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Short-Term Rental Update: Sonder now worth $1 billion after its latest funding round; commercial tax rate could quadruple short-term rental tax bills

Sonder Reaches Unicorn Status
("Airbnb competitor Sonder says after new funding round it’s now worth $1B," Real Deal - LA Real Estate News on Jul 11, 2019)
Congratulations is well-deserved for Sonder, which just completed a $210 million funding round for a total $1 billion valuation, launching the short-term rental platform into so-called unicorn status. Sonder relies on an asset-heavy model that draws some comparisons to WeWork, which also leases space, outfits them and then rents them to end users. Owning significant real estate assets brings a certain amount of risk, but one way in which Sonder appears to be mitigating against that risk is by partnering with real estate developers on new projects. A reported $15 million of the latest round of funding comes from equity provided by development partners.

Commercial Tax Rate Could Quadruple STR Tax Bills
("Airbnbs are commercial properties, assessor says. The fallout could be huge," Colorado Springs Business Journal on Jul 11, 2019)
The Colorado Springs business journal reports “an explosive move with potentially devastating consequences for some” relating to plans by the El Paso County Assessor’s Office in Colorado to tax short-term rentals as commercial properties. There is a long list of potential problems with categorizing the properties as commercial instead of residential, including mortgage implications, utility rates, insurance coverage questions, tax planning consequences and violating homeowner’s association regulations. The financial burden of imposing a commercial tax rate on owners of residential STRs could be significant—the residential assessment rate is 7.15 percent of assessed value, whereas the non-residential assessment rate stands at 29 percent, meaning property tax bills on STRs could quadruple.


Other news: 

Industry News

Airbnb, Under Attack in New Jersey, Seeks a New Ally: Voters
International Herald Tribune Reuters business on Jul 17, 2019
One of the most popular lodging choices for visitors to Manhattan is not actually in New York City. 

Regulation & Legal Developments

Airbnb Offers Greater Price Transparency in Europe After Regulatory Threats
Skift Travel News on Jul 12, 2019
Once again — and this time it’s the issue of pricing transparency in alternative lodging — European regulators are out in front of their counterparts in other parts of the world, including those in the United States. 

Henderson OKs short-term rentals in neighborhoods
Las Vegas Review-Journal on Jul 16, 2019
The Henderson City Council voted unanimously Tuesday night to allow the operation of short-term vacation rentals in residential areas. The move sets Henderson apart from other Las Vegas Valley municipalities, which either do not allow or have voted to limit short-term rentals such as those on Airbnb. “We have to do something to be able to regulate these,” Ward 4 Councilman Dan Stewart said during the committee meeting. “We can’t do it right now. If we just don’t do anything, we’re just sticking our heads in the sand and it’s just going to keep being the way it is.”

Lubbock taking steps to regulate short-term rental houses
Lubbock Avalanche Journal - News on Jul 14, 2019
Lubbock has no regulations specific to short-term rental houses available through websites like Airbnb and HomeAway, but that will soon change. When city leaders discussed this earlier in the year, their responses were to wait and see what comes out of the state ...

RealtimeCampaign.com Promotes Short Terms Rentals Toronto Has to Offer
MarketWatch - All Company Press Releases News & Commentary on Jul 18, 2019
It can be tough to find short term rentals in Toronto, but this isn't to say that it isn't doable. It's important not to give up or compromise on what you want. 

Woodstock hashes out where to go with homestays
Valley News - News on Jul 14, 2019
Nancy Hoblin can’t help noticing all the vacationers coming and going to the rental property near her home on High Street in Woodstock. And she’s not thrilled about it.

Airbnb host narrowly clears hurdle in First Amendment claim against city
The Real Deal - New York on Jul 9, 2019
A Brooklyn Airbnb host who claimed he was unfairly targeted by the city in retaliation for his advocacy will move forward with a civil rights lawsuit after a U.S. District Court judge dismissed some of his claims but declined to throw out the suit in full.

Pennsylvania Supreme Court Clarifies Transient Rental Law
Attorney Rates & Arrangements on Jul 8, 2019
This decision is of vital importance, considering the proliferation of short-term rental offerings, with marketing streamlined by websites as Airbnb and VRBO.

Short-term rentals are popping up all over Utah. Many cities don’t know how to handle them
Salt Lake Tribune News on Jul 8, 2019
Dale Carlile sees himself as an honest man. But sometimes, honesty doesn’t pay. After moving to Utah from Oregon two years ago, Carlile decided he wanted to enter the short-term rental business. Others advised him to run his operation under the radar, because obtaining a license would be too difficult.

LA’s new Airbnb rules bar short-term rentals of second homes and some apartments
Star Online - Tech on Jul 5, 2019
New restrictions on Airbnb and similar services in Los Angeles went into effect this week, driven by complaints that an explosion of short-term rentals has turned apartment buildings into hotels and pinched the city’s already tight housing supply.

Enforcement

Astoria gets better grasp on homestay lodging
Daily Astorian on Jul 12, 2019
For some, it is an annoyance. Others complain it feels like robbery. Fair to say opinions are mixed over Astoria’s new homestay lodging license. The license, which allows people to rent bedrooms in their homes to tourists, went into effect this year. 

That loud party in Scottsdale may cost you up to $1,500 if proposed city rule passes
AZ Central - Arizona Elections on Jul 11, 2019
Two years after a state law limited cities from regulating short-term rentals, Scottsdale may crack down on parties that become a nuisance. A proposed ordinance will hold property owners accountable for repeated unruly gatherings or parties on their properties — including short-term rental owners.

Attorney accused of gaming Denver's short term rental rules
KUSA 9 News on Jul 8, 2019
A Denver man has been charged for illegally running a short-term rental business, the Denver District Attorney's Office announced. Aaron Caleb Elinoff was charged Friday with one count of attempting to influence a public servant, the DA said. 

Reports of Illegal Airbnb-ing in San Francisco Continue to Drop

SocketSite on Jul 8, 2019
The number of formal complaints related to illegal short-term rental activity in San Francisco has continued to drop, with around 130 complaints lodged in the first half of 2019, which is down nearly 30 percent versus the same time last year and 60 percent fewer than the roughly 320 lodged.

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We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.
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