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Austin Can’t Learn To Share

Airbnb and HomeAway get sucked into the latest battle of Austin v. the sharing economy.

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Chad Baker/Jason Reed/Ryan McVay

Austin is involved with yet another battle concerning the sharing economy, this time aimed at hotel alternatives such as Airbnb and HomeAway. Last Monday, a conservative think tank filed a lawsuit against the city on behalf of seven homeowners that claims Austin is violating homeowners’ constitutional rights and the “tenants’ rights to the freedom of movement, privacy, and assembly.”

Currently, Austin requires short-term renters to pay a $285 application fee, fill out an application, pay a hotel tax, provide proof of insurance, and pass an inspection. This is fine. A valid critique of the sharing economy is that a handful of the companies believe that innovation, technology, and eschewing tradition are a pathway to minimal or no business regulations.

But earlier this year, the city cracked down even further on short-term rentals. There’s an occupancy limit to six unrelated adults; a prohibition of “outdoor assemblies” at night like concerts, parties, weddings; new enforcement actions on repeat offenders; and expanded authority to suspend and ban licenses. Additionally, the city is no longer accepting short-term rental applications with the goal that, by April 2022, Austinites who don’t live on a property full time won’t be able to use it as a short-term rental at all. As Dan Solomon pointed out back in March, people are generally ignoring the law and will probably continue doing so. But it’s unclear if Austin will let them continue getting away with it. During SXSW—which is Christmastime for short-term rental properties—Austin’s code department cracked down (a little) on violations

All of this seems like a relatively abrupt about-face. Back in 2013, city literature described flexible vacation rentals that could offer an “authentic Austin experience for visitors” and “a source of income for the property owner.” But the pushback against short-term rentals isn’t necessarily a quick decision to deprive residents of extra cash. A big part of the national debate around short-term rentals is that they displace residents and drive up rent and mortgages. This is a legitimate concern, especially in Austin, but companies like Airbnb and HomeAway aren’t the root causes of gentrification. Rent control and caps on short-term rentals are the logical protection for residents against an increasingly costly renter’s market, the latter of which was a part of Austin’s original ordinance.

It’s odd that a city so heavily infiltrated by the tech industry is having such an awful time regulating app-based companies. Austin just finished another chapter in its well publicized battle with Uber and Lyft. The transportation networking companies weren’t fond of being regulated like taxi cabs, even though, essentially, they are. When you consider the fact that New York City and Houston both require fingerprinting—the main source of contention—and the companies will almost assuredly never leave the Big Apple or H-Town, it becomes clear that these Uber and Lyft were bullying Austin. It’s in everyone’s best interest that these companies are reasonable and safe, and that’s where the governmental bodies step in. It’s not reasonable nor is it safe to resist background checks when instances of rape and sexual assault by Uber drivers has been documented not only in Texas, but across the globe

For the most part, it seems like Airbnb and HomeAway are relatively harmless. Airbnb has had widespread issues with racism, but that is more so a symptom of America at large rather than the company. So in this case, it seems that Austin is strong-arming these short-term rental companies and the people who use them, just like Uber and Lyft strong-armed Austin. There has to be a way for city government to make these companies work within the city on decent terms, not ban them or drive them away. By the same token, companies in the sharing economy need to come to terms with the fact that if they want to play at the big boy table, there are gonna be rules that they need to follow.

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  • SpartaCrumbles

    This is a nice synopsis of this issue.

    Austin has had a severe shortage of hotel rooms for a long time.

    And Austin city council was more than happy to turn a blind eye to Airbnb and such back then.

    Now that the hotel industry is building a ton of new rooms magically the city council feels it’s time to get rid of the competition.

    That’s exactly what this is.

    It’s local government doing the bidding of a powerful vested interest, at the expense of the rest of us.

    I love staying in Airbnbs. Why? Because I get to experience the neighborhood. Meet some actual neighbors. Go to some local neighborhood restaurants that otherwise I would have never known about.

    And the Austin regulations are sortof absurd. You can’t have groups of six outside? Even if they are, say, a nice pair of grandparents, three of their kids, and a grandkid or two? Sipping horchata and talking about the weather?

    Though the long term rental next door can have a keg party all night long, with 50 drunks there?

