unshakable.
However, we were curious about facts on the ground, so in mid - September (months
after enforcement in SLO had started and after everyone listing on Airbnb must have
known of it) checked listings for single rooms on Airbnb, and for motels in SLO, and
here's what we found.
• There were 10 Airbnb nightly rental listings for single rooms still being advertised
(which, frankly, we found shocking given the publicity about enforcement and
illegality of the practice), average posted cost $96 per night (cheapest at $55 was in
a mobile home, most costly was $134 plus a $20 "cleaning fee "). Curiously, an extra
is often added on to the posted Airbnb rate, a "cleaning fee" of another $15 to $20.
(There were many more SLO Airbnb listings, but for things greater than a "room. ")
• We then went to several composite motel listing websites and compiled the results.
There were 20 motels in SLO with posted rates less than the average $96 Airbnb
rate. The average nightly rental in those motels was $59. These were all decent
older motels, most of them conveniently located in the central part of the city. (Of
note: 9 of the motels listed nightly prices at or below the lowest Airbnb room, with no
Airbnb add -ons like "cleaning fees. ")
In other words, at that moment in time the average listed price of reasonably priced
conveniently - located legal in -town SLO motels was about 60% of the average illegal
Airbnb room.
The SLOHosts Appeal Poster -Lady: Sky Bergman.
Sky Bergman is probably a perfectly wonderful person — let's stipulate that. But by
appealing her cease and desist order in a manner to maximize publicity (a news story
with a poster -like photo of herself in her nightly rental in the Tribune, an editorial with
her photo in the Tribune, a self- authored story in New Times, her extensive appeal
documentation including published material about her house, among others) and acting
as a spokesperson for SLOHosts, she has said much that has shaped public perception
of this issue, and has made herself a public figure for purposes of this discussion. What
she has said therefore is fair game and merits examination in any discussion of what
SLOHosts stands for and what its request for legal relief will bring about in SILO.
"Alleged Code Violation." It is interesting that in her appeal to the Planning
Commission Bergman refers to her "alleged code violation" (PC appeal letter), and
challenges the validity of her cease and desist order, despite the fact there is zero
question she was violating the law. This seems a bit off. It suggests detachment from
her obligatory membership in the larger social contract based on respect for our laws.
Rather than pretend a violation's an "alleged violation," would it not have been more
truthful to admit the obvious violation while humbly asking for the change she seeks in
the law?
25
"Off -ness" is not limited to Bergman's appeal. The first sentence of her article in New
Times (Oct. 2, 2013) states: "Currently in the city of San Luis Obispo, it is illegal to host
a traveler in your own home for less than 30 days." No qualifications to that statement
are provided. Later in the story, she repeats a variant of the charge, stating the city
"bans me from welcoming travelers into my own home." This is utter nonsense. The
Biblical "host" welcomes the "stranger" into his home as an act of kindness, and the city
in no way prevents Bergman from doing that, for any length of time. However, it is illegal
to have a paying nightly renter in her home if that "lodging is furnished for compensation
for fewer than 30 days." (SLO Muni code) There's great difference betwixt the two:
Bergman's false statement about the city prohibiting guests in her home, and what the
law actually says. In fact, the city is as welcoming to actual "guests" as any Biblical text
would advise good people to be. So, the "story" she seeks to tell begins with a really big
whopper.
Perhaps Bergman's confusion about the meaning of the word "guest" can be traced to
Airbnb's deliberately duplicitous propaganda, which equates having paying "pirate" hotel
customers in one's home with "guests in your home." Most people don't ask guests to
fork over $96 per night for being their guests. And wouldn't we all, if forking over that
$96, consider ourselves paying customers, not guests?
It's all about money, not about harboring "guests."
Airbnb Gentrification. When Bergman purchased the building that's now her house, it
was, in her words, "a dilapidated triplex." (PC appeal) She proceeded to remodel the
triplex into a single luxurious upper class residence, with kitchen and bath straight off
home fashion magazine pages (in fact, she submitted pictorial evidence of such to the
Planning Commission), to be occupied by "a single woman" and her paying Airbnb
nightly renters. While she may look down her nose at what her house used to be, the
fact is it was home to three less well -off, less privileged, less pretentious households;
now it is apparently home to one person and an Airbnb nightly rental hotel operation.
There can be no clearer illustration than this of the gentrification incentive that
permitting such nightly rentals would offer for additional work force housing to disappear
through conversion to more lucrative nightly rentals, just as has happened in other
cities. In fact, perusing Airbnb listings makes clear this is already happening here; there
are numerous SLO operators offering multiple units of what was workforce housing for
nightly rental. Is this what the city wants to have happen to its neighborhood work force
housing stock? It certainly contradicts everything the City Council has said about
wanting more work force housing.
