Don Quijones: Barcelona Just Declared War on AirBnB (and Its Hosts)

Yves here. I encourage you to read past Don Quijones’ support, albeit qualified, for “sharing economy” business models. The justification is that they are “innovative”. Yet the technology, such as it is, is close to 20 years’ old Internet ideas, of the way Craigslist displaced classified advertising and travel sites like Travelocity and Priceline ate the lunch of travel agents.

Services like AirBnB depend on breaking local laws, generally both zoning and those that require licensing or regulation of hotels. And as I can attest from first hand examples in NYC and other cities, and is widely reported to take place in San Francisco and now apparently Barcelona, the idea that these services allow apartment owners to earn an extra buck when they are traveling or on vacation is considerably overstated. Many if not most of the units are dedicated AirBnB properties, meaning that housing stock has been taken out of the market and has been converted to an unregulated hotel. Yet this direct threat to communities’ ability to engage in planning and control over their neighborhoods has for the most part prevailed due to the “innovation” of throwing tons of outside money into influencing the political process (I was stunned when in SF briefly last year at the amount of radio ads I heard, all on the side of the pro-AirBnB position in an upcoming election).

And before you try raging that economic rationality always prevails and produces the best outcomes, a wee story. Portland, Maine turned down the opportunity to have a Ford plant in the 1930s. The city fathers didn’t want outside manufacturing money dominating their community. At the time, and easily through the 2000s, it would be easy to depict the decision as shockingly retrograde. It clearly cost the state development and a lot of jobs. GM or American Motors could even have followed and provided even more auto-related employment.

But Portland’s dogged sense of what it was and refusal to deviate from that kept it out of the Rust Belt bust. Even though Maine is still a poor state, Portland has become the Santa Fe of the east, and has been rapidly gentrifying in recent years. I was told (but have yet to have this confirmed) that its population grew 10% in the last year.

By Don Quijones, editor at Wolf Street. Originally published at Wolf Street

live in Barcelona, Spain, and two days ago, the strangest thing arrived in the mail: a sealed, unaddressed envelope bearing the blue stamp of the Barcelona city authorities. Inside was a sheet of paper with five shortish paragraphs explaining the Council’s decision to intensify its crackdown on “illegal” tourist apartments in the city.

Under a 2012 regional law, any apartment rented to visitors in Catalonia must be logged in the province’s Tourism Registry and have a permit. Unlicensed apartments “promote speculation, the underground economy, and could even threaten the harmonious and coexistence of resident communities” in the city, the letter warns.

In the last paragraph, the council urges local Barcelona residents to snitch on any neighbors who they believe are running illegal tourist accommodation operations in their buildings. Residents are invited to cross-check their neighbors’ apartments against an open-access database of the city’s registered tourist flats, and if their suspicions are confirmed, they can denounce their neighbors on a free, around-the-clock hot line.

Judging by how many of my friends and acquaintances have received the same letter, it’s safe to assume that it was sent out across the city. In other words, hundreds of thousands of Barcelona residents have just been asked to rat on their neighbors.

Raising the Stakes

This latest incendiary move significantly raises the stakes in a bitter war of words, threats, and actions between Barcelona City Council, headed by Ada Colau, the world’s “most radical mayor” (according to The Guardian), and the world’s biggest accommodation provider, Airbnb. In August last year, the Council warned that people caught running unlicensed apartments through websites would be offered the chance to have 80% of their fine cancelled if they allowed the city council to use the apartment as social accommodation for three years.

Since then, the Council has closed down 256 apartments that were being used as unlicensed tourist accommodation. The owners could face fines as high as €30,000. The Council also imposed a 20-fold hike in the maximum fine that can be levied on home rental sites to €600,000, after Airbnb and its rival Homeaway continued to advertise holiday apartments that did not have permits.

This is a frequent complaint across myriad jurisdictions, from New York to Amsterdam, to Stockholm and Berlin. For Airbnb, any further damage to its Barcelona market could be very costly. With 15,000 registered dwellings, the city is far and away the most popular Spanish destination for the platform’s users and is the fifth most popular global destination with guests.

But the San Francisco-based company faces an uphill challenge trying to charm Barcelona’s local populace. So incensed are residents that a recent city government poll found that respondents consider tourism a worse problem than poverty. Only unemployment and traffic ranked higher on their list of grievances.

And 2016 is a bumper year for tourism, as millions of international visitors shun destinations where security is a concern, such as Tunisia, Egypt, Turkey and even France. As such, the industry’s benefits and externalities are being felt even more sharply and more widely than ever before.

Over the Limit

A common complaint among residents is that the Barcelona they know and love has become a theme-parked city that is reaching the outer limits of its physical capacity — just as has happened with Venice, whose population has shrunk from 180,000 in the 1960s to less than 60,000 today, as more than 2 million visitors flood the city every year.