  • Asher B. Garber

    What we really need is a State tax, so Austinites don’t have to risk losing their homes as their prop values go through the roof.

    That’s the real issue, here. Neighbors turn in neighbors because they don’t want their homes to increase in value to point of no return.

    That’s happening on my street where modest homes are bought, torn down, and in their stead come 2-story, 2-unit townhouses which are then rented by the developers to students or short term folks.

    Should people of all types spend time on my street? Absolutely. But my street shouldn’t lose all of its current residents because none of us can keep up with the cost of living around here. We can see what’s happening on the other side of town. $1000/mo in property taxes = $12,000/yr. That’s just crazy. And it fuels both the STR support and detraction.

    P.S. State taxes are written off the Federal tax, so to most of us, this is a sum zero game. Time for a real tax revolution.

  • Patrick

    The idea of the sharing economy is zealously marketed by these tech startups. Take Uber as an example. The potential earnings they proclaim to be offering their “business partners”, the flexibility and “be your own boss” working atmosphere is very appealing to people. In turn people support and become vocal proponents of the idea without ever joining in or before they join in. There is the idea and then there is the reality. Once you sign up though, welcome to the 1099 economy. The reality is that you are signing up to be an independent contractor, thereby joining the ranks of the most vulnerable workers in the U.S. It’s a great deal for the company because in fact they don’t have to abide by the same labor rules that apply to and offer protection to actual employees. By minimizing their operating costs they can undercut the competition in whatever market they enter. In many cases It’s often a good deal for the customers because the service being offered is much less expensive. In turn, every customer who has downloaded the app becomes a potential lobbyist for the company and can be used for pushbutton astroturfing. It’s a good investment for the shareholders. Everywhere I look though, it seems like the workers end up getting shafted, time and time again. If an idea is so wonderful, let it stand or fall on its own merits. Seeking absolute dominance by persistently and arrogantly breaking the existing rules and regulations in every market they enter ultimately gives people the impression they are corporate thugs and bullies. Hiring high level lobbyists and mounting expensive campaigns to persuade local politicians and the populace…of what?, the inherent, self evident “rightness” of every shady, questionable tactic they engage in? Because why? I have heard it said that Uber is a wonderful idea that has been horribly executed. I personally question if there is any actual disconnect between the idea and the form in which it is being implemented. Steering vulnerable, uninformed people into subprime auto loans so that they can become Uber drivers, then absolving themselves of any responsibility when, after a series of fare reductions their “business partners” realize they are driving full time just to make these usurious car payments. Even worse, thousands of these drivers have had their cars repossessed.

    • jk

      tl;dr

      • biff

        Go shill somewhere else.

      • Patrick

        tl;dr- Too late doctor? Too late; drive? (As in; resistance is futile, you are destined to become an Uber driver) Had to google to find out it means “too long; didn’t read”

        • jk

          My broader point was that this same type of anti-Uber diatribe has been posted ad nauseam in the comments section of nearly every article that even *mentions* the company. As is nearly always the case, you regurgitate the same propaganda posited on sites like Uberpeople.net, regardless of the actual *facts* of the matter. A few cases in point:

          “The reality is that you are signing up to be an independent contractor, thereby joining the ranks of the most vulnerable workers in the U.S.”

          Two-thirds of Uber and Lyft drivers have full-time-salaried jobs elsewhere and merely drive in their spare time to earn some extra pocket money. The majority of the remainder are either college students or retirees, both of which receive benefits elsewhere as well. Nearly all taxi drivers, on the other hand, work full-time — actually, more like an average of 55 hours per week — and are also classified as independent contractors (and have been for decades), which begs the question why you’re singling out Uber. (I’ve also noticed that Lyft is virtually nonexistent from these anti-Uber diatribes, despite proffering a nearly identical business model.)

          “Seeking absolute dominance by persistently and arrogantly breaking the existing rules and regulations in every market they enter”

          That was true … in 2013. Now? Uber and Lyft are fully legalized in EVERY domestic market in which they operate, and they’re subject to a litany of rules, regulations, fees and taxes in each locale, much like taxis are. Further, they are ADHERING to all of those laws, AFAIK.