Economic Benefits for the City. "Renting out room [sic] in my home has benefitted the
local economy by not only my guests spending money while they are staying at my
house but also by relocating to the City..." (PC appeal letter) This "helps the economy"
meme is standard issue Airbnb /SLOHosts propaganda. SLOHosts alleges on its
webpage petition site, and Bergman repeats it in her New Times article, that SLOHosts
has "direct annual economic impact" of "more than $7.6 million." (New Times, Oct. 2,
2013) There is, of course, no way to know if such inflated numbers are anything other
K1.
than fantasy since the facts upon which an honest assessment of Airbnb economic
benefit to the city might rest don't exist. (The SLOHosts numbers probably come from
Airbnb propaganda. Airbnb has put this sort of nonsense on their web pages.)
But the larger question is this: Is there any reason to believe the community economic
benefits of Airbnb nightly rentals are any larger than those from permitted
hotel /motel /B &B stays? Logic doesn't suggest the answer would be "yes." So, since
permitted local accommodations usually fill up dependably only on Graduation
Weekend, and there is excess capacity the rest of the time, there is likely zero
economic benefit to the community from Airbnb "pirate" hotel operations. The illusion of
benefit, other than possibly a small one on that one weekend each year, comes from
ignoring the fact any income going to "pirate" operators is simply cannibalized from
elsewhere in the community, and money spent in shops and restaurants would be spent
wherever the visitors stayed. Net economic benefit: Close to Zero.
In her New Times article, Bergman also states the city is losing $150,000 per year in
hotel tax. Why? Because Bergman and other SLOHosts aren't collecting it and turning it
over to the city.44 Why aren't they collecting it when it's a legal requirement,
independent of the illegality of their nightly rentals, for all accommodations rented for
less than 30 days? You'd have to ask them. However, it is their obligation to collect
such tax and turn it over to the city, whether their hotels are legal or not. This tax is not
something they can ignore, to choose to pay or not. Nor is the city magically disentitled
to the tax just because SLOHosts are running illegal hotels. This isn't something where
SLOHosts can legitimately say (as Airbnb teaches them to say), "Oh, we'd love to pay
the tax, but only if you legalize our pirate hotels so we can." They owe the tax now, even
operating illegally. To not pay it simply digs SLOHosts deeper into illegality (a
misdemeanor, fine and 6 months in jail). If this weighs on their consciences but scares
them because they might get caught for their other illegalities were they to pay the tax
they owe, they could collect the tax from customers, put it into an envelope, and slip it
anonymously under the City Hall door, or into the curbside City Hall mailbox, in the dark
of night. Conscience clear. In case they get caught later, keep a list of what was turned
in when, so the City can match the two. Of course, they don't do that, so evading taxes
must not vex them all that much. The "we'd love to pay your bed tax" line is just another
example of contempt for the law from the "community" of Airbnb's "new sharing
economy" operators. It's a cudgel Airbnb has invented to beat cities into submitting to
their demands for changes in perfectly sensible laws that threaten its bottom line.
[Question: Why isn't the city pursuing payment of back taxes from every Airbnb lister it
can identify ?]
As for the claim that Bergman's Airbnb hotel benefits the community economically by
attracting new residents who relocate to the city, probably not, unless you're a real
estate agent. First, anyone who comes to her nightly rental already thinking about
moving here isn't exactly being recruited as a result of staying at her hotel. Causation, if
any, is thus murky. If it were true, however, would attracting affluent persons from
as One does wonder how she knows how much TOT tax the illegal pirate hotels aren't collecting. Do they
keep records? Did Airbnb come up with this number?
27
elsewhere who can afford to plunk down money on an inflated house in SLO really be
for our community's benefit? We have no lack of local people who'd like to be
homeowners. Equity refugees from more affluent areas are one of the major forces
driving up the cost of local housing (the term "Bay Area People With Money" used to
ring through the RE business) — housing that's desperately needed by people who have
jobs here and need to live here. Strangers with ample money buying up our housing
doesn't seem like a community benefit. So, if Airbnb really does act as a magnet
attracting affluent new residents to a town where housing costs already outstrip
earnings, this doesn't appear to be something the city should want to encourage.
Can't Afford My House Without Airbnb Income. In her appeal, Bergman states: "As a
single woman without the extra income that renting out rooms provides, I simply cannot
maintain the house ..." This is her upscale twist on the standard -issue "helping poor
folks meet their rent" Airbnb meme. Bergman makes an unconvincing poster child for
this argument.
