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More Oakland Homes Turning into Hotels

Landlords are continuing to displace Oakland renters in order to turn apartments and homes into highly profitable short-term rentals. And it's making the housing crisis worse.

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Richard Wingart used to live in a five unit, rent-controlled apartment building in North Oakland, but last November his landlord forced him out of his home, and he ended up leaving the city. Now, his apartment has effectively become an extended-stay motel.

Richard Wingart's story might be familiar to Express readers. I first wrote about Wingart's housing problems last May after he and two neighbors who lived in a four-unit apartment building at 840 55th Street were hit with a 125-percent rent increase (see "Jacking Up Rents," 5/20). Their new landlord, Los Altos resident and real estate investor Arlen Chou, bought the building after its previous owner, Kenneth Kolevzon, converted it from a five-unit apartment building into a four-unit condo building. Kolevzon ran into financial problems and was forced to sell at a steep discount. Chou seized the opportunity to make a big profit. On the real estate investor website BiggerPockets.com, Chou wrote, "[T]he best part of the property is that as they are condominiums, they are exempt from rent control!" Chou called the building his "own little island of rent control free property in a rising neighborhood in Oakland."

Chou also hired the Bornstein and Bornstein law firm, which specializes in helping landlords get rid of existing tenants so that owners can maximize rents. Last October, I wrote about how Chou's attorneys succeeded in pressuring Wingart to leave (see "Pushing Out Tenants," 10/14). To do this, they threatened Wingart with an eviction by claiming that he hadn't paid his full rent on time, even though Wingart insisted he had. According to Wingart, Chou demanded $1,450 a month, when Wingart's rent had always been $600, so he and his neighbors petitioned the Oakland Rent Adjustment Program to contest the new, higher amount. The Rent Adjustment Program had responded to the petition, stating that the tenants should pay their old rent until their case was decided. But Chou's attorneys told Wingart that if he lost the petition before the Rent Adjustment Program, he would be evicted, and that the eviction would harm both his credit record and his ability to rent apartments in the future. Unable to afford an attorney, and fearing that he would lose in court, Wingart signed an agreement to move out in November. Afterward, he said he felt tricked. "I don't know a thing about the law," said Wingart in a previous interview. "I was signing under distress, and I wasn't in a clear mind." Wingart has since moved to Pinole.

And now the latest update in Wingart's story: His old apartment is currently renting as an extended-stay motel for two-and-a-half times more than what Wingart used to pay. Wingart's apartment is one of thousands of short-term rentals in Oakland that are listed on platforms like Airbnb. Critics say that the problem of landlords taking units off the market and turning them into hotels is worsening the region's housing affordability crisis. Unlike San Francisco and Berkeley, Oakland has yet to pass a single law to regulate short-term rentals.

Last week, I knocked on the door of Wingart's old apartment. A woman named Megan answered. She said she's a travel nurse originally from Connecticut. Her company sends her on short stints — often several months at a time — to work at different hospitals across the country. She uses Airbnb and other short-term rental platforms to find places to stay. "I was just in Fargo, North Dakota," she said. "Right now, I'm working at Alta Bates Hospital."

Megan said she found Richard Wingart's old apartment by looking on Airbnb. She was browsing through listings for several Richmond apartments being operated as hotels by a man named J. Thomas Martin. When she contacted Martin through Airbnb and asked about renting one of the Richmond apartments, he instead offered her Richard Wingart's old North Oakland studio.

"He said I'd like this one better, that it's a nicer apartment," said Megan. "I really like this neighborhood. It feels safe." Inside, I could hear dogs barking. Megan said she had two dogs and that Martin allowed her to bring them without paying an extra security deposit.

When I asked Megan how much Martin is now renting the apartment for, or whether she signed any kind of contract with him, or Chou, she said I should ask Martin himself. So I sent emails to both Martin and Chou, and made several calls to both of them for this story, but neither responded. However, according to an ad posted by Martin on the website TravelNursingCentral.com, Wingart's old apartment is now an extended-stay motel that rents for $2,195 a month. "Fully furnished," the ad reads. "Just bring your bags!" And, "pets welcome!"