Barcelona’s tourism boom has brought with it a huge amount of money. According to Mastercard’s Global Destination Cities Index, Barcelona rakes in over $12 billion a year from tourism and is the third-ranked European city in terms of tourist expenditure, just behind the two global powerhouses of London and Paris. However, this money has come at a heavy price, as the documentary film Bye Bye Barcelona documents.

Rents in many neighborhoods are surging as real estate owners and developers refocus their attention on meeting the much more profitable needs of short-term visitors. Added to that, the sheer volume of tourist numbers are crowding out local residents from many of the city’s most attractive districts while putting unbearable strain on public services and the city’s private housing stock. In 2015 the city, with a total permanent population of 1.7 million, drew 8.3 million visitors (and that’s just those who stayed in hotels), almost a million more than the year before and a five-fold increase on the 1990 total.

“The center no longer belongs to us,” laments Manuel Delgado, an urban sociologist at Barcelona University. It’s a common complaint.

Another downside of Barcelona’s tourist boom has been the widespread closure of traditional, often family-run shops, bars, and restraurants as decades of rent controls recently came to an abrupt end. As a consequence, the city is fast losing its distinctive character – the same character that attracted tourists in the first place – in the face of homogenization that accompanies the arrival of multinational chain stores.

Protecting the Racket

The City Council’s multi-year campaign against the likes of Airbnb is not just about protecting Barcelona’s distinctive character, reducing pressures on public services or exerting some semblance of control over a market that has exceeded its limits and is now almost certainly in bubble territory; it is also about safeguarding its own source of funds.

It is about protecting its own racket.

Local hotels, hostels, pensiones, B&Bs, and registered tourist apartments all contribute handsomely to government coffers. By contrast, unregistered tourist apartments pay nary a cent. As for Airbnb, whose business was recently valued at €30 billion, it paid just €81,000 in taxes in Spain last year on the total revenue generated by the more than 35,000 holiday apartments it handles in the country — the equivalent of two-and-a-half euros per property.

Like many global tech giants, the company runs much of its business through Ireland, where corporation tax maxes out at just 12.5%. For years now the Irish government has bent over backwards to secure the patronage of the world’s biggest corporations. But its days as a grudgingly tolerated tax haven on the EU’s periphery may be numbered.

In Barcelona tensions continue to rise between the City Council and Internet accommodation mediators and their thousands of affiliated hosts, many of whom use the money to help pay their bills and stay in their homes. A group purportedly representing Airbnb hosts has already responded to the Council’s informant-recruitment campaign by urging local residents to sabotage the information hotline and website by flooding them with false leads.

Before the situation spirals completely out of control, a balance needs to be struck between protecting the interests of traditional businesses and residents, on the one hand, and accommodating new opportunities of the sharing economy, on the other. Yet even in cities that have been more willing to engage with companies like Airbnb, such as Amsterdam, public resentment against the ever-rising tide of tourists and the expansion of professional landlords using the platform to circumvent landlord-tenant and hotel regulations is on the increase.

What’s happening in Barcelona should serve as a stark warning to tourist accommodation intermediaries like Airbnb, and Homeaway. If they don’t step up their game by offering serious concessions on regulatory and taxation issues, local governments all over the globe will end up assuming the role of legal guardian of the sharing economy by default. And that, as we’re already seeing, will not have pretty consequences. By Don Quijones, Raging Bull-Shit.

Trying to tax the Internet? Read…  New Leak Confirms: Brussels Has Learnt Nothing from Brexit

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  1. tawal

    Very insightful post. My son rents out his home in ATL for 1,750 a month on AirBnb. His PITA is around $500. (He lives and works out of JFK as a flight attendant.) I always worry that his home is being rented by drug dealers, or worse, as a government safe house.

  2. Quentin

    Amsterdam is just being swamped by tourists and rentiers who take real estate out of the market to rent it to tourists and business persons for high prices. The city is decending to luna park status, nothing is real. Barcelona council provides marvellous public transportation and other facilities. So why shouldn’t the visitors and the landlords help to fund it? If Barcelona city council is a racket, what would you call AirBnB contributing only two and half euros per property when their business depends on a well-functioning community.

  3. PlutoniumKun

    Its a tough argument to make with many people. Anecdotally, most people I know absolutely love AirBnB, they rave about the lovely cheap apartment they stayed in Paris, or how it was a lifesaver when they had to be in Brussels for a conference but everything was booked out. I know several people who own properties which previously they rented out on long leases who are now looking to ‘manage’ them more intensively through AirBnB, and see nothing wrong with it (in fact, many are actively proud that they are undermining ‘rip off hotels’ and I can sometimes see their point when I see what some hotels try to get away with). I can also see the environmental and social benefits in having urban accommodation more ‘intensively’ used – when I’ve previously gone travelling for weeks I’ve had acquaintances housesit my apartment, but its proven unsatisfactory sometimes and yes, I would love to make money from it.

