Virginia Beach grapples with Airbnb rentals after deadly shooting at College Weekend party
The Virginian-Pilot | Mary Beth Gahan
May 6, 2016
When Yuanming He rented out his townhome on Airbnb two weeks ago, the Old Dominion University student who booked it promised there would be no parties and no more than three people on site.
Instead, witnesses said, around a hundred people showed up at the two-bedroom house a couple of miles from the Oceanfront during College Beach Weekend. Police were called there twice: once for a report of gunshots and again three hours later for a shooting that left 20-year-old Darren Campbell dead.
The homeowner, who lives in China, didn’t know what had happened at his place south of Interstate 264 until he was contacted by The Virginian-Pilot.
The worst-case scenario has now become part of the debate about short-term home and room rentals through Airbnb, a website that allows people to list such properties for temporary lodging.
Virginia Beach does not specifically permit such rentals in residential areas. But it doesn’t exactly forbid them either. The city and state are studying how to handle the issue and recover hundreds of thousands of lost tax dollars from properties rented out on Airbnb.
For now, privacy settings on the website and a lack of manpower make it tough to regulate.
“We don’t have the Airbnb police,” said Robert Matthias, assistant to the city manager. “This is very hard to enforce.”
Airbnb, which started in San Francisco in 2008, has emerged in recent years as a competitor to hotels in Virginia Beach. In March, the site had 160 active listings at the Beach, according to Airdna, a company that collects data about the service in select cities.
Some Airbnb hosts in Virginia Beach make as much as $30,000 a year per listing, according to the Airdna report. Those who list their houses include grandparents with extra space, homeowners who have moved away and real estate agents.
Cheryl Simmons and her husband were in the process of moving to Florida when they decided to keep their five-bedroom house in the Red Mill area as a source of income. They thought about renting it long-term to a family but didn’t want to put their furniture in storage or hire a real estate agent.
“Financially, it didn’t make sense to do that,” Simmons said.
Instead, she took her son’s advice and listed it on Airbnb in March. The house, which rents for an average of $500 a night and includes an infinity pool on a lake, is now booked every weekend until Sept. 11.
“Hotels don’t like Airbnb because those potential customers have found other less expensive and great options,” Simmons said.
Simmons said she plans to file the income she makes on annual tax returns. But she doesn’t think she needs to pay the taxes that hotels do because she’s renting her personal property, and “it would not be appropriate for an individual homeowner to pay a lodging tax.”
Short-term room rentals in single-family homes are allowed only when the house is designated as a bed-and-breakfast or country inn, which are permitted only in historic districts and agricultural areas, respectively.
Entire houses renting for less than 30 days, however, are not explicitly mentioned in the zoning ordinance, according to Karen Lasley, the city’s zoning administrator.
“Long-term home rental is an accepted practice throughout the city,” Lasley said in an email. “Short-term home rental has been an accepted practice in residential neighborhoods near the Ocean and the Chesapeake Bay.”
The City Council last week directed the Beaches and Waterways Commission to study the impact of short-term rentals featured on sites such as Airbnb. The state is doing its own research through a group that will meet in Richmond for the first time Tuesday. The group will report its findings to the state’s Housing Commission in November, Matthias said.
Because there’s no real system on the books for these kinds of short-term rentals, he said, the city can’t collect taxes from the transactions. Virginia Beach’s budget office estimates the city misses out on $200,000 a year in tax revenue from Airbnb rentals, Matthias said.
“That is one of our biggest priorities across the world – where we can collect and remit hotel taxes,” Airbnb spokesman Christopher Nulty said. “We supported a bill in Virginia that would have allowed us to do just that.”
The Commissioner of the Revenue’s Office investigates businesses on sites such as Airbnb, according to Deputy Commissioner Tom Zink. If it can pinpoint an owner and address of a rental property, the office sends a letter explaining how to register as a business and pay back taxes. It can be difficult, Zink said, because the website lists streets or areas but not exact addresses.
“A lot of times we get tipped off by neighbors,” he said.
Joe DaBiero, president of the Virginia Beach Hotel Association, said rentals through Airbnb are “flying under the radar on occupancy taxes and anything that a hotel would actually pay that goes toward the city’s coffers.”
“They are not being held to the same standards of safety as hotels,” he said. “They should be subject to the same restrictions and guidelines.”
Nulty said: “We hear from our hosts all the time they want to make sure they’re complying with local laws, and we want to help with that and make it easier for them.” He added that the company collects taxes from those who rent out their places through the site and remits them back to where it’s based in San Francisco.
“We first began collecting and remitting hotel and tourist taxes from guests on behalf of hosts in San Francisco and Portland,” Nulty wrote in an email. “Today, we are doing this in 160 plus jurisdictions globally.”
Bruce Miriam of YPB Properties, a vacation-rental company with 15 listings on Airbnb, said he uses the 8 percent lodging tax that hotels pay as the basis for figuring out how much to turn over to the city in monthly taxes.
City Council member Ben Davenport wanted a commission to study the issue because he is concerned about safety after the recent shooting death of Campbell.
“You can see the unintended consequences that can happen when you have an owner that isn’t from the area and renting out a house for the weekend in a residential area,” Davenport said.
The student who rented the townhome from the owner in China left a review a few days later saying the house was clean but the neighborhood was dangerous.
The Pilot exchanged messages with He, who called himself “the second victim,” on the Airbnb site because it blocks phone numbers until a booking is confirmed.
“If it was not legal, why didn’t the police stop them?” he wrote.
The listing for He’s place was removed less than a week after the shooting. By Wednesday, his profile had been deleted.