Louisville tells Airbnb homeowners to stop

Some Louisville property owners renting out space in their homes to travelers through popular online home-sharing sites have been told by metro government they are operating illegal hotels or motels and need to stop immediately or risk significant fines.

Several owners and their attorney want to work with the city to find a solution, and they said they are not opposed to regulations, paying a fee or purchasing a license.

But one host who uses the Airbnb home-sharing site, which lists more than 400 properties for short-term rental in Louisville alone, said there is no flexibility in the city's letter — they are ordered to "cease immediately."

"There was no option for improving or registering or changing," said Amy Linfield, who rents out a furnished duplex she purchased next to her house off of Southern Parkway.

The city could fine them heavily — up to $500 a day — if they do not stop, according to the letters some operators received.

"This is not accommodated by our zoning ordinance and as such is in violation of our zoning ordinance," said Jim Mims, the former director of codes and regulations who is now head of the city's Develop Louisville office. If the property is not leased for a term of 30 days or more, "it becomes somewhat of a hotel," he said. But the lodging does not meet the definition of a hotel either.

Mims, private attorney Alex Davis and his clients who rent through Airbnb agree Louisville codes do not address short-term rentals.

The city sent out 20 notices of violation, which Mims said originated from complaints. However, none of those citations are near a point where property owners could be fined.

"It certainly scared me and upset me," Linfield said and added it was "a blow" after they spent almost $40,000 improving the property.

Metro government is early in the process of trying to determine the route to move forward and "will take a very cautious approach to enforcement" as the situation is resolved, Mims said.

"During this process, we are not trying to throw the heavy hand down," he said.

Regulation issues

Cities throughout the country are trying to determine how to regulate the home sharing sites, which allow people to rent their property short-term. Some rent a couch, bed or room while others rent a duplex or house.

Some compare the struggle to regulation of Uber and Lyft ride sharing services, which allow people to use an application on their smart phone to solicit a ride from someone who is using their private vehicle to transport others for fees. In both cases, entrepreneurs created avenues for lodging and for transportation without dealing with the traditional hotels, motels and cabs.

Other home sharing sites include VRBO, HomeAway, and FlipKey and they have a worldwide presence.

"If Louisville starts shutting them down, (travelers) will bypass Louisville and stay" in other communities, Linfield said.

But Mims said regulation is necessary to ensure the rentals are safe and healthy, and there is no negative impact on neighbors. He also wants to ensure there is a level playing field for those operating traditional lodging, where guests pay the transient room taxes and businesses are required to have a license and are subject to health inspections.

Mayor Greg Fischer believes there is an unlevel playing field because those staying in lodging through the sharing sites like Airbnb are not paying the same lodging tax paid by those who stay in hotels. Those funds are used to help fund the convention center and Louisville Convention and Visitors Bureau.

"If hotels are paying it, Airbnb users should be paying it," said Fischer spokesman Chris Poynter.

Poynter was clear, however, that the mayor believes there is a "good middle ground for everyone here" and wants the parties to find a fair solution to allow the sharing sites to continue to operate in Louisville.

"If they have concerns, we will address them," Linfield said.

The hosts who talked to The Courier-Journal have continued to operate as they communicate with city officials. Linfield wrote letters to Fischer and to council members.

"The problem is there is not regulation out there," said Tim Loerke, an Airbnb host in The Highlands who received a citation. "We are not breaking any rules because there aren't any rules that have been made."

At the end of the year, the hosts receive a tax statement and pay federal taxes, Davis said.

"We don't mind paying our fair share," said Davis, who is open to regulation.

Those on all sides of the issue said they want to find a compromise to allow the practice to continue, but they are early in the process.

Mims wants to have a community conversation with all parties involved — the operators, Airbnb, those who operate hotels and bed and breakfasts, and neighborhood activists — to understand the best route forward.

A progressive "up and coming city" is going to want to enable home sharing so "this has got to be addressed," Mims said. When the city looked at dealing with ride sharing services, he said the mayor's message was to be adaptable and flexible.

Asset?

Including all of the websites, Councilman Tom Owen said there could be as many as 1,000 homes renting space short-term in Louisville.

