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Portland's Mayor wants to tax Airbnb, its competitors & hosts

Portland's Mayor wants short-term rental giants operating at the core of the sharing economy to share more of their profits.

PORTLAND, Ore. -- Portland’s Mayor wants short-term rental giants operating at the core of the sharing economy to share more of their profits.

Staff with Mayor Ted Wheeler’s office confirmed Wednesday he plans to propose implementing a tax of $4 per night per room on Airbnb, HomeAway, Vrbo and comparable companies, as well as a 2-percent tax on the hosts who rent out their homes through them.

The former, said spokesman Michael Cox, could add up to $2.5 million to the city’s housing budget. Specifically, it’s expected to be allocated to programs that help residents in North and Northeast Portland, displaced by rising housing costs.

Cox called the idea “fair”.

“The short-term rentals are units that, not universally but often, would otherwise be on the market as long-term rentals,” he said. “And that could increase rents. It affects our affordable housing crisis.”

The host tax, officials estimate, would produce up to $840,000 in revenue, to be allocated to the Tourism Improvement District and tourism promotion.

It’s another step in a years-long struggle, felt in cities across the country.

“These are new technologies that come into big cities and prove very disruptive to existing housing markets, existing transportation markets, and government is having to catch up in terms of how we regulate these businesses in a way that’s fair and puts them on a level playing field with other businesses,” said Cox.

But representatives for Airbnb dispute the theory that the company’s popularity is exacerbating Portland’s affordable housing crisis.

They point to a 2016 study by ECONorthwest, that found the company’s presence in Portland “minimal impact” on the city’s housing market. It also found the number of entire home Airbnb listings booked full time represents 0.03 percent of the city’s housing units.

That said, this is not a new battle for Airbnb.

Other research, including a new study still awaiting peer review, backs up the city’s theory that an influx of short-term rentals impacts housing costs.

A new study, still awaiting peer review, found “a 1% increase in Airbnb listings leads to a 0.018% increase in rents and a 0.026% increase in house prices at the median owner-occupancy rate zip code.”

Researchers behind it also clarified, impacts vary depending on if the short-term rentals are owner-occupied.

Earlier this month, New York City’s comptroller published a report that claimed renters there “had to pay an additional $616 million in 2016 due to price pressures created by AirBNB.”

In an open letter, the company called the report “deeply flawed”.

Portland-based public affairs manager Laura Rillos released the following statement via email on Mayor Wheeler’s plan:

“It’s important to ensure that any new tax doesn’t unfairly penalize hosts who depend on home sharing in order to afford staying in their homes. We’re open to conversations with the city about an additional fee to fund housing initiatives and have supported similar efforts in other cities. We support paying our fair share, which is why, in Portland, we’ve been collecting and remitting hotel taxes since 2014, which the City spends on affordable housing. We look forward to continued work with the City as the proposal develops.”

Rillos also pointed to findings that show 58 percent of Portland hosts said they used Airbnb to stay in their homes in 2017.

Cox said Wednesday the Mayor plans to bring the proposed taxes to the City Council for a vote in June.

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