How the City of Toronto is Addressing Issues with AirBNB

Listen to “How the City of Toronto is Addressing Issues with AirBNB” on Spreaker.

Guest Speaker: Tracey Cook

Executive Director, Municipal Licensing & Standards, City of Toronto

Her Insights

What the City of Toronto will be doing with respect to Airbnb
Why Tracey and her team felt it was necessary to look at the impact of short-term rentals in the city
The feedback process from the various stakeholders
Are the hotels in losing out on revenue because of AirBNB and other short-term rental providers?
How much home owners are making from having their place on AirBNB
Are AirBNB rentals taking away units from an already low rental pool in Toronto?
Will the City end up taxing the end user or create some kind of short term rental license for home owners?
The ideas that Tracey has learned from other cities around the world dealing with AirBNB
When will the City of Toronto decide what it wants to do?
How can listeners have their say and be a part of the City’s AirBNB consultation process?

Transcript

D Morrison: Welcome to the Morrison Report. I wanted to create a podcast that would give people insights into the Toronto real estate market. You can follow me on Twitter, @DavelleMorrison and on Instagram as Davelle Morrison and you can like my business page on Facebook.

Thanks everyone for joining us today. Today we have Tracey Cook, she’s the Executive Director of Municipal Licensing and Standards with the City of Toronto. Welcome, thank you so much for joining us today Tracy.

Tracey Cook: My pleasure Davelle.

D Morrison: Awesome. Can you tell us a little bit about what you do for the city of Toronto?

Tracey Cook: I am in charge of the division that is responsible for the bulk of the enforcement of our municipal bylaws. That relates to property standards issues as well as zoning issues, business licensing, and regulation around the businesses that are municipally licensed such as restaurants and tow trucks and taxis, as well I have animal services under my portfolio. We have three shelters across the city and do all the enforcement related to that as well as a sheltering animals, adoption programs, spay and neuter clinics. We do, MLS as we call it, does a lot of very different things for the city. It interacts with a lot of different members of our community.

D Morrison: Awesome. Can you give us an idea what your department will be doing with respect to Airbnb?

Tracey Cook: Sure. We’ve been asked to work on developing recommendations for committee and council on what’s happening with short term rentals including those in Airbnb being the more significant player in the market right now. This is a partnership effort between ourselves and our city planning division as well as other divisions that may have an interest, such as Toronto Building and others. We were directed last year to undertake a comprehensive review and we are leading that review right now. We actually had our first public consultation session last night, March 28, and that’s in addition to a number of round tables and other things we’re doing. Right now, we’re in the review phase, we’re in the consultation portion of our work and to understand what the public’s interest is in Airbnb, whether it be people who offer their properties as hosts, people who use the service as visitors, or people who are living next door to a property that is being used on a short term rental basis. We’re really trying to reach out and see where everybody stands. Then, that will help inform what we’re going to do from here.

D Morrison: That sounds great. Can you tell us a little bit about why did you and your team feel it was necessary to look at the short term rental impact on the City of Toronto?

Tracey Cook: Absolutely. There were a couple of things. We started to get, and as sometimes happens, a couple of rather higher profile incidents or issues that arose. There was a property up in North York where a community was quite upset by, it was a property awaiting a development application of some kind, but it was sitting vacant and the owner started using it to offer short term rental. It started causing some disruption in the community. We have another street, more downtown Toronto, where a number of properties had been purchased by we believe a common owner, and again started offering these properties for short term rental and large parties and noise ensued. We had a couple of these areas where some complaints from local communities were coming up.

Then our council, through our Executive committee last year said, “We understand this is something that’s happening in cities all around the world, we know it’s happening in Toronto, we want to understand what that means and what role the city should take or not take as it relates to this.” It was really this culmination of changing dynamic and neighborhoods, the whole discussion around the sharing economy more broadly, what this means opportunity wise as well as issue wise and we were directed to undertake that work, so the work is underway.

D Morrison: Very interesting. How are you getting feedback from the various stakeholders in this discussion?

Tracey Cook: We’re doing everything we can to get as broad consultation process as possible. I mentioned earlier, we opened up our first open public consultation last night, we had about 120 or 130 people come out to the North York Civic Center, which was fantastic. A really great mix of people, great dialogue. We have had and will continue to have more industry related stakeholders in smaller round table groups. We did have one facilitated last week by Mars Solutions Lab where we had representatives of all stakeholders, all together in a room, from the hotel industry, the hospitality industry, the real estate industry, legal, hosts, users, we had communities, condo associations. We had a great session of about 60 people last week as well, we’ve just launched yesterday, a very short survey online through our website. I can tell you more about that a little later if you like.

