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|Wednesday, April 23, 2014|
BY CLIFF HOCKLEY | OB GUEST CONTRIBUTOR
Eric was in a bind. The rent on his Southeast Portland studio had increased for the third year in a row. His salary as a paralegal at a downtown law firm wasn’t enough to cover the rent increases. Then one of his coworkers mentioned he could subsidize his rent with short term vacation rentals through Airbnb. His coworker did warn Eric about the city’s new Airbnb tax and said permitting procedures adding red tape to the process. Nevertheless, Eric created a profile and put his apartment up for rent for $100 a night. Soon he had two reservations and was expecting to earn $200.
Eric had turned his apartment into a money maker, but there were some larger issues Eric had overlooked. With cities and landlords catching up to the Airbnb craze, the laws and policies Eric’s coworker warned him about doomed Eric’s new operation.
Eric is a composite figure. But the problems I've described above challenge plenty of real world Airbnb landlords. After months of city hall battles March 2014 brought with it Portland’s new attitude towards Airbnb. Mayor Charlie Hales struck a deal with the online lodging coordinator, which uses a network of members throughout the world to offer their homes to travelers for a fee. The agreement called for Airbnb operators to pay an 11.5% tax, to cover the city’s 6% lodging tax and the 5.5% county tax.
Airbnb is a wildly popular concept that nevertheless violates many standard leases and zoning codes while angering a hotel industry that pays heavy tourism taxes. That combination, along with a new Airbnb headquarters scheduled to open in Portland this summer, forced officials to address the illegal short-term rental issue. A solution could come with the proposed revisions of Chapter 33.207 of the Regulatory Improvement Code Amendment Package 6 (RICAP 6), which introduced the accessory short-term rental.
The accessory short term rental language creates a new property classification which reads as follows:
An accessory short term rental is one where an individual resides in a house, attached house, duplex, or manufactured home and rents bedrooms to overnight guests. There are two types of short-term rentals
Type A: accessory short term rental where the operator is renting no more than 2 bedrooms to overnight guests
Type B: accessory short term rental where the operator is renting between 3 and 5 bedrooms to overnight guests.
The tax and the proposed laws would allow Airbnb to operate legally in Portland. Operators would need to apply for a permit from the Building Development Services. The application to acquire a permit for both Type A and B rentals includes:
These proposed laws don’t bode well for current Airbnb renters, especially those in rented properties. My daughter Ellen, a New York renter who agreed to speak on the issue, sub-rents her apartment through Airbnb, says these new proposals would dissuade her if New York were to adopt them. “I use Airbnb because it’s simple and allows me to subsidize my rent. It provides people a home when they’re traveling and assures me that someone is staying in my apartment overnight when I’m away.” Ellen’s lease, similar to most apartment leases, does not allow for any short term rentals. The recently updated rental agreement we use at Bluestone & Hockley says “tenants shall not advertise available occupancy of their unit if that available occupancy is in exchange for any sort of compensation." Language like this is assures liability and resident safety are respected in addition to making sure the lease agreement is upheld and that the Tenant / Landlord relationship stays intact.
With these new laws, to be voted on at the April 22nd 2014, Portland city hall meeting, operators like Eric and Ellen may have to reevaluate their commitment to Airbnb. These regulations protect Portland’s strict zoning codes and hotel operators, but they may have an adverse effect on Airbnb’s business. The popularity of the concept Airbnb could inspire renters to ignore both Airbnb and the law. Existing operators of cheap short term vacation rentals will could bypass these new laws and find alternatives ways to rent. Other on-line companies could use this business model more creatively to capitalize and help operators fill their empty pocket books.
Cliff Hockley is the president of Bluestone & Hockley Real Estate Services
Thursday, June 19, 2014
BY MONICA ENAND | GUEST CONTRIBUTOR
Nine tips for building habits among employees to respond when needed.
Thursday, July 31, 2014
BY MARY SPILDE | OB GUEST CONTRIBUTOR
Faced with the aftermath of the “great recession,” increasing concern about the environment and dwindling family wage jobs, we have some very important choices to make about our future.
Thursday, July 03, 2014
BY TED AUSTIN & MIKE BAELE | GUEST CONTRIBUTORS
The Office of Economic Analysis announced that Oregon is currently enjoying the strongest job growth since 2006. While this resurgence has been welcome, the lingering effects of the 2008 “Great Recession” continues to affect Oregon businesses, especially with regard to estate planning and business succession.
Tuesday, July 01, 2014
BY HANNAH WALLACE | OB BLOGGER
Demand for organic food continues to soar: Last year, sales of organic food rose to $32.3 billion — up 10% from 2012. In Oregon, organic produce wholesaler Organically Grown Co. has been championing organic growing methods for four decades.
Thursday, July 24, 2014
BY CLIFF HOCKLEY | OB GUEST CONTRIBUTOR
With the increasing retirements of Baby Boomers, a massive real estate shift has created a significant increase in demand for NNN properties. The result? Increased demand has triggered higher prices and lower yields.
Thursday, June 12, 2014
BY ANDREA DURBIN | OB GUEST BLOGGER
Last week, the Obama administration took an important and welcomed step in the effort to protect the health and well-being of all Oregonians by limiting carbon pollution from existing power plants.
Thursday, June 26, 2014
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Geffen Mesher is saddened to announce the passing of long-time shareholder, Tom “Mike” Anderson, who died on July 10, 2014, from liver disease diagnosed after recent heart surgery. He was 55 years old.
Fifteen Lane Powell attorneys have been named 2014 “Oregon Super Lawyers,” and another five attorneys have been named as “Oregon Rising Stars” by Super Lawyers magazine.