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The Pay-To-Play Culture

A report from the New York Daily News. “A social media spat and an Airbnb-friendly bill being considered in the state capital brought renewed attention to the big bucks the home-sharing site dropped on an upstate Senate race. Critics from across the political spectrum are raising questions about the nearly $500,000 the company’s campaign arm, Stronger Neighbors PAC, spent in support of state Sen. James Skoufis (D-Orange County) last year. Skoufis is the sponsor of a piece of legislation that would legalize and regulate home-sharing in the city and across the state.”

“‘This is a bad bill that puts tenants in harm’s way while paving the way for the loss of affordable housing,’ said Mike McKee, the treasurer of the progressive advocacy group Tenants PAC. ‘No amount of campaign spending should be worth selling out housing protections or going back on your own word to clean up Albany’s pay-to-play culture.'”

“Records show that last year Airbnb spent more than twice as much on Skoufis than all the other candidates it backed combined. The company’s PAC dropped $498,273 on TV, radio, digital and print ads in support of Skoufis. The group only spent $224,000 on four other candidates combined.”

From The Gothamist in New York. “In what appears to be a gross exploitation of the home-sharing industry, a Brooklyn landlord with a history of violations has been renovating apartments into luxurious Airbnb rentals while allowing rent-stabilized units to languish in neglect for decades, according to a new lawsuit.”

“A group of ten rent-stabilized tenants filed a legal complaint in Kings County Supreme Court against a family of building owners led by Miriam Shasho. In addition to a litany of harassment and housing violations, the tenants charged the Shashos with running an illegal Airbnb scheme out of three buildings in Prospect-Lefferts Gardens, constructing units with separate heating and cooling systems and advertising the newly renovated units on Airbnb as ‘paradise and luxury in a beautiful flat.'”

“The case substantiates one of the sharpest criticisms against Airbnb and other home-sharing platforms: that it incentivizes greedy landlords to harass and force out rent-stabilized tenants to make room for illegal hotel schemes. ‘He pours all of these resources into Airbnbs,’ said Catherine Frizell, a housing attorney at Brooklyn Legal Services’ Tenant Rights Coalition who worked on the lawsuit. ‘Meanwhile his tenants have rodent infestations and are not being provided with heat and hot water. It’s dehumanizing, and it has to stop.'”

The Florida Phoenix. “Jennifer Riley has lived for the past four years in a residential area a few blocks away from the water in Indian Rocks Beach in Pinellas County. She’s been dealing with short-term renters in the neighborhood who play loud music, party deep into the wee hours of the morning, and even threaten her.”

“‘I had one guy. It was after 10 p.m. and we called the police and so he came over, and he looked at my boyfriend and he said, ‘You know what the bad thing is? I know where you live. You don’t know where I live,’ Riley recalls.”

“The owner of the rental in question is an absentee landlord living mostly in Pennsylvania. He told her he intended to use the house as his own vacation home and visit whenever he could. ‘A total lie,’ Riley says.”

“In 2010, the city of Miami Beach banned property owners from renting a short-term rental (defined as less than six months and a day) unless it was in a legally permissible zone, such as in South Beach. Violators are subjected to a $20,000 fine, with the fine going up in $20,000 increments for every subsequent time they are caught.”

“That rankles Natalie Nichols, who is legally challenging the city’s laws on rentals and has placed a petition on change.org calling for support to reinstate the right to rent short-term property in Miami Beach. ‘They don’t want second-home owners and investors in a town that is 80 percent second-home owners and investors,’ she says. ‘I just don’t get it.'”

The Idaho Statesman. “When Brittany O’Meara first moved into a one-bedroom townhouse with her boyfriend, her neighboring units were filled with renters. Then, slowly, she started to notice that as neighbors moved out, her landlord wasn’t finding more tenants. Instead, one by one, he converted the townhouses into short-term lodging through Airbnb.”

“In the last two years, nearly half of the 12 townhouses have become Airbnbs, she said. ‘We’re in constant fear that our landlord will turn our unit into an Airbnb,’ she said.”