    People do sometimes have a kind of weird double standard though – I have lots of visitors through a genuine ‘sharing economy’ site – – where bike tourers host other bike tourers (no charge, the site is run through volunteers). I’ve never had a problem with it, and it is a great way to meet people and help them out. But some people just can’t get their heads around me letting strangers stay with me without making any money from them, I’ve had so many odd questions about it.

    The key point of course is regulation. I can’t see anything wrong with a genuine short term rental market for people with a spare room or who have an empty home for a few weeks. Its an efficient way for everyone to use their homes. But there has to be a level playing field for everyone and it has to be run and taxed the same as any other business.

    1. JTMcPhee

      “Efficient way for everyone to use their homes.” And yah, all that’s needed is “regulation.” Which is subject to “regulatory capture,” and simple flouting.

      Besides, “everybody’s doing it, it’s the rage, my little contribution to demolition of the pre-existing ‘community,’ whatever it was, is de minimis, And it’s just delicious to be cutting edge and doing something that may be illegal, just like the Really Rich People!”

      Oh, and the “sharing economy” aspect is also so great, with its “social and environmental benefits.” Really?

      Pretty straight neoliberal-libertarian thinking, which has helped the rest of us to fall into the hole that we helped dig and which we “efficiently” keep digging at — “I just LOVE the FREEDOM of being an Uber independent contractor! The extra income is so helpful in paying off my student loans and my share of the apartment-share and the monthly lease on the Corolla that Uber so kindly has extended to me! So glad that my advanced degree in rationalization is finally starting to pay off!”

      “I can pay half the laboring class to kill the other half.” Because the folks at the top have been so skillful at keeping us mopes from developing any kind of model, of an operating premise and principle, that might lead to everyone having a “fair share” of Maslow’s fundamental needs. MY local short-term advantage tops any considerations of comity…

      1. PlutoniumKun

        It takes some logical leap to argue that short letting a home to someone else when you are away on holiday or business, or because of family changes you have a spare room (or even a home left empty because the occupiers are in hospital) that might be used by someone who needs it temporarily is ‘neoliberal thinking’. It used to be called ‘thrift’.

        There is a huge problem in many cities with underused residential space. Anything that allows it to be put to sensible use is an environmental and social gain. The problem with AirBnB is that it is not actually doing that in a fair manner.

        1. JTMcPhee

          Who gains from “putting underused space to sensible use,” again? maybe the “owner” or lessee playing the margins — but costs of all this are accounted how, again? And as to “underused,” how is that defined? By The Market?

          How about hundreds of thousands of “housing units” formerly known as “homes” from which people have been evicted “legally” and illegally, sitting vacant so the banksters can play with their balance sheets and not have to recognize the losses their frauds have caused?

          And all this supposedly beneficial in-filling, what does that do for the homeless that “efficiency” is producing, and for any kind of possibility of “market” or other incentives to build or re-fit actually minimally environmentally burdensome living spaces? It’s just “gimme a buck for my ownership rights that I can subdivide and sell.”

          Maybe “we” need some housing overlord or AI algo to inventory every little corner where a human can be parked for sleeping, sh!tting and maybe even eating, and make sure it is filled with a paying customer? Nothing wrong with that, right? Just “efficient! and environmentally responsible!” and especially cool because it relies on The Market as augmented by Tech to provide New! and Improved! opportunities for profit! so more people can afford to get on jumbo jets to fly off to distant places to fill spaces in the inefficiently utilized dwelling spaces in those other places, because that Feels Good to the fortunate travelers seeking Experiences! and Fun! or for Very Special Business Meetings In Far-Off Places…

        2. grayslady

          The problem with AirBnB is that it is not actually doing that in a fair manner.

          I’d say the problem is much greater than that. People who have spent a great deal of money to own a home in a particular neighborhood (or condo building) don’t want to find themselves in the midst of transients. Even B&Bs can have a rough time being licensed for the same reason. Then there are all the other issues mentioned in the article itself, such as loss of revenue to the municipality and taking real estate off the market that might be desirable to potential permanent residents.

          1. PlutoniumKun

            I’m on the management committee for my apartment building so I’m well aware of how difficult these issues can be. But there is nothing inherently wrong with short letting of any type – its all about context and management. My building is directly across the street (about 10 yards from where I’m sitting now) from a homeless hostel for male alcoholics. But its not a problem for me or my neighbours at any time because its exceptionally well run. However, a similar facility several blocks away has caused problems in the neighbourhood because of its poor management. There are two short term letting apartment blocks on my street (they predate Airbnb), which are a positive boon to the street, they bring in a lot of business for local cafes and restaurants and never cause problems because the owners manage them quite strictly (both have 24/7 staff on site). However, quite an upmarket hotel about half a mile away does cause issues for us – mostly because of parking overspill and drunken bachelor(ette) groups returning to the hotel at 2am on Saturday mornings.

            As Yves points out, the entire AirBnB model is about evading local regulations and taxes. But it would be a huge mistake to simply dismiss the entire concept because of this. There is a benefit to matching people with genuine surplus space to travellers and other short term uses, but it all has to be on a level playing field with traditional businesses.

