Booming local firm threatens to pull up rental-market stakes

Photo Credit: TRIBUNE PHOTO: JONATHAN HOUSE - Vacasa executives Scott Breon, 30, (left) and Cliff Johnson, 33, have helped make the vacation rental business the fastest-growing company in the Portland area.The metro area’s fastest-growing company is feeling snubbed by the Portland City Council.

For several weeks, leaders of Portland-based Vacasa have watched with a bit of jealousy as San Francisco’s Airbnb got much of what it wanted from the City Council in an ordinance legalizing short-term home rentals in the city.

Airbnb’s lobbyist had ample meetings, phone calls and emails with Mayor Charlie Hales and his top advisers.

But when Vacasa contacted the mayor’s office about the pending ordinance, it was simply told it could testify at an upcoming hearing, says Scott Breon, Vacasa’s chief strategy officer.

“We don’t have the clout of Airbnb, I guess because we’re not bringing a call center here,” says Cliff Johnson, Vacasa’s co-founder and chief operating officer.

Airbnb operates a website that connects visitors with short-term lodgings in local homes, apartments, condos and vacation rentals. None of that is legal in Portland, though the pending ordinance will legalize short-term rentals in local homes where the resident is present at least nine months of the year. Recently valued by Wall Street at $10 billion, Airbnb promised early this year to open an operations office in the Old Town/Chinatown area with about 150 local jobs.

Vacasa, which manages and markets vacation rentals, has 380 employees, about 50 of them at its Portland headquarters on Northeast Martin Luther King Jr. Boulevard. It doesn’t manage vacation rentals within the city because that isn’t legal here. But it would like to.

Vacasa jumped from $800,000 in revenues in 2011 to $26 million in 2013, earning the top spot in the Portland Business Journal’s 2014 list of the Portland area’s 100 fastest-growing private companies.

Vacasa is growing so fast that it’s contemplating an initial stock offer or IPO to become a publicly traded company “in a few years,” Breon says. It now manages more than 1,050 vacation rentals in seven states — 600 of them in Oregon — and it’s poised to grow fast by acquiring smaller vacation rental management companies.

But Vacasa officials have grumbled that if the company isn’t wanted here, it might relocate its headquarters to Boise, Idaho, where CEO and co-founder Eric Breon (Scott’s older brother) lives.

“At some point, it might make sense for us,” Johnson says, “depending largely on what happens here.”

Vacasa figures it should be invited to help draft ordinances on the new sharing economy, and not just have it “all on” Airbnb, Johnson says. “We’d love to help them.”

Dana Haynes, Hales’ spokesman, did some checking and said Vacasa hadn’t even contacted the mayor or his staff.

(After this story appeared in print, Vacasa provided copies of two lengthy emails sent to Hales and his staff, on May 27 and June 20.)

Vacasa officials say Hales touted the new Airbnb office in his State of the City speech this year and seems to want to court the company.

But the mayor has been pushing the City Council to also address legalizing short-term rentals in apartments and condos, as well as in vacation rentals. In a July 2 public hearing on the ordinance, the mayor evoked a scene from the old “Let’s Make a Deal” television show that seems to have caught on. He says the short-term ordinance is only addressing “Door No. 1” He wants the city to now address Door No. 2 — legalizing short-term rentals in apartments and condos — and then Door No. 3 — vacation rentals.

“It’s happening now; it’s contrary to our code; what will we do about it?” Hales said of the latter two doors.

Breon figures the new city ordinance will only capture at most 15 percent of the potential lodging taxes that have gone uncollected in Portland. That’s because the ordinance doesn’t legalize Airbnb and other hosts who rent out more than two bedrooms, those who live in apartments and condos, or those who rent out vacation rentals.

It’s pretty clear that the vacation rental market, once confined to resort towns such as Cannon Beach and Oceanside, has spread into urban areas. A simple Google search of “Portland vacation rentals” yields many listings within the city limits by VRBO, HomeAway, Airbnb, Flipkey and others.

Vacasa often uses those other services to advertise its listings in cities where vacation homes are legal, so it views them as contractors rather than direct competitors. But since Vacasa employs a fleet of housekeepers, maintenance staff, photographers and data geeks, it figures if the city legalizes vacation rentals the company could add 200 to 400 more employees here, Breon says.

Many Portland residents, neighborhood associations, hoteliers, apartment landlords and others have expressed numerous concerns about legalizing short-term rentals here.

Johnson and Breon say many of those concerns are legitimate, but can be worked out via regulation. Breon is a former chairman of the King Neighborhood Association in Portland.

One of the main concerns raised by city Commissioner Nick Fish and others is that short-term rentals can reduce the stock of affordable housing in Portland.

But the vacation rentals managed by Vacasa tend to be second homes occupied a few weeks a year by the owners. “It’s not an available option on the long-term rental market,” Johnson says, and most of the homes are upper-end accommodations.

Vacasa also finds that most of its renters are families, who appreciate having a full house rather than a hotel or motel.

Steven Unger, a bed and breakfast operator who is closely following the deliberations over the ordinance, says it’s understandable that Vacasa managers are a bit miffed. They are based here and following the law, Unger notes, while others in the industry, including Airbnb, already are operating vacation rentals outside the law here.

Unger says the city must take a broader look at all the lodging options available through the sharing economy. “They need to appropriately regulate and legalize vacation rentals, because they’re going on anyway,” he says.

That may occur by next year.

Under Hales’ urging, the city Planning and Sustainability Bureau will bring forth options to allow short-term rentals in apartments and condos in the next few months. That may follow Hales’ suggestion of only allowing those when the landlord or condo owners’ association authorizes it in a formal letter.

Next, city planners will tackle a vacation rental ordinance in a broader review of city codes known as the RICAP process. New draft rules are expected by year’s end. They will be aired by the Planning and Sustainability Commission next year, and then move on to the City Council.

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