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Firms balk at new rule requiring names, addresses, permits

A showdown is looming between the city of Portland and companies like Airbnb that promote short-term rentals in local residents’ homes.

The Portland City Council, in a 3-to-1 vote, approved a get-tough policy last Wednesday against hundreds of short-term rental hosts who have failed to obtain city permits. The new city ordinance requires Airbnb and its competitors to divulge the names and addresses of its local hosts so the city can assure the properties have been inspected and permitted, and are paying lodging taxes. The companies also will be required to collect lodging taxes on behalf of the city, and refrain from advertising for local hosts who don’t get permits.

Those are fighting words to companies in the so-called “sharing economy,” who take umbrage at sharing the names and addresses of their local hosts.

“The industry has made it clear they do not intend to play ball with us on the enforcement side,” said city Commissioner Nick Fish, as he cast one of the votes in favor of the ordinance.

This is a $40 billion industry that doesn’t think the city should be regulating it, Fish said. “What we have been told by the industry is ‘butt out.’”

Portland became one of the first big cities in the United States to legalize short-term rentals in peoples’ homes last summer. Two weeks ago, the City Council expanded the service to allow it in condos and apartments as well.

Airbnb, which opened a regional office in Portland last year and touts its special relationship with the city, has some 1,600 local hosts in Portland, and has agreed to collect lodging taxes for the city. But so far, only 135 short-term rental hosts have bothered to seek permits — required since Aug. 30 — and only 76 permits have been issued, said Mike Liefeld, enforcement program manager for the Bureau of Development Services.

And Airbnb competitors HomeAway and FlipKey, which have fewer local hosts, are resisting the idea of collecting taxes for the city.

The Short Term Rental Advocacy Center, a new group that lobbies for Airbnb, HomeAway and FlipKey, issued a sharply critical statement after the ordinance passed.

“Deputizing short-term rental platforms as a policing mechanism is simply an abdication of responsibility by the city of Portland and a violation of the privacy of the platforms’ end users,” the group stated. “Making the regulatory process for rental providers easy and affordable is the only path to improving compliance, which will ultimately lead to greater economic benefits to the entire city.”

Portlanders hoping to rent out rooms in their homes must seek a permit costing $178 and an inspection by the Bureau of Development Services. BDS inspections are superficial; inspectors make sure there are adequate smoke alarms and carbon monoxide detectors and that hosts are renting out legal bedrooms.

If the city doesn’t require that hosts get permits, Fish said, “we cannot say with a straight face that the guest is safe.”

Commissioner Amanda Fritz, who oversees BDS, cast the lone “no” vote against the ordinance.

“It changes the way we do enforcement,” Fritz said. “We need to take a lesser, encouragement approach before we go after people with a big stick.”

After the vote, Airbnb’s local lobbyist, Dan Jarman, said the company expects to continue working with the city to encourage its local hosts to seek permits. But the company has resisted pressure to require its hosts to get permits as a condition for listing their properties on Airbnb’s website.

Asked if Airbnb intends to sue over the city’s new ordinance, Jarman said “absolutely not.”

However, it might be a different matter if the city seeks personal data on its hosts, he said.

BDS has a hands-off policy about enforcing the city rules, until someone files a formal complaint. The bureau can levy large fines, but there’ve been relatively few complaints, and neighbors usually have no idea whether a local operator obtained a permit or not.

But now the Revenue Bureau, which requested the ordinance, will start enforcing it, and it intends to take a more proactive approach.

Thomas Lannom, bureau director, said he’ll start by sending a letter to each short-term rental company advising them of the new requirements, which take effect Feb. 20, and ask them to come into compliance.

“Our starting point will be to strongly encourage the companies to voluntarily comply by educating and making the BDS permit a requirement for all their local operators,” Lannom said.

The new ordinance requires companies to “prominently display” the permit numbers, which Lannom said means on the Internet where the hosts’ properties are listed.

Since only about 7 percent of local hosts operating in single-family homes have bothered to seek permits, that could upend the entire industry here.

Fritz said she feared the new ordinance is “going to cost the taxpayers a lot of money,” an apparent reference to legal fees.

But the ordinance also could be costly to the short-term rental companies and local hosts.

The ordinance gives the city authority to fine hosts and companies up to $500 per property that’s not in compliance, Lannom said.

That could mean a fine of several hundred thousand dollars if Airbnb does not cooperate.

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