Dealing with rentals issues elsewhere

Charleston isn't the only city grappling with how to handle Airbnb and websites like it.

San Francisco, where the lodging company was established, doesn't allow rentals for shorter periods than 30 days, either. But the rental sites have become so ubiquitous, the city is considering measures that would allow short-term rentals under strict regulations, according to the San Francisco Chronicle.

In New York, Airbnb's most popular market according to its website, the company has come under fire by lawmakers because people are using the service to host vacation rentals in their leased apartments.

Critics also say Airbnb is given an unfair advantage over hotels because it doesn't pay accommodations taxes. The company is pushing for a measure in New York that would allow it to collect accommodations taxes, which could boost tax revenues by $21 million annually, according to the company.

Companies like Airbnb have created a worldwide phenomenon, now referred to as the sharing economy, driven by new tech-based programs that provide a marketplace for person-to-person services such as transportation or lodging .

The leading companies offering share services are Airbnb and Uber, an app that allows passengers to catch rides with everyday drivers for small fares. Both are based in San Francisco.

While the companies argue that their new technologies have improved conditions for consumers, many legislatures aren't sure whether to let the new companies go unregulated for the sake of innovation.

Ellen Pfeiffer was at her home in Radcliffeborough on a May afternoon, chatting online with someone she thought was a potential visitor.

Pfeiffer has a separate suite in her downtown Charleston home that she had rented out to short-term visitors for several years. She's been fined before for violating the city ordinance that restricts vacation rentals in generally every downtown neighborhood except for Cannonborough-Elliottborough. But Pfeiffer was still taking her chances by using a new and rapidly spreading online service called Airbnb, which acts as a person-to-person booking site for everyday people to rent rooms or their homes to travelers.

"Hi, Ellen," someone named Shannon wrote on the site's messaging service, according to records Pfeiffer provided to The Post and Courier. "I have some friends coming into town 6/29-7/01 and noticed you had an opening on those days. Can you please confirm that you can accommodate them for just a couple of nights? Your description says something about a 30 day rental so I just want to make sure before I show them the ad."

"Shannon. Sorry for the confusion," Pfeiffer replied in the message. "The City of Charleston mandates that I use the '30 day rental' language. Yes, the place is available for the two nights you've inquired about."

Hours later, Pfeiffer answered a knock on her door expecting to see Shannon, who had asked to come by to scope out the rental. Instead, she was met by a city livability code officer, who handed her a $1,092 fine for violating the ordinance that says houses in her neighborhood can't be rented for a shorter period than 30 days.

Pfeiffer, who has lived in the same house downtown for 10 years, said the city's strategy felt like entrapment.

"I believe this is a real overreach. This is my house. I pay my property taxes," Pfeiffer said. "I don't think I'm impacting anybody negatively by doing this."

Pfeiffer isn't the only resident that's been hit with the citation recently. When the city found out a few months ago that residents were using online lodging services to list their homes as vacation rentals, the livability division started doing online sting operations like the one with Pfeiffer, city planner Tim Keane said.

In the past two months, 13 livability code citations with a maximum fine of $1,092 were issued to residents who listed their homes on Airbnb or similar websites. That's more than twice as many citations issued in the previous six months combined.

The recent increase in enforcement comes as the city works with the Tourism Advisory Council, an appointed board of residents and hospitality industry professionals, to strike a balance between the robust tourism industry on the peninsula and the quality of life for downtown residents.

As the council considers adding new rules to the Tourism Management Plan, city officials aim to make sure the rules already on the books, such as the vacation rental code, are being enforced.

The livability department is in the process of hiring three new enforcement officers to keep an eye out for violators.

Keane said they're specifically targeting the vacation rental ordinance because downtown neighborhoods are already steeped in enough tourism activity. Residents of Cannonborough-Elliottborough are allowed to host vacation rentals because the neighborhood leaders said they wanted more visitors in the area, Keane said.

But it's a problem in all the other neighborhoods, he added, because short-term rentals exacerbate parking problems and threaten the "healthy neighborhood dynamic."