But pets aren't welcome for the existing tenants that Chou has been trying to push out. Last year, shortly after Chou bought the building, he told one of the existing tenants, Cris Cruz, that she could not have her dog live with her anymore, and would face a $25 per day fee each day her dog stayed. Cruz subsequently gave her dog away to a friend.

When I visited the building last week, it was apparent that Chou is also refurbishing the other empty condo, and that he has split this single condo back into two separate living quarters, making the building once again a five-unit structure. According to Martin's listing on TravelNursingCentral.com, he and Chou intend to rent at least two of the building's units as short-term rentals.

If the name J. Thomas Martin also sounds familiar to Express readers, it's because, like Arlen Chou, I've also written about Martin before. Martin is one of an unknown number of entrepreneurs in the East Bay who are taking rental housing units off the market and turning them into hotels (see "Turning Housing Into Hotels," 9/16/15). One of Martin's profile names on Airbnb is "Oakland!" He currently rents several studio apartments on International Boulevard near Lake Merritt for $107 a night on Airbnb. Guests get access to the apartments by obtaining a lockbox code via email. "Professionally cleaned before every stay," Martin wrote in the ad for one of these studios. "Looks like a stylish hotel room in San Francisco, instead of the 'lived-in dorm room' style apartments you tend to find on Airbnb in Oakland."

According to public records, Martin is an employee of the California Department of Finance. He also owns real estate in Richmond, and rents it through Airbnb as well. It's unclear how Martin became Chou's agent to run a hotel out of the apartment building at 840 55th Street, but both of them are frequent contributors to BiggerPockets.com.

East Bay Housing Organizations (EBHO), an affordable housing advocacy group, recently studied the problem of short-term rentals in Oakland using data obtained through a web scrape of Airbnb listings. According to Mia Carbajal, the author of the report, there were 1,155 Airbnb listings in Oakland as of last June. Of these, 57 percent were for entire homes. The average Oakland Airbnb listing was available 237 nights a year. Carbajal said that these numbers indicate that a significant proportion of Airbnb listings in Oakland are entire houses and apartments that have been taken off the residential rental market so that they can be operated as hotels instead.

Alison Shumer, a spokesperson for Airbnb, declined to offer data to the Express that would reveal how many apartments and houses are possibly being run as hotels in Oakland. Shumer said, however, that Airbnb disagrees with the data in the EBHO report. "When people scrape our site, it leads to inaccurate conclusions about our community," she said.

Carbajal said Airbnb and other companies could easily make accurate data available to cities so that policymakers could understand how many housing units might be affected, but Airbnb has refused to provide this information.

The only step that Oakland has taken to better regulate short-term rentals is to sign a tax agreement with Airbnb to collect hotel taxes, but many activists criticize the deal's secrecy. I requested a copy of the tax agreement months ago using the Public Records Act, but the city responded that the agreement is a confidential tax document, and so the public is not allowed to review its terms.

Carbajal said that without seeing the tax agreement, it's impossible to know if Airbnb is actually transmitting to the city the full 14 percent hotel tax that it's now collecting from its thousand-plus hosts in Oakland. In fact, Assistant City Attorney Kathleen Salem-Boyd and Revenue Administrator Margaret O'Brien declined to tell councilmember Lynette Gibson McElhaney during a finance committee meeting on January 26 how much money Airbnb has actually paid to the city, and even told her that they couldn't disclose the information in private.

But O'Brien did tell members of the city council that Oakland will conduct a compliance audit in June of short-term rental businesses in the city. The city will obtain income tax returns from the state Department of Finance and identify short-term rental operators and then cross check this against city records to see if Airbnb hosts and those who use other platforms have obtained a business license from the city, and are paying hotel taxes.

But none of this helps Richard Wingart, one of an unknown number of Oaklanders displaced by landlords who are increasingly turning homes into hotels.

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