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City opens door to Airbnb rentals

Council vote clears way for rentals as city wrestles with rules


Starting next month, Portlanders renting their homes to tourists will be operating legally for the first time — if they follow new city rules.

Portland city commissioners voted 4-0 last Wednesday to adopt a new ordinance that will allow the thriving short-term home rental scene to emerge from the underground economy. More than 1,500 Portlanders have properties listed with Airbnb, and others advertise their residences on Craigslist, VRBO, HomeAway and other websites. All are illegal if the guests are staying less than 30 days.

Under the new ordinance, residents may rent out one or two bedrooms for periods of less than 30 days if they get a $180 city permit and submit to cursory safety inspections by the Bureau of Development Services. The hosts, either homeowners or those renting a single-family home, must reside on-site at least nine months of the year. They can hire whoever they want to manage the in-home rental business.

Hosts can apply for the new permits starting Sept. 2 on the Bureau of Development Service’s website at portlandoregon.gov/bds, or by visiting the bureau’s downtown permit center at 1900 S.W. Fourth Ave.

The city is effectively allowing more “commerce to happen in single-family homes,” Mayor Charlie Hales said after the council vote. “I think it’s the right call.”

Portland has long allowed residents to do home-based occupations such as piano teaching, Hales noted, so this is an expansion of that practice.

A cautious vote

Airbnb, which lobbied heavily for the ordinance, separately struck a deal with the city agreeing to start levying lodging taxes for its Portland listings. That began July 1.

City commissioners like the new revenue source, and they are enthused about supporting the “sharing economy” that is bringing more tourists and visitors to Portland neighborhoods.

Commissioner Dan Saltzman praised Airbnb as a “great corporate citizen.” He hailed last week’s announcement by the San Francisco-based company, which recently opened a customer service office in the Old Town/Chinatown neighborhood, to provide lodging to emergency workers here after natural disasters or other emergencies.

Earlier the City Council agreed to dedicate $500,000 from the new lodging tax proceeds for affordable housing in the 2014-15 city budget. Saltzman, who oversees the Portland Housing

Bureau, will ask the City Council this week to dedicate future lodging revenue to affordable housing.

Commissioner Steve Novick said he’s still nervous about legalizing short-term rentals. But right now the underground operations have an unfair advantage against regulated and taxed businesses such as bed and breakfasts and hotels, Novick said. “I cautiously vote aye,” he said.

Commissioner Amanda Fritz, who also supported the ordinance, is among those concerned that Airbnb and similar operations will cut into the city’s supply of affordable housing. But she was able to add a requirement that city planners report back in September 2015 on how the ordinance is working, and how it might be affecting the stock of affordable housing.

Commissioner Nick Fish was not present Wednesday.

For now, the city isn’t allowing Airbnb or its competitors to use apartments or condos for short-term stays, or whole-house vacation rentals. Nor can hosts rent out more than two bedrooms of their home, unless they want to register as a bed and breakfast business, which is much more complicated.

Industry insiders say those short-term visits not covered by the ordinance account for the majority of the stays in Portland — and the majority of potential lodging taxes.

But everyone expects such illegal operations will continue, as the city only intervenes in response to citizen complaints.

“We think that this is a really good first step,” said Matt Curtis, director of government relations for HomeAway, which lists vacation rentals.

New provisions

By October, city staff expect to submit new provisions to the City Council that might allow short-term rentals in apartments and condos, says Sandra Wood, city planner. That likely will require the signed approval of landlords and condo owners associations, she says, as suggested by Hales.

The mayor promised the council also will consider legalizing vacation rentals in the city. However, Wood says that’s not a sure thing yet. “It’s undetermined at this time what the timeline would be,” she said.

Other cities that have tried to ban short-term rentals, including several in the Palm Springs area, found those didn’t halt the practice, and they wound up rescinding those bans, Curtis says.

“A lot of communities find out over time that bans or heavy restrictions just don’t work,” he says. Having a good ordinance that addresses community concerns is the best way to get compliance with the law, he says.

Hales also promised the City Council will tackle what he views as a more politically sticky issue in the new “sharing economy”— legalizing grassroots alternative taxi services such as Uber and Lyft. Those allow citizens to use their cars as taxis, “flagged down” by people using their smart phones.

Portland taxi companies are wary of the new competition, and they have a long track record of lobbying the city and mobilizing their cabbies to defend their interests.

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