Life, liberty and property — the real shared economy
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Our Founding Fathers declared our independence based on the pursuit of life, liberty, property and happiness.

Fast-forward to today: technology and entrepreneurship are making us face unintended consequences of housing shortages, unemployment and economic unfairness.

We must consider how these new business activities are stressing the middle and working classes of America. Those classes revolted last Election Day; many thought they were being left behind.

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Much of the new marriage of technology and business is called the “shared economy.” Benefits of the shared economy? I can hail a car from my smartphone and get most anything delivered to my home in days or even hours, sometimes even by drone.

 

Some elements, however, benefit very few.

Lately, I have been alarmed about the home-sharing movement, where houses act as hotels minus the employees, benefits and other regulations required for hotels. I am generally for a free market, but I also believe in transparency, equity and economic growth.

As an example, home-sharing giant Airbnb — with its $31 billion valuation — claims it has brought $1.2 billion into the Los Angeles area economy and $420 million to greater San Diego.

But the reality is that short-term rentals suppress hotel occupancy, restaurant receipts and in turn sales taxes.

The Airbnb statistics do not take into account the thousands of businesses and jobs that suffer because those dollars are going to an underground economy rather than to the regular, labor-intensive tourism industry.

Sit-down for a fast food restaurant meal in California, for example, and you are taxed, while groceries and kitchen meals are not.

Local leaders around the country are faced with entire neighborhoods overrun by short-term renters and party houses.

In tony Del Mar, Calif., locals battle short-term rentals in front of a befuddled city council. And in Los Angeles, the battle revolves around an existing housing shortage, property rights and a continuous contraction of rental housing.

Landlords push people out of apartments, condos and houses in order to rent the units out for short-terms. The aforementioned millions are the allure.

Los Angeles, incubator of the new America, now is “ground zero” for the battle of short-term rentals vs. the poor and low-income renter.

Among the poor and low income renter of Los Angeles is the largest immigrant population in the country and one of the largest college student populations in the country.

There are thousands of short-term rental properties in Los Angeles. Returning that number to the housing stock would not erase the existing housing crunch, but it would help.

Another major issue is that Latinos and blacks are heavily employed in hotels and restaurants. They are suffering consequences of a surge in short-term rentals. Add to that mix smaller minority homeownership rates and it is easy to see who is experiencing financial benefits of short-term rentals, and who suffers.

Today, unregulated short-term rentals are bringing hotel-like businesses into residential neighborhoods, adding more outside traffic and people to otherwise tranquil residential neighborhoods.

Professional landlords and investors are moving people out so they can cash in on those claimed millions of the short-term industry.

In some areas, like the beachfront Venice neighborhood of Los Angeles, entire multi-family apartment buildings have been emptied of permanent residents so they can be rented for double or triple normal rents.

There are limits to property rights. You can no more yell “fire” in a crowded theater than you can turn a neighborhood house or apartment into a full-time hotel-like party rental.

What happened to inexpensive rental units for college students and seniors in entire neighborhoods?

What happens to neighborhoods overrun by transient populations?

Through creative zoning and capping of short-term rentals, there are ways of accommodating the new short-term industry without compromising neighborhoods and communities and, the pursuit of happiness.

By capping the number of days a residence, condo or apartment can be rented, we can assure common sense and protection of our neighborhoods from the inching danger of blight and inequity.

In addition to caps and creative zoning, business licenses for short-term rentals might help as well. For example, per-unit fees would allow single landlords to continue renting and at the same time, require multiple-unit landlords to pay multiple fees, which would help level the playing field.

At the epicenter of this debate, Los Angeles can create a model short-term policy that every community from beach towns like Del Mar and Miami Beach to Mississippi, Missouri and Ohio riverfront towns and many cities across the nation can model their rules after.

If nothing changes, the spread of unchecked triple-digit growth in short-term rentals will continue and more units will be unavailable to full-time residents. Unemployment will plague the vulnerable. Regular rents will increase as fewer units will be available to full-time residents. In this, we see a looming disaster.  

But it can be tempered with limits, caps and licensing. Some problems caused by short-term rentals will be solved.

Technology and innovation have benefits, however there are unintended consequences that we must face, now, before we are overwhelmed.

As it stands today, this short-term rental economy is benefiting very few at the expense of many.

Raoul Lowery Contreras is the author of “The Armenian Lobby & American Foreign Policy” and “The Mexican Border: Immigration, War and a Trillion Dollars in Trade.” His work has appeared in the New American News Service of the New York Times Syndicate.


The views expressed by contributors are their own and are not the views of The Hill.