Most people think of Airbnb as a room or two in a private home that homeowners offer for for intermittent rental as a sideline. But truth be told, AirBnb is a major corporate enterprise with volume as the driving force.
In Airbnb’s top 13 U.S. markets, exponential growth is driven by hosts renting out multiple units and entire homes. Six percent of the hosts in New York City, some with hundreds of units, take in 36 percent of the short-term bookings and 37 percent of the revenue. In Washington, D.C., 24 percent of the company’s revenue comes from hosts with more than 20 units, and 77 percent of revenues comes from whole-house rentals. As it prepares to invite the public to invest in it through purchase of stocks, Airbnb is no Mom and Pop business.
Airbnbs have proliferated throughout Raleigh, despite not being legal in residential zoning districts. In response, the City Council created the Short-Term Rental Task Force (aka the Airbnb Task Force) to consider conditions under which the short-term rentals should be allowed. In June, after an 8-5 vote, the task force sent a proposed ordinance to the council. Here are the essentials:
“Type 1” short-term rentals would be allowed in all residential zoning districts and most mixed-use and commercial districts. Up to five bedrooms could be rented. A manager would be required to live on-site for at least 181 days a year and be present in the dwelling unit throughout the rental period.
“Type 2” is the same as Type 1, with two differences. The resident manager is not required to be present throughout the rental period, and a detached accessory unit can be rented (though like Airbnbs, accessory units are not allowed in residential districts).
“Type 3” is whole-house rentals in mixed-use and commercial districts, with no resident manager. Though Type 3 would remain illegal in residential districts, the task force recommended that the city continue its practice of not enforcing this regulation.
As proposed, short-term rental will introduce much more commercial flavor into neighborhoods than long-term rentals. Considerable commercial activity is currently allowed in homes, with some conditions. These include a special use permit from the Board of Adjustment, no more than five customers at a time, and an additional on-site parking space. The overarching principle is that the business use must not overshadow the residential use – the house is a home first and foremost. Under the proposed ordinance, Airbnb will not have to abide by these conditions. Are you a seamstress who would like to see three or four clients in your home each week? Get a permit, create a new parking space. Want to rent a whole five-bedroom house to five couples for the weekend? No Board of Adjustment permit or parking needed.
Institutional uses like churches and day-care centers have long been part of the residential zoning fabric. But a short-term, whole-house rental is a mini-hotel. What other purely commercial intrusions will we allow in residential neighborhoods? How will potential buyers react when they learn that the house next door to the one they just fell in love with is a whole-house mini-hotel? Short-term rental can easily be regulated by inserting a new provision into the current “live-work” regulations, treating short-term rental like other businesses in neighborhoods.
Since the 1980s, most new homes have come with restrictive covenants limiting their use for commerce, including Airbnb. Most older neighborhoods do not have these private protections, so except for the few with high price points, these are where short-term rentals will become concentrated. Many older neighborhoods with problematic long-term rentals would be more susceptible simply because they are more affordable to investors.
Zoning arose from Aristotle’s maxim that a city should be built to give its inhabitants security and happiness. Most neighbors we’ve asked don’t think that short-term rental of a bedroom or two in a home, with the neighbor there while the business is operating, threatens their security and happiness. Let’s treat short-term rental like we do other home businesses. Writing ordinances is like writing prescriptions for drugs. Sometimes they work very well, other times there are severe side effects. Like medicine, zoning is an inexact practice. Caution should be the word of the day. It would be a mistake to throw the doors open wide without any thought of potential ill effects.
Bob Mulder is a member of Raleigh’s Airbnb Task Force and a former chair of the Raleigh Planning Commission. Ted Shear is a member of the Airbnb Task Force