D Morrison: Okay sure.

Tracey Cook: Again, opening up the door for anybody who has an interest in providing some input. We are doing in person round tables and actually, what’s really neat, one of our next public consultations will be on April 12th and we’re going to live stream it through YouTube.

D Morrison: Cool.

Tracey Cook: Yeah. We’re going to engage people, hopefully, through Twitter as well. We’re really trying to find a number of different mechanisms to get stakeholder and public feedback.

D Morrison: That sounds amazing. It’s a good idea to really do that.

Tracey Cook: Thank you.

D Morrison: Can you tell us, do you feel, or I should say does the hotel community in Toronto feel, that they’re losing out on revenue because of Airbnb?

Tracey Cook: We’ve been speaking with the hotel industry. We don’t have numbers that support any significant loss or impact of business, though anecdotally they’re saying that they are impacted, but it seem more, the narrative from the hotel side is around this notion of level playing field. Not dissimilarly to what we heard when we went through the Uber debate and the taxi industry. The hotel industry is saying and the long established bed and breakfast industry are saying, level playing field. That people are doing similar things to what they’ve been doing and what does that mean from a regulation, taxation, point of view. The hotel industry’s been very good in participating in the dialogue. They recognize that this is not something that’s going away anytime soon, but that there needs to be a balancing. I think the best people to ask if there have been financial impacts, really would be the hotel industry. They have not put that forward as any detailed case to us yet.

D Morrison: Interesting. Do you have a sense of how much money you think home owners might be making from having their places on Airbnb?

Tracey Cook: Yeah, we don’t have that data directly. Really, all there is around that, is what Airbnb has been putting out as far as their communications. They’ve had some research done, some studies. A lot of times, you’ll hear the narrative that they’re providing people a few thousand dollars a year just helping them make ends meet. I’m sure there are those cases but we also know they’re a large volume of properties that are investment properties, second or third properties where I’m sure people are making considerably more. We’ve not delved into how much money people are making because really our interest right now is around how the lands are being used, are they being used for the purpose they’re intended to, if not, how and how does that impact communities, what do we need to do. We’ve really not been looking at how much money people are making.

D Morrison: Got it. That’s fair. I know in Vancouver they found that Airbnb was taking away units from their tight rental market. Do you see the same kind of thing happening in Toronto, that it’s making it harder for renters to find a place because there are so many places listed on Airbnb?

Tracey Cook: Right. We do know that we have an extreme housing challenge in Toronto. Just globally, we have a challenging … As far as the real estate market, it’s not a bad thing with increasing values of properties, but people are finding it hard to find places to live anyway. We certainly are hearing from some people, they believe that there is some impact from the properties transitioning to short term rental versus long term rental. Again, very difficult to quantify, we didn’t have a huge inventory of all these private owners that were offering second or third properties on a long term rental basis. We didn’t have that.

We do know that we have a housing shortage. We do know that we have an affordable housing challenge. To what extent does the Airbnb phenomenon contribute to that? It’s difficult to quantify. There is a component there, but it’s certainly something that we are going to seek to try to understand more fully and really bring facts to the table as far as is this a contributor. Is this the problem? I don’t think it’s big enough yet to be the big problem. Is it a contributor? Quite possibly. To what extent can we mitigate that or what measures can be taken to mitigate it, we still need to work on.

D Morrison: How can the city do more research to find those things out? Is that even an option?

Tracey Cook: We’ve engaged with our other partner divisions that do analysis on population trends or looking at census data, do housing planning. We’re hoping that there may be some indicators through all that work. In the absence of that, it comes through the consultation work that we’re doing and hearing from people about the impact and try to determine, what can we absolutely determine through these variety of sources. We’re certainly going to endeavor to do it, because I do believe that this particular topic, the impact Airbnb may or may not be having on the availability of long term rentals for people, I think is going to be a significant point of discussion when this goes forward to committee and council.

D Morrison: That definitely makes sense. Do you think, I guess it’s hard to say because obviously you’re still in the consultation phase and you’re trying to create your plans based on hearing feedback and what everyone has to say. Do you think the city might end up taxing the end user or taxing the owners of the short term rentals in the end or having some sort of licensing service for them?

Tracey Cook: Right. On the taxation front, our council has been pretty out there, vocal, as far as wanting to seek authority from the province for the city to have the ability to implement a lodging tax or a hotel tax. That is out in the public discourse around the city seeking authority to implement taxes. There was a motion that came out of council, or our budget committee, that talked about if a hotel tax registered at established hotels was at 4%, should a short term rental tax be more like 10%? That evoked some feedback from Airbnb, being one of the platforms. That’s all out in the public domain. Ultimately the authority needs to be there for the city to consider doing it and then council needs to make the decision.

