The Coastal Star

Along the Coast: Cities at odds with state on controlling vacation rentals’ growth

By Mary Hladky

Steve Homrich watched with growing unease over three nights as young people arriving for parties at his neighbor’s home left rubber on the road while doing doughnuts on his street.
Then Friday night rolled around.
“My wife said, ‘Oh my God, look out the window,’ ” he said. “Groups of 10 and 20 kids were walking down the street to the house. They kept coming. My wife stopped counting at 300.”
That night’s party in June was big — with about 500 guests — and loud, complete with a DJ.
When police arrived, the kids scattered, with some jumping over the fence into Homrich’s yard.
Homrich learned that his neighbor, Thierry Chevrier, had rented out his Boynton Beach waterfront home on Northeast 15th Place through the vacation rental company HomeAway.
Chevrier, who could not be reached for comment, told Homrich he thought he was renting to an 84-year-old writer.
The actual renter secured the reservation with a stolen credit card. Chevrier’s house was trashed and some of his property stolen.
“It is going to become a bigger and bigger issue,” Homrich said of vacation rentals. “You feel you are living in a desirable area, and then you very well may end up with a rental property next to you. To me, it changes the character of the neighborhood completely.”
The vacation rental business is growing rapidly. Pegged as a $30 billion industry in the U.S. two years ago, it is forecast to top $36 billion this year.
As the industry has grown, so have complaints from neighbors about vacation renters partying into the early morning hours, jamming streets with cars and disrupting the quality of life in once-quiet residential neighborhoods.

State wants to set rules
Yet the state Legislature has been hostile to allowing local governments to set the rules for vacation rentals. In 2011, lawmakers prohibited cities from regulating short-term vacation rentals. The legislation, though, allowed cities that had put regulations in place before 2011 to continue to enforce them.
In 2014, the Legislature relented a bit, allowing local governments to adopt vacation rental ordinances that addressed issues such as noise and parking. But cities still could not prohibit short-term rentals or regulate their length or frequency.
This year, bills have been introduced in the state House and Senate that would take away control from local governments.
A Senate bill, introduced by Sen. Greg Steube, R-Sarasota, would prohibit local governments from setting rules for short-term rentals and give that power to the state. Vacation rental companies support the bill.
It originally would not allow cities to enforce rules they set before 2011, but that has since been removed.
A House bill, introduced by Rep. Mike LaRosa, R-St. Cloud, prohibits cities and towns from adopting ordinances specific to vacation rentals.
“I think it is horrible,” Homrich said of the proposed legislation. “That just seems to go against what local cities are all about. They are about making sure single-family neighborhoods stay single-family neighborhoods.”

Vacation rentals surge
Meanwhile, the vacation rental business keeps getting bigger in Florida.
Airbnb, one of the best-known companies, posted 75 percent year-over-year growth in the number of Florida guests in 2017, with 40,000 hosts in the state renting their properties to 2.7 million guests and earning $450 million. In 2016, 32,000 Florida hosts rented to 1.5 million guests and earned $273 million.
Airbnb now has 2,300 hosts in Palm Beach County, up from 950 in 2015. Airbnb rented to 72,500 people last year and earned $17.1 million, up from $9.5 million in 2016, according to the company.
For years, vacation rental companies billed themselves as giving regular people a way to earn extra income by renting out a spare bedroom. At the same time, the companies offered a far less expensive and potentially more interesting alternative to hotels.
Indeed, many media reports told of hosts earning relatively modest amounts, but enough to stave off foreclosure during the Great Recession or to take a vacation.
But over time, the nature of the business began to shift.
Investors snapped up properties for the purpose of turning them into full-time rentals. The hotel industry, feeling the heat from vacation rentals and going on the offensive, released a report last year that said vacation rentals had become big business, with many hosts renting out entire homes. Hosts listing multiple homes for rent are the fastest growing segment of Airbnb’s business, the report by the American Hotel & Lodging Association said. Airbnb disputed the findings.
The vacation rental bills are among a flurry of proposed legislation that city officials say is attempting to strip them of governing powers that are enshrined in the state constitution and known as “home rule.”

