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Tossing The Entire Short-Term Rental Industry On Its Head

A weekend topic starting with Domain News in Australia. “Owners in Melbourne’s high-rise apartment towers are selling properties at a loss amid a tarnished reputation thanks to wild parties and crime. Some city and Docklands buildings are tarnished thanks to the sheer volume of short-stay apartments and what happens there, such as the confronting death of Laa Chol, 17, who was killed at a party in an Airbnb apartment in the EQ tower in the CBD.”

“Landlords and vendors in the tower have been forced to reduce rents to lease properties in some cases, and vendors in the past 12 months have often sold at a loss. Nelson Alexander Docklands partner David Anderson agreed residents did not like having poorly managed short-stays in their buildings. ‘We’re finding owner-occupiers moving into new developments can be a bit dismayed when they see people walking in and out all day with suitcases,’ he said.”

From Fox 4 now in Florida. “The Naples Area Board of Realtors reports that home sales in Collier County rose to 12.8% in April 2019 from the same time in 2018. This is despite a fear from realtors that potential home buyers might start looking elsewhere after county leaders decided in March to begin issuing warnings and fines to owners of some short-term rental homes. The decision was based on numerous noise complaints from homeowners living in neighborhoods with short-term rentals.”

“‘I think it made the entire market nervous, because even though we’ve converted to more of a year-round market, we still have a lot of the transient people that enjoy season,’ said Naples realtor Tiffany McQuaid. ‘The average sale price dropped to $340,000 from $360,000, which was last April’s number.'”

From NBC San Diego in California. “A bill that could limit the availability of short-term rentals moved one step closer to becoming law, worrying some proponents of the richly-debated industry. Jonah Mechanic, President of Share San Diego and STVR property manager criticizes the bill’s effectiveness, and says it does little to solve the region’s affordable housing crisis like its authors claim it will.”

“‘These homes never have been affordable housing, and no matter what they never will be affordable housing,’ he said.”

“Brian Curry is among the long list of San Diegans cheering for AB 1731’s passage. ‘We’re not just talking about the noise next door or the party next door that happens in Pacific Beach anyway, it’s Pacific Beach,’ Curry said. ‘If it’s a long term tenant, you can go next door you can talk to that tenant. If it’s a visitor who’s gone the next day, they’re gone the next day.'”

From Pew Trusts. “Just a couple of days after a rowdy house party at a short-term rental property ended in gunfire in a residential neighborhood in Rocklin, California, near Sacramento, Erin Youman, a neighbor, approached the City Council at its regular meeting.”

“‘I’m concerned about the welfare of our families on Grove [Street], especially after what happened over the weekend. What’s the plan?’ she asked. ‘Can we have something stricter? I know it’s an Airbnb and people have their right to make money, but is there something we can do to make the environment a little more regulated? My family’s home is directly across the street from the Airbnb. We’re a little concerned.'”

“Oh, yes, responded Republican Mayor Joe Patterson, who said he had asked his staff to come up with some new rules in the next month or so. ‘We’re all shaken by the incident that happened over there,’ he said. Patterson was referring to the fracas in the wee hours of the morning, in which two people were shot and the alleged perpetrators sped off in a car, only to make an abrupt U-turn and fire more shots at the home on the way back, according to the Sacramento Bee.”

“A number of violent incidents have been reported at short-term rentals around the country. Just this month, a shooting at a graduation party in Pittsburgh left two dead and one injured. Neighbors told WPXI news that the home is rented out regularly on Airbnb. In Nashville, Tennessee, police earlier this month said a guest went ‘psycho’ at a party and was arrested after she allegedly drank two bottles of wine and trashed a short-term rental house, the Tennessean reported.”

From West Hawaii Today. “The Honolulu City Council voted unanimously Monday to impose stiffer fines and harsher regulations on Oahu’s vacation rentals, tossing the entire short-term rental industry on the island on its head. The vote was 9-0, and Mayor Kirk Caldwell said that, subject to a usually routine legal review, he will sign the bill.”

“As at previous meetings, proponents of vacation rentals warned of dire consequences to their businesses and the economy if either bill were to pass. They warned also that because they rely on the additional income of renting out their homes to make ends meet, they might need to sell their homes if either law were to pass.”

