Could Cambridge City Council Regulate Airbnb? Should It?

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It’s a sweltering, humid July day, but the Sullivan Chamber at Cambridge City Hall is nonetheless overflowing with attendees. A few audience members are spilling over into the threshold of the chamber door; some look down on the proceedings from the second-floor balcony.

The source of such fervent interest in a mid-afternoon City Council meeting? Airbnb.

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Cambridge is one of a number of cities around the world struggling to figure out how to deal with the sharing economy from a legislative and taxation standpoint. And while it would turn out that most stakeholders present at this specific meeting—Airbnb hosts, neighbors of hosts, Airbnb reps and policymakers—were essentially seeking the same goals, it may take the city some time to figure out how to regulate the meteoric rise of the room renting model.

Since its 2008 debut, Airbnb’s prevalence has boomed. Today, its website claims the company has served more than 60 million guests across 34 thousand cities and 191 countries and that it offers 2 million listings worldwide. It’s no surprise that Airbnb has caught on in Cambridge and Greater Boston as well. Will Burns, a corporate representative for the company present at the meeting, reported that there were 1,065 active listings in Cambridge alone.
screen-shot-2016-09-09-at-10-36-46-amThe meeting was the beginning of what councilman Craig Kelley called “a discussion” about the issues and uncertainties surrounding the use of Airbnb. Following this conversation, the city wants to create responsive, adaptive policies that allow residents to rent out rooms using the service, without causing housing issues or endangering neighborhood culture.

One of the first issues discussed—and perhaps the most aggravating for hosts—is that many Airbnbs are technically illegal in Cambridge. For example, it’s illegal to operate a tourist house without an occupancy permit in residence zones A or B. Twenty-six percent of Airbnb listings in the city fall into those zones. Moreover, If someone is running an Airbnb without all the proper permits—including, but not limited to, an occupancy permit and a food handler’s permit—they could be faced with a fine from Inspectional Services in the amount of $300 per day.

Yet many of these laws aren’t tailored to fit a sharing economy model, where hosts are not incorporated entities with a staff but residents renting out a spare bedroom to guests they connect with online. Because the city has no specific regulations for Airbnb, there’s no easy way for hosts to find out if they are in compliance. Even if they do manage to find out what the the city requires, those permits may be difficult—or impossible—to obtain for their purposes.

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The tone of the July meeting was generally friendly toward the idea of Airbnb hosts, but there was an overarching resentment toward commercial operators—those who rent out real estate assets in which they do not live to Airbnb guests. Commercial operators make up about 14 percent of the Airbnb listings in Cambridge, according to company data. A commercial operator may develop condos just for Airbnb, and the earning potential for these users can be huge. They might rent out five units at, say, $200 a night, 365 nights a year. And they’re not paying the same taxes that above-board tourist houses and hotels do.

In a city with an affordable housing crisis, the idea that people are renting out precious real estate to tourists and turning big profits doing so—without being taxed—leaves a bitter taste in the mouths of city councilors, residential Airbnb hosts and concerned neighbors alike. Outside the city council building prior to the start of the meeting, a handful of young protesters stood holding signs with slogans like “Airbnb increases rents.” None of the protesters—who filed into the chamber sans signs—made a public comment.

screen-shot-2016-09-09-at-10-51-32-amElizabeth Bowen, a neighbor to a commercial operator, stated, “I’m not speaking against people renting a room in their own home. [But] the building [next to me], as far as I know, is entirely short-term rental … it is not a pleasure to live next to this building.” She went on to describe the frustrations, the noisy parties and the general mistrust she feels toward the man who owns the house but doesn’t live in it.

“We believe there should be a different regulatory scheme for operators … versus folks like my mom who are renting out a bedroom in their house,” explained Burns, the corporate representative from Airbnb. Burns also revealed estimates that show the commonwealth could stand to gain 13 to 20 million dollars in revenue were it to develop tax regulations specific to Airbnb hosts.

Burns, who was once a Chicago alderman, assured the city council that Airbnb would like to work with the city on three fronts: crafting sensical legislation for short-term occupancy, cracking down on commercial operators and mitigating racial bias in Airbnb hosting.

