Nelson city hall will study the proliferation of unlicenced and unregulated Airbnb accommodation by hiring someone this summer to look at what other municipalities are doing.
According to its website, Airbnb has 130 sites in the Nelson area, with 96 of those in city limits.
Any Airbnb operating outside the downtown area is illegal, because the city’s zoning bylaws prohibit short term accommodations there. (Bed and breakfasts are an exception and in a different category.) If the Airbnb doesn’t have a business licence, that’s an additional problem.
Then there’s taxation. Hotels pay a two per cent tax that goes to Kootenay Lake Tourism to market the area, and pay business taxes to the city, not to mention provincial sales tax and GST.
Some critics say Airbnbs take up accommodations that might otherwise be rented long-term to locals in a community with a rock-bottom vacancy rate.
These issues are discussed regularly these days, among local hotel owners, city council and its housing committee, Kootenay Lake Tourism, and social service organizations like Nelson CARES, which operates and advocates for affordable housing in Nelson.
Then why doesn’t the city crack down? Why not go on the Airbnb website, locate the illegal businesses, and shut them down or enforce compliance? Why commission a study?
The city’s head planner Pam Mierau says there are three reasons. First, bylaw enforcement is complaint-driven, by financial necessity. Bylaw officers don’t go out looking for infractions.
“If we had to enforce this, think of the time it would take,” Mierau says. “Are Nelson residents prepared to have an increase in their taxes to pay for this?”
She points out that each extra expenditure of $75,000 by the city requires a one per cent tax increase to pay for it.
Would having all Airbnbs buy business licences and pay business taxes pay for the cost of enforcement? The question is moot, because any Airbnb outside the downtown core is illegal to start with, because they violate zoning rules.
Mierau’s second reason is that Airbnbs bring in many tourists who might not come otherwise.
“They bring in a lot of dollars. Do we want to say no to that?”
Dianna Ducs, who heads Kootenay Lake Tourism, doesn't agree that regulating Airbnbs would hurt tourism.
“It would not detract from tourism. It would improve tourism because we would have regulated Airbnbs. People would know they are safe and clean and there would be a standard. I have no issue with Airbnb and neither do the hotels that I know of, but the issue is having regulation, having a fair playing field.”
Mierau’s third reason for wanting a study is that she says Airbnb owners have a lot of creative ways of getting around the regulations, and she wants to see how other municipalities deal with that. (She didn’t want to tell the Star what those creative methods are, for fear of making them more popular.)
Ryan Martin, general manager of the Hume and Best Western Hotels in Nelson, told the Star the Hume recently lost a five-day booking to an Airbnb, and that’s not unusual. He says it’s the “Wild West” out there.
“I just came back from Best Western district meetings, and they are feeling it is taking about a ten per cent market share away from hotels and it is growing exponentially.”
He says Airbnb owners are not living up to their responsibilities.
“Hotels have to pay wages, and we pay taxes including the two per cent marketing tax that we collect from our guests that goes into marketing this great town. Airbnbs get the advantage of that marketing.”
He says the provincial sales tax and GST he charges to hotel customers help build roads and schools.
“The city needs to step up and at a minimum charge for business licenses, and that money should go into marketing. I know Airbnb is here to stay and I respect that it is a different experience than staying in a hotel. People want options, and I am good with that, but they need to pay to play.”
Martin says Airbnb reduces the amount of rental housing available to prospective staff members at his hotel.
“I am concerned about our long term rentals in Nelson. This is driving people out.”
Jenny Robinson, executive director of Nelson CARES, says she is not sure how much Airbnb is affecting long term rentals because no one knows how many of those units would be rented out long-term otherwise.
“We have had a persistent low vacancy rate for years. It is hard to analyze whether it is truly biting in, because everything is biting in because the vacancy rate is so low. There is lots of speculation that it is.”
Robinson suggests the housing affordability problem in Nelson could be a cause of, rather than a result of, people wanting to rent their property out with Airbnb.
“I think affordability of housing in general contributes to it. People have large mortgages, so they want to have income off their property and this is the way to do it.”
City councillor Michael Dailly sits on the city's housing committee, along with Robinson. He thinks the presence of Airbnb is reducing the amount of long term housing available, but there are no statistics to prove this.
“Yesterday I had a conversation with a resident who listed a home for rent and had 20 applicants, some of whom offered to pay more than they were asking,” Dailly said. “It sure seems there is more demand than supply at the moment. I have spoken to the workers who handle [provincial government] rental supplements and the trouble they are having finding rentals is real and growing.
“Addressing this issue is a top priority for council,” Dailly said.
Mierau says the city’s summer student hired to study Airbnb started work this week and will produce a final report in August.
“The process will include a best practices review, an inventory of the current situation in Nelson in terms of Airbnbs and B&Bs, and a collaborative process with key stakeholders including numerous meetings in order to develop an approach for Nelson. There will definitely be opportunities for public input.”
At a council meeting this month, Nelson resident Kevin Megale presented a detailed analysis of Airbnb’s impact on Nelson, and asked for action from council.
Megale said his family of four rents.
“I know four families among my personal friends who have been struggling to find a place to rent for the past year. Nelson families with children, families like mine.”
He said there are consequences.
“Young families and low wage earners are moving away from town because they can’t afford to live here. Long term community members who contribute actively are being displaced by low-budget tourists.”
Megale criticized council for not regulating Airbnbs.
“Some operators are outright profiteering, exploiting the sharing economy without fulfilling their responsibilities to the community … the consequence is severe distortion in the market for long-term rental housing for low and middle-income locals. This is already changing our community.”
Megale recommended that council start enforcing its bylaws this summer in a “gentle and conciliatory” manner that includes education, consultation, and eventual compliance. He suggested hiring a rental ambassador similar to the city’s water ambassador.