          As for them “arrogantly breaking the existing rules” in new markets they enter: has it escaped your attention that the city officials in all of these markets have *agreed* with them in the end, and acknowledged that their existing ground transportation regs — which were designed for taxis in nearly every case — were outdated and a poor fit with U/L’s service offerings?

          “Hiring high level lobbyists and mounting expensive campaigns to persuade local politicians and the populace”

          1. Austin is the only market where they’ve run any sort of public campaign. Even Uber & Lyft will tell you it was a disaster, and one they don’t intend to repeat.

          2. Uber’s “high level lobbyists” haven’t exactly accomplished much … because the taxi lobbies in every given state and major city are VASTLY more experienced in greasing the wheels in America’s City Halls and legislatures. They’ve been at it literally for decades now! And if you think Uber drivers somehow have it rougher than anyone else, I’d strongly suggest looking into the reality of the modern American taxi driver’s life. Taxi-franchise owners hold ALL the control, and consequently taxi drivers are *lucky* if they net $25K a year — and that’s from working the aforementioned 55 hours per week.

          “Steering vulnerable, uninformed people into subprime auto loans”

          …a program that lasted only a few months, and was only offered in a handful of states. I completely agree that it was a terrible idea, but the notion that it was ever “the norm” at Uber is a total crock.

          Anyway, my point is that you’ve scapegoated Uber to the point of caricature, making out Travis Kalanick to practically be Satan incarnate. The fact that you wholly exclude Lyft in your rant only further supports the notion that you’ve singled Uber out as the personification of Corporate Evil. Worse, I’m guessing you don’t have a single *clue* that you’re being 100% PLAYED by America’s taxi lobbyists, who’ve been engaged in an unambiguous propaganda campaign against Uber for over three years now. (They run the whosdrivingyou.org website, among other things.) Worse, you’re being played by a group that’s an order of magnitude WORSE than Uber!

          • Patrick

            I happen to know that Uber continues to operate in flagrant, defiant disregard of local law on a daily basis all over the world. It’s easily documented by going to numerous reputable online news sources. Take Honolulu International Airport as just one of a multitude of such examples. On June 9th, Uber unlocked access to the airport, allowing their drivers to make curbside pickups despite having no agreement with the airport or any other transportation regulatory entities. Drivers can opt out of accepting these fares, but if they accept and are caught breaking the law, it is they who are liable for the 500 dollar fine, not Uber management. You seem to agree with Uber that it is okay to be selective about which laws one must comply with, in anticipation that somewhere down the road the lawmakers will have an epiphany and suddenly realize that it was a bad law in the first place. As harsh as the reality of making a living as a full time taxi driver may be, how much harder might it become now that they are competing with drivers who operate under a different, more lax set of rules, or in complete and utter disregard of the existing rules. You portray this unruly corporate behavior as the rare exception rather than the rule, but I see things rather differently due to Uber’s aggressive modus operandi which continues in operation to this day. Do your research to remain current and up to date on the facts, as bothersome as that may be. Xchange Leasing LLC is a wholly owned subsidiary of Uber that was started in July of 2015. The article that I read on June 3rd of this year reported that, led by Goldman Sachs, a group of Wall Street financial entities have loaned them a billion dollars to finance subprime auto loans so that those with a poor credit history or no credit history at all can obtain a new car to become Uber drivers. Take a look at the terms of those loans in regards to the drivers, then take a look at how Uber has no legal obligations under the agreement. Time will tell, but I have read reports from reputable sources, (including current and former Uber drivers), that these loans are just not working out for many part time or full time Uber drivers. I do my own research and speak for myself. You may agree or disagree with me, but I would hardly describe my words as a “diatribe” consisting of an “ad nauseum regurgitation” of taxi industry lobbyist propaganda. (I used no upper case letters or exclamation points). Having been a full time taxi driver for 13 years, believe me, I am fully aware of the reality of it. On a year to year basis it is a struggle, sometimes there are just too many cabs on the road. It affords me a humble existence, one in which I am able to pay for the basic necessities of life and meet my financial obligations, which is all I ask for. There is a fundamental dignity in that which enables me to deal with the stress and indignities inherent to the job, and that dignity sustains me in my interactions with my numerous passengers, many of which are quite challenging. I don’t think Travis Kalanick is a demon, I just think he is very far removed from the harsh economic realities of existence that the vast majority of us working class people face and our ongoing struggle in the current tenous economy. He may be so far removed that he is able to disregard us entirely. He speaks quite adequately and articulately for himself though. Peace and goodwill to you and yours.