“With so many landlords tempted, the market has become so saturated with short-term rentals that Airbnb hosts say their revenue is decreasing. Some property managers said they have had to cut prices to compete. Outside investors are looking to locals for advice on how to get into Airbnb-ing in Boise. Aaron Catt, a Realtor and property manager, runs 15 Airbnbs around Boise for owners who don’t want to be involved in day-to-day operations. But he’s also become a consultant to investors looking to buy homes in Boise to list on Airbnb.Catt said he gets two to five inquiries each week for just that.”

“He has seen revenues fall in the last year as the inventory of Airbnb rentals has increased — but said that properties in the right location still can deliver impressive profits. ‘You had better have a super-dynamic plan to operate as an Airbnb or you would make less money than a long-term rental,’ he said.”

“Lori Dicaire, a local renters advocate, is calling for the city to regulate Airbnb the way it has ride-sharing scooter companies. ‘Before a single scooter hit the streets, the City Council hammered out a 15-page ordinance that regulated every aspect,’ she said. ‘The city has yet to create one single rule around Airbnb.'”

“O’Meara, the Bench townhouse tenant, has become more careful to lock her doors before she goes to bed at night and shut her windows when she leaves for the day. She can’t rely on neighbors to look out for her anymore. ‘Before, we knew our neighbors,’ she said. ‘Now we have no relationship or sense of community with the people we live next to.'”

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This Post Has 39 Comments

  1. ‘As Airbnb prepares for an IPO expected this year or next, the company continues to make investments that indicate a shift toward a more regulation-friendly strategy. In its latest move, the home-rental and hospitality unicorn has led a $160 million investment in Lyric, the operator of a luxury apartment rental platform.’

    ‘Perhaps most importantly for Airbnb, it’s all done above board. In an interview with Bloomberg, Lyric co-founder and CEO Andrew Kitchell said the company operates completely legally in all 13 cities it has a presence.’

    “We are really good at regulatory compliance,” Kitchell said. “We don’t sneak into cities or buildings, we walk in the front door and we introduce ourselves.”

    ‘Traditionally, that hasn’t been Airbnb’s policy. But as the San Francisco-based company prepares for a public debut and seeks to appeal to long-term investors, it’s perhaps trying to change an image that’s raised eyebrows around the world, opting to embrace regulation rather than continuing to fight against governments.’

    ‘Acquisitions like those of Lyric and Luckey Homes could help by providing something of a middleman between Airbnb and its users. In January, for instance, New York City filed lawsuits seeking more than $20 million in damages against property owners who had used Airbnb to illegally offer permanent housing for short-term stays. While Airbnb was merely the provider of the platform where the rooms were listed, the company’s lack of direct oversight enabled the trouble to brew.’

    https://pitchbook.com/news/articles/airbnb-leads-lyric-funding-amid-ongoing-deal-spree

    1. I’ve been involved in business all my life and I can’t understand this illegal activity as a part of a “model.” It’s really just old fashioned graft and corruption, silicon valley style. Or maybe I should say Obama style, cuz he and his lawyer friends got on the teat early on.

      If it was sustainable, they wouldn’t be pouring millions into political campaigns. And it’s already run into a dead end in Australia for the toilet scrubbing “disrupters.”

      1. If it was sustainable, they wouldn’t be pouring millions into political campaigns.

        But that’s straight-up corruption, Ben. If such practices were really occurring, our hard-boiled investigative journalists of the MSM would shine a spotlight on such malfeasance, and our ever-vigilant regulators, enforcers, and policymakers would spring into action to put things right, with Senator Running Deer, Champion of the Middle Class, leading the charge.

        I slay me….

      2. It’s really just old fashioned graft and corruption, silicon valley style.

        Masquerading as “innovative disrupters.”

      3. It’s old-fashioned slumlording with a thin veneer of technology. They want us to believe AirBnB is the next Intel.

      4. “We are really good at regulatory compliance,”

        Whilst eye agree that room rental$ can cause damage to communities, eye’m @ a loss to understand how Indu$trial farms that can cause to damage (herbicides, fungicides, pesticides) to rivers & streams are knot seen in a similar “di$rupter” fashion as Indu$trial airbnb intrusions in innocents folks personal lives?

        A rental across from Golden Gate park is equal to a small $helter.$hack next to a $mithfield hog manure processing yard? (Folks gonna have to endure a lot of sh.t!)