            1. Yves Smith Post author

              I disagree vehemently.

              I’m in a rental and do not at all like the idea of strangers having access to my building. We already had a problem with theft by a visiting relative of a tenant.

              Moreover, transients create additional wear and tear, which the landlord eventually pays for when the apartment is vacated. It’s basically ripping off the landlord, who agreed only to rent the apartment to the tenant and never allowed for commercial use, as well as a violation of zoning regs. These services give landlords a legitimate excuse to jack up rents even further.

              1. PlutoniumKun

                I do understand your view, Yves, I’ve been through all that, both as a renter, an unpaid host on hosting sites, and as a board member on more than one building (as well as professionally). The ideal imo for living is in a co-op where the rules are set by everyone and everyone must comply (I’ve a relative in a wonderful NY co-op which is safe and a pleasant environment for all residents despite being in a historically ‘bad’ uptown neighbourhood).

                But in a mixed tenure urban neighbourhood such as the one I live in there is limited scope for that type of control (this entirely depends of course on local regulations and the peculiarities of different tenure systems) and in my experience hands on management really is the key. The big problem with AirBnB (with my Board member hat on), is that it circumvents existing controls and agreements making management very difficult.

    2. Alexis SOULE

      I also participate in 2 free travelers’ organizations– the ubiquitous Couch-surfing, and it’s spiritual parent, SERVAS.

      Servas has been around for 60+ years, & is in 100 countries. It promotes peace-building by people getting to know other people from varied cultures. It is NOT a competitor to AirBnB, or a hotel. It is an absolutely amazing way to travel and meet people (or to stay home and meet people.) Members are interviewed locally, in their home countries, so there is a level of confidence which may be missing from CS.

      There are several other, similar organizations, including home-swapping organizations.

      Perhaps if a distinction could be made between the ‘mom & pop’ people who really are renting out a spare bedroom, & those who take rental property out of the marketplace for locals, AirBnB may thrive & be a more constructive force.

      I have also frequently used AirBnB– usually staying in someone’s home, occasionally renting a whole apartment, so there is some self-serving & / or hypocrisy here. I am retired & travel a good deal– & I couldn’t begin to do it if I paid hotel rates everywhere, so I use these organizations, and hostels, and camping, as well as hotels and conventional BnB’s.

      BUT the primary reason is the people I meet. Servas folk (& most Couchsurfers) are interesting, warm people who share their lives with strangers, for no money. It is one of the most amazing organizations I’ve ever been part of.

      1. PlutoniumKun

        Yes, although unfortunately couchsurfing seems to have gone ‘commercial’. There is nothing new in them of course as you point out – Hospitality International has been around for decades. The internet just makes them more efficient and easier to (over)commercialise.

        I don’t think distinguishing genuine home sharing organisations or commercial organisations that facilitate ‘mom and pop’ renting as you put it is all that difficult. The solutions have to be specific to every local legal code, but its not rocket science to make a distinction between occasional renting or short term renting of individual rooms from commercial scale operations (in reality, in most jurisdictions you do need some sort of license or permission to use a residential unit for short term letting – AirBnB just seems to facilitate people who ignore these permits.

        1. JTMcPhee

          Yes, we just need credentialed people to sort it all out, right? … Efficiency, opportunity, and a nod to “doing it with permits.”

          All comes down to what outcomes “we” [those who have the inside track, anyway] want from our political economy. And what outcomes can be expected from the gentle massive irresistible pressure of monetary interests…

          Yes, “a gentle answer, subtly rendered, turneth away wrath…

  4. hemeantwell

    The city fathers didn’t want outside manufacturing money dominating their community.

    There are a range of connotations to “dominate.” One is that an auto firm would pay higher wages and likely be unionized. Local firms would have to raise wages to attract workers. Union drives in local firms would be more likely. In this respect the auto firm’s dominant position would weaken the local subordination of labor.

    1. JTMcPhee

      Here’s part of what goes on when a corporate “franchise” invades what we mopes think of as a “community,” which itself as an “entity” is actually made up of all the individuals and interest groups (from farmers to Chamber of Commerce to “developers” — during the mid-19th century, that was a nasty pejorative — to churches to the elected and appointed leaders, all wrapped in the haze of beliefs and day-to-day-isms that make up the nominal identity of the place:

      And here’s what the genius of capitalism (sic) brought and continues to bring, behind myths like the beneficence of Ford’s $5 a day wage: 2000% annual worker turnover — micromanagement and metrics — that is too often what “bringing in jobs” by giving corps the subsidies that “communities” — actually the usually corrupt “governments” thereof — extend…

      And “we” are ruled by the durable energies of “Fordism:”

      The folks with the power are just fine turning Bacelona into another theme park, where the costs are all devolved onto the mopery… because who has the power to oppose the great onslaught of disruption and innovation? Maybe the few remaining ordinary people in Aleppo and Mosul and Homs,

      1. hemeantwell

        Dunno about franchises, and I’m hardly cheerleading for the Fordist labor process, but it was often the case that local elites — their power grounded in small manufacturing and mercantile establishments, real estate and local banking — would not like a large manufacturer to drive wages up. However, and obviously, interests among local elites would be potentially conflicting and the unity of the coalition wouldn’t necessarily hold.