All three areas have gained national—and even international—attention. The BBC recently reported on mass protests in Barcelona against commercial Airbnb operators. Protesters were enraged at what they saw as a degradation of their community due to increasing tourism—something Airbnb’s affordability has fueled, in their eyes. Meanwhile, the hashtag #airbnbwhileblack went viral on Twitter earlier this year, revealing stories of discrimination prospective guests of color have experienced from Airbnb hosts. In response to the discrimination issues on Airbnb, alternatives such as Innclusive, which work to provide a more secure community to travelers of color, have sprung up.

Burns explained that Airbnb was in the midst of a 90-day review, which they hired David King and Laura Murphy to spearhead, as a way to mitigate racism on the platform at a systemic level. David Pincus, an Airbnb host who made a public comment at the meeting, called such discrimination “repugnant,” and most hosts who spoke emphasized how valuable the connections they built with their guests were to them.

“All of us here are part of one of the greatest companies created in the last 25 years,” noted Jonathan Steinman of Cambridgeport. “When we look at the world today, where 50 percent of Americans are in favor of building a wall … We are opening up our homes.”

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While Airbnb grapples with discrimination and commercial renting issues on a large scale, many Cambridge hosts who attended the meeting said there are aspects of Airbnb that do, in fact, help preserve Cambridge’s socioeconomic diversity. One advantage? The service helps longtime residents remain in this increasingly expensive city.

The benefits of supplemental rental income to older residents is not specific to Cambridge. Burns revealed that the fastest-growing host demographic is women over the age of 60—his own mother included—who are using Airbnb to supplement Social Security income. “They’re also our most highly rated hosts,” he noted.

As almost a gesture of goodwill to the city, more than one host addressed a willingness to pay taxes, particularly if the taxes collected from Airbnb listings helped fund homelessness prevention and affordable housing initiatives.

Even Rachael Solem, president of the Cambridge Hotel Association and innkeeper of The Irving House, had no issue with small-scale Airbnb hosts. “I’m really happy to see there’s a robust collection of owner-operated, owner-occupied rentals,” she said. “The hosting that happens around the city with individuals is really robust, really necessary.” Her position might come as a surprise, considering that she’s in a competing sector, but she’s not the only one in her industry who feels this way.

Girogos Zervas, a guest presenter, shared data that explains Solem’s somewhat surprising comfort with Airbnb competition. An assistant professor of marketing at Boston University with a Ph.D. in computer science, Zervas’s research shows that Airbnb typically takes business away from budget hotels—which urban hotspots like Cambridge and Boston don’t have many of—and hotels that don’t offer business amenities to guests. In times of high volume visits—events like South by Southwest in Austin, TX—more Airbnb hosts come online, responding to the ebb and flow of seasonal demand, keeping prices stable. This immediate supply responsiveness to demand is something hotels and bed and breakfasts simply can’t do. For an innkeeper like Solem, who can only offer 44 rooms during the Head of the Charles or Harvard’s parents weekend, Airbnb is an alternative she can offer to prospective guests she can’t accommodate herself.

With so much good possible with Airbnb, is it possible that Cambridge might help lead the way towards state-level legislation of the company and sharing economy models like it? Ken Doolan, a Winthrop resident who has been a host for five years, spoke at the meeting to attest how well the regulation process had gone in his town, and said he hopes to see such cooperation extend across the state.

Because on the other side of the sharing economy, there are ridesharing services like Uber and Lyft. In June, the Cambridge Taxi Commission announced it was suing the city for not levying the same regulations on ridesharing companies that it does on taxis. Uber and Lyft recently withdrew operations from Austin because voters struck down a motion to loosen regulations on ridesharing.

The conflict over Uber indicates why the city’s regulations on Airbnb will be all the more important. As Councilman Kelley stated, “If we can learn how to work through this [Airbnb] territory well, we’ll be able to take whatever the disruptive economy throws at us in the future.”

This story originally appeared as “Up in the Air” in our September/October print issue, which is available for free at more than 200 locations throughout Cambridge and just beyond its borders or by subscription.

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