Washington D.C.'s new occupant in debate over gentrification? Airbnb.

WASHINGTON - In the eight years since Airbnb began operations in the District of Columbia, thousands of homeowners have used it to become short-term landlords, often illegally. But now, a practice welcomed as a novel way to augment income - and maybe befriend tourists - has become a flash point in the city's debate over gentrification.

Opponents of Airbnb and similar companies are backing legislation before the District Council to prohibit some short-term rentals and regulate the rest. They say that renting houses and apartments for brief stays gobbles up living space that could ease the city's shortage of affordable housing.

Many citizens also resent seeing a surge of transients disturb the residential character of their buildings or street blocks. Residents complain about noise, unfamiliar faces and loss of precious parking spaces.

But Airbnb's defenders turn the gentrification argument on its head. Given the city's high housing costs, they say, people rent out rooms in their primary residences, or in second and third homes they own, to earn enough money to remain in the District.

They also say that the housing shortage has resulted not from short-term rentals - which occupy a small fraction of the city's total housing stock - but from larger economic factors such as the desire of millennials to live in cities.

The dispute over online, short-term rental services has erupted at community meetings, on neighborhood message boards, in courtrooms and in ads on television and radio. It pits entrenched interests in the hotel industry and their union against an upstart competitor in a classic example of how a new technology can threaten an established business model.

At the core of the controversy are the same questions that grip the District over how redevelopment is transforming neighborhoods, raising housing costs, adding to congestion, and altering the city's economic and racial demographics.

"Most of the Airbnb folks don't fit into the neighborhood that well," said the Rev. H. Lionel Edmonds, pastor of Northwest D.C.'s Mount Lebanon Baptist Church, who is helping lead a grass-roots campaign in favor of tough regulations. "They don't invest in the community. . . . It increases the gentrifying component."

Airbnb landlord Shaun Johnson talks with tenant Taylor Valencia, of San Francisco, at his property in Northeast Washington. Washington Post

The short-term rental market has exploded in the District since Airbnb got its start with homeowners renting space to visitors for President Barack Obama's first inauguration in 2009. Last year, the number of Airbnb guest arrivals jumped almost 80 percent, from 160,000 to 287,000. The number of people who hosted at least one trip jumped from 3,900 to 4,900.

Although Airbnb is the largest and best-known short-term rental service in the city, other companies such as HomeAway and VRBO are active, as well.

The rapid growth has stirred concerns. Brenda Shields, an advisory neighborhood commissioner in the low-income Congress Heights neighborhood in Southeast Washington, says Airbnbs victimize the needy citizens she sees when she volunteers at her church food pantry or delivers clothing and toiletries to the homeless. She's willing to let people rent rooms in their homes but wants a ban on Airbnbs in multiunit buildings.

"You're taking away an apartment that somebody could live in, who's living in the streets," Shields said. "You're taking away from those people and giving to people who are here for a weekend or a week."

Airbnb was a hot topic at a summer meeting of the Congress Heights Community Association, which was unable to reach a consensus.

Mary Cuthbert, vice president of the association and an advisory neighborhood commissioner, warned that short-term rentals bring in transients who dilute a neighborhood's residential character and pose safety risks.

"You see all sorts of strange people coming and going" at Airbnbs, Cuthbert said. "Somebody may want to rent a room who is a psycho killer."

She said short-term rentals were also contributing to a change in the racial makeup of the community.

"You have people coming in, and rents being pushed up, and minorities moving out to Maryland," Cuthbert said.

But a short drive away, in River Terrace in Northeast, Shaun Johnson said he can afford to stay in the city only because of the extra income he makes as an Airbnb host. Johnson regularly rents out two bedrooms and the basement in his rowhouse and describes the extra $40 or $50 a night per rental as a "godsend" in meeting his mortgage payments.

Johnson, a baggage ramp employee for American Airlines at Reagan National Airport, also says he has befriended many of his guests and especially enjoys introducing Washington to foreigners.

"I feel like I'm an ambassador for the city and black Americans," he said.

Johnson resents the accusation that he is contributing to a lack of affordable housing in the city. He says the government and big developers, not little guys trying to make a buck from Airbnb, are to blame for high housing costs.

"Why should the burden of affordable housing be on me? I can barely keep a roof over my head in my own house," Johnson said.

On Capitol Hill, which has the most short-term rentals of any neighborhood in the city, Dunnzy Levin is concerned because the proposed legislation would bar her and her husband from operating a building they own that has six units for corporate furnished rentals and short-term Airbnbs.

"It's a huge deal for the income," Levin said. "It's giving us a little bit of a cushion to put some money away, because living in the city is kind of hand to mouth."

If the legislation sets a limit lower than six for the number of units that a host can rent - as council members say is practically certain - then, Levin said, she and her husband would "change our business model."