Cities try to defeat bills
The effort so concerns the Florida League of Cities and Florida Association of Counties that they have made defeating the bills a top priority.
“We have dealt with this for many years, but this is the year it is the most pervasive,” said Richard Radcliffe, executive director of the Palm Beach County League of Cities. “We have had statements from legislative leadership that they feel they know better what is good for cities and people than we on the local level do.
“The bottom line is you can’t legislate a neighborhood from Tallahassee. That is what we do.”
Ocean Ridge Town Manager Jamie Titcomb agreed that the effort to strip cities and towns of the ability to regulate has intensified this year.
“There is a full-court press to preempt local government from matters we deal with on a daily basis. It is more ramped up than I have seen in the past,” he said.
“We aren’t worried about a person renting out a room,” added Titcomb, whose town prohibited rentals of fewer than 30 days before 2011. “We are concerned about the preemption of local codes, zoning and quality of life regulatory matters that impact our residents.”
With the Feb. 14 massacre of 17 students and teachers at Marjory Stoneman Douglas High School in Parkland consuming much of the oxygen in Tallahassee, the fate of the vacation rental legislation was not clear at the end of February.

Cities’ rules vary
Delray Beach has pre-2011 rules that do not allow a turnover in home occupancy more than three times a year and require a property owner who rents to get a landlord permit that costs $75 a year, said Michael Coleman, director of community improvement.
Boynton Beach has no regulations on short-term rentals. Boca Raton’s pre-2011 rules do not permit short-term rentals for less than six months. First-time violators can be fined up to $1,000 per day and repeat violators up to $5,000 per day.
Delray Beach Mayor Cary Glickstein said his city’s regulations, enacted before vacation rentals were widespread, fall short of what is needed to monitor and control the rentals. As things stand now, state law severely limits the ability of his city and others to do more.
“What we do have is inadequate to protect single-family and multifamily properties from de facto hotel uses,” he said in an email. “Private property rights should not supersede the reasonable expectations people have for the quiet and peaceful enjoyment of their homes, and cities should be able to regulate and restrict … abuses of zoning laws.”
The proposed legislation, he said, “is irresponsible, reflecting ill-advised views of legislators, many of whom live in rural areas that have no appreciation for why well-run cities don’t need Tallahassee to impose their will or tell us what’s best for our citizens.”
Boca Raton’s code would appear to have strong enough teeth to keep people from renting through vacation rental companies.
But a look at Airbnb’s Boca Raton listings shows that quite a few are, apparently because they don’t know the rules or don’t care. The company declined to say how many hosts it has in Boca Raton or other south Palm Beach County cities and towns.
Rentals available in mid-February ran the gamut: a spare bedroom, a detached guesthouse and even an entire waterfront mansion.
Airbnb has similar listings for properties in all of southern Palm Beach County’s cities and towns. Listings for its competitors such as HomeAway and VRBO add to the tally.

Complaints alert cities
Boca Raton spokeswoman Chrissy Gibson said the city has not received many complaints from neighbors — the chief way Boca Raton and other cities learn of problem vacation rentals.
City records show one vacation rental code violation in 2014, 16 violations in 2015 and seven in 2016. Total fines levied were $105.
If cities want to be proactive, they can do some sleuthing on their own by looking at the rentals listed online by vacation rental companies.
But Marc Woods, rental housing inspector for Delray Beach, said “it is difficult at best” to get information this way that would allow the city to take action.
Airbnb, for example, does not list the exact address of its rentals or the property owner, making it very hard to figure out if the owner is in violation of city or county regulations.
Delray Beach does not keep statistics, but Woods said he investigates 35 to 40 complaints about vacation rentals a year, and additional investigations are handled by code enforcement officers.
“A lot of vacation rentals are not a problem,” Woods said. “Some of them are a terrible problem.”
Complaints, he said, often arise from large parties on patios or pool decks, and the size of the problem “seems to be proportionate to the size of their pool deck.”
While cities and towns battle noise and crowd complaints, county and state officials have other concerns.

