Queen Anne resident Denise Derr’s testimony in front of the city council’s neighborhood committee this summer was filled with the kind of one liners that seemed perfectly crafted to draw populist cheers of support from the packed crowd. After all, she had a winning Seattle cause—preserving neighborhood character. And she had the perfect villain, Airbnb, the high-profile company that, much like Uber, makes its profits in what is derisively known as the gig economy.
“Will the new sharing economy be a caring economy?” Derr, one of 200 Seattleites who showed up that afternoon, asked to the approval of committee chair and city council member Tim Burgess.
Burgess was proposing new, stiff regulations on Airbnb and other online short-term rental platforms that would cap the number of days that owners who don’t live on the property themselves can rent to short-term tenants—or possibly bar them from renting at all. Burgess, who bears the label of the stuffy conservative on the council, finally seemed to have a populist issue in hand. And the angry neighbors on his side.
Derr took the microphone to praise his proposal. His regulations, she said, would protect single-family neighborhoods from losing their charm to an impersonal networking concern like Airbnb. “Will non–owner occupied Airbnbs have a negative effect on the sense of community?” she asked rhetorically.
There was a smattering of polite applause for Derr, but it was the next speaker, Charlie Cunniff, in opposition to Burgess’s regulations, who brought down the house. A gray-bearded 61-year-old in owl glasses, Cunniff recently moved into a 600-square-foot place in Columbia City to scale back for retirement and to be closer to his grandchildren, leaving his Fremont duplex after 13 years.
Burgess’s regulations were aimed at people like Cunniff, who was now renting out the Fremont place short term through Airbnb. “Basically, it pays our day-to-day living,” the retiree later told me. “It’s how we keep ourselves going, food and gas and presents for the kids. Utility bills.”
The crowd, fired up in solidarity with Cunniff’s testimony, eventually earned a scolding from a frustrated Burgess after they jeered a city staffer who supported the proposal. The day hadn’t gone as Burgess imagined.
The ease and convenience of its online platform—hosts advertise short-term rentals with a cut going to the company—has allowed Airbnb to go from an experiment in the “sharing economy” to running in 35,000 cities around the world. There are about 2,900 hosts in Seattle, a fraction of which, like Cunniff, rent out units not in their home but at secondary, off-site properties they own.
Burgess frames his proposal in terms he hopes will endear him to Seattle’s left: Off-site Airbnb hosts are exacerbating the housing crisis by squandering precious long-term rental housing stock. “We have whole floors of apartment buildings that have been taken off the housing market,” he told The Seattle Times. “We have entire buildings that essentially have become hotels.”
The thing is, though, off-site Airbnb hosts don’t exactly fit the bill of a real estate spectator or corporate bogeyman.
No, Cunniff is practically a sitcom caricature of an old-school Seattleite: A former director of an environmental nonprofit and a retired city economic development bureaucrat, he first moved to Seattle in 1979 and ended up staying after he “met a girl and got a gig selling solar panels.” His girlfriend (now wife) worked at a bar in the 1980s and booked bands like Soundgarden.
The long line of hosts who showed up to testify against the proposal at that June 15 council hearing—including a lesbian couple saving for retirement, a West Seattle man whose job had been phased out, and a host who caters to families of cancer patients—not only defied the bad-guy stereotype and Burgess’s game plan, it upended the script in another important way.
Courtney Kaylor, an attorney representing Sea to Sky Rentals, which manages short-term rentals, capped her testimony with a line the council doesn’t hear too often: “Please tax us.”
Cunniff agreed. “The short-term genie is out of the bottle,” he told council. “Rather than fighting us,” he went on, gesturing to the crowd as it became apparent they were on his side, “ask the genie, all of us, for more money.”
The statement, which robbed Burgess of the moral high ground, is a reference to the tax that traditional hotels pay—an extra 7 percent convention center tax on top of the 9.6 percent sales tax that both hotels and Airbnb-style companies already pay the city.
Cunniff and his fellow Airbnb hosts were suggesting that rather than capping short-term rentals, a more sensible way to address the housing crisis would be to direct the tax revenue toward affordable units.
The idea appealed to other council members, including the youngest. Council member Rob Johnson later told me he’s trying to move Burgess away from the cap model and toward a revenue approach. “We need to recognize that this business isn’t going away anytime soon, so let’s find a way to assure we’re not legislating people out of business, and instead collecting revenue to help preserve and create affordable housing.”
Citing the crowd’s Don’t cap us, tax us testimony, council member Mike O’Brien asked if the city could also create a brand new tax. When a city staffer told O’Brien the city didn’t have that authority—state law doesn’t currently allow lodging taxes to subsidize housing costs—he drew some cheers of his own when he quipped back: “We can ask all these folks in the audience to come with us to Olympia.” (The proposal is now on hold until winter, after a second public hearing featured more mom-and-pop type hosts—this time decked out in lime green T-shirts that said “Save Seattle’s Short-Term Rentals”—telling stories about how important their Airbnb income had become.)
But the more fundamental flaw in Burgess’s effort to tie Airbnb’s business to the housing crisis appears to be the data. Airbnb says 87 percent of Seattle’s 2,900 hosts rent out of their own homes. It also says between just 165 and 300 units are in competition with other units on the long-term rental market. That’s a a minuscule fraction of Seattle’s housing stock of more than 320,000 units.
Low-income advocacy group Puget Sound Sage, which backs Burgess’s effort, estimates that the number will be much higher in just three years—between 1,000 and 1,600 off-site units—theorizing that the fastest growth in Airbnb’s business comes from hosts who manage more than one unit at a time. It’s more likely, they reason, that people who manage more than one unit have off-site properties.
But Airbnb spokeswoman Alison Schumer says Puget Sound Sage’s data “draws inaccurate conclusions that misrepresent our community.” Entrepreneurs who manage multiple properties, for example, may have portfolios that represent several individual on-site hosts. Airbnb contends that this may have skewed Puget Sound Sage’s guesstimate.
The fastest-growing segment of hosts, Schumer says, are senior women. Which leads to another key point: Seattle’s Airbnb hosts made $30 million in 2015. And Airbnb reports that 34 percent of hosts, the biggest group, spends the income on their mortgages and rents, while 36 percent make a yearly income below $79,000.
Short-term rental income is key to people like Robert Porter, a laid-off 55-year-old West Seattle host for VRBO, another rental platform. Porter spent his retirement money on a second property (a foreclosed home that had sat empty for four years) thinking he’d make the money back and live off the rental income into retirement. The cap the council is considering for off-site hosts—90 days—wouldn’t be enough to break even. “My job’s been phased out,” he told the council, and the rental “is the only way we can go forward.”
I asked Denise Derr, the Queen Anne resident who spoke in favor of council member Burgess’s proposal, why she felt so strongly about regulating Airbnb. She answered with a question. “Will a profit-motivated Airbnb owner who lives elsewhere vote to support our schools or plant a tree for future generations?”
Cunniff, who as one of Airbnb’s 2,900 Seattle hosts has helped bring 151,000 guests and $178 million into the economy in 2015, told me he’s always voted for the school levy and will continue to.
Remember, he’s happy to be taxed.