          • jk

            “I happen to know that Uber continues to operate in flagrant, defiant disregard of local law on a daily basis all over the world.”

            And I happen to know this is brazen hyperbole, and that you apparently believe exceptions make the rule.

            “Take Honolulu International Airport as just one of a multitude of such examples. On June 9th, Uber unlocked access to the airport, allowing their drivers to make curbside pickups despite having no agreement with the airport or any other transportation regulatory entities.”

            Okay. And? (You said “all over the world.” Honolulu is one city.) I don’t endorse this activity, but you’re acting as if a class-C misdemeanor constitutes some sort of gross injustice. And btw having *been* to Honolulu, the only injustice I encountered at the airport was the obscenely high fares charged by the local taxi cartel to the Waikiki vicinity.

            “Drivers can opt out of accepting these fares, but if they accept and are caught breaking the law, it is they who are liable for the 500 dollar fine, not Uber management.”

            Okay, you lost me. If drivers can opt out with no penalty — but *knowingly* decide to break the law regardless — why on earth would Uber be responsible for the fines they incur?? (Also, $500 sounds awfully high. You sure that’s the *actual* fine levied, or is merely the potential maximum?)

            “You seem to agree with Uber that it is okay to be selective about which laws one must comply with, in anticipation that somewhere down the road the lawmakers will have an epiphany and suddenly realize that it was a bad law in the first place.”

            Not in the least. I was merely pointing out that Uber has made its peace with local officials in the vast majority of American markets, and is now operating entirely within the scope of the law. As such,

          • Patrick

            Please continue. I will respond as time and energy allow…

          • wessexmom

            One doesn’t have to be “played” by the Taxi interests to see the problems/issues with UBER’S business model/mo. After they agreed to fingerprint their drivers, they should fingerprint THEIR DRIVERS!
            They meet NYC’s stringent requirements because they HAVE TO in order to operate there! They can do the same in Austin, Houston, Dallas, etc. to meet public safety requirements. Pretty soon, they’ll be obsolete anyway.
            And yeah, Kalanick IS a nasty jerk–THAT’S common knowledge.

        • PeterTx52

          took uber thursday nite in Dallas. the driver does it part-time in the evening as he has a FT 8-5 job.
          saw an article the other day that said there were over 10,000 uber and lyft drivers in Austin while there were only 900 cabs. DWI arrests are up as a result of both companies leaving Austin. with uber and lyft in place DWI arrests had dropped because it was so easy to get a ride.

          http://www.vocativ.com/327333/a-world-without-uber-dispatches-from-austin/

          http://reason.com/blog/2016/06/21/austin-after-driving-out-uber-and-lyft-l

  • jk

    “A big part of the national debate around short-term rentals is that they displace residents and drive up rent and mortgages. This is a legitimate concern, especially in Austin”

    Driving up rents/mortgages and reducing housing supplies are legitimate concerns, but the problem is that short-term rentals (STR) are NOT having this effect, at least not in Austin. The city’s own data show that the percentage of STRs run by absentee owners is well under 5%. The overwhelming majority of them are not only owned by fellow Austinites; they’re also frequently rented by Austin newcomers who are looking for a place to live permanently but can’t find anything suitable because the city’s housing market remains so overheated. Even in the parts of town with the largest percentage of STRs, their effect on the broader housing market has been negligible at best.

    “The transportation networking companies weren’t fond of being regulated like taxi cabs, even though, essentially, they are.”

    Um, no, they’re not. SuperShuttles have more in common with taxis than TNC, actually. Nearly all taxi drivers work full-time (actually, the national average is 55 hours per week); 80% of TNC drivers work fewer than 20, and the overall average in Austin is 12 hours per week. Further, nearly two-thirds of Austin TNC drivers already have full-time-salaried jobs elsewhere, and drive for the TNCs simply to earn extra pocket money. Also, taxi vehicles are purpose-specific commercial vehicles that cannot be driven for personal use under any circumstances; TNC cars are, obviously, the opposite. The city of Austin strictly limits the number of taxi permits issued, as does nearly every other American city (which is one of the industry’s biggest problems); in contrast, neither Uber nor Lyft has any restriction on the number of drivers who can use the platform, nor have any *cities* imposed any limits.

