Economic Costs and Benefits of STR

How Airbnb Short-Term Rentals Exacerbate Los Angeles_s Affordable Housing Crisis -Analysis and Policy Recommendations – Lee 2017

Sand City Ecoresort Economics from Pine Cone article- Much Higer Revenue from Licensed Hotels than STRs

 

The Impact of Airbnb on NYC Rents : Office of the New York City Comptroller Scott M. Stringer

New York City Comptroller Study on the Impact of AirBnB on Rents

Between 9.2% and 20% of Increased Rent Costs Due to AirBnB

Airbnb Drives Up Rent Costs in Manhattan and Brooklyn, Report Says – The New York Times

Landlords turned 14 SF apartments into illegal Airbnbs, city attorney says – San Francisco Chronicle

According to the Monterey County Hospitality Association they have 27,000 employees.  Many are paid minimum wage, and the rest the minimum the owners reasonably can.

Housing costs are going up in the form of higher rents, higher mortgage costs for more expensive homes, and longer commutes (that have an opportunity cost “I could be doing something else besides driving,” fuel, maintenance, and car depreciation. This also adds to the general traffic problem, and increases greenhouse gas and other criteria pollutants – which is an actual physical environmental harm.

But if we just take housing costs, and assume there are 27,000 housing units needed (less some percentage for other domestic arrangements), then for every $83 in increased monthly expense ($1,000 per year), there is a cost to the employees that is not reimbursed by their employers (?) of $27 million.  To the extent those costs are passed on to the employer who passes them on to the customer, that’s another cost but hard to quantify.

The County takes in (guessing ) $1.7 million in TOT from STR/Homestay.  That’s about what PG gets.

This suggests that the cost of STR to the community is largely born by the workers in Monterey.


I think the number as far as negative impact to employees is much higher.  With 145,000 or so dwellings and a population of 415,000, the total impact must be higher.


Month All Beds 1 Beds 2 Beds
Jan-11 1,195 0 1,195
Feb-11 1,195 0 1,195
Mar-11 1,195 0 1,195
Apr-11 1,195 0 1,195
May-11 1,195 0 1,195
Jun-11 1,195 0 1,195
Jul-11 1,165 964 1,308
Aug-11 1,176 1,085 1,374
Sep-11 1,176 1,023 1,334
Oct-11 1,170 1,032 1,317
Nov-11 1,099 992 1,362
Dec-11 1,182 1,080 1,373
Jan-12 1,160 1,061 1,366
Feb-12 1,208 1,137 1,235
Mar-12 1,272 1,185 1,355
Apr-12 1,324 1,139 1,397
May-12 1,348 1,152 1,411
Jun-12 1,358 1,190 1,376
Jul-12 1,329 1,172 1,284
Aug-12 1,295 1,152 1,297
Sep-12 1,305 1,134 1,326
Oct-12 1,304 1,184 1,372
Nov-12 1,252 1,103 1,361
Dec-12 1,370 1,180 1,482
Jan-13 1,329 1,155 1,488
Feb-13 1,224 1,121 1,395
Mar-13 1,326 1,212 1,487
Apr-13 1,422 1,218 1,504
May-13 1,485 1,193 1,507
Jun-13 1,518 1,182 1,532
Jul-13 1,506 1,205 1,593
Aug-13 1,577 1,141 1,609
Sep-13 1,651 1,174 1,540
Oct-13 1,704 1,222 1,566
Nov-13 1,766 1,152 1,562
Dec-13 1,769 1,161 1,541
Jan-14 1,621 1,165 1,518
Feb-14 1,549 1,208 1,539
Mar-14 1,479 1,149 1,529
Apr-14 1,439 1,148 1,484
May-14 1,387 1,173 1,495
Jun-14 1,377 1,161 1,516
Jul-14 1,397 1,159 1,512
Aug-14 1,459 1,268 1,531
Sep-14 1,429 1,223 1,560
Oct-14 1,485 1,265 1,608
Nov-14 1,500 1,254 1,588
Dec-14 1,577 1,241 1,570
Jan-15 1,588 1,238 1,671
Feb-15 1,583 1,252 1,672
Mar-15 1,489 1,215 1,668
Apr-15 1,555 1,202 1,723
May-15 1,688 1,260 1,710
Jun-15 1,637 1,246 1,711
Jul-15 1,667 1,269 1,778
Aug-15 1,689 1,210 1,821
Sep-15 1,347 1,318 1,858
Oct-15 1,626 1,327 1,873
Nov-15 1,673 1,368 1,868
Dec-15 1,652 1,340 1,811
Jan-16 1,624 1,371 1,801
Feb-16 1,651 1,392 1,853
Mar-16 1,675 1,428 1,859
Apr-16 1,691 1,444 1,903
May-16 1,699 1,409 1,918
Jun-16 1,674 1,440 1,858
Jul-16 1,665 1,435 1,811
Aug-16 1,694 1,483 1,849
Sep-16 1,702 1,508 1,905
Oct-16 1,779 1,534 1,939
Nov-16 1,692 1,476 1,937
Dec-16 1,752 1,514 1,944
Jan-17 1,712 1,471 1,948
Feb-17 1,730 1,498 1,944
Mar-17 1,729 1,529 1,863
Apr-17 1,680 1,492 1,890
May-17 1,751 1,504 1,979
Jun-17 1,840 1,600 1,961
Jul-17 1,814 1,526 1,968
Aug-17 1,806 1,537 1,960
Sep-17 1,888 1,654 2,012
Oct-17 1,906 1,678 1,996
Nov-17 1,873 1,641 1,986
Dec-17 1,852 1,638 1,967
Jan-18 1,789 1,587 1,937
Feb-18 1,826 1,630 2,000
Mar-18 1,831 1,655 2,034
Apr-18 1,846 1,631 2,091
May-18 1,880 1,659 2,103
Jun-18 1,995 1,724 2,164
Jul-18 1,944 1,705 2,116

