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Staff directed to work with Planning Commission to develop a possible strategy for legalizing short-term rentals

Lake Oswego city councilors weighed the possibility last week of loosening an existing ban on short-term rentals (STRs) facilitated by services like Airbnb.

The discussion revealed some early outlines of what a regulatory framework for the service might look like, but the only direct result was a 4-3 vote in favor of directing staff to explore the topic further.

The council had previously voted in June 2017 to maintain the ban and step up enforcement. But that decision was met with pushback from would-be Airbnb hosts, prompting the council to schedule another study session last week to reassess the issue.

SIEGELPlanning Director Scot Siegel and Code Enforcement Specialist Bill Youngblood told the council that staff had begun working with a software firm to identify local Airbnb hosts and confirm their locations, which allowed for more proactive enforcement. As of the end of March 2018, there were 32 confirmed units in the city, they said, plus 24 that still need to be verified.

"It is a fairly labor-intensive process," Siegel told the council, although he added that the overall number of units is small enough that the work is manageable. The software also gave officials more meaningful data about the overall STR usage patterns in Lake Oswego, he said.

Some Airbnb hosts live in their houses and rent out individual rooms, while others live elsewhere or rent out their houses while on vacation. The council had previously expressed concern about the latter category because of the possibility of individual hosts owning multiple houses and using them exclusively for Airbnb, thereby taking them out of the regular housing market.

According to the data, roughly two-thirds of local Airbnb listings are for entire houses, while the rest are partial rentals. The greatest concentration of units is in the First Addition neighborhood, although almost every neighborhood has some units. The ratio of whole-house to partial-house rentals is largely consistent in each neighborhood.

Roughly a third of the hosts are not the owner of the property. A minority of hosts live outside of Lake Oswego, and a small percentage reside outside of Oregon. STR rents in Lake Oswego vary from $30 to as much as $1,000 per night, with a median of $132 per night.

Based on the current number of Airbnb units, the City would likely bring in roughly $18,500 per year in tax revenue if it legalized STRs and began taxing them, according to a staff report — although that number is a conservative estimate because the number of units would likely increase if Airbnb were legalized.

Staff also compared Lake Oswego's rates to other cities both nearby and worldwide, Siegel said, and studied some of the approaches that other governments had taken to try to regulate the industry. They also looked at obstacles the cities had encountered, such as finding an effective way to collect taxes.

"We're not alone in this," Siegel said. "We're up there with Paris."

Some cities have chosen to impose a limit on the total number of nights per year that a unit can be rented, he said. Many have also chosen to require that the unit be "owner-occupied," meaning the homeowner lives inside the unit for a significant portion of each year.

The staff report also noted that there have been concerns about discrimination on the Airbnb platform, because the app allows hosts to deny booking requests without providing a reason. The company has faced multiple lawsuits alleging that African-American guests have been rejected at a higher-than-average rate.

Councilor Joe Buck said he favored an approach that would only allow hosts to rent out their primary residences, and suggested that the restriction should apply to apartments and condos as well as houses.

He added that he would want to make sure any inspection process was self-funding via licensing fees, although he said he was less concerned about inspections because the Airbnb platform tends to self-regulate by allowing guests to publicly rate their hosts.

Councilor John LaMotte also said he doubted the need for ongoing inspections, and he emphasized the benefits that allowing Airbnb could bring to Lake Oswego, particularly increased business patronage and tourism dollars.

Councilor Theresa Kohlhoff pushed back, expressing concern that STRs would essentially monetize the city's neighborhoods. Inspection procedures have proven to be extremely difficult to apply in Portland, she said.

"I never saw one city say, 'This is such an awesome thing (after they legalized STRs),'" she said.

Councilor Skip O'Neill agreed, arguing that neighborhood character is part of the city's brand and something the city ought to protect. He also noted that Airbnb hasn't prevented the platform from being used in Lake Oswego despite the ban.

"If we do anything today to help that," he said, "then we're rewarding people to come into our city and not abide by our codes."

Mayor Kent Studebaker said he supported the rights of individual property owners, but ultimately felt that the regulatory and enforcement challenges were too great to allow STRs. Councilor Jackie Manz disagreed, saying she didn't think potential enforcement issues posed a big enough problem to justify the ban.

Councilor Jeff Gudman floated the idea of the City legalizing STRs for a period of one or two years to evaluate the results, and reserving the right to re-impose the ban if things aren't going well.

Gudman, Buck, Manz and LaMotte outvoted Studebaker, Kohlhoff and O'Neill in favor of proceeding with the issue, so Studebaker directed staff to work with the Planning Commission to develop options for legalizing and regulating STRs.

Contact Lake Oswego Review reporter Anthony Macuk at 503-636-1281 or This email address is being protected from spambots. You need JavaScript enabled to view it..

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