        I was a VISTA in Vincennes, Indiana. In our analysis of the local power structure it was clear that the Brown Shoe company was top dog and had, according to some local notables, had been able to get other elite factions to oppose, as I recall, a GM plant from moving in. I don’t think Vincennes was the better for it, we felt a big reason we were there was because of Brown and the unemployment — aka industrial reserve army — it ensured.

  5. Jack

    This article is particularly fascinating for me on two levels; one, I am a frequent user of Airbnb. And as well (which is a free exchange), and two, I am actually traveling to Barcelona next weekend for a conference and am using Airbnb. For $40 a night I get a nice private room with a local family vs. $150-200 for the most basic of hotel rooms. Yes, Airbnb has a problem and they are misleading about how there business functions. I know that from personal experience. I have stayed twice in those units that are mentioned in the story; apartments or houses purchased and rented out as temporary units. One I had to cancel out on in Seattle, WA. It was a house that an investor purchased, then rented it out as five separate rooms. I arrived with my wife and there were two people sleeping in the living room, and all the bedrooms were full as well. The ad showcasing the place was very misleading. Anyway we canceled and got our money back. I also stayed in one in Boston. Same scenario though not as bad. After that I make it a point to make sure I am staying with an actual homeowner or resident and their family. You can easily figure this out, because Airbnb actually lists on the site whether the person has referrals from other listings. And there are other ways to figure it out as well. So Airbnb is very misleading because I assure you they know when hte listing is not by someone who actually lives there.

  6. Damian

    The airbnb business model is based upon the disintermediation of normal commercial expenses plus the valuation of the asset at zero and possibly the maintenance labor within the dwelling.

    Typically commercial zoning has higher property taxes and other charges by the local authority. It is subject to a variety of inspections and standards all which cost money. Just take one capital cost – sprinklers – in hotel rooms not in bedrooms of houses and the list goes on from there. Further the coop halls / elevators / lobby / doorman / all have more use which are not charged by frequency of use to these owners who rent out their facilities. The risks (capital / personal) to the other owners are considerable and born entirely by them for FREE without compensation – same is true for a neighborhood or development.

    If all these costs were taken into account with upcharges by the local community authorities (public / private) the price per room would be equal to a hotel given the efficiency of a hotel (ex imputed capital cost).

    Zoning Rules in large measure were intended to eliminate this type of infringement on residential rights.

    These people should be charged on their property tax bill surcharges of X% or use taxes to equalize the system.

  7. PlutoniumKun

    On the subject of Portland, Maine, I recall back in the early 1990’s doing research on industrial location policy in Ireland and found that it was quite common practice from the 1960’s to refuse foreign investors from locating in smaller towns if the factory was seen as ‘outsized’. It seems some companies even back then (from memory, mostly US and German ones) favoured small communities as it was seen as giving them strong political leverage. But at the time the Irish government was very wary of this and (quite rightly I think) told them that while they were welcome, they had to locate in larger towns or cities if they were employing more than 100 people. I’ve no idea if its still the case, but that was quite farsighted given than no doubt a few factories were lost.

  8. JSacks

    My son and his room mates had their one year lease renewal cancelled in Cambridge MA after the first year so the owner could rent out the unit on AirBNB. The unit below them was already an AirBNB rental throughout the year. This was a $4,000 a month rent, paid on time every month, with an up front $4,000 payment to the rental agency. In a residential area not zoned for such.

    In areas of housing shortages and skyrocketing rental prices, AirBNB makes the situation worse and allows schleb ‘500 thousand-aire’ Trump wannabees pretend to be innovative entrepreneurs, but they’re tax and regulation dodging corrupt fraudsters.

  9. Katharine

    >Even though Maine is still a poor state, Portland has become the Santa Fe of the east, and has been rapidly gentrifying in recent years.

    I would never assume that was good without more evidence. All the gentrification I have ever seen displaced people who had lived in the neighborhoods for years, sometimes grown up in them, sometimes even with parents who had done the same. Portland’s growth is only a good thing if it is helping and not hurting non-wealthy long-time residents.

    1. lyman alpha blob

      It isn’t good at all if you ask me. I’m not sure if the population has really increased by 10% or not but developers are slapping up hotels and ‘market rate’ housing as if it has. Rents are going way up and so are housing prices. One house in my neighborhood sold for $240K a year ago and the prefabbed new construction piece of junk house built on the lot beside it sold for $360K a year later. Real estate speculation is rampart right now.

