Jojo’s Blue House is a five-bedroom craftsman that can be booked for $608 a night. But like many others in Portland, this short-term vacation rental is un-permitted.
Courtesy Dave Killen / The Oregonian
The housing and homelessness crisis in Portland was a key reason city officials pledged in 2019 to crack down on unpermitted short-term rentals on Airbnb. Four years later, an investigation into the city’s regulatory efforts finds a near complete breakdown. Those who should be enforcing regulations say they are understaffed, can’t get access to the data they need and don’t have access to the technology to get the job done. Meanwhile, safety inspections of properties are rarely done. The Oregonian’s Ted Sickinger shares with us his reporting and what the city is likely to do next.
Note: This transcript was computer generated and edited by a volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. The housing and homelessness crisis in Portland was one of the drivers for city officials to crack down on unpermitted Airbnb rentals in 2019. A city official at the time said that the agreement they struck with the company was the “toughest in the nation.” But four years later, an investigation by The Oregonian has found that basically nothing is working as intended, meaning a huge number of unpermitted rentals, a lack of safety inspections, and nearly no enforcement.
Ted Sickinger is an investigative reporter for The Oregonian. He joins us to talk about what he found. Welcome back to the show.
Ted Sickinger: Thanks, Dave. Good to be here.
Miller: It’s good to have you on again. I want to start with the lead up to 2019 and the data sharing agreement. What was happening before then?
Sickinger: Well, I guess in a word, it was chaos. When Airbnb arrived in Portland, and that was prior to 2014, it really took off. Portlanders quickly listed hundreds and eventually thousands of rentals on the platform, but there were no rules. It was completely unregulated at that point. By 2014, there was pressure on city hall to change that. Neighborhood groups were concerned about livability and safety issues. Tenant advocates worried about the impact on the long-term rental market, and the city wanted to collect lodging tax revenues on these rentals. So the city council adopted rules requiring operators to obtain a permit, undergo an inspection, limit the number of rooms they rented, and to live in their rental properties at least nine months a year. Those sounded pretty tough, but Airbnb and the other platforms refused to share bookings and host data. They denied responsibility for policing unpermitted listings on their sites. So the city really had little means of enforcing any of the rules, ensuring hosts paid all the lodging taxes they owed, etc.
The city auditor has looked at this repeatedly since 2018, and in their first audit they came out and determined that there were about 4,600 listings on Airbnb in Portland, and 80% of them were unlicensed. They said the enforcement of the rules was lax and that the city had no real idea what the effect of these rentals on its long-term rental market were.
So in 2019 ‒ and this followed a court case with the city of Santa Monica ‒ Portland adopted its own ordinance giving the short-term rental platforms a choice. They could either agree not to collect booking fees from hosts that weren’t registered in the city’s licensing database, and that’s called the short-term rental registry, and that’s an important new piece of the puzzle going forward, or they could agree to share host data and transaction data with the city and they could do its own due diligence on that.
Airbnb chose the latter option, to share the data. It signed an agreement with the city that, as you just mentioned, Thomas Lannom, the head of the revenue division at the time, said that this was the toughest set of regulations in the country, and everybody took a victory lap, and this was going to function beautifully going forward.
Miller: Do you have a sense for the percentage of Airbnb listings in Portland now that are actually registered?
Sickinger: It’s really hard to say. The city has about 850 properties listed in that short-term rental registry that supposedly have valid permits. And that’s about a quarter of the short-term rental listings of less than 30 days on Airbnb, which are the ones that are regulated. But if you go through the short-term registry and permitting data, many of those supposedly valid permits have expired, they haven’t had any activity on them in years.
And likewise, the city has a massive backlog of about 1,700 pending applications and renewals across all the platforms. And many of those are years old, although the city still considers those to be in compliance, and if you’re in that registry you’re allowed to immediately list your properties on Airbnb even if you haven’t filed a complete application. And that includes properties that are of more than two bedroom rentals that require a land-use review that might never get approved.
Miller: What are the hoops that property owners are supposed to go through if they want to rent out their spaces on sites like Airbnb and do so legally?
Sickinger: It depends. If you’re renting two bedrooms or less, or you’re renting to less than five guests, or five or less, you’re supposed to apply for what’s called a Type A permit. And that actually is a fairly perfunctory process. It’s an allowed use in residential areas. So you pay a $180 application fee. You notify neighbors, you self attest you have proper entrance and exits, that you have smoke and carbon monoxide detectors in place. And in that process, you should basically be good to go. And you have to renew that permit every couple of years.
If you’re renting more than two bedrooms, the process is a lot more involved. It requires, again, a land-use review. The fee of the city is $7,700. You have to put in a traffic study that can cost $4,000, architectural drawings... a variety of explanations of how the use of this house is compatible with the area. Many hosts who go that route hire a consultant, and now the total bill can rack up to $15 grand. And if you do get approved, the city can put all kinds of conditions on those rentals, but the license doesn’t expire.
Miller: What did you hear from people who have actually gone through these hoops when they now know for sure that they’re absolutely in the minority, that most other people aren’t doing this?
