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Airbnb Flies Under the Radar

Eugene-area private rentals growing in popularity

Jerry Henderson and his wife, Junaida, rent out the first floor of their taupe cedar-sided south hills home to people passing through town. For $60 per night, travelers stay in a private “suite” with a bedroom, bathroom and family room and access to decks that skirt along ferns and wrap around the trunks of 100-foot-tall fir trees. They have rented their extra space to 190 people since May 2010. Jerry Henderson says they have reported all of their Airbnb earnings, which total at least $11,000, to the IRS. 

Eugene saw a 70 percent increase last year in rental activity through the short-term private rental facilitator Airbnb.com, according to an Airbnb spokesperson. Listing a short-term rental on Airbnb does not require any licensing, permits or commitment to pay lodging taxes, which puts 180 Eugene rentals in somewhat of a legal gray area. Airbnb has caused other larger cities, such as Portland, to re-examine zoning laws and crack down on lodging, or transient room, tax collection. 

Airbnb listings are not required to pay a transient room tax (TRT). The Lane County and city of Eugene transient room taxes total 9.5 percent of the cost of the stay for short-term rentals. A minimum of $150,000 has gone through Airbnb for Eugene rentals — based on the prices of rentals and the number of reviews each listing has and not including stays longer than one day, cleaning fees or service fees. $150,000 taxed at 9.5 percent would have brought in at least $14,000 to the city since the company started in 2008. Airbnb is negotiating an agreement with the city of Portland that would task the company with collecting an 11.5 percent tax from guests and distributing the money to the city and county.

Henderson says he welcomes the work Airbnb is doing in other cities to collect transient room taxes. “Yes, of course, higher costs might result in fewer guests but we do this because we enjoy it, not to earn a living,” he says.

All of the site’s users had to agree to new terms of service on April 30. Airbnb has added a clause to the mandatory agreement which notifies site users that, depending on where they stay, the company may collect a lodging tax on the city’s behalf.

Airbnb warns site users to review local laws before posting a rental because some city laws place restrictions on short-term rentals. “Certain types of short-term bookings may be prohibited altogether,” the website reads. “Local governments vary greatly in how they enforce these laws.”

Rentals of 30 days or less are prohibited in residential zones in some cities, including San Francisco and New Orleans. Portland’s zoning laws state specifically that short-term vacation rentals are not permitted in residential zones. Portland’s Planning Commission approved a plan April 22 which would allow Portlanders to rent one or two bedrooms in their primary residence short-term, provided they pay a fee, install smoke detectors and submit to a city inspection. The City Council will decide on the matter in the coming months.

The Eugene Planning Commission has not yet discussed modifying codes that relate to short-term rentals. City Planning & Development Department spokesperson Laura Hammond says the city has not received any complaints about Airbnb. “We will continue to keep an eye on it and be listening for concerns from the community as this form of the sharing economy continues to evolve in Eugene,” Hammond says. A continued growth rate of 70 percent would increase listings to approximately 300 in another year.

The Downtown Riverfront Special Area Zone is the only zone in Eugene that prohibits tenancies of less than 30 days, according to city Land Use Analyst Katharine Kappa. All other residential zones place restrictions on “bed and breakfast” lodging. Low-density and medium-density residential zones require a conditional use permit from the city. Limited high-density and high-density residential zoning codes require only that the total number of bedrooms is within zoning standards and limit outdoor sign size.

Oregon Restaurant and Lodging Association Vice President of Marketing and Communications John Hamilton says hotels in Portland haven’t yet been financially affected but some neighborhood associations are against it. He says Airbnb rentals should go through the same steps as other short-term rentals like hotels.

“All we’re really looking for is equality in how these same types of businesses pay taxes — that they contribute to the TRT — that they’re inspected and that they don’t pose any public risk for health concerns,” Hamilton says.

Eugene-area bed and breakfasts receive licensure through Lane County Public Health (LCPH). Zach Manning, a registered environmental health specialist, says inspectors look for a dedicated hand-washing sink, a clothes washer and dryer specifically for guests’ items and linens and a separate bathroom for the host, among other requirements. Establishments with one or two bedrooms for rent, which includes many Airbnb rentals in Eugene, are exempt from licensure.

“We look for hand-washing; we look for food storage,” Manning says. “As with restaurants, we want to go over cooking temps, correct hand-washing and illness policy procedures.”

LCPH evaluates an initial plan review for residencies that are seeking bed and breakfast licensing. Following approval of the review, LCPH performs inspections on licensed bed and breakfast facilities before they open and twice per year after that.