      The Munjoy Hill neighborhood was considered one of the worst neighborhoods if not the worst just a few years ago but all the old rundown houses are being bought up and converted to condos. And not condos that previous residents of the neighborhood could come close to affording.

      The rumors I hear say this is being driven not by current residents, but by rich ‘people from away’ as Mainiacs like to call them who are able to telecommute. I’ve been wondering who’s been buying all the $500K and up condos and I’m told that $500K looks cheap to someone from Brooklyn where real estate is much much higher.

      Now I’m wondering how much of this new construction is being used for AirBnB as there are a lot of people coming to Portland for weekend getaways to enjoy the foodie culture the city is currently marketing. Traditional businesses like fishing are being pushed out of Portland, I’d say partly because the real estate is more valuable converted to condos and partly becuase there aren’t that many fish left in the Gulf of Maine.

  10. Katharine

    I am bothered by the implication that Portland’s gentrification is necessarily good, or reflects a continuing “dogged sense of what it was”. All the gentrification I have ever seen displaced long-time residents, sometimes people who had grown up in the communities, or even people whose parents had. (And in one recent case, it has been widely observed that it is the newcomers who have no courtesy. While their money displaced poorer residents, their arrogant bad manners disgusted others who could have afforded to stay but saw the character of the community destroyed.) Before I can believe Portland is doing well, I would need to know a lot more about how its long-time residents view the changes.

    1. Katharine

      Sorry, done it again! Really, I check to see whether my comments have posted before I rewrite them, but the lag time is variable enough that I produce too many of these duplications.

  11. shinola

    Sharing??? When did renting something become “sharing”?

    Uber drivers RENT themselves & their vehicles out to others; property owners RENT out their homes/apt’s for a fee. Renting does not equal sharing.

    The “sharing” B.S. is simply a smokescreen effort by Uber, AirBNB & the like to evade regulations that would apply to public livery & landlords. Their real business models are are based on nothing more than attempting avoid the cost of regulations that apply to such businesses.
    (Although, there may be some propaganda value in calling it sharing – as in “How dare the gov’t tell me how I can go about sharing my own property!”)

    1. JTMcPhee

      No sh!t, shinola! tell it like it is. Shedding externalities, monetizing other peoples’ costs. Fokk em. And still there are the few who find “efficiencies” to laud in this crap, apparently because the whole scam serves their parochial interests. While everyone else ponies up the costs, eats the maintenance, all that…

      1. Anon

        JT I love your gleeful debunkery!

        Some of the “externalities” that come with the sharing economy:

        + Tourists/travelers who use community resources without paying for them (no bed tax)

        + Out-of -town drivers who don’t know the area and consistently create danger on the roadway

        + Loss of a ‘slack’ period where a community can reclaim its gathering places for creating community

        + In my town: loss of public beach access to over-the-top weddings by out-of-towners.

        Cities and towns do have a functional limit on tourism.

  12. Carol

    The taxpayers foot the bill for the true costs of Airbnb. Here in Portland, Oregon where over 90% of the Airbnb rentals are not registered with the city, they generate no revenues for us. Instead they cause homelessness as the most vulnerable renters, such as the elderly and the disabled as well as low income workers, the ones who have always lived downtown because they don’t have cars and need to be close to services, are being evicted so that their little apartments can be put on the market as Airbnb hotel rooms. When they become homeless or in immediate need of subsidized housing, the rest of us must pay for this. When the tourists who occupy these uninspected apartments, many without even a smoke detector or fire extinguisher, get hurt or are robbed or attacked because the place has no normal security anymore, the taxpayers must pay for the emergency services they need. Soon we’ll be paying for the numerous lawsuits, too, because the public supports the justice system in many ways, even for private law cases. And when downtown areas that once were vibrant neighborhoods where we all looked out for each other are populated entirely by tourists and homeless people, who will pay to clean them up and maintain the necessary large police presence? The taxpayers! Airbnb has almost ruined my once lovely neighborhood already with dozens of listing in a 3 block area alone. The noise and littering around the Airbnb apartment buildings is awful and pushes us to make more demands on city services, including police calls about the drunken tourists shouting in the streets all night. Because city centers are disproportionately affected, many suburbanites don’t care that city neighborhood life is being spoiled. But you’ll start caring when the bills come due.

    1. Paula

      When I was reading about Tiny Houses, Portland was one of the places allowing them. But it was only as a second dwelling with independent water/sewer lines. Not 40 of them in a bunch with shared amenities. Like a garage apartment. I wasn’t thinking about Airbnb at that time. I wonder if Air had anything to do with getting those code changes. Maybe 80% of the returns about Tiny Houses on google are by people making a living building or promoting them.

  13. Kris Alman

    Yes, young creatives are getting priced out of their hip city, thanks to Mayor Charlie Hales who welcomed Air B&B as the North American headquarters. While celebrating their role in the sharing economy, the city was in damage control because of lobbying violations between Mark Weiner, Hales and City Commissioner Steve Novick. Weiner, the Uber lobbyist, just happened to also be Hales’ chief political consultant. Oops!