Sickinger: Well, I think there’s a lot of deep frustration regarding that. The folks I talked to said they’d gone through this process, they’d spent the money, and they are facing competition from folks who just have completely ignored it, that have no license or are just scofflaws with the rules, and feel like enforcement is nonexistent. When the city does receive a complaint, it can take forever for them to act on it, so the enforcement is lax. So, from one standpoint that’s, you know, “I shouldn’t have to compete with this” and “everyone should be subject to the same requirements.”
And housing advocates, again, are still worried that this is having an impact. We are in a housing emergency, and that this is taking properties that should be available to Portland residents off the market and into the short-term vacation rental market.
Miller: I want to turn to the safety question, because you’ve noted that safety inspections are basically nonexistent. What are those inspections supposed to look into, and supposed to guarantee for would be renters?
Sickinger: This was a concern, again, that Nick Fish, city commissioner at the time, was really adamant about, Chloe Eudaly as well. Again, you’re supposed to ensure that you have proper egress, that the rooms are actually permitted for habitation, that you have smoke and carbon monoxide detectors in place. And you know, at that point, you should be good to go if you’re in one of these smaller rentals. And you have to renew that every two years.
As part of the data sharing agreement with Airbnb, in order to expedite the permitting process which was lengthy at that point, the city agreed to back off on its inspection requirements for all new listings. And the Bureau of Development Services, which is the regulatory agency in this case, adopted new rules that required it to pull a minimum of 10% of the new listings for safety inspections each year. Since 2019, the city has only conducted 14 inspections of new listings. So they’re essentially not happening at all.
Miller: [You] have found that the city’s efforts to crack down on unlicensed rentals has been a complete failure. One of the reasons for this failure, as you documented, has to do with the city’s software problems. What’s happening?
Sickinger: Well, again, as part of this data sharing agreement with Airbnb, they set up an exchange system of this information and that data sharing is completely broken at this point, due to a software problem that city regulators.. basically can’t tell you exactly what that is. They haven’t been able to obtain any of the data for 15 months,so they don’t know how many new hosts have registered new listings with Airbnb or where those properties are. They haven’t sent out permit applications to operators of new Airbnb listings since May of 2022. It just leaves the regulators completely in the dark.
Miller: But you note that the regulators who can’t do their jobs, they asked the bureau’s tech team for help in May of 2022 and nothing has come of it. Why has this been such a low priority seemingly for city leaders?
Sickinger: Well, again, the bureau officials I talked to said there are a lot of competing priorities for the technology team. This one didn’t rise to the top of the pile. Meanwhile, the city continues to collect its lodging taxes and fees. So there’s no pressing economic pressure to deal with it. At this point, they acknowledged that the agreement is nonfunctional, dysfunctional, and it’s not worth expending the resources to fix the software issue for a system that it just isn’t working at all.
Miller: Meanwhile, the city is making money from these properties, from these short-term rentals, whether they’re licensed or not. How is that working?
Sickinger: So, the city and county collect an 11.5% hotel tax on all bookings. There’s a nightly booking fee of $4. There are other surcharges that go to Travel Portland and the state to promote tourism. In total, it’s about 16%. And the revenue department says it can audit hosts, it can get information from Airbnb to complete those audits so it’s confident that it’s collecting the proper amount of transient lodging taxes. They initially wouldn’t tell us how much revenue is coming in through sites like Airbnb. But since the article ran, they’ve actually provided some figures. And for all the platforms, the city, county and Travel Portland’s portion of those revenues, they’re taking in about $12 million a year.
Miller: The city did make another recent change after you started reporting on this issue. It terminated its data sharing agreement with Airbnb. What’s that going to mean in practice?
Sickinger: Well, it sort of remains to be seen, and it means that Airbnb heads to the same system as the other platforms have been using. It has to check if the properties are in the short-term rental registry before it actually allows our host to list a property on its site. But again, as we noted, that registry is an absolute mess at this point. There is the backlog, there’s the outdated information in there, and until the city really cleans up that system, it’s hard to see how this pretends to be a really big change. The city needs to clean that up, and it’s a manual process. They don’t have any automated system for taking in these applications. So they’re going through paper applications, they’re sending out notices, then if a property doesn’t respond, presumably they’ll remove them from the registry.
What I was told is that the city has about 10 administrative staff who work on this, but they only spend about 10% of their time processing applications. So, that’s effectively one person on the job. Maybe they’re prioritizing this a little more, but it is a time consuming process and they couldn’t provide me with any deadline when the registry would actually be cleaned up.
None of the changes that they’re contemplating, by the way, addresses what hosts are advertising on the site. Many hosts get a Type A license for two bedrooms or less and then go ahead and advertise their entire home on the site. And the city says it can’t police the platforms itself due to federal law. It has considered adopting some new rules that would allow it to penalize houses for advertising, say, more bedrooms than they were allowed, but it hasn’t adopted that yet. None of this addresses whether they’re listing their whole house, whether they’re living in their rental property the required nine months a year, and it doesn’t increase any of the enforcement resources that have been lacking in enforcing compliance with these rules.
Miller: Ted, thanks very much for joining us.
Sickinger: Sure. Thanks Dave
Miller: Ted Sickinger is an investigative reporter for The Oregonian.
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