    In any event, the crux of the Austin contretemps was the question of whether TNC drivers should undergo the same fingerprint-based background checks that taxi drivers do. And the fact of the matter is that there is no proof whatsoever that print-based checks are superior to the electronic background checks the TNCs have been using for five years now. Not only that, the little evidence that *is* available points to the opposite conclusion: print-based checks are likely *inferior* to electronic checks on whole, mainly because the national FBI database (through which all prints are run) is woefully riddled with erroneous entries and incomplete data. A conservative estimate is that a full 25% of fingerprints taken by local law enforcement never make it into the FBI database AT ALL!

    “it becomes clear that these Uber and Lyft were bullying Austin.”

    Seriously??? The only thing “clear” here is the author’s bias on the subject. (Since when does TM report opinion in lieu of fact?) Their purported “bullying” only came after the Austin City Council decided to rewrite the TNC rulebook barely three months after the previous Council did so. Oh, and were you even aware that Uber and Lyft spent SIX MONTHS working with a Council-appointed group of stakeholders to hammer out Austin’s original TNC ordinance? It passed 6-1 and wasn’t supposed to be revisited until after a full year had passed, but newly elected council member Ann Kitchen — whose campaign was well-funded by the taxi lobby, by the way — decided to bring it up barely six *weeks* after she assumed office.

    “It’s not reasonable nor is it safe to resist background checks when instances of rape and sexual assault by Uber drivers has been documented not only in Texas, but across the globe.”

    1. At no point has Uber or Lyft “resisted background checks.” They’ve argued, with *very* good reason, that the electronic checks they use are at *least* as good as print-based checks.

    2. Uber operates in over 70 COUNTRIES around the world, and offers over two million rides PER DAY (and well over a BILLION to date). How you think you can draw reasonable inference about Uber as it exists in *individual* markets based on its GLOBAL history is beyond me, given that it quite literally has 100x more drivers than any other ground transportation network in global history.

    Finally, it would’ve helped to look at documented sexual assault claims IN AUSTIN, given the inherent impossibility of drawing any firm conclusions based on what may have happened 10,000 miles from here. In 2015 a total of seven alleged sexual assaults by TNC drivers took place, and five were purportedly committed in taxis. As is often the case, the numbers don’t tell the full story, which in this case is the fact that Uber and Lyft provided AT LEAST four times as many combined rides as Austin taxis did. To put it another way: the PER CAPITA sexual assault rate in taxis is *considerably* higher in taxis than TNCs.

    But hey, don’t let facts get in the way of your diatribe against Uber!

    • ChknBttrBscts

      ^ I second all of the above. I would also just like to say that this article is not up to TX Monthly standards. TX Monthly is my favorite publication. This article is poorly written and poorly edited. Aside from the obvious bias, and the sweeping pronouncements with absolutely no supporting facts — is it too much to ask that glaring typos and grammatical errors not make it onto the website?

  • Gwen O’Barr

    This is about a “hotel like” use in a residential area. Businesses with no owner on premises are not residential usage. If you want no zoning regulations, then move out of the city limits. If you get a pig farm next door, tough luck, as there is no zoning use laws in the county. It’s also obvious that you don’t live next to a Short Term Rental 2. This is a propaganda piece, not reporting.

  • PeterTx52

    the problem is that Austin doesn’t want to grow up. the housing situation (homes and rentals) is easliy solved by allowing for greater development. but that won’t happen because the liberals in Austin wish to keep it weird.

  • Grace Renshaw

    Short-term rentals violate both the principle and the sanctity of residential zoning. Far from being the “sharing” economy, they’re thoroughly undemocratic–only a small percentage of people, most of whom are investors, can operate what amounts to a hotel with no desk clerk to police guests in residential neighborhoods where transient guests present an unacceptable risk and where guests’ “what happens in Austin stays in Austin” behavior makes permanent residents miserable. Enough already with the “sharing”–what about the 100% of us who bought our houses based on the assumption that residential zoning meant that your neighbor couldn’t open an all-night business right next to you?