A member of Boise’s City Council will ask for a refund of housing incentive dollars used for short term rentals. The move by Elaine Clegg comes after our reporting last week on the Fowler building and an STR program. The developer also says it is working with the city to make the situation right.
Los Angeles-based LocalConstruct is using 30 units at The Fowler for short term rentals. About one-fifth of the apartments at the building on Broad St.
The City of Boise paid LocalConstruct $159,000 as part of an incentive program to bring more housing to downtown. The money was structured as a refund of fees paid to the city by the developer.
‘Wasn’t the intent’
“This wasn’t the intent of our housing incentive,” Clegg wrote on the BoiseDev Facebook page in response to questions. “I supported the incentive as it was designed for the time we were in but I am not OK with using the incentive this way.”
LocalConstruct Founding Partner Mike Brown said the conflict between the incentive and short term rentals hadn’t occurred to them.
“From the landlord’s perspective, these corporate housing type of master leases are extremely common in the multifamily industry, and have been for decades,” Brown wrote in response to questions from BoiseDev. “Many, if not most large apartment projects master lease some units to operators of furnished rentals, who then furnish the units and offer them to the public on lease terms shorter than a traditional landlord such as ourselves would entertain.”
Brown emphasized his company is in compliance with city code, and the requirements of the incentive. He said short term rentals didn’t come up while discussing the project during its development with the city.
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Clegg said the city council intended the program for housing as its name implies.
“We created the incentive program at a time when the market was not producing housing downtown and hadn’t for a decade,” Clegg wrote. “That housing was meant for residents, not visitors. “
“We certainly did not think of our Stay Alfred tenant in the same light as VRBO or Airbnb when we signed a lease with them,” Brown wrote. “But in light of your article, it is apparent that this is the way they are perceived.”
Not a bait and switch
Brown emphasized his company didn’t set out to run afoul of the intention of city leaders.
“There was never any bait and switch with the city, as you seemed to insinuate last week,” Brown wrote, referring to our story. ” I just don’t think this was an issue on anybody’s radar 3 or 4 years ago when we were putting the Fowler project together.”
Both Brown and Clegg wrote more action is needed in light of the perception and reality.
“In response to using the units for short term rental we intend to request a refund of the incentive for any unit that’s being used in this way,” Clegg wrote. “We will also reach out to all other businesses who received the incentive to remind them that the intent of the program was not to fund short term housing but to help make permanent housing downtown a reality.”
Clegg said city staff members are working on determining the best way forward. Brown said they have also engaged in what to do moving forward.
“We have reached out to the appropriate city leadership to see what we can do to help address the issue of short term rentals in this particular instance and in future projects,” Brown wrote. “We look forward to those conversations, and, in terms of possible solutions, we will be a good partner to the city as we always have been.”
LocalConstruct is developing another project nearby known as The Cartee. The city ended its downtown housing program and the project is being developed without any public incentive.