ana027: 11 Spooky Fears About Short-Term Rentals | ASSUAGED!!!

 Tim rents his home as a short-term rental on summer weekends.

Why is this so scary to everyone else?

 We discuss eleven fears about short-term rentals, one of which is legitimate. Fear not, we have a non-governmental solution for that one. All others will be #ASSUAGED!!!

 11 Fears About Short Term Home Rentals

• Fear #1 - Home rentals hurt a town's "character"
• Fear #2 - Home rentals make housing less affordable
• Fear #3 - Home rentals are unsafe
• Fear #4 - Home rentals are not in compliance with building codes
• Fear #5 - Home rentals are not licensed and inspected as lodging places
• Fear #6 - Home rentals are preparing and serving food without a license
• Fear #7 - Home rentals are not ADA / FHA compliant for accessibility for people with disabilities
• Fear #8 - Home rentals do not have adequate insurance
• Fear #9 - Home rentals are not paying taxes
• Fear #10 - Home rentals are unfair competition to hotels
• Fear #11 - Home rentals are creating nuisances

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View full show notes at http://anarchitecturepodcast.com/ana027.----more----Intro

 

Tim rents his home as a short-term rental on summer weekends. Why is this so scary to everyone else?

 

We discuss eleven fears about short-term rentals, one of which is legitimate. Fear not, we have a non-governmental solution for that one.

 

Discussion

 

