Seattle's Next Big "Sharing Economy" Challenge Is Regulating Airbnb When a Couple Gets Evicted and Then Their Apartment Goes Up on Airbnb, How Should the City Respond?

After Hunter Hudson, left, and Colin Walsh, right, were evicted from their Pioneer Square apartment, an ad for the same apartment went up on Airbnb. Kelly O

Hunter Hudson's former apartment was built by fire. In 1889, the same year Seattle's great fire burned down 30 blocks of wooden structures, laborers began re-creating the city out of brick and stone, and the Terry and Kittinger Building, now known as the State Hotel, rose on First Avenue South and Washington Street. Four stories tall and embellished in terra-cotta, the building housed loggers, farmers, and miners for cheap. Then, in a flush decade spurred by the Klondike gold rush, Seattle's population multiplied by a factor of 12. Even so, the State Hotel maintained a sign advertising rooms for 20 cents.

One hundred and twenty five years later, during another boom—this one spurred by the tech industry—Hudson and his partner, Colin Walsh, moved into one of the State Hotel's units. The couple loved the place, and they were paying $1,650 for 1,000 square feet, which gave them plenty of space for their cooking and brewing equipment. Hudson, now 42, had just started teaching himself how to manufacture pot edibles, and Walsh, 28, had moved to Washington to get into the craft beer scene.

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Sure, sometimes the foyer carpeting of the State Hotel smelled ripe with urine—the result of the lack of bathroom facilities for the homeless taking shelter near the doorway outside—and the brick walls buckled and bulged erratically after years of ground settlement in Pioneer Square. But the State Hotel also offered a rare and valuable opportunity: giant live-work spaces for creative types at a relatively affordable price.

Even after the landlord raised Hudson and Walsh's rent by $300 last year, they decided to stay.

But the stay wouldn't last long. After a little more than a year of living in the building, they were evicted. They claim it was to make room for an Airbnb unit.

The trouble began last summer, when Dean Haugen, the building LLC's co-owner, told the couple that his former business partner's daughter wanted to move into their apartment and they'd need to leave. That's legal—if the landlord is a person. In this case, the building is owned by an LLC, so Hudson and Walsh, with the help of the city's Department of Construction and Inspections, were able to get the State Hotel to rescind its tenancy termination notice (which is technically different from an eviction, though the resulting loss of one's apartment is the same).

A few weeks after Hudson and Walsh had their tenancy termination notice rescinded, they got an actual eviction notice. This time, though, the reason given was a history of late payment, despite the fact that the couple claim they always paid by the fifth of the month and others in the building had varied payment schedules. Haugen, however, says that rent was always due on the first of the month, and this generally held true for other tenants.

Hudson and Walsh had already seen another unit in the building converted to an Airbnb listing. They had a strong suspicion that's why they were getting kicked out, too. Then, a little more than two months after Hudson and Walsh moved out, they found it: an Airbnb listing for their old unit. It was hosted by the daughter of one of the former State Hotel LLC owners—who had herself recently become an owner—and it was offered up for $175 a night. (At that rate, the unit would have to be rented only 12 nights a month to eclipse the $1,950 a month that Hudson and Walsh had been paying before they moved. If the unit were rented 23 nights a month, the take from the unit would be more than double the old rent.)

Other neighbors in the building are now worried about the future of their units. One tenant, who did not want to be named, expressed concern the LLC was just trying to make fast cash on short-term rentals at a time when long-term renters have a hard enough time finding affordable space in Pioneer Square.

Airbnb and the State Hotel building's owners would disagree. In December, Airbnb released a report that concluded the service's impact in Seattle was negligible. More than 80 percent of Seattle hosts were sharing their primary residences, Airbnb reported, and the number of "dedicated, short-term housing" units hadn't changed. The company even suggested that most hosts make less money renting short-term over long-term. And Haugen says he's not just out to make a buck off the building's Airbnb units.

While his primary residence is on Vashon Island, he and his wife used to live part-time in one of the State Hotel units. Then the financial crash happened. Haugen and his wife converted the unit to an Airbnb so they could afford to go back to using their Pioneer Square building as a second residence. As for Hudson and Walsh, Haugen acknowledges that having his old business partner's daughter move in was one of the reasons he wanted them to leave, but claims that the main reason the couple got kicked out was because they were habitually late on rent. Haugen wasn't a fan of Hudson's culinary experiments, either.

"Hunter and Colin, they're real nice guys, but they were infusing marijuana in the food and selling it out of there," he says. "So it'd stink up the halls, you know, with everything else, but eventually stopped after I had some words with them."

For her part, Leela Weiss, the recipient of a trust that co-owns the State Hotel LLC, and who now lives in Hudson and Walsh's old unit, says she's using Airbnb to be able to afford to live in the building again. She grew up there, and it's close to where the 25-year-old now works, at a local coffee shop. Weiss acknowledges that she also earns money as a building owner, but says she still needs help paying her new rent.

Haugen, meanwhile, was happy to talk about the broader issue of Airbnb and displacement. He says he knows other Airbnb hosts who invest in new units just to rent them (as opposed to living in them at least some of the time), and he doesn't think that's the most ethical way to use the service. He and his wife rent out their unit maybe 20 days a month over the summer, but only five days in the less popular winter months. "We're actually using the place," he says, "and trying to make it a little more affordable to live there, and for us to have a place in town."

Still, Haugen's objections to using Airbnb solely for profit don't mean he's a purely casual user. He and his wife traveled this past fall to an Airbnb conference in Paris, where breakout sessions had names like "Be a Hostrepreneur," "Make Your Listing a Money Machine," and "Making Home Sharing Your Small Business."

When buildings like the State Hotel convert units into Airbnbs, the conflicts expose a strange moment in Seattle history. In a new era of rapid-fire growth, housing and transportation technology have advanced faster than Seattle's existing infrastructure, as well as its laws.

"Technology [like Uber or Airbnb] has created a very, very fast-changing marketplace," Seattle mayor Ed Murray tells The Stranger. "And regulating these things is going to be a challenge because, you know, they almost come into existence and morph overnight."

Both New York State and San Francisco have special rules about apartments being converted into Airbnbs or short-term rentals; Seattle doesn't have any. (It's currently legal for a landlord to evict a tenant, as long as there is just cause, and then convert the unit to an Airbnb.) New York's multiple dwellings law, for example, forbids renting apartments to someone for less than 30 days, which, as of fall of 2014, meant that most of the Airbnb units in New York City violated regulations. San Francisco has explicitly legalized Airbnb hosting with an added hotel tax, but limits renting out a full home to a cap of 90 days out of the year.

Portland, Seattle's neighbor to the south, has also pioneered a new kind of regulatory framework for its Airbnbs. In 2014, Airbnb had to start collecting a hotel tax from people who booked units in Portland, and this year, the city council approved a resolution to direct revenue from short-term rentals like Airbnbs toward affordable housing.

Sharon Lee, executive director of the Low Income Housing Institute, wants Seattle City Council members to do the same thing. Washington State law might not allow that, but the city council has plans to develop regulations for Airbnb this year, and Mayor Murray asked his Department of Construction and Inspections to study the issue and put forward proposals for the council this coming spring. Neither the council nor the mayor has released more details than that.

"There are several things that I think we need to get a handle on," Murray says. "One is the issue of creating an even less affordable housing market." At the same time, he points out, there are people using Airbnb rentals "as a way to afford their house."

Though Haugen and his former tenants disagree over why the couple was evicted, they all say they agree on one thing: Airbnb should be regulated in a way that helps the city create more affordable housing and doesn't take long-term units off the market. We'll find out this year whether our elected city leaders agree, too.