Thirty percent of Airbnb revenue in L.A. comes from hosts who list their units every single day of the year, according to a recent study by the Pennsylvania State University School of Hospitality Management.*
It points to a serious problem: In a town with America's worst housing crisis, much-needed apartments used for Airbnb full-time are off-limits to renters.
The Los Angeles City Attorney's Office today announced that it has filed suit against the owners of four properties used primarily as Airbnb rentals.
The core of city prosecutors' argument is that the owners allegedly kicked out rent-control tenants and then immediately turned around and put the properties on the Airbnb marketplace, which would be a violation of the state's Ellis Act.
The city of San Francisco filed similar suits against local property owners in 2014.
“The property owners are illegally operating and advertising as hotels,” the City Attorney's Office alleges in a statement. “The lawsuits seek a court-appointed receiver to operate the properties until they are brought into compliance, as well as restitution and significant civil penalties.”
The targets of the city's legal action include the following, according to the office's statement:
Carl Lambert, the owner of Venice Suites (417 Ocean Front Walk), allegedly has operated and advertised the 32-unit apartment building in Venice as a hotel complete with its own website and regular hotel amenities. In January 2015, the Department of Housing and Community Development (“HCIDLA”) issued Orders to Comply to discontinue use as a hotel. Those orders allegedly continue to be ignored by the defendant.
William Andrew Layman, Rose Layman and Matthew Moore, the owners and managers of Venice Beach Suites (1305 Ocean Front Walk), allegedly operate the 30-unit apartment building as a hotel, extensively using internet sites to advertise the apartment units as hotel rooms for reservations, though the zoning for the location does not allow for its current use. In January 2015, HCIDLA issued Orders to Comply to the property owners citing the illegal use as a hotel. Those orders allegedly continue to be ignored by the defendants.
George Panoussis owns a 59-unit apartment building (830 N. Van Ness Ave.) allegedly operating and advertising as the Hollywood Dream Suites Hotel in direct violation of the area’s residential zoning requirements. Panoussis and his co-defendants allegedly have denied inspectors access to the premises at least eight times. In January 2014, HCIDLA issued Orders to Comply to the property owner for illegally using the property as a hotel without proper permits from the Department of Building and Safety. Those orders allegedly continue to be ignored by the defendants.
At a fourth property, Carol Jean Alsman, the owner of a four-unit property located at 500 N. Genesee Ave., was charged with six counts in a criminal case alleging: failure to comply with an Order to Comply, zoning violations; illegal use without proper building permits, failure to file notice of intention to re-rent, failure to offer rental to displaced tenants, and renting property within five years after withdrawing from the rental market under the Ellis Act.
“In a city with a profound shortage of affordable housing, unlawfully converting rental units to operate hotels has got to stop,” said city attorney Mike Feuer. “My office will continue to intervene to keep rent-stabilized units on the market and hold owners accountable for not complying with the law.”
The office will send a list of properties taken off the rental market under the state's Ellis Act with the hope that Airbnb will do some self-policing.
We reached out to Airbnb. A rep sent us this statement:
While we don't comment on pending cases, we strongly oppose real estate speculators who illegally evict tenants and abuse platforms like ours in search of a quick buck. The vast majority of our community are middle-class people trying to pay the bills and stay in their homes. In fact, in Los Angeles alone, an estimated 3,000 hosts avoided foreclosure or eviction by hosting on Airbnb.
*UPDATE at 3:42 p.m. Tuesday, June 21, 2016: Airbnb refutes that statistic, saying the year-long figure is based on listings, not actual bookings.
“In the previous 12 months, less than 0.5 percent of booked listings were booked for more than 360 days,” a spokeswoman said. “Those listings represented less than 0.5 percent of revenue for all Airbnb hosts in L.A.”