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AirBnB

AirBnB bill fails to pass

One minor surprise from this now-ended legislative session.

A conference committee Saturday voted to strip an amendment that would have blocked cities from regulating short-term rentals like Airbnb, all but killing the measure with less than two days left in the legislative session.

The move comes during a legislative session in which lawmakers have otherwise been willing to overrule local ordinances — including regulations for ride-hailing services.

Senate Bill 451 by state Sen. Kelly Hancock, R-North Richland Hills, aimed to prevent Texas cities from banning short-term rentals and rein in their ability to write ordinances restricting the practice. Austin and Fort Worth are among the cities that have enacted such restrictions.

The Senate passed Hancock’s bill, but both SB 451 and a similar House bill languished in the House without receiving committee votes.

Hancock later tried to revive his bill by adding it as an amendment to House Bill 2445, a measure to regulate the use of the hotel occupancy taxes collected in each municipality. But the conference committee stripped it back out, and with the legislative session ending Monday, only extraordinary measures could revive it.

See here for the background. The Trib published that on Sunday, when there was still a theoretical chance the bill could be passed in some form, but it was not to be. I figured this bill would sail through in more or less the same fashion as the rideshare bill, but apparently not. Well, it took two sessions for a rideshare bill to pass, so maybe next time. I’m fine with it not passing, but I’ll be surprised if one never passes.

Senate passes AirBnB bill

As you know, I don’t care for this.

A Senate bill that would limit local government control of short-term home rentals in Texas passed out of the upper chamber Tuesday in a 21-9 vote.

Under Senate Bill 451 by state Sen. Kelly Hancock, R-North Richland Hills, Texas cities would be prevented from banning short-term rentals and their ability to write ordinances restricting the practice would be narrowed. Austin, San Antonio and Fort Worth are among the cities that have enacted such restrictions.

Critics of the bill said it would lower property values and allow Texans to rent houses to people who might host disruptive parties and increase traffic in their neighborhoods.

Proponents say SB 451 would protect homeowners from strict local laws that infringe on property rights while still allowing a limited amount of local regulation, such as prohibitions on short-term renters housing sex offenders or selling alcohol or illegal drugs to guests.

“The bottom line is you cannot ban short-term rentals,” Hancock said Tuesday.

Among local policies that would be limited in scope by Hancock’s bill: a Fort Worth regulation that requires property owners to obtain a bed-and-breakfast permit only available to homes built before 1993 and an ordinance in Austin that has capped the number of short-term rentals with no live-in owners.

During Tuesday’s debate, several legislators expressed concerns about the effects the measure would have on their communities. State Sen. José Menendez, D-San Antonio, even proposed a failed amendment to exempt his home district from the bill.

The lower chamber’s companion to Hancock’s legislation, House Bill 2551 by state Rep. Tan Parker, R-Flower Mound, was heard in the House Urban Affairs Committee on Tuesday afternoon. Testimony was divided over whether short-term rentals would be better regulated at the local or state level.

See here for the background. The reservations I expressed then remain with me now. At the very least, if the Legislature is going to insist on taking away cities’ autonomy on this matter, they could include a provision to require collection and remittance of state hotel taxes, so individual cities don’t have to negotiate their own deal with AirBnB as Houston just did. A little consistency would be nice, though apparently too much to ask. The House bill was left pending in committee, so this is may be as far as this effort goes this time. If so, you can be sure it will be back in 2019.

AirBnB tax collection deal

Seems reasonable.

[AirBnB] announced Wednesday it will begin collecting and remitting the 6 percent state hotel occupancy tax May 1. The decision followed more than a year of talks, said Laura Spanjian, Airbnb’s Texas public policy manager. Airbnb has similar tax-collection agreements with 25-plus states.

“These agreements are a meaningful revenue boost for communities, and we hope to reach similar agreements with cities around Texas soon,” Spanjian said by email.

Houston homeowners who rent out their properties are supposed to pay a total of 17 percent in occupancy taxes, 7 percent of which goes to Houston First, which oversees hotel tax collection for the city.

Yet of the 7,200 active hosts Airbnb says operate in the area, only 70 have registered with the city as taxpaying hosts, said Jonathan Newport, Houston First’s director of government affairs.