“Kailua resident Lisa Marten said her house is surrounded by vacation rentals, which has had huge ramifications for her once ‘established, middle-class kamaaina neighborhood.’ Ten percent of the 140 houses in her subdivision are now vacations, she said. The situation has caused Enchanted Lake Elementary School to experience a huge drop in enrollment, which amounts to a significant loss in funding for the campus.”

“But Ana Gilberti-Ippel said home-sharing is the only way her family is able to survive. The single mother rents out her Waikiki condominium unit while living elsewhere. ‘This is my small family business that allows me to be a homeowner, finally, and live a modest and comfortable life.'”

The Globe and Mail in Canada. “Jae Lazar moves more than she would like. A single mother of two, she has lived in the District of Tofino, on Vancouver Island, for much of the past three decades, but was never in a position to buy a home. As with many renters in Tofino, Ms. Lazar has bounced around from home to home, given that many landlords rent to vacationers during the peak summer travel season.”

“It got worse, Ms. Lazar said, ‘once the Airbnb thing took off.’ Over the past five years, she’s aware of at least five homes where she once lived that were later rented to vacationers, including on Airbnb.”

“The McGill report found that commercial operators, or those who manage multiple listings, play an outsize role in Canada’s Airbnb market, generating nearly half of total revenue in 2018. Prince Edward County, about three hours east of Toronto, is seeing this trend play out. Mayor Steve Ferguson said speculators are ‘going on shopping sprees’ for up to four properties at a time ‘with the sole intent of converting them to short-term accommodation.'”

“Beyond housing supply, he worries about short-term rentals changing the fabric of a community. ‘The net effect is that entire neighbourhoods [in Prince Edward County] were going dark, because houses and properties would be in full use from the May 24 weekend to Thanksgiving, and then … kaboom, there’s nothing going on.'”

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This Post Has 65 Comments

  1. ‘Ana Gilberti-Ippel said home-sharing is the only way her family is able to survive. The single mother rents out her Waikiki condominium unit while living elsewhere. ‘This is my small family business that allows me to be a homeowner, finally, and live a modest and comfortable life.’

    Get a job Ana.

    1. Airbnb ??

      I originally thought that this model was a ingenious idea…But, I have come around to the position that it just causes to much disruption and as we see with your post above actual violence…Horses are now out of the barn…Not sure how we get them back inside…

      1. > Not sure how we get them back inside…

        So true. We must recognize that we’re not going to back to ‘how things were before’ but to try and see where is this all going to go.

        1. IMO it’s a doomed concept. If it wasn’t for booming prices it would’t exist at all. It’ll go the way of the Craigslist thing a few years ago.

          1. AirheadBNB has morphed into 2hr room rentals for hookers and johns. Anything illegal? Use AirheadBNB. It’s an epidemic in California with all the underwater home-debtors. Washing sheets, disposing condom wrappers, syringes and cleaning toilets. Yep…. You’ve really come a long way.

            AirHeadBNB…. poster child for a money losing failed business.

          2. ‘Seldom has a warning seemed so prescient, so quickly. Last month, as Investec pulled the plug on Click & Invest — its robo-advice venture, which had gobbled up £32 million of its parent’s cash without showing any prospect of turning a profit — the co-chief executive of the London-listed bank issued a damning assessment of the entire financial technology sector.’

            ‘It was, Hendrik du Toit said, “hyped” and based on a misapprehension. “To think you can create a parallel financial sector to the existing one is a fallacy,” the 57-year-old industry veteran argued.’

            ‘A week later Loot went into administration. Though Royal Bank of Scotland had ploughed in £5 million for a 25 per cent stake in the digital current account start-up, and despite the business attracting 212,000 customers since its launch in 2014, it had run out of cash. The warnings haven’t stopped since then. According to David Brear, 40, a co-founder of 11:FS, a digital bank advisory firm, Loot is unlikely to be the last financial technology company to go belly-up.’

            “A particular concern, given the amount of money and time spent, is that little of substance has been achieved,” McKinsey said in research published in January. “The bottom line is that despite billions of dollars of investment and nearly as many headlines, evidence for a practical, scalable use for blockchain [in financial services] is thin on the ground.”

            “Billions” is a word that crops up often in the financial technology sector. Companies with billion-dollar valuations are the so-called unicorns that politicians and entrepreneurs dream of, but those values are not locked in stone. Indeed, the private market valuations being ascribed to some of Britain’s fintech unicorns seem to some to be heroically optimistic.’