As far as on the licensing side, we’re at the point right now, licensing is a possibility sure. I think some jurisdictions have done that. We’re not there yet. We don’t know if a license for the platform or a license for operators or both or neither or simply more of a different regulatory approach where amendments are made in the zoning bylaw. We will have to see where our research takes us and what we feel the most appropriate tools are that the city needs to utilize.

D Morrison: Interesting. I think I was speaking with somebody in Collingwood recently and they mentioned that in Collingwood, people do have to obtain some sort of license from the city, I guess a yearly license that they pay for, in order to be able to provide short term rentals. They sort of renew it and there’s some sort of inspection process and I just kind of wondered. Obviously there’s many cities around the world that have been dealing with the short term rental issue. Are there any sort of key findings or interesting things that you’ve heard from around the world? What other people are doing?

Tracey Cook: Yeah. You’re absolutely right. There’s different approaches being taken all over based on the local context. Amsterdam was one, early out of the gate, a couple years ago. They’ve got a memorandum of understanding with Airbnb as the platform and they’ve implemented a maximum on the number of days a property can be used. Some responsibilities on the platform side to monitor that or take action once they’ve reached that max. I think, when we approach these reviews, we do look at other jurisdictions, not just what they’ve done. What I find far more interesting and informative is how has it worked. If it has not, why not? Certainly people’s expectations are, if rules are implemented, that the rules are enforceable.

That’s part of the dialogue we’re having with some of these other jurisdictions to get, not just the what did you do but what worked, what hasn’t worked, if it has why and how and if it has not, why and what are you going to do about it. I’ve not found any jurisdiction that I would say has it 100%. I think there are elements that we’re looking at that are similar to a variety of jurisdictions. Certainly we have the uniqueness of Toronto, best city in North America, and the world, I’m a little biased.

D Morrison: Woo-Hoo. Totally.

Tracey Cook: I’m very biased. We want to make sure that the answer we bring forward is an answer that works for Toronto and the uniqueness we have, versus the uniqueness of any other city. Haven’t found the magic answer yet.

D Morrison: Can you share with us maybe, what some of the other elements that you’ve seen that piqued your curiosity that other cities have tried? I know that you’re saying that you’re not sure what they’re results are like or the results might not necessarily be 100% what you want, but are there some sort of elements, examples you can share with us of what’s been done around the world?

Tracey Cook: Sure. There are a number of them that have looked at, as I mentioned, a maximum number of days. Some have taken an approach of differing the permissions based on the type of property. Perhaps a fully detached or semi-detached home may differ as far as what they would permit on a frequency basis versus an apartment or a condominium. Some are not permitting, like New York. They have a significant rent controlled regime there and are not permitting the use of apartment units that are under rent control to be used as short term rentals. There’s various different aspects on the type of property, the zoning that’s applicable to that neighborhood or that property, maximum number of days, length of stays. Really there’s a number of different component pieces.

I think our very interesting challenge here and I will be looking into what some other jurisdictions have done, is the condo market and what’s happening with condominiums. It does present some unique opportunities with the authorities of the condo boards, but also challenges for them. You can turn the dial on a variety of different aspects of the where, the how, the how many, the is there a maximum, is there no maximum, as well as some are looking at a city registration or a city license and individual home owners have to come in. San Francisco has that. Don’t think it’s working too well, where individuals are expected to approach the city. We’re going to look at all of these basics and see what is the most suitable for us.

D Morrison: I think it is challenging, specifically in the condo world. I used to be on the board of directors for my condo building and most condo declarations, it basically says, you can’t have a rental term that’s shorter than six months. You have a lot of people using Airbnb and they’re doing it in secret til the condo board finds out and is trying to get them to stop. Unfortunately condos don’t have a lot of mechanisms to make people stop using Airbnb, other than, “We’re going to get our lawyer involved, you’re going to have to pay for it, maybe they can give you a fine.”

Tracey Cook: That’s what makes this so complicated.

D Morrison: Absolutely. When will the city decide what it wants to do? What’s your deadline after you’ve done all your consultations to figure out, “Okay, this is what we want to do.”

Tracey Cook: We have a commitment to report to our executive committee on June 19. That’s when we’ll be at committee. That means the report that outlines our series of recommendations would be available to the public, just over a week in advance of that. Obviously, we need-

D Morrison: Hmm.

Tracey Cook: Yeah, it’s coming fast.

D Morrison: Soon.

Tracey Cook: We need to have our work done, at least know where we’re shaking out as far as recommendations we’ll make to council. Really, I’m saying to my people, we need pen off paper by mid-May.