[…]

Under the new agreement, the state portion of the hotel-occupancy taxes will be guaranteed. Guests will be charged the correct amount on their bill for a stay of 29 nights or less, and Airbnb will then remit the collected taxes to the state.

“The sharing economy plays an important role in our state’s overall fiscal health,” Texas Comptroller Glenn Hegar said in a statement. “We applaud Airbnb for agreeing to collect state hotel occupancy taxes, as all lodging facilities in Texas are required to do.”

See here, here, and here for some background. This is a positive step, as it gets some revenue that otherwise would have been lost for the city while giving AirBnB some regulatory certainty. People want to use AirBnB, and as seems to be the case with everything these days there’s a bill in the Legislature to override local restrictions on it, so this is another level on which it makes sense for the city to reach a deal with them. Hope it works as intended for everyone.

Restricting restrictions on AirBnB

I have issues with this.

A legislative proposal that would limit local government control of short-term home rentals in Texas has reawakened a fight over regulations that has already played out in cities across the state.

Senate Bill 451 by state Sen. Kelly Hancock, R- North Richland Hills, would prevent Texas cities from banning or restricting short-term rentals. Austin, San Antonio and Fort Worth are among the cities that have enacted such restrictions.

Critics of the bill said it would lower property values and allow Texans to rent houses to people who might host disruptive parties and increase traffic in their neighborhoods.

One of those critics, David King, president of the Austin Neighborhoods Council, said houses with no live-in residents are sometimes rented to rowdy visitors. Neighborhood disapproval of these houses led cities like Austin to enact local ordinances that limit their presence.

However, bill proponents say SB 451 would protect homeowners from strict local laws that infringe on property rights while still allowing local regulations that limit or prohibit short-term rentals. Under the bill, local governments could still prohibit short-term renters from housing sex offenders or selling alcohol or illegal drugs to guests.

Through an aide, Hancock declined to comment on his bill. State Sen. Dawn Buckingham, R-Lakeway, the bill’s co-author, said it shields Texas property owners from governmental overreach.

“Private property rights in Texas are sacred,” she said.

Here’s SB451. I can understand the logic behind wanting to have a statewide framework for short-term rentals, in the same way I can understand it for transportation network companies. There’s a legitimate interest in providing something like a uniform regulatory environment for them. That said, hotels and traditional bed and breakfast places are generally subject to local zoning laws, land use requirements, and deed restrictions. Allowing the AirBnBs of the world to skirt those rules sounds more like an unfair advantage than a level playing field to me. In some cities, the proliferation of AirBnB properties has led to concerns about housing shortages in some neighborhoods. Neighborhood issues and quality of life are the province of local government, and as with many things this session I have concerns about the state stepping in to override their authority.

One more point, which I suppose was outside the scope of this story: Lots of cities levy hotel taxes, for a variety of purposes. AirBnB puts the responsibility for following local codes and collecting such taxes on the hosts. Here’s their advice for Houston hosts – you’re gonna have to do some reading to know what you’re supposed to do. The long and short of it is that the growth of AirBnB means that cities and states have been missing out on potential tax revenue, which in some cases is a substantial amount. To their credit, AirBnB is beginning to work with cities on this. The text of SB451 doesn’t address this at all. If the state wants to mandate a uniform regulatory code for short-term rentals, then the least the state can do is provide a uniform mechanism for collecting hotel occupancy taxes as well.

Your Super Bowl AirBnB dream probably did not come true

Alas.

Vacation rental websites like Airbnb and Home Away still have pages of listings available for this weekend. Many are asking well over $1,000 per night for, in some cases, run-of-the-mill two-bedroom apartments.

Data from Airbnb Thursday show the typical price of booked listings in Houston for the Super Bowl is $150 per night. Listings within a 5-mile radius of NRG Stadium get a slight premium: $200 per night.

The most popular Houston neighborhoods for guest arrivals included Montrose, the Medical Center area and the Greater Heights.