            ‘Peer-to-peer lending, comprising the online lending brokers that make up one of the more mature areas of the fintech industry, has been subject to concerns that some platforms may have been lending irresponsibly. When Lendy, a peer-to-peer player that had £160 million in outstanding loans, of which £90 million was in default, went bust on May 24, worries about the wider sector were amplified.’

            ‘Ian Rand, Barclays’ business banking chief, recently warned of a bubble in the UK’s peer-to-peer market, saying that too much of the sector had been picking up high-risk credit that had been turned down by banks — the inference being that bubbles burst. Should it happen in Britain, it is unlikely to be on the scale of the one that exploded in China, where hundreds of lending platforms have collapsed in recent years.’

            https://www.thetimes.co.uk/article/hype-millions-raised-and-failure-welcome-to-fintech-jz0fkf98m

          3. Airbnb has 20% of the entire US lodging market. They brought in more revenue than Hilton last year.

          4. “Airbnb has 20% of the entire US lodging market. They brought in more revenue than Hilton last year.”

            Hehe…there goes the hospitality degree. Would you like an extra shot with that latte?

        2. Airbnb definitely needs regulation by local governments. If a local area prohibits it, then they need to have the ability to go directly into the platform and ensure that there are no listings violating their laws. If this is the case, then Airbnb should get punitive fines. Right now though Airbnb is complicit in allowing Airbnb hosts to disguise the location and whereabouts of their rentals. There are so many too that it’s hard to crack down on it. But it would be easy to do Airbnb required an accurate address and use some geo-tagging.

          1. Airbnb has 20% of the entire US lodging market. They brought in more revenue than Hilton last year.

            Without out having all the limitations, taxation and regulation that Hilton hotels are subject to.

            Only a matter of time until AirBnB and their ilk are similarly regulated, but for the benefit of the regulating entities taking precedence over the benefit of the neighbors.

          2. Without out having all the limitations, taxation and regulation that Hilton hotels are subject to.

            All of my Airbnb units are taxed at the same rate as hotels (e.g. Utah transient room tax). It’s about 13% including city and state.

      1. That article is a must-read. Very insightful into what is happening nationwide as the investor class takes over single family housing.

        1. I expected to be annoyed by it but wasn’t so much. He’s actually doing to the houses what the owners should be doing…if the former owners had any money. So he’s preventing the neighborhood from turning into a ghetto. I suspect his numbers won’t look so good once the houses stop going up in price though.

          1. That was also my take-away. I certainly don’t view this as a negative actually, just interesting to see what is happening.

            I felt like it is actually capitalism applied in a decent way. Mainstreet Renewals seems like an apt company name. While he is seeking a profit, it is reasonable (~6%) and methodical. It made me think I might want to live in one of these houses myself because of the care and attention they seem to take in making them livable.

        2. Agreed. A recommended read.

          One thing that caught my eye, besides nearly winding up like Dobson (TRS-80, worked in whole sale loan office for a bit) was the part how they scan listings and make offers in near realtime. They have an advantage over Joe and Jane Doe when a good house comes up for sale in their neighborhood at a good price. Main Street Renewal can spot and offer cash and take it off the market before most of the locals even know it is on the market.

          1. Timing is everything. This is true in the rental market as well. Everyone knows that person who scored a great apartment at below market rates and you wonder how they got it. Quite likely they leased during an off-peak time or when there was a lull in demand or something like that. You can score good deals if you are apartment shopping, you just need to know what time of day, day of week, and month of the year is most likely to net you a good deal.

          2. Timing is everything. This is true in the rental market as well.

            That’s how we would up with this house – When we had to leave the FLW-style Usonian house, we spent nearly 6 months looking for our next place and we had alerts on all the major sites for when new listings in our zip code popped up.

            The listing for our (now) house came online and we responded within 4 hours. We booked the earliest time to view it that we could, and when we got there there was already another family walking through it (they decided to show up a day before their scheduled showing, H1B moving to work for Amazon). After seeing so many other houses, we had a real good feel for what we wanted and the pricing in the area, so after kicking the proverbial tires for a couple hours, we didn’t hesitate to send in our application that same night.

            Now we had the luxury of waiting and being picky as well as being able to move on a moment’s notice – most of the other people out hunting couldn’t be quite so free and opportunistic.