    2. “‘They don’t want second-home owners and investors in a town that is 80 percent second-home owners and investors,’ she says. ‘I just don’t get it.’””

      Then you are stupid. You’re not supposed to *live* in those homes. You’re supposed to leave it vacant but continue to pay taxes on it. What’s needed are some real regulations with enforcement and hefty fines.

  2. ‘I had one guy. It was after 10 p.m. and we called the police and so he came over, and he looked at my boyfriend and he said, ‘You know what the bad thing is? I know where you live. You don’t know where I live’

    ‘He pours all of these resources into Airbnbs…Meanwhile his tenants have rodent infestations and are not being provided with heat and hot water’

    Oh tech. Oh IPO. Just how fudged up can a situation be?

    1. “and he looked at my boyfriend and he said, ‘You know what the bad thing is? I know where you live. You don’t know where I live’

      Quick question for you Jennifer, does your boyfriend actually have testicles?

      Getting his @ss kicked or not, going to jail or not, if there ever was a time to stand up and be a man, that was it.

      1. ‘if there ever was a time to stand up and be a man, that was it’

        At 10 PM. Is airbnb great or what? I mean that’s what I want to do, roll around in the grass with some meth head because some fella wants to make money running an illegal room thing. What the fudge has this come to?

  3. ‘Before a single scooter hit the streets, the City Council hammered out a 15-page ordinance that regulated every aspect…The city has yet to create one single rule around Airbnb’

    ‘The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. The RICO Act focuses specifically on racketeering and allows the leaders of a syndicate to be tried for the crimes they ordered others to do or assisted them in doing, closing a perceived loophole that allowed a person who instructed someone else to, for example, murder, to be exempt from the trial because they did not actually commit the crime personally.[1]’

    https://en.wikipedia.org/wiki/Racketeer_Influenced_and_Corrupt_Organizations_Act

  5. OT
    solar PPA agreements are dead in ca due to pg&e bk
    so do you still have to include solar roofs in new builds?

    1. Good que$tion!

      $olar roof$ … what % of an add on cost is that to a $1,000,000 $helter.$hack financed with .02% down anywho?

        1. As long as the “energy implement” can be carried on the Non.Bank$ book$, how can that $ignificantly effect the homeloanmoaner?

    1. When will these Keynesian fraudsters ever let true price discovery assert itself at last?

      Only when they have no choice.

  9. ‘Vacation rentals and the websites that support them have grown in popularity with travelers, while the increase in short-term rentals, many Hawaii residents complain, has changed the character of some neighborhoods and worsened a housing shortage.’

    ‘Airbnb commented in written testimony that any tax bill should be written to help ensure the assessment, collection and payment of taxes and “not to use confidential tax information to facilitate the Department of Taxation’s enforcement of county land use laws.”

    ‘While the number of officially recorded vacation rental units increased 21% in the previous four years, and doubled in the last decade, for a total of 13,082. Still, the total vacation rental units number is likely underreported using the standard survey methods, and supplemental reports analyzing the rental websites peg the actual figure at more than 30,000 units.’

    ‘Honolulu’s current regulations generally limit renting properties for fewer than 30 days outside of resort zones, and there are approximately 800 units outside the resort zones that were grandfathered in when the prohibition was implemented. Yet research shows there are roughly 9,000 short-term rental units on Oahu.’

    https://www.travelweekly.com/Hawaii-Travel/Insights/Lawmakers-weigh-heightened-vacation-rental-regulations

    “not to use confidential tax information to facilitate the Department of Taxation’s enforcement of county land use laws”

  10. I run 15 Airbnbs within an apartment complex. These things do very well! Right now we make more in short-term rentals than we do with rentals. We could break down our short-term rentals and convert them into leases, but we choose to keep a handful in play for various reasons.

    For us, Airbnb guests are generally less problematic than residents. This might be because we are not a beach house in San Diego. The people who come stay with us are quiet travelers and business type people. You are always in the units every few days so you make sure there is no hoarding, pet urine/poop, damage or filth. Airbnb guests are never late on rent either. Airbnb is a real innovation, even though it seems simple. It has reduced the cost of travel and brought a platform where people can put excess capacity into the market. Many cities and states are grappling with how to balance that and it will be litigated for years to come, but short-term rentals as a concept are here to stay.

