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Los Angeles Times

Thursday December 4, 2014

Airbnb Touts Its Economic Benefits As L.A. Leaders Seek To Clamp Down

By Tim Logan

A screen shot of the Airbnb website shows Los Angeles rentals. (Airbnb)

The debate over short-term rentals in Los Angeles is heating up.

Two days after a pair of City Council members called for tighter regulations on the fast-growing business of "home-sharing," the industry's biggest player — San Francisco-based Airbnb — released a study touting its economic impact.

In one of the more detailed looks yet at its operations in L.A., Airbnb said its website helped nearly 4,500 "hosts" rent out rooms or entire homes over a 12-month period ending in April, with hosts collecting $43.1 million in rent. A consulting firm Airbnb hired to conduct the study estimated that guests and hosts spent, directly and indirectly, $312 million, enough to support 2,600 jobs.

The study — which looked only at stays in the city of Los Angeles, skipping other hot spots like Santa Monica, Malibu and the South Bay — is one of about a dozen studies Airbnb has conducted in cities worldwide over the last two years, as its fast growth has butted up against complaints from neighbors and concerns that short-term rentals might put a new squeeze on already-tight housing markets.

In the U.S., those concerns have been loudest in San Francisco and New York, where a state attorney general's report found that three-quarters of Airbnb units violated zoning laws. Airbnb, which was recently valued by investors at $13 billion and is widely expected to launch an IPO, says it wants to help craft "win-win" regulations in the cities where it operates. And part of that process is pointing out how Airbnb helps its everyday users.

"It's important for us to provide the side of the story of how this benefits people," said David Owen, Airbnb's regional head of public policy.

City Council members Mike Bonin and Herb Wesson on Tuesday filed a motion asking for a city study of short-term rental laws elsewhere, and recommendations on what might work here. The company has operated in the shadows for too long, Bonin said; it's time for clear rules.

"The current system works for no one," he said. "We have a city zoning system which says they don't exist, even though they do exist. We have no way to capture the revenue, and no way to make sure the character of our neighborhoods is protected."

The motion needs the approval of the council's Economic Development Committee, and any proposals are probably months away. In the meantime, housing advocates say they increasingly see short-term rentals squeezing the broader housing market, especially when landlords push out rent-paying tenants to run what Bonin calls "defacto hotels."

It's hard to say how much that actually happens here. Airbnb keeps its data close to the vest, and Thursday's study made no mention of the practice. But neighborhood groups in Venice, a local hot spot for Airbnb rentals, point to buildings they suspect are permanent short-term rentals. And Larry Gross, executive director at the Coalition for Economic Survival, a tenants rights group, says it's becoming more common in other pockets of the city too.

"It's a wave on the horizon," he said. "And along with everything else it's an added threat to our affordable housing stock, taking existing housing off the markets and increasing our housing crisis."

For its part, Airbnb officially frowns on full-time operators, touting its service as a way for regular people — including L.A.'s large population of traveling entertainment industry workers — to make some extra cash. That was the theme at a press conference/pep rally the company held Thursday in the Mid-City backyard of one of its hosts.

As a little fountain burbled, a half-dozen hosts took to the microphone, telling how money earned through Airbnb has helped them cover their bills, buy a new air-conditioning unit, even launch a nonprofit dance program for foster children.

For Mary Williams, renting out her backyard guesthouse in Century City has been a lifeline while she rebuilt a wholesale business that, she noted, has been disrupted by new technology just as Airbnb is disrupting the hotel industry. Turning some unused space into a profitable asset has made a big difference in her life, Williams said.

"I have a mortgage. I have a kid to take care of. I have a business to rebuild," she said. "And I have this guesthouse in the back."

Still, Williams, who said she makes sure to pay the proper occupancy taxes, said she'd welcome some clearer regulations. This new industry comes with a lot of gray area, and it'd be good to know exactly what the rules are. Hopefully, she said, "they'll work out for everyone."

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