Some taxes shirked
Many hosts do not pay the tourist development tax, or bed tax, and sales tax due on rentals, because they are unaware that they should or just don’t want to. The vacation rental companies have not done so on their behalf.
Palm Beach County Tax Collector Anne Gannon has sued the companies twice. In 2012, companies including Expedia, Orbitz, Priceline and Travelocity agreed to pay the county $1.9 million.
She sued again in 2014, alleging Airbnb, HomeAway, TripAdvisor and CouchSurfing International failed to register as rental dealers and did not pay the bed tax of 6 cents per dollar owed on short-term rentals. A trial date will be set in May.
“We are going to trial,” Gannon said. “We are not looking to settle.”
Her office also is doing outreach to homeowners to educate them on their obligation to pay the tax, which has improved compliance. Beginning in May, vacation rental owners will be able to register their properties and pay bed taxes online.
Counties have long been frustrated that bed tax money was going uncollected. But Airbnb’s tough stance against helping began to soften in 2015. In April, both the Miami-Dade and Broward counties’ commissions approved deals with Airbnb under which the company will collect the 6 percent Miami-Dade tax and the 5 percent Broward tax from its hosts and remit the money to the counties every month.
The tax deals were expected to bring in at least $6 million annually to Miami-Dade and $1 million to Broward. Both counties plan to seek similar deals with other home-sharing platforms.
The agreements don’t require Airbnb to release any information about hosts or their addresses and don’t require payment of previous uncollected taxes.
Thirty-seven other counties in Florida also have such deals, but not Palm Beach County. In an op-ed to The Palm Beach Post in May, Tom Martinelli, policy director for Airbnb Florida, pressed Gannon to follow suit, saying it would ease the county’s burden of collecting the taxes.
In response, Gannon said she is “willing, even eager” to do so, but could not agree to keep host and property location information confidential. That, she said, gives Airbnb a competitive advantage over its rivals. More important, without that information, she can’t check to see if Airbnb is paying all it owes.
Airbnb also reached an agreement in 2015 with the state Department of Revenue in which the company collects the state sales tax from its Florida hosts.
In 2017, Airbnb turned over $33 million in sales tax revenue to the DOR and $12.7 million in bed tax revenues to the 39 counties, the company said.

Outside help boosts compliance
For cities and counties at a loss on how to get hosts to comply with vacation rental regulations, private industry is offering solutions.
Delray Beach is considering contracting with Host Compliance, a Silicon Valley company founded in 2015. Gannon has used Host Compliance and two other similar companies but does not have contracts with them.
Host Compliance says it can identify which properties are being used as vacation rentals, ensure that renters and hosts comply with local ordinances, can increase vacation rental tax collections and free up city and town staff for other priorities.
The company uses big data and algorithms to gather information, although humans check the results.
Its clients in Florida include Fort Lauderdale, Hollywood, Pompano Beach, Hallandale Beach and Monroe County, but none so far in Palm Beach County.
A May memo drafted by Jamael Stewart, Delray Beach’s assistant director of community improvement, said Host Compliance would charge the city about $18,000 a year.
Host Compliance founder and CEO Ulrik Binzer said cities and counties get back five to 10 times what they spend to hire his company through increased collection of sales and bed taxes and fees for permits.
“Cities that wait for the phone to ring [with a complaint] are not having a lot of luck with compliance,” Binzer said. “Cities and counties that have decided they want to do something about it will actually make money.”

Views: 277

Comment

You need to be a member of The Coastal Star to add comments!

Join The Coastal Star

© 2018   Created by Mary Kate Leming.   Powered by

Badges  |  Report an Issue  |  Terms of Service