      2. Everyone from the Realtor next door to the tattoo parlor all the way up to members of Congress and Wall street are devouring the middle-class. Moral suasion is for flag-waving losers as the billionaires want your health-care, pension and shelter. It’s fat cats and starving dogs!

        2. Who was it that said “A lot of people who consider themselves middle class are actually working class” ?

          1. Who was it that said “A lot of people who consider themselves middle class are actually working class” ?

            Don’t remember…it was pointed out a long time ago. A leftover artifact from the post WWII era when skilled labor was at a premium. It allowed workers to get way too uppity. But we’ve almost got them crammed back down now. Took longer than expected.

      3. Do they really make money? The REO-to-Rental companies that are public have always been money-losers, except for one-time-events (i.e., selling inventory).

      4. The end of Home depot and the like. These big landlords will buy at a discount in bulk. $21 a gallon for Dunn Edwards paint at Dunn Edwards using a contractors discount lic number that a contractor just gave me while I was in Line, thats cool thanks bro. $52 bucks at do-it-center for Harvey homeowner same paint. That’s a pretty bad scalping.

    3. Aye, there’s the crux of the biscuit. Having a regular job and trying to save to buy a house doesn’t work anymore. You just fall farther and farther behind. We’ll see more and more of this trend. People doing desperate and unconventional things to try to make ends meet as the middle class is eviscerated. It’s been going on for decades. Can housing become affordable again without the entire financial system disintegrating. Affordable for whom? Millennials with >100k$ in student debt, an income 1/8th of the median home price, and 3000$ in savings? The gap is just too wide. N’est-ce pas? That’s German for the strudel cannot be separated again into its individual ingredients. Or the schnitzel cannot resume its original shape after hammering.

      1. “Can hou$ing become affordable again without the entire financial $ystem di$integrating.”

        30 years @ 11.25% would bee a good $tart.

        1. That’s why they’re not raising rates – because they don’t want asset prices to fall.

          1. What happens if asset prices begin to slide against a backdrop of ultra-low rates?

            Oops…it’s already happening to housing…

  3. These homes never have been affordable housing, and no matter what they never will be affordable housing,’ he said.

    Never? Sounds like a famous last words kind of quote.

  4. S-t rentals are a bad idea and for a lot of reasons, but there’s money to be made.

    https://www.theglobeandmail.com/canada/article-airbnb-likely-removed-31000-homes-from-canadas-rental-market-study/

    Airbnb likely removed 31,000 homes from Canada’s rental market, study finds

    Short-term rental sites are ‘having rather large impacts on our housing markets,’ McGill researchers say in groundbreaking paper
    Tom Cardoso and Matt Lundy
    Published June 20, 2019
    Updated 2 days ago

    As short-term rental activity has grown globally, regulators in many of the world’s tourist hubs – Barcelona, New York, Amsterdam, Los Angeles – are cracking down on short-term rentals, citing concerns over distortions to the local housing supply and lost tax revenue, along with a host of other issues.

    In New York, for instance, Airbnb directly accounted for a US$380 increase in median annual rent costs, according to a separate report from Prof. Wachsmuth last year that was funded, in part, by a hotel-industry organization. “The more Airbnb activity you see in a city, the higher housing prices and the higher rents are going to get,” he said. “There’s no question that [Canadian] cities are now past that point.”

  5. The only solution to the Airbnb problem is to take every single participant in it and shove them into a wood chipper feet first.

    1. As someone who has converted 3 Airbnb guests to long-term tenants in the past month, I would assert that there is a broad range of applications.

      An empty nester couple who is Airbnb-ing out their Casita/guest room because their children have grown up and moved away is different than an illegal hotel in NYC or speculators converting apartments. Likewise, our application of Airbnb is basically to use it as a marketing tool. We take empty apartments during the lease up phase of a unit and convert them into short-term rentals to get some additional revenue. It can take anywhere from 12 – 18 months for a large complex (e.g. 200+) to get fully occupied. When a complex is ready, it’s not like you automatically have everyone move in the day you open up. So there is a huge vacancy loss that is incurred by having units sit empty. We had about 10% of our units in short-term rentals and it has been a wonderful experience. Lots of our residents love it too because they can have their parents/friends come and visit since apartments don’t normally have a guest room. All of the short-term rentals are in an isolated wing and are completely separate from full-time residents.