See here and here for the background. That story was from Thursday, so I suppose it was still possible for some desperate last-minute renters to come in and sweep up those unclaimed listings at the listed rates. I kind of doubt it, though. Turns out, unless you have a particular kind of high-end property to rent out – and a particular kind of high-end renter looking for that kind of property – AirBnB is going to be the cheap alternative to a hotel, not the expensive alternative. Maybe next time, y’all.

Now is the time to rent out your house

If it was your plan to do that, anyway.

The teams playing in next month’s Super Bowl [are now set] and the final rush for last-minute lodging will be in full swing.

That also means more house and apartment rentals will hit websites like Airbnb, VRBO and Austin-based HomeAway, which says demand for Houston-area vacation rentals has shot up by more than 1,300 percent. Rates for homes near NRG Stadium are averaging $2,000 per night.

HomeAway listings include an array of properties, from a “mini yacht” docked in Kemah for $375 per night to a three-bedroom traditional in West University with a pool for $4,600.

Local listings on Airbnb have also shot up, increasing 50 percent from Oct. 1 to Jan. 1 to 5,700 listings.

On HomeAway, there are 637 properties listed and as of Thursday, 84 percent were booked.

See here for the background. Looking at the chart at the end of the story, there are a lot of my Heights neighbors renting out their houses, with even more folks in Montrose doing so. Hope the money’s worth the trouble.

Who wants to rent their house out to Super Bowl visitors?

I don’t, but some people hope to make a lot of money renting theirs.

With the Super Bowl heading to Houston next month, locals are starting to see dollar signs as well, hoping to cash in on visitors’ willingness to pay thousands to rent their homes or apartments during the biggest football game of the year.

While Beyonce isn’t likely to hit up Airbnb this year – she’s hails from Houston, after all – plenty of other celebrities will need places to stay. So will countless corporate executives with sky-high lodging budgets, and, of course, all the others simply unable to get a hotel room in town.

Exactly how many takers, and how much they’re willing to spend, will become clearer after the participating teams have been determined. In the meantime, a couple of thousand hopeful Houstonians already are checking their emails waiting for the alert that shows their place has been booked during the game.

“My hope is the market is going to get really tight for premium properties,” said Michael Salinas, a CPA who’s listing his three-bedroom townhouse in Montrose for $3,699 a night during Super Bowl LI.

Local listings on the popular Airbnb rental website have increased 40 percent in just the last two months, the company said.

The city expects about 140,000 out of town guests and there are roughly 84,000 hotel rooms in the metro area, according to A.J. Mistretta, a spokesman for the city’s tourism bureau.

“We believe most properties will be full but there are a lot of factors that play in, including who ends up in the game and how far their fans will travel for the experience,” Mistretta said in an email.

Chris Bisel is listing his four-bedroom Meyerland home for $5,500 per night. With that, Bisel is offering free chauffeur service in his GMC Yukon XL Denali. He hasn’t had any takers yet.

“Frankly, we put it up there at sort of a crazy price just to see what would happen. If we rent the place out for five or six nights, we clear 25 or 30 grand,” he said, enough to pay for the first year of college for his daughter, a high school senior.

[…]

As of Jan. 1, Houston had about 5,700 listings on Airbnb, according to the company’s most recent data, up from about 4,100 listings at the beginning of November.

During Super Bowl weekend last year, Airbnb guests stayed in more than 4,000 listings in the Bay Area, said Laura Spanjian, public policy director for the San Francisco-based company. The average rate was $225 per night.

“There are some very expensive listings, but there are also some very affordable ones,” Spanjian said.

Yes, that’s the same Laura Spanjian who had been the city’s Sustainability Director under Mayor Parker. The wide disparity between what some AirBnB listers in Houston are asking and what people actually got on average in San Francisco makes me think the folks here are dreaming a little too hard, but I guess you never know. Maybe San Francisco had more hotel space available, and maybe fewer people made the kind of last-minute arrangements that can lead to premium prices being charged. I do know people in Austin who have made a bundle renting out their places during SxSW, so it is possible. It’s not practical for me and my family at this time, but if it works for you, go for it. Just avoid renting to Johnny Manziell and you should be fine.

Lawsuit filed in Austin over short-term rental ordinance

Geez.