    Consequently, Hale is a one-term mayor whose record on homelessness is dismal.

    It’s no wonder that Novick is running hard to maintain his seat against a newcomer with no money, Chloe Eudaly.

    1. Paula

      Who’s Beau Breedlove? Maybe the mayor has a better offer. I know our mayor has the perfect look for bigger scheming.

  14. Ignacio

    I really didn’t realise how important for municipal management and planning can be the registration of tourism facilities. Large and populated metropolitan areas face complex problems that require fine management so it is understandable that a large city that receives so many tourists asks for registration. Besides, there is the problem of tax dodging.

    So it is quite normal that a disruptive new approach for lodging, as the one AirBnb and their competitors offer, arises new problems, particularly in a metropolitan area that receives so many tourists. Nothing as simple as free supply/demand arguments should be the only guide on how the urban space is shaped and organized.

    Good post!

    1. ckimball

      Ah, not only “metropolitan areas face complex problems”. On the island where I live people who have
      rented and been part of the community for years have been facing thirty day notices to leave their
      homes. Sometimes It is because the owner is selling but very often it is to change to AirBnb. It is very
      difficult to accept that there is nothing available to rent, especially something affordable. I am told that
      a hookup for a trailer is going for $850/mo. This community is going to lose the people that do not live
      their lives to make a lot of money. In order to stay many will pay more than is comfortable. The stress
      of the disruption and life change creates too much focus on money. Being too narrow It does not foster creativity or diversity. If there is too great of an influx in a short amount of time, the organically evolved culture will be hollowed out. I think if you’ve come from city, it takes a year or two to assimilate the atmosphere of this place. I think people are coming because they want to feel the beauty and slower pace but then dashing off to an Airbnb to enjoy the sensation of getting something cheap if you can
      really afford more seems to me to be at cross purpose. On the other hand, it must be exciting to have
      a way to explore open up through AirBnb. But then, our infrastructure is disappearing along with accountability. It seems it is another symptom. I like having a phone book

  15. der

    “… throwing tons of outside money into influencing the political process (I was stunned when in SF briefly last year at the amount of radio ads I heard, all on the side of the pro-AirBnB position in an upcoming election).”

    Working my way through Antonio Garcia Martinez’ “Chaos Monkeys – Obscene Fortune and Random Failure in Silicon Valley” and from his tell-all there is a lot of Galtian Billionaires millions-millions invested in unregulated AirB&B, Uber and such.

    It’s like Silicon Valley’s versions of Wall Street’s derivative “deals” but more tangible, touchy-feely, user friendly. Jenga Economics. Seems also the legs to this business model are made of fragile material. A few weak-kneed wobbly influenced (bought) government pols and the whole thing comes crashing down.

    Good marketing begins with good press! Innovators & their ideas! HAL 9000 rules! (rules: uhm, I mean power not regulation).

    1. Paula

      Destructive creationism? A lot of people in the “sharing economy” don’t realize they’re being shared. And all the buzzwords sound so cool to them. The cab drivers pleading with the Atlanta City Council to keep Uber out of the airport made me tear up. CC has kicked it down the road as of yesterday. Until after the election no doubt. The cab drivers were mostly older Black guys.

    2. Paula

      You know what’s weird? I read the two Ayn Rand books when I was young. I remember loving them. And I turned out left-ish.

  16. parisblues

    You could substitute the name of my town — Santa Monica, CA — for Barcelona in this story. The situation is identical.

  17. Paula

    Great article. Better comments. I live in a little city ten minutes from downtown ATL. I’m three blocks from the rail station. If/when the rail extends down to where most of the movie studios are, it will be from this station. Just south of here in Clayton County, it was recently reported that whole hoods had been bought up by large corporations and the homeowners were freaked at the sky-high rental ratio in their old hoods. This city gov’t started doing things that seemed destined to destroy my hood. Surrounding downtown with low income housing, ignoring crime which has soared as the hood has gentrified, blocking organic economic growth downtown and taking on serious debt, while dodging a referendum, and now about to allow a freaking EcoVillage of forty Tiny Houses in the deepest valley of a flood plain. And into our aging water/sewer/stormwater system. Recently as I was trying to figure out who was giving the largest donations to our pols, as per the State ethics/campaign finance disclosure page, I found a small local “investment firm” buying up homes on the other side of our rail station. Selling the properties back and forth to itself over a period of years. I don’t know what that’s all about, but I know it ain’t no good. My neighborhood is being farmed. The developers of the LIHTC housing coming in seem to have a great long term business plan. I went to their development in Pooler GA, well outside Savannah, near the airport (as is my city) and the people I spoke to near there were freaked because they’d moved there to escape Savannah’s crime. That worked five years, until the LIHTC development moved in. This developer claims to provide “affordable” housing for teachers and policeman. That’s bull. But in 10-15 years they can kick everybody out and make a killing on a well placed property. If they ever put rail between ATL and the ports it will pass right by the Pooler property. I’ve been called negative, paranoid, crazy and racist when I objected to some of these developments on FB. Most of these gentrifiers fall for every buzz word out there. The rest are real estate agents. I suspect some “stakeholders” are merely tools. I’m on the Building Authority, quite by accident. After not having a quorum for three years it has suddenly been resurrected to issue a bond for a palatial City Complex and parking deck, so they won’t need a referendum. I researched for days to get a few questions in the record and address the one other member who doesn’t seem to be in on it. A little Robert’s Rule’s dance slapped me right down. They separated the slam-dunk refinancing from the new money bond the moment I pointed out that the Rules and Regulations, (which we got in the first meeting when they were going for a vote on both) required an independent legal advisor for a contractual revenue bond. (you can’t believe how long it took me to dig that up). This city has had perpetual financial problems. One of the few docs I could find online was the 2010 Financial Recovery Plan. Sorry. Sorry. I’m ranting. It’s just so good to hear from people who understand the ugly underneath the story. I wish I didn’t know any of this. But I do. I kinda miss the old racists who were running the place when I moved here. They tried to screw the city by bringing in a giant medical waste incinerator. We fought them, got 800 people to City Hall, with cries of environmental racism. It worked. Don’t have that hammer now.