D Morrison: Right.

Tracey Cook: So we can have those last two weeks of May, first week of June, to scrub through our assertions, or our assumptions I should say, and ensure that we’re presenting a report that outlines our findings and rationale for the recommendations that we will ultimately make. The pedal’s on the metal for this at this point. Or is it pedal to the metal? Yeah, pedal to the metal.

D Morrison: Do you consult at all with other areas in Ontario, other councils, any other sort of city? I know, for example, in Prince Edward County, they’re sort of undergoing the same thing where they’re trying to figure out if they need to license the Airbnb use. Does the city of Toronto consult with other councils or municipalities to figure out what they’re doing as well too?

Tracey Cook: Certainly. At a staff level we absolutely do engage with other cities. Many of us just went through the taxi, Uber issue and many of us are now dealing with the marijuana legalization and illegal dispensary issue. We’ve gotten to make a lot of contact across the country.

D Morrison: That’s good, everybody’s working together.

Tracey Cook: Absolutely. I think that’s the best way to do these things. If we can get some consistency, that certainly helps the pubic and helps the operator. We will be talking on the Airbnb front, at least as far as our local partners go, we have the most significant volumes so we haven’t found an answer outside of the GTA but we’re absolutely open to the discussions and when we get together or make phone calls, a lot of times it’s a quick, “Hey, what are you doing about this?” Talking to the province as well and seeing where are they headed, where were they getting involved or are they getting involved? They came out in respect to the Airbnb issue last year talking about a pilot they did with Airbnb on informing people on how to meet their taxation obligations. It’s a lot of conversation with a lot of different people and everybody’s just trying to sort a path too to balance all the competing interests.

D Morrison: Wow, very interesting. Is there anything else you think our listeners should know about this issue and what you guys are doing?

Tracey Cook: I think what I’d like them to know is that their input is important. We truly, truly do listen to what people’s opinions are, what suggestions they have, goods, bads and uglies. What they like about it and what they don’t like about it and suggestions on what they think the city and or other levels of government ought to do. I think every voice counts and people should not think, I don’t have much to say. Everybody’s got something to say. We’re absolutely happy to hear it. They don’t have to represent large groups. We have individuals write us all the time and really encourage them to do that. Just know that we are endeavoring to find a balance in recognizing that this is a thing that’s happening in our city that people want and people don’t want. This is happening in our city and we need to find how we balance everybody’s interest. We’re working hard and hopefully we can strike that balance.

D Morrison: Where should people go online to voice their opinion? I think you have a survey or something?

Tracey Cook: Well thank you for asking!

D Morrison: No problem.

Tracey Cook: Yes. Our website, is through Toronto.ca. I never know if it’s a backslash or forward slash.

D Morrison: Forward slash.

Tracey Cook: It’s one of those slashes, yeah. Then it’s MLShaveyoursay. We’ve got the online survey. It went up last night and encourage everybody to have a look. We will, as we go along, be posting information on our website, the presentations that we conduct, the public consultations, and also as I mentioned, on April 12, the live streaming of the consultation, the engagement through Twitter, a lot of opportunities for people to reach in and let us know what they think. If someone has a more substantial submission they want to make, through our website they’ll find some email addresses of two of my staff that they can send that to directly.

D Morrison: Perfect.

Tracey Cook: We’re really open for business and open for input.

D Morrison: Awesome, that sounds great. Tracey, I always like to ask everyone who I interview, what part of the city they live in, and obviously since you work for the city of Toronto, what part of the city do you live in a why and do you rent or do you own?

Tracey Cook: Oh, I am a life long Toronto resident, always have been, always will be. Very proud to be. I live in Dawn Mills and I own my home.

D Morrison: Awesome, excellent.

Tracey Cook: Nice kind of center of the center of Toronto.

D Morrison: Center of the center. I guess everybody always debates what the center of Toronto is. I happen to live at Yonge and Eglinton so I’m always like-

Tracey Cook: Oh, now see, you’re the center then.

D Morrison: Exactly.

Tracey Cook: We are all our own centers in Toronto.

D Morrison: Exactly, that’s what I mean. It’s all in our mind, where ever we live is the best part to be, right?

Tracey Cook: Absolutely.

D Morrison: Well, thank you so much for joining us today Tracey. I know you’re super busy and thanks so much.

Tracey Cook: My pleasure.

D Morrison: Awesome thanks.

Thanks again for joining us for some Toronto real estate market insights. You can visit my website at Morrisonsellsrealestate.com or visit Morrisontalksrealestate.com for more episodes of the podcast. Thanks for listening.