      Don’t throw the baby out with the bathwater. I wonder if those who are so quick paint all of Airbnb with a negative brush have ever used it.

      1. I’ve used it, and I get the point about it’s not all bad/disruptive.

        There is an AirBnB nearby in a house that had been partitioned in half by a lady with 2 teens. I talked with her a quite a bit, since I was renting her AirBnB for an entire month for my parents (while they were waiting for they new condo back in Michigan to be completed). She had wound up with the house in a divorce, and was renting out the smaller half for income.

        She wasn’t taking any long-term rental capacity off the market – her kids had spent the last decade in the local schools, and she wanted them to finish out school there if possible, so in an alternate universe, she was either going to keep the house all to herself, or perhaps have to sell it, in which case it’s still a net zero to long term rental (or ownable) stock. And in my use case, there’s are no hotels in my zip code / on the island, so it was an accommodation for my parents that otherwise didn’t exist.

        That contrasts somewhat with someone who buys a house just to AirBnB it, but doesn’t live in it. Long term rental (or ownable by family) stock is -1 then.

        The situation I used for my parents was not perfect for the neighborhood – i.e. there’s now an extra car and more people coming and going. So I don’t know what to think in that case.

        1. That contrasts somewhat with someone who buys a house just to AirBnB it, but doesn’t live in it. Long term rental (or ownable by family) stock is -1 then.

          You got it. This is exactly my point. But I will say that the percentage of corporate Airbnb speculators is a large (and growing) segment of the Airbnb market for sure. I do think this segment should be reigned in.

          Same thing with building. We don’t chide legitimate mult-family builders who are just trying to make a profit and create something of value. What we gripe about here are luxury apartments and McMansions that are astronomically priced. Surely there are good applications of construction and multi-family building that are less bubbly. I think the same thing can be said about short-term rentals.

  6. Got gubmint bonds?

    Credit Markets
    Bond-Yield Plunge Confounds the World’s Economy
    Investors, companies and central banks are adjusting to the sudden drop in bond yields
    By Patricia Kowsmann,
    Avantika Chilkoti and
    Sam Goldfarb
    June 23, 2019

    The collapse in bond yields since this spring has been stark, swift and global, upending expectations that the world’s economy would be strong enough to support a return to normal monetary policy after years of easy money.

    The drop says investors expect a recession may be looming, and that central banks will have to step in with lower rates to try to forestall it. Ten-year bond yields last week fell to record lows in Germany and France and below 2% in the U.S. for the first time since 2016.
    …

  7. ‘College student Naida Lam didn’t think much about her digital privacy until June 11. It was the night before massive protests in Hong Kong against a law that would allow suspects to be extradited to mainland China.’

    ‘Like many students, Lam, 20, had been using the encrypted messaging app Telegram, participating in group chats that were used to plan and coordinate ahead of the demonstration. But that night, Hong Kong authorities arrested the administrator of one of the largest of these groups.’

    ‘For Lam it was a wake-up call. “When my friends told me that another group’s administrator got arrested, immediately I feared that something will happen in the group I was in,” Lam said. “I left the group and changed all my privacy settings.”

    https://www.nbcnews.com/news/world/hong-kong-protesters-are-deep-fear-about-leaving-digital-footprint-n1020146

    1. “I left the group and changed all my privacy settings.”

      That’s cute. Like it’s going to help. When they come for us I look forward to being questioned on all my posts here. They better pack a lunch :-).

    1. Good op-ed and agree 100%. Strong regulation is needed by local municipalities with regards to Airbnb. I also like how the author makes a difference between true “home-sharing” vs “corporate Airbnbs often run by multi-million-dollar investors.”

      At the end of the day it comes down to private property and regulation. The local residents should make laws to create the society they want and those laws should be enforced vigorously.

      1. How do you make a law against buying? It’s a age old trick to buy up the supply to than set the prices.

        1. “How do you make a law against buying?”

          The “fed.gov” is loaning these investors cheap printed money, and your government is guaranteeing these investor’s success by allowing them to rent basic shelter at exorbitant rates.

          So, how about a law against printing money without having the gold to back it up?

