Short Term Rentals: A Growing Problem For Saratoga Springs (Think Airbnb)

Short term rentals have become a growing problem nationally.  Imagine if someone purchased the house next door to you and turned it into a short term rental facility.  There is clearly potential for abuse.  Policing such houses is problematic.   The downsides are pretty obvious.  The city has minimal resources for policing these kinds of operations.  The house could end up with many people staying in it resulting in noise and parking problems.

The internet has made possible a radical expansion of short term rentals.  Managed properly this can be a boon to local people and to the city.  On the other hand, there is the real possibility that the more aggressive folks among us might buy up properties to exploit this market with little concern about the impact on neighborhoods.

The city has been wrestling with this problem for some time.  I recall discussing this with former Public Safety Commissioner Chris Mathiesen at least two years ago.

At the last City Council meeting, the Public Safety Deputy Commissioner did a presentation on this issue.  This follows an RFP issued earlier this year for a consulting firm to assist the city in regulating short term rentals.  According to the presentation, the city will be basing its program on one adopted by New Orleans.   Apparently they are going to be using Host Compliance LLC although the city is still negotiating with the firm.  Their proposal came with a price tag of $55,000.00.

The presentation emphasized the safety factor.  As the readers may know, a family renting a vacation house in Mexico recently died of some kind of asphyxiation due to a leaking gas line.  I thought the presentation was excessively upbeat. This is not going to be an easy process as borne out by the experience of New Orleans

There are many complex issues that will need to be addressed.

Having said this, I am wholly in support of this project.  Unmanaged these rentals could become a tremendous headache for our city.  In fact, it is my understanding that the city is already receiving complaints about properties that have been converted to meet this market.

Interestingly, AirBnb has taken a very cooperative approach with New Orleans and has been taking the same approach with other communities.  They are offering to assist in the collection of taxes based on the activity of the people renting out to travelers.

I did some research on what has been happening in New Orleans (NOLA).  Not surprisingly the road has had its bumps.  NOLA appears to be the first city that Host Compliance has started working with.  Among the hurdles they have run into has been the lack of cooperation with Expedia.  Expedia owns Vacation Rentals By Owner (VRBO) and HomeAway which have been the most popular websites for short term rentals.  I have used VRBO on a number of occasions.

It is my understanding that Host Compliance has told our city representatives that they have a way of monitoring sites like VRBO and figuring out where the rentals are.

I find this a bit hard to believe.  VRBO and HomeAway do not post the actual addresses on their websites although they pretty much always include pictures.  While the descriptions include the number of bedrooms and bathrooms, it is hard to believe that there is enough info to determine the actual location.  As the links to stories below show, New Orleans so far has not been able to identify successfully the Expedia related locations.

The contract for Host Compliance LLC was only awarded in December of 2016.  According to the Times Picayune:

“The regulations include establishing a dedicated enforcement unit, limiting whole-home rentals [JK:Not occupied by owner] to 90 days, allowing unfettered short-term rentals in owner-occupied housing, and an outright ban on short-term rentals in most of the French Quarter. The regulations also allow uncapped short-term rentals in certain commercial districts.”

“Mayor Mitch Landrieu’s administration and representatives of Airbnb said they expect the regulations to become a model for other cities because no other local government has passed an ordinance that includes a deal with Airbnb that includes what’s known as a “pass-through” registration system. The deal means Airbnb will share certain data with the city to enforce the 90-day limit, as well as enforce  safety regulations.”

An effort by one of the members of the NOLA council to further limit the program failed.  This council person wanted to limit the rentals to a tax status that proved it was owner occupied [JK: Homestead Exemption].  He also wanted to limit these rentals to two per block.

Housing preservationists opposed the ordinance as written because they believed it would adversely affect neighborhoods and would drive up the cost of rentals.

A representative of Landmarks Louisiana Society opposed the ordinance due to the fact that it did not include the Homestead Exemption.

I went to the NOLA city website and found the latest brochure explaining the program.  I saw that those with Homestead Exemptions now receive certain advantages over those without these exemptions.

As far as I can tell, while the application for a permit requires the floor plans of the rental along with affirmation of safety features, there is no requirement for an inspection by the city.

The permit fee for whole house, non-owner occupied residences is $150.00.

Apparently, the city established an enforcement department with a staff of seven.

Following a May startup, in June the city mailed out citations for 400 violations at 382 addresses.

In a June story in the Times Picayune, it was reported that Airbnb was having difficulties in removing violators from its website.  As an example, there were “dozens” of listings that exceeded the 10 person limit for addresses or were offering housing for numbers of people in violation of their permit.