• Tim's experiences renting his primary residence as a short-term rental on Airbnb
  • Initial setup
  • Moving out every weekend
  • Strangers in your house
  • Reputations on AirBNB
  • Piercings, tattoos, and hardcore music
  • Faith in humanity - people tend to be respectful of other people and of their property
• Airbnb facilitates peer-to-peer exchanges
  • Fully utilize real capital assets
  • Much more personal experience
  • Short-term rental is nothing new, but it has become much easier
• Setting up a listing
• Airbnb bans
  • Transient occupancy - less than 30 days
• ADUs and STRs
  • Accessory dwelling units - a loophole to allow affordable forms of housing in restrictive single-family residence zones
  • Presenting 20 minutes of deeply researched content in three minutes
• 11 Fears About Short Term Home Rentals
  • Fear #1 - Home rentals hurt a town's "character"
  • Fear #2 - Home rentals make housing less affordable
  • Fear #3 - Home rentals are unsafe
  • Fear #4 - Home rentals are not in compliance with building codes
  • Fear #5 - Home rentals are not licensed and inspected as lodging places
  • Fear #6 - Home rentals are preparing and serving food without a license
  • Fear #7 - Home rentals are not ADA / FHA compliant for accessibility for people with disabilities
  • Fear #8 - Home rentals do not have adequate insurance
  • Fear #9 - Home rentals are not paying taxes
  • Fear #10 - Home rentals are unfair competition to hotels
  • Fear #11 - Home rentals are creating nuisances
• Fear #1 - Home rentals hurt a town's "character"
  • Character - "The main or essential nature, especially as strongly marked or serving to distinguish"
  • Joe is now a NIMBY
  • "Character" is the free space in the middle of the board in NIMBY Bingo
  • Apart from a potential increase in nuisances (discussed later), is a short-term rental use of a single-family home substantially different from long-term occupancy?
  • Vacation rentals are out of character in... Vacationland...?
  • Maine was built around vacationers
    • 15% of homes in Maine are vacation homes. This is the highest percentage of vacation homes in the United States, and five times the national average of about 3%. This has been true every decade as far back as 1940 when 10% of homes in Maine were vacation homes.
    • There were 3,700 AirBNB listings in Maine in 2016, which is less than 1% of homes and less than 5% of vacation homes.
  • As long as there have been vacation homes, there has been short-term rental of vacation homes
  • Homes used to be used in more flexible ways
  • The ability to rent one's home on a short-term basis is a long-established property right. Removing this right should be considered a form of regulatory taking
  • Visitors reinforce many of the things that are essential to maintaining a town's character
• Fear #2 - Short-term rentals make housing less affordable
  • Maine - Less than 1% of homes are on Airbnb, less than 5% of vacation homes
  • 2018 Study in Santa Monica CA - Short-term rental ban has had no significant impact on long-term rental prices
  • 2015 NYC study
    • AirDNA - problems with data
    • Zillow - reliable data?
    • Statistical analysis, not direct comparison
    • Built-in bias - Investors may tend to buy properties for short-term rentals in areas that are already appreciating
    • In NYC, short-term rentals have taken 5,000+ units off the rental market in a city of 3 million housing units with 25,000 housing starts a year, resulting in an increase of a whopping 0.5% per year in rent.
    • Researcher was cherry-picked to get the same results he got in Canada by NYC's powerful hotel union who funded the study
    • These results are not transferable outside of NYC
  • Primary residences rented short-term, rooms in a primary residence rented short-term, and vacation homes rented short term would not come back on to the housing market if STRs are banned
  • Kea Wilson at Strong Towns - renting one unit short-term allows her to keep her other units affordable.
  • Short-term rentals optimize inefficiencies and vacancies in the housing market
  • How Airbnb got started - subsidizing the founders' rent
  • Tim covers 60-70% of his annual mortgage by renting during the summer season
  • Tim's town could change one number in the zoning ordinance to double the potential capacity for housing to be built incrementally, yet they think short-term rentals are causing housing unaffordability?
• Fear #3 - Short-term rentals are unsafe
  • Safety of homes vs. hotels
    • There are approximately 91 million single-family dwellings in the US and about 2,200 deaths from fire each year. That’s one fire death per 41,000 single family dwellings.
    • Hotels are relatively safer, with only 15 fire deaths out of about 4.8 million hotel rooms in the US. That’s 1 fire death per 320,000 hotel rooms.
    • There are also 48 deaths from carbon monoxide from heating appliances in US homes, which is 1 death in 2.8 million homes annually.
    • Hotels, even brand name chains, have had carbon monoxide poisonings as well. A 2012 USA Today investigation found eight carbon monoxide deaths in hotels over a three-year period. This averages to 1 carbon monoxide death in 1.8 million hotel rooms per year, which is more risky than the rate of 1 carbon monoxide death in 2.8 million homes.
  • Short-term rentals have a different risk profile than single-family homes: 
    • Smoking is one of the leading causes of deadly residential fires, and most home rental hosts probably don’t allow smoking.
