What you need to know about Carmel’s crackdown on Airbnb

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On Jan. 17 the City of Carmel sent out a news release letting the public know that they would be cracking down on Airbnb hosts operating within the city limits. A letter was sent out to the users of this short-term rental Web site — which is like running an occasional bed and breakfast from your home — and told them they need to be rezoned as a commercial business or cease operations.

To readers of Current in Carmel, this came as no surprise. I wrote a cover story on this issue which ran on Dec. 13 (http://youarecurrent.com/seismic-shift-in-lodging-carmel-considering-how-to-handle-room-renting-sites-like-airbnb). In that story, we talked to Airbnb hosts in Carmel and heard their side of the story. We also talked to tourism officials, hoteliers, Airbnb public relations and Carmel Mayor Jim Brainard.

In that article, Brainard said that a letter was drafted in November to be sent to all Clay Township homes advertising on the site.

“Unless the property is zoned as a hotel or boarding house or has a variance, it cannot operate as a business,” Brainard said in the article. “Leasing rooms is a business. It is not fair to adjoining homeowners who relied on zoning when purchasing their homes. Conducting a commercial business may also subject the property owner to the commercial property tax rate, roughly double the residential rate.”

But with the January press release, this story is in the public eye once again. So here we are to answer your questions on this issue.

WHY IS THIS HAPPENING NOW?

There are a couple of possible reasons. The City of Carmel says they’ve had an increase of complaints from residents about this issue and believe there is a statistical increase in the number of Airbnb hosts in the area. AirDNA, a site that tracks Airbnb usage, confirms that is true. But the real reason might be because of a home in the Cool Creek North neighborhood. There is a house that was allegedly purchased for the sole purpose of being used as an Airbnb, and it has upset many people in the neighborhood, prompting a meeting and many calls and e-mails to the city. This isn’t someone deciding to list their spare bedroom during Indianapolis 500 weekend. This is a house where the owner wouldn’t be living there and different guests would come and go almost daily.

HOW MANY AIRBNB HOSTS ARE THERE?

As of October 2016, the site AirDNA calculates the number of active Airbnb listings in Carmel at 87. This is different from just doing a search of Airbnb’s Web site. Other reports have said there are as many as 300 Airbnb listings in the Carmel area, but that’s likely a huge overestimate. For one, the search area could extend beyond the city limits. Second, some of these listings might never have hosted a guest, and if they have it was one time during a particularly busy weekend, such as GenCon or the Indianapolis 500.

Brenda Myers, president and CEO, of Hamilton County Tourism, Inc., said it’s tricky to get an accurate headcount of how many Airbnb hosts there are and what kind of business they are doing, but some Web sites like AirDNA do their best to calculate the figures. Myers provided a report that showed there are about 33 listings in Carmel on Airbnb. In October of this year alone, there were 985 nights booked in Carmel for entire place rentals out of 1,367 available nights listed. The average price for an entire listing was about $320 and about $93 for an average comparable hotel room. It can also be hard to compare apples to apples because with Airbnb you can sometimes rent just one room or the entire house, so that changes the analysis.

Here are some historical graphs from Airbnb to illuminate the scope:

WHAT IS THE CITY GOING TO ACTUALLY DO?

I talked to several Carmel city councilors, and they don’t seem interested in passing a law regarding Airbnb. Instead, the City of Carmel will use its existing zoning laws to enforce this decree. Airbnb hosts will be told they are in violation of zoning code and be forced to rezone or cease operations. Rezoning to a commercial development can be pricey, because there’s a cost of hiring an attorney and going in front of the city to ask for the rezone. There’s also no guarantee it would get approved. Neighbors could speak out against the rezone. And even if it was passed, there would be higher taxes to pay. Commercial taxes are usually higher than residential taxes.

At first, I was a little surprised to find out that Carmel was fighting this issue because Myers, of Hamilton County Tourism, Inc., told me it’s a tough issue to enforce.

“We joke that they’re like whack a mole,” Myers said. “Once you try to suppress them, they’ll pop up somewhere else, so it just makes more sense to work with them and adapt. Everybody is waiting for a solution. Including me.”

Myers did advocate for some government regulation, “because you at least know where they are.” But she said she hasn’t heard too many complaints from local hotels since business is already doing well and they don’t seem to be losing business to Airbnb hosts. She notes that it’s a bigger issue in downtown cities, especially ones with convention centers that are tied to hotel bed taxes.

In some cities there are laws that limit the number of days that an Airbnb can operate. That way the occasional room-rental during weekends when hotels are packed — such as Indianapolis 500 weekend — are still allowed without people running a nonstop hotel from their homes. This can be tough though, because then the City would need to enforce that law and count the number of days and that can be difficult.

Some of this could become a moot point. Indiana State Rep. Matthew Lehman has authored House Bill 1133 that would prevent cities from banning short-term rentals such as Airbnb. Home Owners Associations could still prohibit short-term rentals.

WHAT DO OTHER HAMILTON COUNTY CITIES DO?

I contacted representatives in Westfield, Noblesville and Fishers, and there are no laws on the books regarding Airbnb. Most people told me that they can’t remember if the issue has ever come up. I sat next to Westfield Mayor Andy Cook at an event and picked his brain on the issue. He said his city gets far more Airbnb listings than Carmel because of Grand Park, which brings thousands to town for youth travel sports. Often hotels are booked or even if there are vacancies, it can be hard to find a large space to accommodate a team, so Airbnb is popular. Cook told me he has no interest in going after Airbnb hosts because he said it’s not worth his time and it’s not hurting anyone. If it became a problem, that’s a different issue, he said.

DIDN’T SCOTT JONES TRY TO LIST HIS MANSION ON AIRBNB?

Yes, the billionaire tech entrepreneur did list his mansion on the site and even gave interviews to the TV media about the listing. It was shortlived, though. He soon removed the posting, likely after the city alerted him to the zoning requirements.

WHAT ARE THE PROS OF AIRBNB?

I talked to users and hosts and they say it helps bring economic activity to the area. Users say they like the character and at-home feel. One host told me that her guests are a delight and only contribute positively during their stay. She said it’s time that Carmel gets with the times and realizes that Airbnb offers a different experience that hotels aren’t offering, comparing the change to Lyft or Uber in the taxi industry.

“I’m not competing against the hotels,” Airbnb host Karen Kedanis sadi. “I offer something totally different, a choice for something more personal. I offer an experience in someone’s home, a slice of Carmel culture. Many people have been against Uber. But it is obviously a very successful business model that people want. The free market should dictate, not heavy handed government. There were people, and still are, that opposed roundabouts because they do not like change. But Carmel has been innovative and accepting to new ideas. Airbnb is an innovative new idea, like Uber. Airbnb is home sharing. It’s giving people a choice not to stay in a hotel but to stay in someone’s home.

WHAT ARE THE CONS?

Neighbors say they didn’t sign up to live next to a hotel when they bought their property, and they don’t like the idea of people they don’t know coming and going from houses. Jeffrey Brown, CEO at Schahet Hotels, which includes the Hampton Inn in Carmel, noted that Airbnb hosts don’t have to follow the same safety guidelines when it comes to fire protection or locks. He said not only could the hosts be at danger from an unknown guest but he said his daughter once stayed at an Airbnb and she didn’t feel safe leaving her belongings in an unlocked room with people she didn’t know. Neighbors say it causes parking problems along the street and possible noise concerns. And, of course, Mayor Brainard said they’re cheating the process by not paying their fair share of taxes or going through the proper procedures of opening a business.

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