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Garcetti wants Airbnb to help solve LA's affordability crisis

Everyone agrees housing has gotten too expensive in Los Angeles, but how to solve the problem? On that, there’s a lot less consensus.
File photo by GABRIEL BOUYS/AFP/Getty Images
Since it was founded in 2000, the city's Affordable Housing Trust Fund has provided loans to developers to incentivize them to build apartments for low-income residents.

In his State of the City address this week, Mayor Eric Garcetti pledged to replenish the city's Affordable Housing Trust Fund, giving it $5 million from its general fund, and another $5 million generated from a future hotel tax on Airbnb rentals.

Thousands of Los Angeles residents use Airbnb to make extra money renting out their properties. The city of Los Angeles wants the site to charge rental customers a 14 percent tax at check out, and pass that revenue directly to the city. Airbnb has agreed to do that in many other cities - a deal with Los Angeles is in the works.

The Affordable Housing Trust fund is used to incentivize developers to build housing for lower-income residents - usually apartment units. Many believe housing like this is needed now more than ever. Los Angeles has been rated the most unaffordable city to rent in America, according to recent studies by Harvard and UCLA. 

Seven years ago, the fund had more than $100 million in the bank, but now it’s down to $19 million, according to an estimate from the city Housing Department, after federal grants slowed to a trickle, and dollars from the Community Redevelopment Agency stopped coming in 2011.

Airbnb says its 4,490 Los Angeles hosts rake in $35.5 million a year, so a 14-percent occupancy tax would indeed generate nearly $5 million. The tax has no expiration date, meaning it would continue to be assessed on Airbnb rentals indefinitely.

“The actual amount would vary based on Airbnb’s revenue in a given year," said Ashley Atkinson, Garcetti's Planning and Housing Specialist, who acknowledged that the city has yet to finalize its agreement with Airbnb.

“It’s currently under review by the city attorney,” she said.

No one at Airbnb would agree to be interviewed, but the company did release a statement: "We've been working with cities across the country and around the world to help our community pay hotel and tourist taxes and we're continuing to have productive conversations with officials in Los Angeles."

Airbnb already collects occupancy taxes from hosts in San Francisco, Portland, San Jose, Washington D.C., Chicago, Amsterdam, and more locally, Malibu.