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Mayor, council downplay effect on affordable housing

The Portland City Council is poised to “roll the dice” on an expansion of Airbnb-style rentals into apartments and condos, hoping it doesn’t do much to worsen the city’s affordable housing shortage.

Portland Mayor Charlie Hales said at a recent council work session that his colleagues are close to agreement on his proposal to legalize short-term rentals in multifamily properties. That would allow tenants in apartments, and condo owners or tenants, to rent rooms on a nightly basis to tourists and other visitors, if they have their landlord’s or homeowners’ association permission.

Hales doesn’t deny that short-term rentals will reduce the stock of affordable housing, but argues that Airbnb-style operations already are occurring here, even if illegal, and the impact isn’t likely to be significant.

At a recent City Council work session, Hales said there are about 80,000 multifamily units in Portland, and about 500 of those are now used by Airbnb hosts to rent out rooms. Developers have added about 5,000 multifamily units in Portland this year alone, Hales said, estimating that about 2,000 of those are affordable housing.

Justin Buri, executive director of the Community Alliance of Tenants, said his group isn’t “banging on pots and pans and screaming at the top of our lungs” to thwart the policy, “but I can see it getting to that point.”

Buri and John Miller, executive director of the affordable housing coalition Oregon Opportunity Network, told city commissioners the city needs to tightly enforce its new short-term rental policies to keep the impact on affordable housing to a minimum.

“Our hope is this isn’t going to have a huge impact if the rules are being enforced,” Miller said.

But so far, the city is relying on neighbors to file complaints to the Bureau of Development Services about problems from short-term rentals in neighborhoods. “To me,” Miller said, “that’s not a very robust compliance mechanism.”

As of Nov. 20, only 81 Portlanders had applied for permits under the July ordinance legalizing short-term rentals in single-family properties. That’s well less than 10 percent of those doing short-term rentals, who were supposed to apply by Aug. 30. Now, Hales wants to expand the program into multifamily properties.

Jessica Kimmet testified that she’s been renting out a room in her apartment for the past year — with her landlady’s permission. But she worries the landlady might try to raise her rent, knowing she’s getting some extra income via Airbnb.

Buri observed that Airbnb is more popular in closer-in “amenity-rich neighborhoods,” and it’s likely to bring more gentrification to those areas. He cited neighborhoods in Northwest Portland, the Pearl District and areas along North Williams Avenue, Northeast Alberta Street and Southeast Division Street. Some people say it’s too late to do anything in such places about gentrification, Buri said, adding, “I disagree with that.”

Others worry landlords will convert apartments or condo units to short-term rentals, because they often can make more money than renting to long-term tenants. Steve Unger, proprietor of the Lion and the Rose Victorian Bed & Breakfast in Irvington, estimates a landlord could make as much off a short-term rental in three months as in a full year with a long-term tenant.

The city ordinance would require the apartment or condo tenant/owner to live on-site at least nine months of the year, but it’s unclear how well that will be enforced.

Commissioner Amanda Fritz, who oversees the Bureau of Development Services, said if she has extra money to hire more enforcement staff, they would be deployed to inspecting distressed properties and properties in East Portland.

Buri, the tenants’ advocate, agrees those are higher priorities.

Commissioner Nick Fish, who seems the most concerned among city councilors about the impact to affordable housing, lobbied Hales to put a 10 percent cap in the mayor’s proposal, so that no more than one-tenth of the units in any apartment building or condo project could be used for short-term rentals.

However, Fritz proposed raising that cap to 25 percent, meaning one-fourth of a building’s units could be used for Airbnb or similar operations. That means during the summer or other peak tourism periods, one-fourth of a multifamily building could be filled with short-term renters.

“It strikes me at some point it’s beginning to change the character of the building,” Fish protested.

Miller and Buri also opposed raising the cap, but Fritz seems likely to prevail, since she runs the agency that will enforce the ordinance.

Fritz also mentioned she reached an agreement with Airbnb about lifting the cap to 25 percent, in exchange for the San Francisco-based company’s promise to help do a survey among its hosts about why they’re not seeking permits from the city under the new ordinance.

“We’re rolling the dice here,” Fish said, hoping the new policy doesn’t do too much harm to the city’s affordable housing stock.

Fritz said she’s content to assess the impact of short-term rentals on the housing market when the city completes a report on the program in September 2016, a report she insisted on when the city legalized Airbnb in single-family homes.

Commissioner Steve Novick said he is concerned that landlords might raise rents across the board because of the new revenue-raising potential via short-term rentals. However, Novick added, “in my mind at least, these are dice that can be unrolled,” if a city study finds the impact is significant.

Buri said he’s not content with simply waiting for a study nearly two years down the road. At that point, he said, undoing the damage won’t be as simple as unrolling the dice, as Novick suggested, but more like “getting toothpaste back in the tube.”

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