    • Home rentals owners are also more likely to have smoke detectors. Only about 67% of single-family homes have smoke detectors, while a recent study showed that at least 80% of AirBNB hosts reported having smoke detectors (there may be more who have them but didn’t report it). While this is not perfect, it is more comparable to multi-family housing in which 88% of units have smoke detectors.
    • AirBNB hosts can advertise smoke detectors and other safety features on their listing.
    • AirBNB provides free smoke and carbon monoxide detectors to its hosts.
    • In Maine, most short-term rentals probably happen in the summer when people aren’t using heating equipment or making fires in the fireplace.
    • In Maine, Title 22 2501 requires one-family rental hosts to post signage in every bedroom notifying renters that the unit is not inspected by the DHHS, so the renters should be aware that the risks are commensurate with a single-family home, not a licensed lodging facility.
    • Insurers issuing policies for short-term home rental units may require safety features like smoke detectors.
    • The primary concern with a transient occupancy is unfamiliarity with the building and egress paths. Most single-family dwellings have fairly simple layouts with obvious egress paths.
  • Deaths in short-term rentals?
    • One death in Taiwan from CO poisoning
    • Family of four died in gas leak in Mexico
    • One death in an Airbnb in the USA - from a rope swing
    • If we conservatively assume that rope swings may claim the lives of one AirBNB guest per year, that’s one death per 550,000 AirBNB listings in America. That is almost twice as safe as the 1 fire death per 320,000 hotel rooms.
    • Of course these numbers are too small to justify these types of comparisons. The reality is that hotels are generally very safe, and so are short-term home rentals.
  • Making your short-term rental safe
    • Maintain smoke and carbon monoxide detectors, provide fire extinguishers, provide emergency contact information, and provide first aid kits.
• Fear #4 - Home rentals are not in compliance with building codes
  • The Maine State Fire Marshal has the following statement on their “Bed & Breakfast Life Safety Requirements” page on their website at https://www.maine.gov/dps/fmo/plans/bed_breakfast.html: “You are allowed to rent to 3 outsiders without needing State approval. At 2 people per bed, that equals 1 bedroom (the 2nd rental bedroom might include a 4th person).”
  • This appears to suggest that any short-term rental unit with more than one bedroom should be classified as a Lodging or Rooming House occupancy, requiring sprinklers, a fire alarm system, fire-rated stairways, etc., as well as a change of use permit from the State Fire Marshal.
  • Tim believes this is an incorrect interpretation of both the NFPA 101 Life Safety Code and the Maine Uniform Building and Energy Code.
    • Number of Occupants - NFPA 101 Life Safety Code defines a one-family dwelling as occupied by members of a single family with not more than three outsiders. The most conservative interpretation of this is four people, not three. Depending on the size of the family, and definition of “family,” there could be many more than four people and it could still be considered a one-family dwelling.
    • Number of Occupants per Bedroom - A limit on the number of occupants does not mean a limit on the number of bedrooms. It would have been easy for the NFPA to define a one-family dwelling by the number of bedrooms, but they chose not to do that for good reason. There are many instances in the code where the use classification of a building depends on the use and number of occupants rather than the spatial configuration (Assembly >50 occupants, Healthcare with >4 people incapable of self-preservation). It is an oversimplification to say that two bedrooms equals four occupants.
    • Short-Term vs. Long-Term Occupancy - These distinctions in the code between lodging houses and one-family dwellings apply to both transient occupancy of the unit (meaning short-term rental less than 30 days per NFPA) as well as permanent occupancy of the unit (meaning long-term rental or owner-occupancy). There is no distinction, in either the NFPA or the Maine Building Code, between short-term and long-term occupancy of one-family dwelling units.
    • This last point means that if their Office requires two-bedroom homes used as short-term rentals to comply with the requirements for transient Lodging Houses, they would have to require every single house in the State of Maine with two or more bedrooms to apply for a change of use permit as a permanent Rooming House, and to install a sprinkler system, fire alarm system, fire-rated exit stairs, etc. Clearly this is not the intent of the NFPA. 
    • The State Fire Marshal has a more nuanced (and correct) understanding of the code than what their website statement implies.
  • Concern is that towns will incorporate this incorrect interpretation into their land use ordinances
  • There is some reasonable limit on the number of occupants in a single-family residence - a "family" plus three outsiders - but not a specific number
  • "Family" is sometimes defined as "a single housekeeping unit." It does not mean relation by blood or marriage.
  • Towns should stick to the language of NFPA 101 if trying to incorporate this requirement into their ordinance
• Fear #5 - Short-term rentals are not licensed and inspected as lodging places
  • Laws and regulations are a hot mess of contradictions and confusion
  • Departmental "Rules" are what get enforced, and bypass democratic checks and balances