The director of the office of Safety and Permits indicated that his seven person staff was busy reviewing online postings to check for unpermitted residences and also making field inspections.  He said they were pursuing the authority to issue administrative subpoenas to compel websites to provide addresses of rentals.  He also noted that AirBnb’s cooperation is voluntary, and he currently lacks the authority to require that postings be removed.

The city has an administrative hearing process that can result in fines of $500.00 per day for violators.

An April 3rd article showed major cracks in the program.  Expedia was unwilling to share addresses of its postings with the city in order for the city to enforce its ordinance and ignored the city administrative subpoena for this information. Reflective of Expedia’s attitude, they accused the city of failing to cooperate with them.  They had offered to send advisories of the city’s ordinances to landlords posting properties.  They wanted the city to draft the warnings.

In the case of AirBnb, while the company provides data on past rental dates, they refused to provide data on reservations for future rentals that would exceed the ninety day limit.

Jane’s Place Sustainability Initiative presented a study they said showed that the enforcement process was failing badly.  They noted that there are 21 cases of hosts who have exceeded the 90 day limit and that these properties have been listed on average 221 days.

Jo Dedecker, a spokesperson for the group told the newspaper:

“That is an abysmal rate.  The current standards that the city and Airbnb have agreed upon for data sharing are so poor that bringing the rest of the platforms into compliance with the existing regulations will not do enough to make enforcement against bad actors easier and more expedient.”

Here are links to a number of interesting newspaper articles on the problems experienced by the City of New Orleans

Short Term Rentals Legalized

Airbnb Violations

Short Term Rental Issues

Expedia Vs The City of New Orleans

New Orleans Brochure For People Wishing To Join Short Term Rental Program

In today’s (April 16) Gazette, it was reported that beginning on May1, Fulton and Cayuga will join eighteen counties in New York that have agreements with AirBnb to collect tax on short term rentals.  AirBnb reported that in 2017 70 “hosts” had 4,500 “guests” and the average “host” made $6,300.00.

Where, you might ask, is Saratoga County?  Commissioner Michele Madigan has told the City Council she will be putting together a proposal to the county to implement a local occupancy tax on short term rentals.
So with all of this in mind, I wrote to Commissioner of Public Safety Peter Martin.  The Public Safety Department will be responsible for this program.

I asked him what fees the city anticipated charging landlords for this program.  He responded with the following:


John,

The City sent out a request for proposal for short term rental management services several months ago.  We received several bids.  We have a qualifying bidder and are currently discussing specific terms before announcing the winning bid.  All bids (including fee proposals) are currently available to the public for inspection.  They are in the Accounts Department/ Purchasing Office (1st floor of City Hall).

We have not yet determined whether there will be registration fees, inspection fees, or penalties, nor the amounts if we do charge such items.  Fees, if any, will have to be adopted by the city council.  I expect that we will discuss these at council meetings either later this spring or early summer.

Regards,

Peter R. Martin Commissioner of Public Safety City of Saratoga Springs

4 thoughts on “Short Term Rentals: A Growing Problem For Saratoga Springs (Think Airbnb)”

  1. An important issue – thanks for covering this. As you point out, enforcement is key for this to have any chance of being successful. I’m skeptical, as enforcement of current zoning codes is almost non-existent. There seems to be no appetite within the city departments to enforce existing regulations. In addition, the occupancy tax only applies to operations with 4 or more units. This is outdated and deprives the City of additional revenue, as many of these home rentals can be considered single units.

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  2. Interesting story, but I must say that I have not personally heard any public outcry about noisy parties, or overcrowded houses. Could it be that some residents are simply jealous about the good fortunes of their neighbors? Reading further into your story, I think I have found the real reason the city is so interested in regulating the Airbnb rentals. This quote tells it all:
    “Commissioner Michele Madigan has told the City Council she will be putting together a proposal to the county to implement a local occupancy tax on short term rentals.”

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    1. I received a number of complaints from residents who are living in neighborhoods where homes have been purchased by landlords who offer their properties as continuous short term rentals. For most weekends throughout the year, these homes are occupied by different groups who may or may not be respectful of their neighbors. Noise and trash are the main complaints but there is also the issue of the negative impact on neighborhood character.

      It continues to be my contention that a home in a residential district that is being used for multiple short-term rentals is in violation of the zoning codes. It is an illegal commercial use in a residential zone. The City needs to protect our neighborhoods.

      Chris Mathiesen

      Liked by 3 people

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