    1. ‘short-term rentals as a concept are here to stay’

      Yeah, that’s the horseshit they push. I’ve seen a lot of it come and go. BTW, say goodbye to your progressive credentials greedy bashtard.

  11. Let me give you a couple of examples of current short-term rental guests that I have currently:

    1) Guy recently getting a divorce. Wife lives in the house and is getting ready to sell it. He doesn’t want to live in a hotel or an extended stay.
    2) Travel RN
    3) Med school student doing rotations
    4) Couple working on an out-of-state adoption

    All of these are valid reasons for people to choose something in between a hotel/extended stay but they don’t want our 12-month lease. I do think that Airbnb has gotten out of hand in many areas. I would go directly after the platform and litigate if it allows users to post illegal listings where city zoning rules disallow this. However, I live in UT and our state is one of the reddest, lowest regulation, most landlord-friendly states in the US. We’ll be the last place to regulate short-term rentals because the voters here hate government intrusion and regulation to an almost excessive degree in my opinion.

    1. ‘I do think that Airbnb has gotten out of hand in many areas’

      But keep cashing those checks greedy bashtard.

    2. This is really sickening stuff. You are basically patting yourself on the back for ripping off all of your long-term tenants in favor of short-term profits. When people rent an apartment they sure as heck are not signing up for a rotating cast of neighbors who come and go every week. If they knew that going in, they probably wouldn’t be willing to rent there to begin with. Plenty of apartment complexes offer short-term 3 month leases, which would cover all of the ridiculous situations you cite.

      You are either running a hotel or a place to live. Make up your mind. It’s astounding that this scam has been allowed by regulators. I will fight to my last breath to see it outlawed in as many communities as possible. The fact that it was ever even seriously considered just shows the depth of greed and venal corruption of our politicians and of rent-seekers like yourself.

      Your duties as an apartment owner are to provide tenants who sign a lease with working utilities and appliances, and a safe, quiet environment to live in. There is no way you can guarantee their safety or their quiet enjoyment when you are filling your units with Air BnB stays. People treat these units the same way they would rental cars or hotel rooms – with no consideration.

      I can’t wait until the long overdue crash wipes the smug grin from the face of all these self-important hucksters who think their purpose in life is to squeeze every single drop of revenue from the public with their parasitic schemes.

  12. Genuinely curios, what is your stance on Airbnbs Ben? Totally against them in all situations?

  14. People treat these units the same way they would rental cars or hotel rooms – with no consideration.

    This is the perception that exists, but it has not been true from what I’ve seen. Our residents are much harsher on the unit and we have more repairs and deposit related issues than a short-term traveler. I think maybe if we were doing full house short-term rentals in a tourist destination where there were crazy parties maybe we would see something more along the lines of what you are describing.

    To your point, all residents know up-front that the ownership group has a set of short-term rentals. They are segmented in an isolated wing of the complex. A few long-term residents who live here now actually tried out living here for a short stay before they signed a lease. There are actually some really good synergies that exist with this setup. For instance, just this week one of our residents recently had his mom come to visit him from Maine. She stayed in a short-term unit and he was thrilled to be able to have her visit, but not stay with him (too small of a place) in his unit, but also she was closer than staying at a hotel.

    I don’t know any apartment complex in this area that does leases for less than 6-months as standard operating procedure.

  15. For us, Airbnb guests are generally less problematic than residents.

    Interesting observation. I did about 5 months in an Airbnb last spring in a similar way to what you are talking about. But yeah, the places where people just want to party sound totally different.

  17. 1. It would be neat to see an undergroundbnb that takes less of a cut with cheaper offer.

    2. The spirit of the site is that the tenants are renting out their rooms, not that the landlord is involved.

    1. I would love to see a real competitor to Airbnb emerge. There is VRBO and Homeaway, but they are small fry compared to Airbnb. The “network effect” will probably ensure Airbnb will win. I think the competition was over years ago.

      Most Airbnb speculators are doing this illegally, that is to say that they are breaking the terms of their lease by offering up a spare bedroom for rent or renting their entire unit. It is quite a different story when the owner of the complex is running the short-term rentals. This is what is happening in our complex.

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