    1. backwardsevolution

      Paula – good luck to you! So much goes on behind everyone’s backs.

      You said: “…I found a small local “investment firm” buying up homes on the other side of our rail station. Selling the properties back and forth to itself over a period of years. I don’t know what that’s all about, but I know it ain’t no good.”

      I heard the same thing is going on in my city, the selling of properties back and forth. Try to find out what that is all about. Does anyone out there know? Is this to keep prices up/escape taxes? I’d be very interested to know what’s going on.

      1. Lambert Strether

        That jibes with the Dr. Housing Bubble poll I posted yesterday in Water Cooler that 20% of offers for houses were made without viewing the property, especially at the high end. That certainly looks like speculation.

        More sightings from the ground on this topic welcomed. And can any real estate professionals comment?

        1. Paula

          This selling back and forth lasted over a period of years. A completely different set of entities was also doing that back and forth on this street. I’ve seen stuff like this when I was looking at sales history of houses I was checking out, the selling for $0 or $10 thing. But just once. I assumed it was relatives and something like a quick-claim deed. I didn’t quite understand it but it didn’t look fishy. OAN, I wonder if those tiny houses are a way to set up an airbnb. The downtown ATL market is nuts and this is between ATL and the airport. 3 blocks away is the train that takes you right into Hartsfield/Jackson.

      1. Paula

        Thanks Lambert. Giddy time. Hey. I just read about a push for more Fed money going for rural water projects. Cantwell and some Repub I think. Then I was saw an NBR seg about a luxury active-senior place outside Denver. I wonder how much Fed money goes to rich gated communities moving away from more populated areas? Because even if the origin of the LIHTC was ok, I’m pretty sure a lot of it has ended up being welfare for developers and investors buying securitized LIHTCs. BTW, I found out the MARTA train station just north of us which is in ATL and hasn’t gotten the trendy TOD treatment yet, has a developer guy mentioned in the plan who markets himself as having done the biggest LIHTC deal in history. That’s not mentioned in his bio attached to the TOD (Transit Oriented Development, very hip) project, but it’s in his other company’s bio. In the TOD plan it’s all about his community involvement and usual fuzzy jargon. That hood is mostly in bad shape. Lots of boarded up housing surrounding the former Fort McPherson army base.(which is historic, beautiful, walled and now Tyler Perry Studios) Maybe coincidence. I just know it’s a great location now full of increasingly desperate poor people being driven out of the city and in the way. One man’s development is another man’s displacement. The local news just did a seg about small condos downtown that they weren’t selling for $80K four years ago but are a hot item at $180,000 now. The poor are also being scattered and smothered in the suburbs. At least once a week somebody’s on the news reminding those responsible for their new crime problems that they carry guns. And since I’m rambling, have you ever looked at a google map of Ferguson Missouri? I did, before I knew about any of this stuff. Remember how the Governor waited a day before sending help and the town burned? Ferguson is also in a great location between St Louis and the airport. Very near the rail station if you’ve got a car.

        1. Paula

          PS. Both the train stations of which I speak have large, free parking lots. Especially Fort Mac. Just north of there is where you go if you need a $15 used tire.

          1. Paula

            I’ve never been able to make it past the other Ferguson stuff and find any info about what’s going on there now. It’s probably been six months since I’ve tried and now the anniversary thing will make it harder.

            1. Yves Smith Post author

              Please Google rather than ask us questions like that. We are already overtaxed and asking us to do things you can readily do yourself is not considerate.

              1. Paula

                Sorry. I was so surprised to see a response in the middle of the night I acted like we were yakking on FB. I don’t want to distract one of my favorite sources.

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