  • Innkeepers, lodging houses, victualers, campgrounds, lodging places, cottages, vacation rentals, hotels, inns, private homes, guest homes - which one are short-term home rentals?
  • How to write a departmental rule - cut and paste the law, then change it to say whatever the hell you want it to say
  • In Maine, private homes shall not be considered a lodging place and subject to a license where not more than three (or five?) rooms are let
• Fear #6 - Home rentals are preparing and serving food without a license
  • Stop the victualization of short-term rental guests
  • This is already covered in licensing laws and land use ordinances. Next.
• Fear #7 - Home rentals are not ADA / FHA compliant for accessibility for people with disabilities
  • ADA physical access requirements generally don't apply to single family homes
  • FHA physical access requirements generally don't apply to building with less than 3 dwelling units, or existing building unless substantially altered
  • We don't give legal advice. Better call Saul.
  • Are short-term rentals "public accommodations?"
    • Probably not - more like a private lease agreement
    • Even if ADA did apply, units might not be required to be modified to retrofit physical access features unless undergoing substantial alterations
  • Airbnb allows people to search for accessibility features, creating a market incentive to provide them
• Fear #8 - Home rentals do not have adequate insurance
  • Many owner-occupied homeowner’s policies may exclude coverage for short-term rental, and there may be some home rental hosts who are not properly insured, whether they know it or not.
  • However there are policies available that provide coverage for the homeowner as a principal residence while also allowing a certain number of short-term rental days during the year.
  • Our Liberty Mutual policy covering up to 180 days of short-term rentals costs us about $1000 more than a typical homeowner’s policy.
  • AirBNB provides liability insurance for all of its hosts, however hosts should review the adequacy of this coverage with their insurance provider.
  • If a home rental host does not have adequate coverage, they are taking a huge financial risk upon themselves and may lose their home if they lose a lawsuit.
  • However, this is a financial decision each host needs to make, and I don’t see a role for a Planning Board or Town Council in prescribing what types of financial products a homeowner should or should not buy.
• Fear #9 - Home rentals are not paying taxes
  • Income tax - Airbnb makes it easier to document rental income, and possibly to audit it.
  • Sales / Lodging Tax - In Maine and several other states, AirBNB automatically collects and remits the 9% lodging tax to the State. This has improved compliance and income for the state.
    • Taxation without representation
  • Property tax - Short-term home rental owners who are not permanent residents pay property taxes without burdening the school system and other services as residents do.
• Fear #10 - Home rentals are unfair competition to hotels
  • Maine Innkeepers Association - a nice sounding name for the hotel industry lobbying group
  • Tim's town has an 80 room hotel being built... Why would they build this if short-term rentals are driving hotels out of business?
  • Hotels and inns who choose to rent more rooms to more people for more money present greater potential risks to their occupants than home rentals, with respect to fire and life safety, health and sanitation, food service, and security. 
  • In exchange for a greater opportunity for profit, hotels creating these risks subject themselves to the State’s licensing requirements, licensing fees, inspections, and building code requirements for sprinklers, fire alarms, protected stairways, etc. 
  • Home rentals do create competition for hotels, but there is nothing unfair about them. Hosts of single-family homes are not breaking any laws or building codes, are not avoiding licensure or taxes, and are not putting their guests in harm’s way. 
  • STRs are competing, fair and square. We offer a better product at a better price in better locations than hotels can.
  • A hotel is where you go while you are waiting to experience a place. A home rental IS the experience of a place.
• Fear #11 - Home rentals are creating nuisances
  • Nuisances are a legitimate concern, and the only legitimate fear on this list.
  • Nuisances are property rights violations according to libertarian theory
  • Noise Regulations
    • Subjective, difficult to measure and enforce
    • This aggression will not stand
    • Dependent on content and context, not just volume, frequency, and duration
    • Existing limitations - Code / Family plus three outsiders, Licensure / up to three bedrooms (in Maine)
    • House rules - no parties, limit number of occupants
  • Parking
    • This is a public space management problem
    • Tim's town has very detailed regulations in place
    • Parking violations are easy to enforce
    • Short-term rental guests are allowed to park on public streets unless there is a parking restriction in place
    • One more reason to destatalize
  • Tim's solution: Home Rental Mediation service
    • Neighbors file anonymous complaints
    • Mediation service contacts rental host and negotiate ways to mitigate nuisances that are acceptable to the neighbors
    • Communications between hosts and neighbors remain anonymous (if desired)
    • Better than calling the cops
    • Home rental hosts may be the best candidates to provide mediation services
• Fears ASSUAGED!!!