Economic benefits and costs of STR

The MCVRA dramatically overestimates the economic benefits of STR, while failing to take in to account any costs whatsoever.

The MCVRA relies on a study by TXP Inc. of Austin Texas entitled “The Local Economic Impact of Short Term Rentals in Monterey County.”  The study, published in the fall of 2014, can be found in its entirety here:  MCVRA Study on Economic Benefits of STR-OCR

The study is invalid on its face.  It makes several key and clearly erroneous assumptions. Specifically:

The principal fallacious MCVRA assumption is:

STR guests indicate they would not visit Monterey County if STRs were not available . . . The economic impact of STRs in Monterey County in 2013 was calculated by first estimating the direct accommodations spending by visitors using STRs. Next, this figure was used as the basis of calculating total STR direct spending.

In other words, the study assumes that none of the STR renters would have come to visit Monterey without STR’s, and therefore none of the money would be spent.  This is ludicrous on its face.

The study itself and all subsequent analysis indicate a surplus of visitor lodging even if every STR stopped operating.  Also, the total number of visitors to the Monterey area has DECLINED since the advent of STR’s, not gone up as the text of the report says (see below).

Fact: The likelihood is that an extremely high percentage of the visitors to Monterey who rented STR’s would have come anyway.  The $1.4 million to $2.8 million TOT benefit to Monterey County will happen anyway if those visitors stay in the hotels and other permitted lodging.  The $131.8 million benefit to the Monterey economy would also happen with or without STR’s.  The claim of 1,400 jobs is equally dubious.

MCVRA Assumption: In 2013 . . . annual average occupancy rates  . . . reached [an] all time high of 65.3 percent . . .

FACT: The report itself (Figure 1 below) shows that from 2011 to 2013 the number of visitors by almost one million people from 2009 – 2010.

MCVRA Study Graph Visitors 2007 to 2013

FACT: The report itself shows that there is plenty of lodging available for visitors and that  STR’s are not necessary.

MCVRA Assumption: “For the purpose of this study, STRs are defined as furnished, private, residential dwelling units that are rented to guests for less than 30 days at a time by an individual or property manager in Monterey County. Any properties self-identifying as short term or vacation rentals, as well as properties listed on major short term and vacation rental websites, were included.

FACT: Law-abiding homeowners rent their properties for the minimum 30 day period in areas that prohibit short-term rentals.  The MCVRA report assumes that every single person doing vacation rentals is violating the law.  This is simply not the case.  Jan Leasure and Susan Bradley (former head of MCVRA) both rent to visitors for 30 day periods.

MCVRA Assumption: The Santa Cruz experience of increasing tax collections is evidence that the same would happen in Monterey County.

Fact: Santa Cruz has less than 4,700 rooms while Monterey has more than 12,000.  there is a shortage of rooms in Santa Cruz and a surplus in Monterey.  See: To be or AirBnB; Voices of Monterey Bay, by Joe Livernois, 12/7/17

 

FACT:  THE MCVRA ECONOMIC ANALYSIS FAILS TO TAKE IN TO ACCOUNT ANY OF THE COSTS OF STR TO THEIR NEIGHBORS

When an STR moves in to the neighborhood there are actual costs to the neighbors.  In Carmel Highlands, trespassing, and trespassing followed by pranks were commonplace.  For example, one night STR renters got drunk and roamed from house to house – at midnight – ringing doorbells and running away.  To protect ourselves from that we would have had to put in extensive fencing, gates and other security measures.  That is expensive and fundamentally changes how one lives in their house.

There were times when it was so noisy for so many days, that some neighbors had to go to a hotel to get a night’s sleep.  That is expensive, and the cost of being driven from your home, deprived of your right to its quiet enjoyment, dramatically decreases the value of the home.

Also, as a practical matter, it is up to the neighbors to collect the evidence needed for authorities to enforce the rules.  This cost time and money as well.  For example, excessively loud parties noise levels have to be measured in a legal way to be introduced in court.  The meters and training cost something.  In the Carmel Highlands hilly areas, sound travels  in odd directions.  Sound levels may be way above legal limits at one neighbors but not at anothers.  This actually happened several times.  Sound levels 30% higher than those permitted adjacent to an LA freeway were measured at the back porch of a home approximately 300 feet from the STR.