The gig economy — specifically, the short-term rental industry that includes HomeAway, Airbnb, and VRBO — is under attack by the city of Austin, Texas, according to a lawsuit filed in state court June 20, which was sponsored by the Texas Public Policy Foundation.

The lawsuit asks the court to issue an injunction halting the enforcement of an Austin city ordinance, which became effective March and governs short-term rentals.

The seven plaintiffs named in the lawsuit are people who either have sought to stay in short-term rental properties or to ease their residential properties for less than 30-day periods.

Neither the short-term tenants nor their landlords engage in any activities that should cause them to lose their rights to privacy and to assemble freely, according to Robert Henneke, general counsel for the Center for the American Future at TPPF.

But the lawsuit alleges that Austin’s short-term rental ordinance violates precisely those rights of the tenants and landlords.

Specifically, the ordinance bars the gathering of more than 10 people inside the short-term rentals and more than six in the front or backyards of the homes. It also limits to sleeping or “any joint activities” in the homes after 10 p.m.

The ordinance also requires the landlords and tenants to permit law enforcement officers into their homes to “enter, examine, and survey, at all reasonable times, all buildings, dwelling units, guest rooms, and premises,” even if the officers don’t present a search warrant.

The ordinance represents part of a trend that allows for the “Californization” of the central Texas city or a region where more government regulation, rather than less, is the norm, said James Quintero, director of the Center for Local Governance at TPPF.

You can see a copy of the lawsuit here, via the Austin Business Journal, which also provides some info about the rental ban, which passed in February. I know nothing about this saga, but I do know that aside from a few stray criminal justice issues, the TPPF is wrong about pretty much everything, in particular matters relating to government regulation. Which doesn’t mean they can’t or won’t prevail in court, of course, just that one should never expect them to be on the side of the greater good. The state of Texas does not currently play a role in regulating short-term rentals. Given this action, I won’t be surprised to see some kind of statewide AirBnB bill pushed in the next legislative session, in the same way that a statewide Uber/Lyft bill is being touted; the TPPF name-checked Uber and Lyft in their statement, so you can see how that will play out. The Statesman has more if you have access to their premium content.

Another look at AirBnB

Interesting.

The hotel industry is starting to object. On Wednesday, a report funded by a national trade group claimed some Airbnb hosts function illegally and operate essentially as full-time hotels without the same health and safety oversight. It also says they can reduce the number of affordable options for full-time renters.

The home-rental site has stirred tensions in cities such as New York City, San Francisco, Paris and Barcelona. Austin has created new short-term rental regulations as a result.

In Houston, which does not have similar regulations, the city’s primary tourism agency is working with Airbnb and similar operators about taxes.

A city of Houston spokesman said Wednesday that the state is responsible for health and safety regulations that affect short-term rentals. But a spokesman for the Texas Department of State Health Services, which regulates hotels and bed-and-breakfast operators, said it does not have a role in Airbnb or short-term rentals.

Houston is the state’s second-largest Airbnb market, behind Austin, and officials are preparing for an increase in tourism around the 2017 Super Bowl. It was one of a dozen large U.S. cities included in the American Hotel & Lodging Association study released Wednesday by Pennsylvania State University’s School of Hospitality Management. Researchers tracked Airbnb data from a 13-month period.

“This study shows an explosion in activity among multi-unit hosts and the rise of full-time operators in each of the 12 markets we analyzed. Further, operators renting out three or more units represent a disproportionate share of revenue with only 7 percent driving more than $325 million in the period studied,” said John O’Neill, the Penn State professor who directed the research and is director of the school’s Center for Hospitality Real Estate Strategy.

The study found that nearly 30 percent of the revenue generated from hosts comes from people operating as full-time landlords, or 360 days a year. Individuals or entities renting out two or more residential properties on Airbnb account for 17 percent of hosts and drive nearly 40 percent of the revenue in those markets, according to the study.

The report found that in Houston there are 30 full-time operators who rent out their space for at least 360 days a year, generating $3 million in revenue during the 13-month period studied. In all, 956 hosts generated a total of $11 million in revenue, the report said.

It found 83 hosts operating three or more properties and 82 others with two units.