          1. As Oxide has sagely pointed out, how about no Federal financing for housing unless it is one’s primary residence?

            I would also have a differential property tax for a property if you can’t tie an it back to someone who files an individual tax return in the state. That would have the effect of favoring true “neighbors” instead of speculators buying up their neighbors’ homes and loading them up with transients.

      1. Nothing like the Spector of “Price Reduced” to strike fear into the hearts of FBs & greedheads, or to dry up the stream of credulous Greater Fools trooping into open houses to be corralled into the worst financial decision of their lives by Suzanne’s research.

    2. This excerpt says it all: “Imagine some mid-level manager at Facebook who is feeling absolutely rich. He’s got Facebook stock, a big six-figure salary, and his youth, so he dives into a $4 million house for his starter family. But what if he turns around a few years later and learns the house could only get $3 million in the open market? And how about if his other principal asset, those FB shares, had dropped in value by half? Not feeling so rich, I suspect. To say nothing of the fact that the $50,000/year tax bill shows up every year, and it’s anchored to your purchase price.”

  11. Manitou Springs, Colorado, is an eclectic little mountain town near Colorado Springs. It’s semi-official motto is “Keep Manitou Springs Weird” and it’s generally a nice little community, though legalized pot has brought an infestation of out-of-state riffraff that is changing the character of the town, and not for the better. Meanwhile, the local greed heads are clinging to their wish prices even though inventory is creeping up toward 100 shacks, which in 2008 was the tipping point where the dreaded: “price reduced” started cropping up on the ridiculously-overpriced listings. It looks like history is starting to repeat itself, as inventory is again on track to surpass 100 while despite stupid realtor re-listing tricks the “days on market” is creeping into the triple digits for more and more overpriced shacks that are sitting unsold and forlorn.

    https://www.realtor.com/realestateandhomes-search/Manitou-Springs_CO

    1. Manitou $prings, CO … fond memories 40 years ago, walkin’ about with this fella; Gia-fu Feng, maybee revisit it one foggy Autumn morning … (Is the artist co.op/workshop still standin’?)

  12. Any area of wealth building that the middle class enjoyed by long term ownership is being highjacked by the investor class. They couldn’t even let people have a shot at affordable home ownership.

    The trend is toward renter Nation with the hambster on the treadmill for the worker bees. They never should of messed with real estate.

    1. I can see why young people perceive that everything is rigged, therefore they are open to socialism.

      They no doubt feel they have more to gain by big government passing out free stuff. They have no clue how bad big government would be.

      1. They have no clue how bad big government would be.

        I agree. I don’t blame them for reaching for anything that looks like a solution. The fault lies with TPTB and all of us who let them do what they’ve done. But I really don’t know how we could have stopped them. I think the majority would have had to stop voting for Rs and Ds decades ago but were successfully diverted into fighting with each other instead.

    2. They couldn’t even let people have a shot at affordable home ownership.

      The trouble with blaming it all on “Them” is that a lot is left unexplained, like people wanting to buy 3,500 ft2 of house they cannot afford rather than 1,000 ft2 at a lower price. Also like people we all know who bought second unaffordable houses as “investments”. Neither of these things were forced on the poor, poor homebuyer.

  13. Short term rentals are not the cause of overpriced housing. This has been an issue since well before the internet was invented by Al Gore. Stop manipulating home values with mortgage deductions, manipulated low interest rates, restrictive land use limitations, non-recourse lending protections, ludicrous environmental laws, bogus impact fees (like forcing someone who makes housing to pay for affordable housing) and a host other market manipulation and housing will magically become more affordable.

    2. Sage words. I agree. But short-term rentals exacerbate a festering problem, no? I tend to believe that it is a multi-faceted problem and that this is one of the facets, albeit a minor contributor and less important than many of those you’ve correctly identified (mortgage deduction is biggest IMO).

      1. Sure, the business of short term rentals increase demand for single family homes in certain markets, as does a strong economy in a free market. The point is if we let the free market economy work, it would eventually solve the problem itself. I don’t think the answer to a problem caused by regulation is more regulation, which will result in more unintended consequences, resulting in calls for more regulation. Free markets don’t always work perfectly. They just work way better than anything else.

        1. We differ a bit in our relative faith in the free markets to deliver affordable housing. I don’t think it is capable of doing so for a decent section of the population. But I’d like to take a whack at single-family-only zoning and land-use regulations and some of the tax policy first and see how close we get.

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