Another host concerned about the bill is Ruth Hamilton, who uses Airbnb to rent out one of two units in a rowhouse in Southwest that she and her husband own, in addition to the rowhouse where they live nearby. The Hamiltons' experience shows the financial incentive to rent through Airbnb rather than through a traditional, long-term lease.

The downstairs unit, which is rented long-term, has been fetching the couple $1,500 a month - a rate they expect to jump to between $1,700 and $1,900 a month with the next tenant.

But the upstairs unit, which they rent on Airbnb, yields an average of about $117 a night, and the unit is rented about three-quarters of the year. That works out to more than $2,500 a month.

"I do make more on that apartment than I would if I rented it out on a long-term basis," Hamilton said. The extra money has helped cover her son's college costs.

"It's really enabled us to do that without debt," she said. "I understand the concerns about big apartment buildings going Airbnb and the need for affordable units. In our circumstances . . . our real estate is our way of making ends meet in the city."

The legislation before the District Council was the subject of a lively hearing in April. Council Chairman Phil Mendelson, D, expects the council to act on it by January.

Both supporters and detractors say the bill could result in a satisfactory compromise. In theory, it would permit individuals and small operators to take advantage of the "sharing economy" by renting out their primary residence, while insisting that they meet basic safety and licensing requirements.

At the same time, it would prohibit large-scale commercial operators from using short-term rental services as a way to operate as hotels while dodging strict regulatory standards required in that business.

"We definitely want to go after the bad actors," said council member Kenyan McDuffie, D, who wrote the bill. People would still be free to market their property, provided they "submit to a clear, concise regulatory framework," he said.

But there is no resolution of several major questions over how far the law would go. The outcome will affect whether large numbers of hosts can continue to rent out rooms and houses and whether it will still be profitable to do so.

It hasn't been decided how many nights each year an absentee host could rent their primary residence. The bill would set a cap of 15 nights, although McDuffie expects that will be amended to 60 or 90. The industry is pushing for at least 180 nights a year.

The biggest dispute may be over whether people can rent out a second home at all. The bill says no, and McDuffie wants to keep it that way. But Airbnb wants hosts to be able to rent at least three "entire home" units. That typically means a house, apartment or basement with its own entrance, as opposed to a single room in a residence.

Short-term rental companies are also worried that new licensing and inspections requirements will discourage too many owners from taking advantage of the service. They say the hotel industry and its allies are stirring up exaggerated arguments about housing costs to protect a monopoly at consumers' expense.

"We find the bill really onerous and overly restrictive for the vast majority of our hosts who occasionally rent out their home or room in their home," said William Burns, the public policy director for Airbnb.

One potential advantage of the bill is that it would make it easier to get a license for short-term rentals - a legal requirement that is widely ignored.

A large but unknown number of hosts are renting rooms or houses in violation of city zoning regulations, according to District officials and Council members. The city has mostly turned a blind eye to the violations, saying it doesn't have the resources to enforce the laws.

In residential zones, where many Airbnbs operate, a single-family home typically can offer short-term rentals only if it obtains a bed-and-breakfast license with a home occupation permit. Many hosts lack such licenses, or are not serving breakfast to their guests, as the permit requires.

"The estimated number of short-term rentals being offered do exceed the number of licenses that would cover that type of activity," the Department of Consumer and Regulatory Affairs said in a written statement.

The fine for operating without a license is $2,000, but the regulation is rarely enforced. In the past two years, DCRA has issued $30,000 in fines for individuals or business for operating unlicensed short-term rentals.

The DCRA said enforcement is "complaint driven," and investigations "generally require considerable time to develop." The new legislation, if approved, "would require considerable additional staffing to implement," the DCRA said.

Much of the debate over short-term rentals has addressed the extent to which they are contributing to the city's chronic lack of affordable housing.

Airbnb issued a report in April suggesting the impact was minimal. It found that of more than 300,000 housing units in the city, fewer than 9,000 "entire home" listings have hosted a trip via Airbnb.

The results were reassuring to the Coalition for Nonprofit Housing and Economic Development, which supports low-cost housing and requested the study from Airbnb.

"We don't see alarming numbers," said Stephen Glaude, executive director of the coalition, said. Short-term rentals "do not have a major impact on the housing stock."

But opponents note the housing shortage is so severe that it's harmful to lose even a small number of apartments or homes.

For instance, in 2016, according to Airbnb, 1,242 "entire homes" were rented for 90 days or more. That is more than the approximately 1,000 affordable housing units created or preserved each year under Democratic Mayor Muriel Bowser's much-praised $100 million annual contributions to the Affordable Housing Trust Fund.

Burns, of Airbnb, said there was no guarantee that the Airbnb units would be affordable if rented long-term.

McDuffie says that even if the numbers are comparatively small, the rapid growth in short-term rentals is a threat to the city in the long run.

"They are taking homes off the long-term rental market in favor or more lucrative short-term rentals," McDuffie said. "If that phenomenon continues without sensible regulations, it's going to have an impact. We have to look to the future."

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