Pub. 4 2019 Issue 4

11 ISSUE 3 2019 those who carry bad credit or who don’t have a large credit history,” Siebern says. Many short-term operators emphasize their background-check processes. For instance, Allen says Stay Alfred screens through a two-step process. e rst step is a public record screening. Any reservation with questionable or unclear results is next run through Stay Alfred’s screening process. Wood Partners has had mixed success with short-term rentals. At a community in Portland, Ore., Managing Director Steve Hallsey says residents complained about unfamiliar people in the hallways, loud parties and the amenity spaces being monopolized. “It was a huge disaster for us,” he says. “We almost had a revolt with our exist- ing residents. We had to move it out of the building.” Short-term rentals at Wood Partners’ Alta Alchemy, a mid-rise building in San Francisco, operated more smoothly when it used a short-term-stay provider. “ e experience was great because we could spread the guests across the prop- erty more e ciently; it wasn’t as obvious that non-residents were living in the building,” Hallsey says. “It works better in a mid-rise garden than in a high-rise, because people aren’t in the elevator and seeing strange people come in and out.” Despite the good experience in San Francisco, Wood decided to shelve its short-term-stay program. “We’re not doing it anymore because of the resident disruption,” Hallsey says. “It impacts the value of your property. Our experience is that [apartment] buyers have come in and discounted [in the underwriting process] those short- term residents even though they sign a one-year contract when they under- write a community.” Chris Herndon, Co-Founder of short- term rental and hotel operator e Guild, hears these concerns. “It’s a huge issue,” he says. “As I like to say, ‘ e bachelor party is a substantial risk to this business.’ ” But Herndon contends that his guests “behave” better than a community’s reg- ular residents. “We advertise on channels with price points that attract business travelers or folks with a little bit more of a budget,” he says. Like other short-term providers, Vacasa’s Viner emphasizes that his rm utilizes noise-monitoring technology in apart- ments it manages and employs sta to handle other potential hot-button issues. “Probably the biggest thing are buildings that have had operators that have previ- ously attempted to manage short-term rentals that left a bad taste in the man- agement company’s mouth,” Viner says. As do many providers, Kitchell empha- sizes that Lyric’s goal is to promote a calm and safe living environment for all involved. “ is isn’t about backpackers and bachelor parties,” he says. “ is is about business travelers coming into your communities.” Regulatory Hurdles As a top national developer, Hines works to nurture its relationships with govern- ment o cials in the cities where it builds. “All of our buildings have local teams working on development projects and looking at acquisitions,” Kuntz says. “ ey have a good grip on what the reg- ulations are, and they don’t want to run into any regulatory issues.” Such issues could potentially create a problem with short-term rentals, which have been a target in many cities nation- wide. Municipalities often take note of companies that remove apartments from their housing stock and convert them into hotels or short-term rentals, making housing less a ordable. Developers that lease apartments through a short-term provider and that want to nurture local relationships could come under re. Kuntz doesn’t want to run that risk. Neither does Novare Group’s Borders. “We want to make sure we’re in compli- ance with local rules and regulations,” Borders says. “[Short-term providers] research that, and they pay to the extent that taxes are owed.” In their agreements with Hines, Newton says short-term providers are contractu- ally obligated to know and follow local rules and regulations. “ ey know they’ll have to have all their permits in place to be an operator,” she says. WhyHotel’s Fudin says questions about compliance are the queries he elds most often. In response, he succinctly tells inquirers, “We secure the regulato- ry approvals.” Herndon says e Guild partners only on buildings where hotels are permitted. As a top national developer, Hines works to nurture its relationships with government officials in the cities where it builds.