News

Neighbors resolve conflict over potential Airbnb rental

Crescent Park home was to be rented to up to 14 people, but owner has reconsidered

A Palo Alto property owner's idea to turn his Crescent Park home into an Airbnb rental set off a maelstrom of protest last week, becoming perhaps an object lesson on the forces of commerce that some say are harming single-family cohesion in the city's neighborhoods.

Gordon Stewart, who grew up in his mother Betty's three-bedroom, two-bath home and inherited the residence, was having a hard time finding a family or suitable single renter to lease the home at 1245 Lincoln Ave. So he approached his neighbors with a new idea: to lease the home to two men who would sublet the home for Airbnb rentals.

Instead, neighbors circulated emails and wrote complaints to the city, culminating on Tuesday, Oct. 4, with protests before the City Council.

Stewart did an about face after he received a letter from the city notifying him that by city law he cannot rent the house out for stays of less than 30 days. At the council meeting, he expressed remorse for upsetting his neighbors.

Stewart did not know that what he was doing was illegal, he said. He thought he was helping to reduce a crisis by providing affordable housing for young workers employed by one of the city's burgeoning technology enterprises, he said.

But the city's letter outlined specific regulations that he and others who seek to rent out their homes in the short term cannot ignore.

The municipal code, for instance, defines rentals for less than 30 days as hotels, motels and dormitories, which are not allowed in single-family, R1-zoned neighborhoods.

In addition, hotels and other transient-occupancy uses are subject to the city's 14 percent transient-occupancy tax.

Stewart told the City Council that he has made peace with his neighbors; the proposal is off the table. Many of those neighbors are now helping him to find a suitable family to lease the house. He is asking for $6,000 a month.

But residents told the council Tuesday that the city must develop a concrete strategy and, potentially, additional ordinances, to rein in transient rentals such as those on Airbnb.

Though the council discussed the issue in March 2015, it declined to take any action, with members deeming the problem not urgent enough. City Manager Jim Keene indicated that city staff would monitor the situation for a year, but short-term rentals have not been placed on the council's agenda since then.

Stewart has rented the home to families since 1998 and he has never had a problem, he said. But a downturn in the rental market took him by surprise, he told the Weekly on Friday.

He typically leases the home out for a minimum of a year to 18 months. But recent ads haven't gotten much traction, he said. Then two men, one who already rents out rooms on Airbnb and the other a real estate agent, approached him for a master lease and offered to leave the worries to them to sublet the house on Airbnb.

But his neighbors, who said the plan was to add four or five beds to each bedroom, balked at the idea of up to 14 strangers potentially rotating through the home every few days.

"The problem we have with greedy actors seeking to take advantage of Airbnb is not over," said Azadeh Malek, a neighbor. "We're facing predators looking for single-family homeowners in our desirable neighborhoods and homeowners willing to let them do so."

A family is generally defined as an individual or a group of persons living together as a "housekeeping unit," she said.

"Anyone with common intelligence knows that finding 14 people on Airbnb, each at a different time and at different terms who come to a three-bedroom, two-bathroom house to simply rent a place to sleep, who are not a static group of persons but an ever-changing array of individuals who may not even know each other by name, cannot possibly be construed as a bonafide housekeeping unit," she said.

Another of Stewart's neighbors, Dawn Billman, said on Friday that she is helping him to find a renter. She acknowledged that Palo Alto has a housing problem, but she doesn't see short-term rentals that last only a few days or weeks as a solution.

"As a community we need to thoughtfully look at the changes taking place," she said.

Billman has heard from many people throughout the city who have experienced large numbers of transient renters in their neighborhoods, she said. She doesn't have a problem with families renting out a room to supplement their income, and she thinks it offers an opportunity for visitors to experience what Palo Alto is about.

But the constant comings and goings of so many short-term renters ultimately hurts the community, she said. Such transient renters aren't contributing to the fabric of Palo Alto -- to its schools and government -- and that erodes Palo Alto and its neighborhoods, she added.

The solution must come from the city, she and others said.

"This is an issue that needs to be carefully looked at in the Comprehensive Plan. Airbnb did not exist the last time the city put that document together," Billman said. "As a community, that needs to be looked at as we prepare the next one and we need to think about what the city will look like in 15 years."

Stewart and some Crescent Park residents have a different take.

"Palo Alto has a huge housing problem. I thought I would actually help balance that," Stewart said.

One resident who spoke at the City Council meeting echoed similar views.

People are rightly concerned about noise, traffic, parking and unknown people in their neighborhood, an Addison Avenue man who identified himself as David said. But his mortgage and property taxes makes it necessary to rent out his six-bedroom home, he said.

He rents to visiting families and corporate groups when he and his family are out of town. And it's becoming a way of economic survival in the city, he said.

"I'd be concerned that you don't accidentally hurt Palo Alto families that are increasingly relying on Airbnb to get by," he said of any additional regulations. "In our case, it allows us to supplement our family income and allows us to take part in this community."

