Canada: City Moves To License AirBnBs And Other Short-Term Rentals

Last Updated: September 24 2019
Article by Erin Berney

The Urban Planning Committee voted on Tuesday, August 20, 2019, to recommend the adoption of a new Business Licence Bylaw, in an effort to begin regulating short-term rental accommodations in the City of Edmonton. Often described simply as "short-term rentals", these accommodations are typically transacted between "hosts" or "operators" and prospective guests, through online platforms like AirBnB, HomeAway and VRBO, typically for stays of less than 30 consecutive days.

Short-term rentals come in all shapes and sizes, ranging from small-scale, home-shares, where the host occupies the premises and merely rents out a room, to rentals of entire homes or condominium units that are not simultaneously occupied by the owner. In the past few years, they have grown in Edmonton from 44 listings in 2014, to 2,420 as of May 2019. You can view the webcast of the meeting and review the background material presented to Committee here:http://sirepub.edmonton.ca/sirepub/mtgviewer.aspx?meetid=2342&doctype=MINUTES

What the New Bylaw Does

Bylaw 18942 will create a Short-Term Residential Rental Accommodation business licence classification, which effectively treats all short-term accommodation providers offering three or fewer rooms for rent in the same titled location, as equal players, despite the vast differences between home-sharing and non-host occupied accommodations. By contrast, hotels are classified as offering accommodations having four or more rooms for rent in the same location. The Bylaw, which has been described only a starting point, includes the following requirements:

  1. the host must provide guests with an approved information guide outlining the City's bylaws, covering community standards on noise, waste management, traffic and parking, and
  2. the host must post their contact information somewhere in the rental property.

It also prohibits the operation of any unlicensed business from the short-term rental property. Upon issuance of a Short-Term Residential Rental Accommodation licence, the City will notify Alberta Health Services, which may follow up with its own inspections to ensure compliance with public health regulations. The fee for this licence will initially be set at $92, with the fine for failing to meet any condition under the licence being $2,000. While the Committee considered increasing the licence fee, City Administration recommended adopting the fee as-is, to ensure greater "uptake" or compliance.

Balancing Competing Demands

Based on the number of registered bylaw complaints between April 2018 and May 2019, mostly related to nuisance, land use and licensing concerns, this move is a positive step in the right direction. But for this writer, the proposed Bylaw falls far short of the kind of regime necessary to balance the competing interests involved. The Committee heard from various stakeholders prior to adopting the motion which would recommend the Bylaw to City Council, including AirBnB hosts of all types (home-sharers, single rental property owners, and some who rent out multiple properties), representatives from AirBnB, members of the hotel and tourism industry, and citizens who have been directly affected by short-term rentals operating in their neighbourhood (typically in a negative fashion).

While the citizens who spoke to the Committee provided direct evidence that non-owner occupied properties had a much greater impact, and in some cases, have been devastating to the surrounding neighbourhood, Council members adopted the recommendation that only hosts who lived in their rental property would be required to apply for and obtain a development permit. Apparently, Administration was of the view that "there is no discernable land use impact" in non-owner occupied rental properties (despite some residential, RF1-zoned neighbourhood listings that advertise "party houses" capable of accommodating 16 to 30 people in a single family home). There will also be no requirement for fire and safety code inspections of any type of short-term rental property.

AirBnB representatives made representations to the Committee that the company, itself, may be willing to enter into discussions with the City regarding contribution to the Destination Marketing Fee program, but only if this is made mandatory (currently, it is a voluntary program in which most hotels that operate in the City participate). Hotel operators unsurprisingly voiced their concerns that permitting short-term rentals to continue without greater regulation fosters an unlevel playing field for tourist accommodations, as only hotels are currently required to contribute to the provincial tourism levy (a 4% charge on the revenue they collect from room rentals).

AirBnB countered this proposal with speculative representations that most hotel operators in Edmonton are foreign, multi-national corporations, while admitting under intense questioning by Committee members that it operates in 191 countries around the world, yet pays no local, provincial or federal taxes in Canada. It views itself as merely a "platform" on which the hosts and guests conduct their transactions (in exchange for a percentage of the fees charged by hosts). The Committee then heard from one hotel operator that directly contradicted AirBnB representatives' assertions about the supposed foreign ownership of most Edmonton hotels.

Effects of Short-Term Rentals

A major, recurring question the Committee grappled with was how to hold AirBnB hosts accountable for the actions of their guests. It heard from several concerned citizens with respect to noise complaints, garbage and littering, vandalism, public intoxication and partying, all of which directly increase the burden on City-provided services. While Administration had tracked bylaw complaints related to AirBnBs over the past year, it neglected to research the number of police complaints received in that same period, which arguably form a much larger drain on public resources.

It was speculated that the cost of police response to a typical vehicle collision in the City costs taxpayers approximately $15,000, while the cost for a bylaw officer to investigate a noise complaint is less than $100. Moreover, Bylaw officers don't currently conduct investigations late at night, so guests that cause problems are generally long gone by the time the officer arrives. While the data was not presented, it is conceivable that there have been a significant number of late night police calls to deal with these issues.

The Committee also heard from a few responsible AirBnB operators, who spoke about how hosting short-term rentals out of their homes has prevented them from having to declare bankruptcy, given the current economic slump. The supplemental income short-term rentals afford has allowed these homeowners to continue paying their mortgages and stay in their homes during these tough times in Alberta.

Potential Future Changes to the Bylaw

Committee members considered a host of prospective changes that could be made to the new Bylaw – sometime in the future – including the issuance of progressive fines, licence suspensions and/or revocations, requiring background checks on applicants, and even a municipal levy or business licence fee charged to AirBnB itself. Currently, there is little to no enforcement by AirBnB on problem hosts who operate "party houses" and whose guests wreak havoc on residential neighbourhoods. Requiring AirBnB to be licensed in the City would likely go a long way toward ensuring that it holds its operators accountable when problems do occur and complaints are received.

Zoning was another consideration identified by the Committee. Options certainly exist to create a short-term accommodation use classification, allowing the City to keep these rentals out of single-family residential neighbourhoods. Further, requiring proof – via submission of registered condominium bylaws – would ensure that short-term accommodations are actually permitted in the applicant's condominium property prior to the issuance of a business licence. Consultation with the neighbours (similar to the requirements when applying for a Major Home Based Business Development Permit), and posted signage, were other options considered.

From the condominium perspective, many residential condominium bylaws already prohibit roomers and/or boarders, restrict uses to single-family, and often do not permit commercial purposes involving the attendance of the general public. These types of bylaws should be sufficient to restrict AirBnB operations, and yet a review of AirBnB.ca reveals that a large number of the current listings for Edmonton are in condominiums. While some hosts argue that bylaws restricting short-term rentals are in conflict with certain provisions in the Condominium Property Act, others note that a short-term rental is not a lease or similar dealing with the unit (the term used in the Act is "devolution"), but the grant of a mere licence to occupy space for a specified purpose. As yet, there is no judicial determination on this point, but the increased tension between AirBnB operators and condominium corporations likely means that one may be coming soon.

One thing is for certain, the sharing economy for rental accommodations will continue to grow exponentially, just as it has with transportation operators like Uber. While instituting a business licence requirement now is generally hailed as a step in the right direction, most agree that it does not go far enough to address the current needs for safety, fairness and enforceability. It certainly does not assuage the concerns of adjacent neighbours, or in any way level the playing field with operators of traditional hotels. Hopefully, however, it will enable the City to continue gathering information and data, so that when the next report is received by Committee in May 2020, it will be in a position to craft a meaningful bylaw.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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