 

Links/Resources

 

• Maine 15% of homes are vacation homes, 10% in 1940: https://www.census.gov/hhes/www/housing/census/historic/vacation.html
• 3,700 AirBNB hosts in Maine in 2016: https://www.pressherald.com/2017/02/22/maine-airbnb-hosts-earned-26-million-in-2016/
• The Effects of Short-Term Rental Regulations: Evidence From the City of Santa Monica, by Cayrua Chaves Fonseca: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3328485
  “Using a dataset of Airbnb listings in the area surrounding the city of Los Angeles, I find that the ordinance has reduced the number of entire homes listed on Airbnb in Santa Monica by approximately 61%. I also study the impacts of this regulation on the long-term rental market and I find no evidence of a significant effect of the ordinance on residential rents in Santa Monica. “
• CityLab article on 2018 NYC Short-Term Rental study by David Wachsmuth: https://www.citylab.com/equity/2018/03/what-airbnb-did-to-new-york-city/552749/
• 91,241,000 single family homes in USA in 2009: https://www.answers.com/Q/How_many_single_family_homes_are_there_in_the_United_States
• 2,165 average annual fire deaths in single-family homes (2014-2016) = 80.2% of 2,700 deaths in all residential occupancies: https://www.usfa.fema.gov/downloads/pdf/statistics/v19i1.pdf
• 4.8 million hotel rooms in USA: https://www.quora.com/How-many-hotel-rooms-are-there-in-the-US
• 15 average annual fire deaths in hotels / motels (2014-2016): https://www.usfa.fema.gov/downloads/pdf/statistics/v19i4.pdf
• 48 average annual carbon monoxide deaths from heating appliances in USA homes (2002 - 2012). Other CO deaths from tools, generators, etc. are assumed not to be relevant to this discussion: https://www.cpsc.gov/s3fs-public/pdfs/2012NonFireCODeaths.pdf
• 8 hotel carbon monoxide deaths over 3 years in USA (2012): https://www.usatoday.com/story/travel/hotels/2012/11/15/hotels-carbon-monoxide/1707789/
• 67% of fires in one- and two-family homes had smoke detectors present (Table 13). 88% of apartments have smoke detectors (Table 16): https://www.nfpa.org/-/media/Files/News-and-Research/Fire-statistics-and-reports/Detection-and-signaling/ossmokealarmstables.pdf
• At least 80% of a sample of AirBNB hosts report having smoke detectors: https://injuryprevention.bmj.com/content/early/2018/05/28/injuryprev-2018-042740
• AirBNB free smoke / carbon monoxide detectors: https://www.airbnb.com/trust - click the Home Safety menu item.
• AirBNB rope swing death: https://www.huffingtonpost.com/entry/a-death-at-an-airbnb-rental-puts-the-tech-company-in-the-hot-seat_us_5640db66e4b0b24aee4b18f7
• 550,000 AirBNB listings in the USA in 2015: https://www.airdna.co/blog/2015-in-review-airbnb-data-for-the-usa
• Maine State Fire Marshal “Bed & Breakfast Life Safety Requirements” webpage: https://www.maine.gov/dps/fmo/plans/bed_breakfast.html
  “You are allowed to rent to 3 outsiders without needing State approval. At 2 people per bed, that equals 1 bedroom (the 2nd rental bedroom might include a 4th person).”
• NFPA 101 2009 24.1.1.1 One- and Two-Family Dwellings are defined as: “Those buildings containing not more than two dwelling units in which each dwelling unit is occupied by members of a single family with not more than three outsiders, if any, accommodated in rented rooms"
  The commentary in Appendix A gives examples illustrating that this “family” can be a family renting the unit from a landlord (not just the homeowner’s family), along with up to three additional outsiders:
  “An individual or a couple (two people) who rent a house from a landlord and then sublease space for up to three individuals should be considered a family renting to a maximum of three outsiders, and the house should be regulated as a single-family dwelling in accordance with Chapter 24. (NFPA 101 2009 A6.1.8.1.1(1))”