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Comments

55 people like this
Posted by price
a resident of College Terrace
on Oct 7, 2016 at 6:49 pm

"Gordon Stewart...was having a hard time finding a family or suitable single renter to lease the home."
I suspect that this would not be a problem if he reduced the rental price the the prevailing level (easy to gauge by using Craigslist). It's good that he was up-front about his Airbnb plans; not all Palo Alto residents are such good neighbors. Airbnb rentals are a huge problem in SF (they both reduce the housing stock and hurt hotels) and will undoubtedly have similar effects in Palo Alto if the 30-day rules are not enforced.


20 people like this
Posted by Jay
a resident of Menlo Park
on Oct 7, 2016 at 7:17 pm

I have a friend who has been renting out his rental property in SF thru Airbnb for just over a year. The way he gets around the city limit is to have his "great renters" text him personally and not go thru Airbnb. So far it's worked out great for him and he's getting almost double what he could rent it for month to month. Also, he raises the rent on days with holidays and special events in SF. I see this as a huge problem for cities and people who want to rent long term.


15 people like this
Posted by Todd
a resident of Another Palo Alto neighborhood
on Oct 7, 2016 at 8:38 pm

Clearly his first mistake was announcing his intentions to his neighbors!


54 people like this
Posted by Ed
a resident of Downtown North
on Oct 8, 2016 at 11:49 pm

Airbnb should be subject to the same regulations and taxes as any hotel, because that's exactly what they are. No sympathy for owners trying to be hip, stuff their pockets with cash, and let their neighbors bear the brunt of unaccountable transient tenants.


48 people like this
Posted by Reading the article gives a clearer picture
a resident of Another Palo Alto neighborhood
on Oct 9, 2016 at 8:20 am

If I'm reading this correctly, this gentleman grew up in and inherited a 3bed/2bath home here, and is now seeking to rent it out for 6k/month. Rather than considering lowering the rent (which would doubtless still provide a tidy profit on a home purchased decades ago with locked-in property taxes as an inheritance), he wanted to turn to Airbnb short term rentals.

I am unclear how this situation could represent "helping to reduce" housing challenges for people who live and work locally, as he apparently stated. It may indeed be the best way for him to maximize his profit, but landlords in this situation should at least own up to that as the motivation.


14 people like this
Posted by xPA
a resident of another community
on Oct 9, 2016 at 12:51 pm

Let's see that house has property tax bill of $2300/year.
So the house adds a little more than $1000 a year to the schools system.
Renting the house to a family with kidss adds about a $30,000/year burden to the school system.

I think the AIRBNB solution is a better for everyone.


1 person likes this
Posted by Republican
a resident of Green Acres
on Oct 10, 2016 at 7:30 am

Its a shame that the neighbors influenced his decision. AirBnB rental is a great way to travel and if Palo Alto neighborhoods would be more open to the idea, they would find the experience of having visitors to the neighborhood both enriching and diversifying. Too bad this opportunity was crushed so easily.


10 people like this
Posted by Be positive
a resident of Leland Manor/Garland Drive
on Oct 10, 2016 at 7:41 am

Be positive is a registered user.

@republican, in this instance, the intention was not to rent to "visitors". It was to rent to 14 separate individuals who work in Palo Alto and perhaps live elsewhere.


28 people like this
Posted by Marie
a resident of Midtown
on Oct 10, 2016 at 9:33 am

Marie is a registered user.

Rents always go down in the fall and up in the spring as people with families look for housing before the beginning of the school year. One answer is to reduce the rent and rent only for 6-8 months. He will be able to get more next spring.

As someone pointed out, if he drops the rent, he will find a renter. It really is not necessary to get the maximum possible rent. I have one rental, and I always try to rent under the market so I can be picky about who I rent to. I favor those with one car, for example, and people who will be long term renters. Having a child in the PA school system is a plus. I also try to keep to no more than a 5% rent increase and often less. Long term stable renters who take good care of my property are of far more interest to me than maximum rent with expensive repairs on the back end.

I think allowing air bnb rentals with no regulation is a mistake. I was at the 2015 meeting where the city council did nothing despite residents giving specific instances of the difficulties resulting from irresponsible renters (wild parties, trash in the street, etc.) The city staff spoke only on their efforts to collect the transit tax through air bnb which they felt were about to be successful. That is, if they could get more tax revenue to support their salaries and very expensive employee benefits, they did not mind the fact that short term rentals are not allowed under city code and that any problems could be solved on a complaint basis, like so many other code violations.

This pits neighbors against neighbors. One of the city residents said that the city staff accepted the the party goers were all friends of the owner and refused to check out air bnb ads. The resident had to do all the footwork to prove the house was used as a short-term rental. It took almost a year to get the owner to stop participating in Air bnb.

If the city decides to allow short term rentals, it needs to be upfront and set regulations in place to prevent rentals with five people to a room, 14 cars clogging residential streets and wild parties. Many Air bnb rentals are normal occupancy that do not disrupt a neighborhood. Responsible regulations could prevent the egregious dormitory situations. But it is not fair to expect residents to have to be the enforces of code violations.


