Portland's mayor is planning to introduce an ordinance that would force online short-term rental companies like Airbnb to take down unpermitted rentals.
The proposed crackdown in Portland follows a federal court ruling in March that dealt a legal blow to Airbnb's long-held position that it is not responsible for policing unpermitted listings on its site.
Portland's revenue division has been trying to reach a voluntary agreement with the company for more than a year over unpermitted rentals.
The city says Airbnb’s latest offer represented a step backward, so it is preparing to try a tougher tactic: an ordinance that goes after Airbnb’s profits.
The draft ordinance would prevent Airbnb from collecting booking fees on unpermitted rentals in Portland.
It's modeled after a similar ordinance in Santa Monica that was recently upheld by the 9th Circuit Court of Appeals. Airbnb sued Santa Monica, arguing the city's rules violated federal laws protecting online speech. The court disagreed, and upheld Santa Monica's ordinance.
Mayor Ted Wheeler’s staff stressed that Portland’s ordinance is still in draft form, and could change. He plans to introduce it to council at the end of the month.
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The ordinance would give short-term rental booking sites two options: rely on a registry of permitted short-term rentals that the city provides, or agree to share data about hosts and take down listings the city flags as illegal.
Revenue Director Thomas Lannom said he remains interested in working with Airbnb, if possible.
“We’re not interested in introducing undue friction into this business model. That’s why we’re providing these two doors,” he said.
Portland’s regulations require hosts to get a safety inspection, pay a permit fee, comply with rental or HOA agreements, and limit the number of months a person can rent their entire home or apartments.
Airbnb declined to answer questions about the draft ordinance, why its negotiations with the city broke down, or why it doesn't require hosts to comply with local regulations. The company's profits are being closely watched as its CEO has said he plans to make an IPO later this year.
In 2014, Portland became the first state in the country to strike a deal with Airbnb: the City Council legalized short-term vacation rentals and imposed permitting requirements, and the company agreed to charge its guests lodging tax that would go to the city.
But while it reached a deal in theory, in practice, Portland has been unable or unwilling to get Airbnb to comply with the regulations on short-term rentals.
Many of the rules were intended to to keep more units in the city available for residents, not tourists, as the city dealt with a significant shortage in rental units and low-income residents were forced out of the center city.
Airbnb and its competitors don’t take down listings that don’t comply, and have refused to share host data to make it easier for Portland to enforce its rules.
Last year, the city auditor estimated that just 22 percent of listings in the city had permits. Approximately 60 percent of the listings were for entire homes or apartments.
In 2015, Portland became entangled in a lawsuit and counter-suit with one of Airbnb’s chief competitors, HomeAway. The city alleged that company was charging its customers lodging tax, but not paying it.
The settlement Portland reached with HomeAway last year appears to have increased the pressure to get Airbnb, which has been paying lodging taxes, to share its host data with the city.
HomeAway agreed to share its host data directly with the Revenue Division, to help with compliance — but only when Airbnb agreed to do the same, according to the findings included with the draft ordinance.
“The delay in getting an agreement from Airbnb has rendered meaningless the agreement Revenue already has with HomeAway, and compliance rates remain very low,” wrote Lannom.