• Maine Rules Relating to Lodging Establishments: https://www.maine.gov/sos/cec/rules/10/144/144c206.doc
  “Private homes shall not be deemed or considered lodging places and subject to a license where not more than 3 rooms are let. (2003 10-144 Ch. 206 1-B.18, exception noted after definition 32)”
• Referenced law Maine MRSA Title 22 2501: http://legislature.maine.gov/statutes/22/title22sec2501.html
  "Private homes are not deemed or considered lodging places and subject to a license when not more than 5 rooms are let;"
• ADA / FHA Case Law: http://www.bhgrlaw.com/blog/housing-provider-obligations-under-the-fha-and-ada-do-i-need-to-allow-service-assistance-animals-in-my-short-term-vacation-rental/
  “   The FHA applies broadly to housing, whether or not federal assistance is required. More specifically, the FHA applies to “dwellings,” which are occupied as, or designed or intended for occupancy as, a residence. See, 42 U.S.C. § 3602(b). While the term “residence” is not defined in the FHA, courts have interpreted it to mean “a temporary or permanent dwelling place, abode or habitation to which one intends to return as distinguished from the place of temporary sojourn or transient visit.” See e.g., United States v. Hughes Memorial Home, 396 F.Supp. 544 (W.D. Va. 1975). Thus, while a temporary residence may fall under the FHA, a mere “transient visit” does not. Courts have found a number of temporary residences to be dwellings under the FHA including, without limitation, homeless shelters, timeshare units, summer bungalows to which one regularly returns, migrant farm worker cabins, a womens’ shelter, and a drug and alcohol treatment facility. See e.g., Telesca v. Kings Creek Condo. Ass’n, 390 Fed. Appx. 877 (11th Cir. 2010); Home Quest Mortg. LLC v. Am. Family Mut. Ins. Co., 340 F.Supp. 2d 1177 (D. Kansas 2004); Connecticut Hosp. v. City of New London, 129 F.Supp.2d 123, 133 (D. Conn. 2001); Schwarz v. City of Treasure Island, 544 F.3d 1201, 1214 (11th Cir. 2008).”
  “...     Individually-owned residential condominiums units are generally not considered “public accommodations” subject to the ADA Champlin v. Sovereign Residential Servs., 2008 U.S. Dist. LEXIS 115274 (M.D. Fla). However, a condominium building may be considered a public accommodation if it is “virtually indistinguishable from a hotel.” Id. The Court in Champlin discussed Access 4 All, Inc. v. Atlantic Hotel Condominium Association, 2005 U.S. Dist. LEXIS 41600 (S.D. Fla.), in which a condominium building was in fact considered a public accommodation. In that case, there was no governing condominium association board, certain units were operated as hotel units, the governing documents defined the hotel units, a separate entity was retained to manage room reservations, and every unit owner had the option to include his or her unit in the rental program.
  "An individually-owned condominium unit that is rented out as a short-term vacation rental of 30 days or less arguably does not fall under the ADA if the condominium building is not operated like a hotel.”
• AirBNB host protection liability insurance: https://www.airbnb.com/host-protection-insurance
• Maine Innkeepers Association testimony to the State legislature, raising every one of these unfounded fears in order to seek monopolizing governmental protections for their industry’s special interests: http://legislature.maine.gov/bills/getTestimonyDoc.asp?id=26701
  “...The spread of unlicensed lodging places needs to be stopped, at least the spread in high risk applications and we believe that overnight lodging is where this danger starts.”
• AirBNB Neighbor Complaints: https://www.airbnb.com/neighbors
  “After you fill out the form, you’ll get a confirmation email with a case number and a copy of your responses. Our team will review your complaint. If we match it with an active Airbnb listing, we’ll send your message to the host when possible.