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Scrutiny of short-term rentals in LA exposes industry rift

L.A.'s budget panel on Monday approved a plan to levy lodging taxes on Airbnb and other short-term rental sites.
L.A. City Council's planning panel considers shutting down professional short-term rental operators who advertise on sites such as Airbnb.

A potential crackdown on L.A.’s booming short-term rental market is deepening divisions within the industry.

On one side is vacation rental behemoth Airbnb, which has become a pioneer in the sharing economy since showing up on the scene just seven years ago.

On the other side is a long-standing community of professional property managers with multiple listings of short-term rentals.

Both factions are embroiled in a controversy over whether short-term rentals are cutting into the city’s tight supply of affordably-priced housing.  Critics point to instances in which large numbers of units in a building get converted into short-term rentals, which generate more money than long-term leases.

Airbnb has emphasized the vast majority of its “hosts” are not those property managers - but rather, are individuals who rent out their own homes. The company has sought to distance itself from the property managers. Most notably in April, it dropped a couple firms with dozens of listings each, and cancelled their bookings.

The move has angered property managers such as Ronnie Mickle, who owns Stay City Rentals.

“I hate them,” Mickle said of Airbnb. “They’re terrible corporate citizens. They adapt their business model to the market that best suits them.”

For its part, Airbnb’s company mission leads it to “routinely review” its listings, said its public policy director David Owen.

“Our primary goal has always been to ensure that our guests have a great authentic local experience, and in cities like Los Angeles, that experience is often one that is provided by staying in someone’s home,” Owen told KPCC.

Industry fissures are sure to surface as Los Angeles opens a debate Tuesday into how to regulate short-term rentals. The City Council’s planning panel will take public input during its meeting, an early step toward a possible crackdown on short-term rentals that could put L.A. in the company of cities such as San Francisco and Santa Monica.

A proposal to create industry controls, brought in June by Council President Herb Wesson and Councilmember Mike Bonin, serves to widen the divide between Airbnb hosts and the property managers.

In their motion, the councilmembers proposed authorizing short-term rentals when someone rents out their primary residence — “a spare room, a back house or even their own home while they are out of town.”

But the councilmembers said hosts should not be allowed to rent units that are not their primary home — to keep “speculators from creating a syndicate of short-term rental properties.” Mickel said such a ban would effectively shut down professional short-term rental operators. 

“It’s not fair to attack any legitimate business owners,” said Mickle, a board member of the Los Angeles Short Term Rental Alliance. “This industry has been going on for decades here with no problem.”

What’s changed in recent years is the rise of home-sharing sites such as Airbnb. Short-term rental operators who previously relied on word-of-mouth and loyal customers, now have access to clients from all over the world. 

Mickle said he no longer advertises his listings on Airbnb, although he uses similar sites such as HomeAway and Flipkey.

Wesson recognized that short-term rental operators are “just trying to be a successful company.”

“I think the city has a responsibility to come up with rules and regulations that ensures how the company operates does not adversely affect the way we operate as a city," Wesson said.

One of the ideas proposed by Wesson and Bonin is making rental hosts pay the same taxes hotels do. Another would be to ban the short-term rental of apartments covered by the city’s rent-stabilization ordinance. 

“Everything will be on the table,” Wesson said. “And we will welcome any idea.”