A copy of that report is here. AirBnB has disputed its findings and released its own report about its potential tax revenue for cities. I have no judgment about who is right or wrong in their facts and figures, I’m more interested in how cities are going to react to AirBnB, which I presume they’re going to have to do sooner or later. So far it has not been on the radar in Houston, but it has been in Austin and may be in San Antonio and elsewhere. I’ll be a little surprised if we see AirBnB regulation on the Council agenda in the near future, but if there’s any indication that it’s negatively affecting hotel tax revenue that could change.

AirBnB in Texas

The Rivard Report offers a useful overview of this growing service.

With success comes regulation and Airbnb, the wildly popular “sharing economy” website that allows users to rent out portions of their home to adventuresome travelers, has had more than its share of success. Recently valued at $13 billion, the company has more than 340 listings in San Antonio alone.

(Read more about local Airbnb operation in Part One of this series: The Rise of Airbnb in San Antonio.)

Airbnb’s success hasn’t escaped the notice of government officials, in Texas and elsewhere. Concerns about health, safety, and taxation have led some cities to begin efforts to regulate residential rentals.

Barcelona, New Orleans, San Francisco, and Malibu have conducted investigations into violations of zoning laws. Amsterdam now collects hotel tax on Airbnbs.

[…]

In 2014, Austin introduced an ordinance that requires short-term rental owners to obtain a license from the city. There is a $285 application fee, plus an annual renewal fee, and owners must submit proof of property insurance and payment of the city’s Hotel Occupancy Tax. They also must maintain a Certificate of Occupancy or proof of a certified inspection. The city intends to limit the number of homes that can be rented in a given building or neighborhood, and has placed a cap on licenses for properties not occupied by the owner.

The Airbnb website offers guidance on existing city regulations nationwide, including those in Austin.

Changes are coming to Texas beyond Austin. Cassandra Matej, executive director of the San Antonio Convention and Visitors Bureau, said that the Bureau is, of course, aware of Airbnb.

“We support anything that makes the San Antonio vacation experience safe and unforgettable,” she said, acknowledging that for some of the millions of visitors to the city each year, “that might mean researching alternative lodging, within legal boundaries.”

That final clause is a significant one. Legal boundaries may be changing in the near future. Scott Joslove, President and CEO of the Texas Hotel and Lodging Association, said his organization is not concerned with people who rent out rooms in their primary residence, but does oppose those who buy or rent properties specifically for the purpose of leasing them to overnight guests. Austin’s measures should serve as a model ordinance, he said, adding that the Association is working with other major cities to introduce registration, licensing, and occupancy tax to residential rentals.

In February, Councilmember Ron Nirenberg (D8) said “public safety” must be weighed against “letting the free market work,” but health and safety concerns seem little more than a front for the issue of taxation.

To date, Airbnb rentals have not been subject to San Antonio’s 6% Hotel Occupancy Tax. Proposed legislation could change that. House Bill 1792, authored by state Rep. Drew Springer (R-Muenster), seeks to legally define and regulate residential rentals. The bill expands the definition of “commercial lodging establishment,” which already includes hotels, motels, and inns, to encompass residential short-term rental units.

The proposed legislation would “characterize and treat a residential short-term rental unit in the same manner as a hotel for purposes of consumer protection, public health and human safety, taxation, licensing, and zoning.”

That means at least some Airbnb operators in Texas would have to adhere to same regulations as hotels, including requirements for the submission of water samples, regulation of appliances, and sanitation.

The bill’s wording is vague, and might exempt individuals who only rent our rooms of their primary residence, where the host is generally present for the duration of the stay. Individuals operating free-standing Airbnb venues, however, would not be exempt.

I blogged about AirBnB in Houston last August. According to the first story in this two-part series, there are about 900 AirBnB listings in Houston. Compared to the 75,000 or so hotel rooms in the Houston area, that’s pretty small. That said, I do expect the city to address this issue sooner or later – there’s too much hotel tax revenue at stake to leave it unaddressed. I’m actually surprised that AirBnB didn’t make like Uber and Lyft and lobby the Lege for a bill more favorable to them than Rep. Springer’s. (I’m assuming the characterization of his bill, and my understanding of it, are accurate.) I still think AirBnB is more likely to be a niche player in Houston, where business travel is what brings many of our visitors here, but you never know. Anyone out there have experience using AirBnB?

