Government and Travel & Tourism

Grand Rapids not rolling out the red carpet for Airbnb

Short-term rentals bump up against established hospitality industry.

July 25, 2014
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While Airbnb may be enjoying a slightly better reception from the city of Grand Rapids than when it was first discussed, the $10 billion sharing economy business is still getting a bit of a cold shoulder.

Last fall, the Grand Rapids City Commission was prepared to vote on regulations that would essentially make Airbnb short-term rentals equivalent to bed and breakfasts under city law and require approximately $2,000 in fees for anyone interested in providing short-term rentals via the Airbnb website. Many of those looking to make extra income via renting out space in their homes would have been priced out of the market. 

Outrage by several area residents already utilizing Airbnb convinced the city to take a step back and consider more appropriate regulations for short-term rentals. A task force was formed to create a set of regulations for short-term rentals that would align the needs of renters, neighbors and existing bed and breakfasts.

Some of the concerns from residents included maintaining the safety of the neighborhoods, parking issues and other quality-of-life concerns.

The task force presented the Grand Rapids Planning Commission with its list of recommendations at the start of the summer, and the commission approved the recommendations by a 5-4 vote.

The regulations proposed include, among others: a $291 home business licensing fee; a limit of 200 licenses; owners must live in the house in which they are renting a room; only one room in a home can be rented; only two adult renters can stay in the home at a time; and neighbors within 300 feet must be notified that a license has been issued.

City commissioners are scheduled to vote on the proposed recommendations Aug. 12.

While fees have decreased substantially from the original proposal, Airbnb users and supporters of the service remain unhappy with the compromise regulations.

The East Hills Council of Neighbors, which had a representative on the task force, has come out against the proposed regulations calling them “too severe.”

The East Hills Council of Neighbors is supportive of services such as Airbnb. We see it as an opportunity for our residents to participate in the sharing economy with community-based tourism, which provides a unique experience to visitors to our area,” reads a statement from the organization.

“To date, we have received zero complaints from neighbors of Airbnb hosts. We are supportive of some legislative regulations to ensure safety of our residents and visitors — for example, Airbnb hosts proving property insurance documentation — however, we feel that requiring Airbnb hosts with no prior property complaints to only be allowed for two adults to stay is against the meaning of Airbnb.”

Josh Leffingwell, a Grand Rapids resident and member of the East Hills Council of Neighbors, said he was disappointed with the final recommendations, which he believes are not much of a compromise and don’t make a lot of sense.

The recommendations themselves were arbitrary and they are silly,” he said. “The folks that were pro-Airbnb, their recommendations were not seen in the final recommendations.”

He said the overarching message the proposed regulations send are that visitors aren’t welcome in Grand Rapids neighborhoods.

One regulation Leffingwell especially takes issue with is a requirement for off-street parking.

“There is no other business run out of a home that requires off-street parking except for this,” he said. “If you are a lawyer or an accountant working out of your home, you don’t have to have off-street parking.”

He noted many downtown homes do not have off-street parking, which will limit a significant number of residents from participating.

The East Hills Council of Neighbors addressed the off-street parking regulation as well, stating, “As far as the issue of parking being a problem, we cannot continue to plan our city around parking needs.”

Leffingwell agreed some regulation is necessary, but he said the task force relied too much on worst-case scenarios rather than creating meaningful regulations focused on a positive vision.

“Let’s create a positive vision for what we want our tourism economy to look like … and find ways to create that solution in a positive way,” he said. “Right now, they are just adding roadblocks.”

Grand Rapids is not the only city to grapple with short-term rental regulations as a result of Airbnb’s growing presence — the company has more than 800,000 listings in 190 countries.

U.S. cities like New York City, Chicago and San Francisco — where the company was founded — all have been considering bans or regulations in the past year. Suggested regulations have mostly been focused on leveling the playing field between Airbnb rentals and the hotel industry, and preventing housing stock from being eaten up by the growing short-term rental business. But some also have focused on safety and quality-of-life issues, mostly in response to a few high-profile incidents involving vandalism and sex parties in rented homes.

One of the big issues larger cities are pushing for is the collection of a hospitality tax.

Since it was founded in 2008, Airbnb has avoided the collection of hospitality taxes levied on the hotel industry, but that is starting to change.

The San Francisco Business Times reported in 2013 that Airbnb finally had agreed to begin collecting an existing hotel tax on San Francisco and New York rentals, in response to growing pressure from the city of San Francisco.

Airbnb is also working with New York City, which has a 2010 law on the books that prohibits rentals of less than 30 days without the resident being present. This law makes many of the Airbnb rentals that have been occurring in the city illegal.

Most cities acknowledge a full ban isn’t a good or reasonable solution, especially when it comes to attracting millennials and others to their cities, but the industry has grown too large to ignore the problems and unintended consequences that have arisen.

Airbnb is not the only sharing program on the rise: Car sharing, bike sharing and a slew of other sharing-style businesses are cropping up, all raising their own regulatory concerns in cities across the country as they grow and become competition for entrenched industries.

“The sharing economy isn’t going away — it’s not going to stop,” Leffingwell said. “Let’s come up with solutions that actually can create a better city.”

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