"Creating what essentially becomes hotel rooms within neighborhoods is absolutely not something we see as appropriate for Charleston neighborhoods," Keane said. "For us, a healthy neighborhood is with people living there year-round. They have ownership in the neighborhood, they're not coming and going for a few days."

He said that if people are renting suites that are separate from their main houses, they should be renting those to long-term tenants instead of vacationers.

"The fact is, we really need more rental units downtown," he said.

Historic burden

Residents on the peninsula, whether they're using the vacation rental websites or not, agree that it's an easy way to offset the cost of owning a home downtown.

Norman Beam, who owns a house in Harleston Village, paid the maximum fine for violating the vacation rental code in May. Beam said he prefers to rent his house for a month or even longer whenever possible.

"But if I have a whole month open and somebody wants it for a week, I can't afford to just let it sit," he said.

Beam said he can make more than $30,000 a year renting to visitors, which he said helps him pay property taxes and insurance premiums.

"I'm retired, so it's between that and Social Security, that's about my only income," he said. "I manage to get by OK. But for a lot of people downtown, if you're retired and don't have a really good income stream from retirement, it is hard to get by."

Pfeiffer said she decided to start renting out the private suite in her house for the same financial reasons.

"It obviously is a very supplemental income, and it's something I'd like to continue doing," she said. "Obviously, it's getting more expensive to live here, with the utilities, maintenance, the insurance."

Vangie Rainsford, president of the Mazyck-Wraggborough Neighborhood Association who is also on the city-appointed Tourism Advisory Council, said if the city didn't restrict vacation rentals on the peninsula, there would be no way to manage how many tourists are in town at one time.

She also understands why vacation rentals have become so common downtown.

"Expenses for these homes keep going up. And if you're going to keep the diversity of this city, you can't keep putting financial burdens on people in the historic areas because they're seeking ways to alleviate those costs," she said. "There has been talk on the committee of giving tax breaks to historic downtown owners, but that would probably involve city and county issues. So I don't know what the answer is."

'The firm stance'

Keane said the city's answer is to just keep cracking down on the problem with fines until it's no longer a problem.

Pfeiffer said she has stopped renting to visitors but that the city's efforts are futile.

"I don't think it's going to go away. People are going to keep being surreptitious and the city is going to spend more and more money going after this," she said.

Keane didn't deny that.

"What is going to happen is we're going to issue citations, then they're going to change how they advertise and try to hide it from us. This is going to be a long effort ... but we are going to take every measure to make sure this kind of stuff doesn't happen," he said.

Pfeiffer argued that it would make more sense if the city would embrace the new alternative lodging services and collect occupancy taxes from them, as other cities have done.

If that were an option, the strategy could have some merit, according to hotel industry analyst Jamie Lane, senior economist at the Atlanta-based PKF Hospitality Research firm.

From his studies on Airbnb and websites like it, Lane said, he has found that the alternative lodging services have attracted visitors to cities that may not have otherwise been drawn to those destinations.

"For a lot of markets, that could mean travelers coming that wouldn't have otherwise stayed in a hotel room. So the hotels aren't getting the revenue, but they wouldn't have gotten it anyway. Now they're spending other money in the city, whether it's spending money at the attractions or restaurants or other things," Lane said.

Pfeiffer said that's precisely why she feels like Airbnb is a good thing for the city.

"These are people that couldn't afford Charleston Place," she said, referring to the posh downtown hotel. "They come here and spend their money instead on the bars, the restaurants and the horse carriages. They say they loved their visit because I'm a good host. What am I doing that's so terrible?"

Keane said the city's position on the issue won't be influenced by the potential for more tourists or extra tax revenues.

"We're not really open to looking at how to allow this in the neighborhoods. We just don't think it's appropriate here," he said. "This is the firm stance because this really isn't about the visitor economy. It's about our neighborhoods being preserved."

Reach Abigail Darlington at 937-5906 and follow her on Twitter @A_Big_Gail