The hosts believe Airbnb and the other services are an asset to Louisville — providing the housing year-round including during the Kentucky Derby and major events at Valhalla Golf Club. Several people point out that, before the emergence of these sites, people made money renting their house for those events.

The hosts do not feel they are taking away from the business of hotel and motels. They said they serve a different demographic.

Those people never intended to stay in a motel, Linfield said.

"The people staying in Airbnb are different. They don't want the sterile motel," she said.

Loerke and other supporters and hosts argue they are bringing business to Louisville. He said guests here for a marathon indicated all of the hotels were booked so they turned to Airbnb, where they were able to rent his third-floor attic converted into a room with its own entrance and bathroom.

"If people want to stay in hotels, they stay in hotels. Not everybody is comfortable staying in people's houses," Loerke said.

Linfield, who showed The Courier-Journal the second-floor duplex she rents with a kitchen, bedroom, smaller bedroom, bathroom and living area, said they tried to furnish the lodging with décor and furnishings "that appeal to younger people." The first floor is rented to a "regular tenant."

She said they are ambassadors for Louisville, promoting the city, with magazines and promotional materials for local attractions and restaurants. She said they also share information on sandwich shops, restaurants and other places that visitors might not find on Yelp.

Loerke said they provide every guest with a business card that lists their favorite restaurants — best places for pizza, a burger, ice cream or a cup of coffee.

Mims, Loerke and Linfield have used home sharing sites and raved about them.

"I have had one good experience after another," Linfield said. She said she enjoys meeting people and learning about neighborhoods at the approximately 15 different Airbnb housing arrangements her family has stayed in from Colorado to Florida.

Linfield said there are photos on the website for many of the locations, and reviews by those who stay there.

Loerke and Linfield have had visitors from other countries and from different states.

"One of the reasons we liked it is we are staying in a neighborhood with real people," said Councilman James Peden, who recently used Airbnb to book lodging for a trip to Europe.

Level playing field

Patrick Gregory, president of the Greater Louisville Hotel and Lodging Association and general manager of the Sheraton Louisville Riverside, said there is new competition in the market, it is going to be around and they want a "level playing field."

He said they have responsibilities, regulations and fees they have to pass on that home sharing lodging operators do not.

"They're a major player and we just want to work with the city of Louisville, in our case, and work with Airbnb to ensure that these smaller operators conform to the expectations that they check on a website saying they do," Gregory said.

Councilman Owen, who has many of the 440 Airbnb rentals in his district that includes The Highlands, said he was not aware of them until last month when an attorney called his office. He said he has not had any complaints about them.

"I'm not opposed to the concept, but you can imagine in a highly competitive hospitality market the established venues have perhaps contacted metro government," said Owen, D-8th District.

Owen and Peden, R-23rd District, want to know what is being done in other cities.

READ MORE | Highlands' rental duplex riles neighbors

Peden said he would do whatever necessary to make it legal here, and said "I don't want to mess with it at all."

"I am a huge fan of this," he said.

As with Uber and Lyft, Peden said he does not want to see overregulation, but possibly deregulating the more traditional companies.

"We certainly don't need to make it illegal," he said.

House sharing is more akin to a bed and breakfast than a hotel, Mims said, but those are required to have a conditional use permit from the city so officials know where they are located and if they are operating properly.

Peden said he did not see the concern if people are not parking in the street, owners are not paving their front yards, and there is one family at a time at the house.

"That is no more obtrusive than having regular residents," he said.

Some regulation options include defining how often there can be a turnover in guests, limiting the number of days people can stay, and possibly creating a licensing system, Mims said.

Peden said he can see the need to avoid extreme situations, where a house would be subdivided and there would be multiple families and cars parking in the street.

Most of the properties for rent have strict rules, require a damage deposit, and user privileges with Airbnb can be revoked if they are obnoxious. Also, he said, there are recent reviews that he trusts more than years-old hotel reviews. Mims, who stayed in a VROB property in Fort Lauderdale, and Linfield said a bad review can be damaging.

Davis said they do not know where the complaints are coming from — from neighbors or people in the hotel and lodging industry, but Mims said he expects to continue receiving complaints.

Reporter Sebastian Kitchen can be reached at (502) 582-4475. Follow him on Twitter at @writeonsk.