25 people like this
Posted by R-1 housing
a resident of Another Palo Alto neighborhood
on Oct 10, 2016 at 12:28 pm

Thank you Marie for your post. You are so right to point out that the city should not be pitting neighbor against neighbor. The city needs to look at short term rentals that extend over 30 days because that kind of turnover is still too short.

No to many multiple beds in a room
No to unlimited tenants in a R-1 house
No to multiple cars at one R-1 house

It doesn't make sense that a motel is restricted from how many occupants are in one bedroom but a homeowner can stuff his/her house with as many tenants as they want to. And have as many cars as they want to. Boarding houses should be restricted to a limited number of tenants and limited number of cars.

If


Like this comment
Posted by Todd
a resident of Another Palo Alto neighborhood
on Oct 10, 2016 at 1:32 pm

All the more reason to keep your intentions to yourself, you think these sorts of neighbors will suddenly lose interest in the how many beds or cars you have as long as your tenants stay more than 30 days? Of course not, they need a firm reminder that it's absolutely none of their damn business.


15 people like this
Posted by Be Positive
a resident of Leland Manor/Garland Drive
on Oct 10, 2016 at 8:26 pm

Be Positive is a registered user.

@todd - to use this rental as an example, it is on a street right off of University. There is no parking on University and it is on the block directly off of it. I think there are about 3-4 house on each side of the street in that block. Room for amy 10 cars total in addtition to driveway parking. So where are those 14 people going to park? There is room for 2 in the driveway.


21 people like this
Posted by Dreadful Idea
a resident of Midtown
on Oct 11, 2016 at 12:32 pm

Dreadful Idea is a registered user.

We have a neighbor who inherited a nicer, larger home recently, and has started renting out his house.

The problem is that it is a 3- bed, 1- bath house, but because he converted the 1-car garage, he is calling it a 4- bed- 2- bath house.

The garage has no windows, a space heater, no closet, and a commode.

The house has a front yard, but no side or back yard-- not even a patio, and no parking area.

The owner is getting $7800/month for this dump! It requires a bevy of roommates to pay the rent-- some full-time, some temporary. Some sleep in the living room, some in the den as well as the bedrooms and garage.

I'm thinking this can't be legal-- but I have no clue who to notify. The living conditions for about half of these renters are abominable, and not too great for the rest-- all share ONE small bath!


7 people like this
Posted by Gale Johnson
a resident of Adobe-Meadow
on Oct 11, 2016 at 6:32 pm

I hope this puts the nail in the coffin of the idea that ADU's won't be used as an income source by Airbnb landlords/owners. Kill it now. Tackle the housing shortage issue in the right way. This is not the right way.


30 people like this
Posted by Jason
a resident of Palo Alto Hills
on Oct 12, 2016 at 7:39 am

Airbnb is a legitimate and effective way for our citizens to extract the maximum amount of value from some types of local properties. It's disappointing to see city regulations, and the residents that make them possible, hurt all of us by reducing the value of our housing.

-Jason


9 people like this
Posted by Neighbors
a resident of Menlo Park
on Oct 12, 2016 at 9:01 am

I think we should be applauding these neighbors for working things out. It is disappointing when folks feel they cannot rely on common courtesy and have to rely more and more on regulations to govern behavior. Here's to good neighbors, hope we all can appreciate ours. Have a nice day!


9 people like this
Posted by Mark
a resident of Crescent Park
on Oct 12, 2016 at 11:12 am

Are neighborhoods mere assets to be strip-mined for individual gain? Alternatively, is there value in neighborhood cohesiveness and the relationships they support?

What is the role of zoning? Hotels are not allowed in residential neighborhoods for a reason.

When homes are rented on a transient basis, impact on infrastructure is increased, relationships are negatively impacted, and much is lost, except for increased cashflow to the owner. As I see it, the tradeoff is not worth it. Furthermore, ABNB is not a solution to a housing shortage; it's a classic workaround to a larger problem that needs a different solution.

Let's not destroy the good things we have - that can't be accounted for on a balance sheet but add social and emotional value to residents and families.


6 people like this
Posted by interesting
a resident of College Terrace
on Oct 15, 2016 at 1:40 pm

It's interesting to hear that rentals of less that 30 days are prohibited in Palo Alto. Sounds like they should shut down "Rentashare" which provides dorm-style housing (6 bunks/room) in residential neighborhoods that can be rented by the Day, Week or Month. They're essentially operating youth hostels but not paying hotel taxes.


Like this comment
Posted by Downtown Resident
a resident of Downtown North
on Jan 17, 2017 at 10:00 pm

I think you got it wrong. If its over 30 days you don't need to pay a hotel tax. Not sure how thats avoiding tax.

You're stating inaccurate info.


Like this comment
Posted by Jane Soros
a resident of Downtown North
on Jan 23, 2017 at 1:59 pm

Actually Rentashare Palo Alto is within the code. They provide stays for 30 days or more. Ive stayed there on the interim for a month before moving into my new home.


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