First, as a single woman she bought a large triplex and apparently spent a lot of money
above the purchase cost ($722,500 according to Zillow) remodeling it into a single unit.
If she can't afford such a house — and maintenance is part of affording a house - -, why
did she buy it? Most sensible people try to live within their means; if they refuse, it's not
up to the city to change long- standing community - protecting laws to bail them out.
Second, Bergman is not exactly an impoverished member of our community. Median
per capita income in San Luis Obispo is $20,000 (2010 census). Median household
income is $32,000. Median family income is $56,000. According to SacBee.com,
Bergman's 2012 state income from her teaching job was $115,000, more than five times
the median per capita income and more than double the median family income. Her
Web presence indicates she has a photography business, presumably a source of
additional income above her salary. For her to claim she cannot afford her home without
running a hotel in it thus is odd.
In any event, there are perfectly legal ways to get a bit of extra income without violating
the law. It's seems unfortunate to claim that running a "pirate" hotel is the only way she
can make ends meet — but again, this is from the Airbnb playbook. Of course there are
alternatives. Someone's preferring not to use legal ways to boost income is not a
reason to change the law. If it were, we'd legalize the crack business.
Bergman's guests are supervised, and thus differ from other nightly rentals. This
is the BIG story SLOHosts (and their buddies on the Tribune Editorial Board) are trying
to sell. "Unlike normal vacation rentals, owners of primary residences live at the
property where they rent rooms to short-term travelers," Bergman states in her New
Times article. "This is an important distinction, because the owner of the primary
residence is normally present at the property where guests stay, which is a different use
than a typical vacation rental." (How it is a different use she doesn't explain; one must
take that on faith.) She goes on: "As an on -site homeowner, I am sensitive to noise,
litter, overcrowding, parking difficulties, and other anti - social behavior, and I am on -hand
to ensure against it." So, she supervises her hotel customers while they're there? But
doesn't she have a full time job? Does she take time off from her state job to supervise
her hotel customers, or are they actually on their own most of the day?
"I support compliance with existing laws," Bergman states in the New Times article.
Really? So what's she fussing about then? She should just comply with them. But, of
course, this isn't a serious statement; it's just that Airbnb- inspired Orwellian inversion of
the meaning of things — her breaking existing laws, claiming her law- breaking was only
an "alleged" violation, insisting the city change its laws to suit what she wants — and
then, incredibly, saying she supports compliance with existing law! Elsewhere in the
article, she declares SLOHosts "are collaborating with city of SLO officials to create a
win - win -win situation for travelers, the local economy, and neighbors." Change "SLO
officials" to "NYC officials" and that could come straight from the double talk on Airbnb's
public policy blog. More from the Airbnb playbook of "attempting to sound reasonable
while being unreasonable."
Tourism Backlash Agent.
One item that has not come up earlier in this discussion is the delicate balance, in a
place the size of SLO, between OK quantities of tourism and too much tourism. Much of
the playing field of Airbnb is in large cities, where a few thousand tourists make less
difference than they would here. Residents here are already having qualms about our
tourist economy's dominance; we manage to put up with it because they aren't where
we are most of the time. We surrender downtown to them, and go to the mall to shop,
and if we still go to Fesitval Mozaic, we find ourselves surrounded by strangers.
Handled adroitly by the City, this standoff might last some years longer without
excessive tension.
But what if we can't get away from them? What if they're in our neighborhoods 2417,
and are everyplace we go? That's a sure recipe for promoting tourism backlash, and
such backlash will harm the tourism industry overall by eliminating large -scale public
support for it. Nightly rentals in neighborhoods are a great way for the city to promote
tourism backlash. Is that what you really want to do?
Conclusion.
We've dealt at length with the parent operation, Airbnb, to show that what's happening
here and what's being said here is nothing more than a SLO version of the Airbnb plan
for changing the world to build its bottom line, leading to an IPO or buyout that will make
its founders very rich. It is remarkable that this scheme has accumulated worldwide
"troops on the ground" who will carry on the unreasonable, selfish corporate battle all
the while claiming they're just asking for what's reasonable. Such is the corrupting
power of money. Hopefully, this background that otherwise Council members might be
unaware of will help in its consideration of what's truly to the benefit of our community,
its homeowners, its work force, its neighborhoods, and its economy.
PEER]
Now, just to once again put all this into perspective, please go back to the beginning of
this white paper and re -read Airbnb fan Ron Lieber's italicized quote. It should make a
lot more sense now, for it pretty much sums things up.
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