Airbnb-ing In PDX – The Ten Things You Must Know

May 2017

You pull your child in for one last hug, admonish them to call regularly, and help slam the trunk on a car bulging with college dorm paraphernalia.  As the apple of your eye rounds the corner and drives away, you turn to your spouse, share a smile, and say . . .

"It's Airbnb time, baby!!"

Not the typical utterance when sending a child off to college, true.  But Portlanders know that, as evidenced by rents and home prices reaching dizzying heights over the past 18 months, people are willing to pay top dollar to experience life in the City of Roses.  If you have an ADU or even a spare bedroom, then you have a prime opportunity to grab a slice of the sharing economy – but here are the ten things you absolutely must know first.

(1) You must register as a business.  If you operate a business in Portland – and yes, providing lodging through Airbnb counts – then you must register your business with the City and obtain a business license.  Those businesses grossing less than $50,000 per year from all sources, before expenses, are exempt from the City's 2.2% business license tax.  Accordingly, most casual Airbnb-ers will not have to pay the tax, but will have to file for and obtain a tax exemption.  Choosing the appropriate business entity – LLC, sole proprietorship, S-corporation, or otherwise – is beyond the scope of this article but is also a question that you should consider carefully.

(2) You probably need a Type A permit.  Anyone renting out their property on an "accessory short-term rental" (or "ASTR") basis, which includes Airbnb rentals and is defined as a situation in which bedrooms are rented to overnight guests for fewer than 30 consecutive days, must obtain a permit from the City.  If you are renting out one or two bedrooms, then you need to apply for a Type A permit, which is this article's focus.  (If you are renting three to five bedrooms, then you need a Type B permit, which has different approval criteria and, incidentally, I congratulate you on your ambition!)  Type A permits are valid for two years and must be renewed every two years thereafter.

(3) The City will inspect your home.  In connection with your Type A permit application, the Bureau of Development Services ("BDS") will verify that each bedroom to be rented to overnight guests (1) met the building code requirements for a sleeping room at the time it was created; (2) has a smoke detector; and (3) has a carbon monoxide alarm.  Alas, that spacious walk-in closet is not a "bedroom" for Airbnb purposes.  And certain converted sleeping areas, such as attics, basements, or sleeping porches may not qualify either.  You will need to pull permits at BDS to confirm.

(4) You must tell your neighbors.  Title 33.207.020(C) of the Portland City Code describes which of your neighbors must receive written notice of your proposed ASTR and the required contents for the notification.  It warrants mention that your neighbors need not actually approve of your plan, just that they have to be informed of it.

(5) You will need to check your CCRs, if you have them.  The City's approval of your ASTR application isn't worth much if the CCRs for your homeowners' association or condominium owners' association specifically prohibit short-term rentals.  Make sure you aren't violating your CCRs lest you be penalized with enhanced assessments or other fines.

(6) You will need to pay taxes.  Operators of ASTRs must pay a combined 11.5% transient lodging tax to the City and to Multnomah County.  If you rent out your bedrooms solely through Airbnb, then Airbnb actually collects and remits the tax for you.  If you use any other hosting platforms, or if you rent out the rooms yourself without using a third-party hosting platform, you are responsible for collecting and remitting the tax.

(7) You will need to actually live in your home.  The City calls these accessory short-term rentals for a reason – namely, that the short-term rental usage is an accessory to the primary, household living purpose for the property.  ASTR operators must occupy the home for 270 days per year.

(8) You will need to comply with your permit requirements.  This means, among other things, you should (1) maintain a log book with specified information about your guests, including names, addresses, license plate information, dates of stay, and rooms assigned to each guest; (2) include your permit number in all advertisements and all listing services; and (3) prominently display your permit number within the dwelling unit. 

(9)  You will need to comply with your permit requirements (continued).  This also means that you should not (1) allow more than 5 overnight guests (again, for the purposes of this article, we are talking about Type A permits – Type B permits have different requirements and allowances); or (2) rent out more than the number of bedrooms authorized by your Type A permit.

(10) The City is done with the wrist-slaps for Airbnb scofflaws.  Effective March 31, 2017, the City implemented fines for violations of the ASTR requirements ranging from $1,000 to $5,000.  Fines are effective immediately and no longer provide for a compliance period prior to the fine assessment.  Additionally, permit violations can result in the revocation of the permit and a possible two-year bar before violators are eligible to reapply for an ASTR permit.

By heeding these ten tips, you will be well on your way to short-term rental success!*

* As for how to go about explaining to your child that you've turned their childhood bedroom into a rental market commodity, well, you're on your own.

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