AirBnB in Houston

When people talk about “the sharing economy” for good or ill, the main players that get named tend to be Uber, Lyft, and AirBnB. We’ve heard a lot about the first two in Houston lately, but prior to this Chron story I can’t say I’d heard anything about the latter.

Airbnb launched in 2009 as a way for those with extra space to connect with travelers looking for an alternative to traditional hotels, in the same way that Uber and Lyft help people turn their cars into temporary taxis. In November 2013 Airbnb chief technology officer Nate Blecharczyk reported that more than 9 million users, or “guests,” have now stayed in AirBnb rentals, up exponentially from the 4 million bookings that the start-up recorded in its first four years of business.

“I had a roommate, and when she moved out instead of going through the whole process of finding a new roommate, I had extra furniture so I thought I would give it a shot,” said Crystal Lee, who has been renting a room in her Montrose house on Airbnb since 2012.

“Everything is yours, so I think people are a lot more respectful of that,” she said. “With roommates, people get used to leaving their stuff everywhere and not caring. When you have a house guest, people tend to be polite. It’s kind of fun to play tour guide and tell people where to go and what to do.”

[…]

Airbnb is most popular in cities that attract a lot of tourism and where hotel prices and rents are high. Austin, with less than half of the population of Houston, boasts nine times the number of Airbnb properties that Houston lists. That’s partly because downtown Austin has only 6,000 hotel rooms, not nearly enough for major events like Austin City Limits and South by Southwest. The fact that Airbnb has made a major push for publicity at recent SXSW festivals – including a promotional park featuring live music and display rooms designed by musicians like Snoop Dogg – could also be a factor.

Houston, on the other hand, has nearly 75,000 hotel rooms in the metropolitan area. According to tourism data compiled by the Greater Houston Convention and Visitors Bureau, a higher than average percentage of visitors are here visiting family or on a business trip, implying that they already have a place to stay or that hotel price is not of primary concern.

Houston is also one of only two cities in the U.S. where the average hotel rate per night is lower than renting out an entire house or apartment on Airbnb, according to the website Priceonomics. (The other city is Las Vegas.)

Cheap, plentiful hotel rooms haven’t made a dent in the demand for Airbnb hosts though. Anderson says her property is booked about 75 percent of the time, and Wright, who only makes her house available on weekends when she is heading to family homes in Tiki Island or La Grange, says she turns down more offers than she accepts. The process has been so successful for Lee that when her job relocated her to New York earlier this year, she kept her Houston house and still rents out the extra room.

While Houston might be lacking in traditional tourists, many Airbnb guests are people who are planning to move to the city and want to get a feel for the different neighborhoods. Others, particularly international travelers, stop in Houston while on cross-country trips as a break between the frenetic nightlife of New Orleans and Austin. Internships, job interviews, weddings and family visits are also commonly cited reasons for a Houston Airbnb stay.

It’s an interesting contrast with Austin. I know several people who have made an envy-inducing amount of money renting their homes via AirBnB for South by Southwest. I suppose the difference between “normal” level of demand for hotel space in Austin and the peak level that happens when SxSW is happening is such that AirBnB makes a lot of sense to fill the gap. I seem to recall there being a few stories about people leasing their homes for outrageous amounts in Houston during the last Super Bowl for similar reasons. I get why people have concerns about the effect of companies like Uber and Lyft on employment opportunities in the industry they’re entering. I think those concerns are valid even as I support allowing Uber and Lyft into currently regulated vehicle for hire markets. I don’t see the same concerns about AirBnB, however. There’s no barrier to entry in the hotel market like there has been in many cities in the taxi market, and there’s no general complaint about the way the hotel business is run like there is for taxis. A ride is a ride, but there’s a vast difference between a Motel Six room and one at the Ritz Carlton, or a traditional bed and breakfast and a resort hotel like the Hyatt Lost Pines. Uber and Lyft could conceivably upend the existing taxi industry, but I don’t see AirBnB as being anything more than a niche. What do you think?