Piccirillo admits “60 to 80” illegal Airbnbs operate in the Falls, despite risk of tragedy

In 2016, the City of Niagara Falls issued 30 cease and desist letters to various operators of Airbnb venues, which the City claimed were operating illegally, outside of the City’s short term rental laws that govern Bed-and-Breakfast-style accommodations.

The Airbnb controversy was the Council’s focus for at least a year before a new set of regulations governing vacation rentals was passed by mid-2017.

Now, with well over 200 Airbnb venues operating in Niagara Falls, the City — under acting Director of Code Enforcement Seth Piccirillo — has been inconsistent and sometimes haphazard in its enforcement of those regulations, leading some developers and Airbnb operators to question City officials, citing a political bias in its ‘selective approach’ to its enforcement.

“Somewhere between 85% and 90% of all vacation rentals are operating without regard to the City’s regulations — many aren’t even permitted,” explains Merle Smouse, a local developer, Airbnb operator, and preservationist who has renovated nearly a dozen properties nearby, and in compliance with State regulation.

Because of the lax enforcement, Smouse notes: “These places that are unpermitted don’t meet fire codes — which require hardwiring of fire and carbon monoxide detectors.  I’m worried sick that, heaven forbid, there is a fire — with how they pack occupants into these places, it would be utterly tragic. It would badly damage the entire tourism industry.”

Little Wheel Holdings purchased 326 Cedar Avenue for $10,000.  It is now operating as an Airbnb venue, but property owners nearby don’t believe that the building complies with either the State or local Airbnb codes.  Little Wheel Holdings is owned by Buffalo developer Bernice Radle, a political ally of Mayor Paul Dyster and his Community Development Director Seth Piccirillo, who doubles as Acting Director of Code Enforcement.

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326 Cedar Avenue

When the property was owned by Sean Wilczak, the City Council would not approve Airbnb vacation rentals at that property location.

With less than $1,000 due in back taxes on the property, the City foreclosed on Wilczak (despite being engaged in ongoing discussions with the City on the tax payment).

However, when Radle took ownership of the property, her Park Place neighbors tell The Chronicle the City seemed to turn a blind eye in allowing 326 Cedar Avenue to operate as an Airbnb, despite Piccirillo’s resolution to Council stating that it would not be an allowed use at that address (see the agenda item here).

A source tells The Chronicle Piccirillo personally instructed City Code Enforcement Department to give Radle a pass and to avoid pursuing the City’s enforcement prerogatives at a time that it was cracking down on others.

But not all developers get that same leniency from City officials.

Merle Smouse purchased a series of dilapidated homes along Third Street and renovated them into high-quality vacation rentals, with prices ranging from $200 to $300 per night.  He envisions the entire Park Place neighborhood revived in such fashion.
Smouse had placed an offer to purchase the above structures, as part of the Cannon Building’s RFP.  They were awarded to an out-of-town firm that bid $2,000 more than Smouse but their bid required large public subsidies.  Smouse’s project required no public subsidies, a key criterion of the RFP.

When Smouse purchased three properties on Third Street, within days of his closing City Code enforcement began citing Smouse for building code violations.  Smouse informed them that he had just purchased the properties, and was in the process of bringing the properties up to code.

The Code Enforcement officers directed him to install new roofs on all three properties and required him to conduct asbestos testing that cost him more than $650 per property (none of which found any trace of asbestos).

Smouse believes City officials targeted him because he frequently attends City Council meetings and is not hesitant to offer his opinion to reporters and politicians.  From the podium, he has been quite critical of the Dyster administration and Piccirillo specifically.

Smouse prides himself in the quality of his vacation rental properties, all of which are equipped with first-rate kitchens, appliances, bathrooms, and even include in-unit washers and dryers. Besides being code compliant for safety issues like hardwired fire and carbon monoxide detectors, they are adorned with art and high-end decor.  He believes that enforcement of these types of City Codes will increase the quality and safety of Airbnb accommodations for Niagara Falls visitors.
The Park Place neighborhood is emerging as a hub of vacation rental properties, just north of the Third Street business district.

Smouse notes that Piccirillo admitted on Channel 4 News that at least 60 to 80 Airbnb venues are unpermitted and are operating illegally.  Smouse is concerned that the City’s haphazard enforcement risks neighborhood safety and could jeopardize the tourism housing industry.

“We probably have around, you know, 60 to 100 that have illegally listed,” Piccirillo told WIVB.

The illegal rentals are operating without a license, meaning that the homes haven’t been checked for safety, making sure it’s habitable and has working smoke detectors.

“I’ve seen situations where hookers use this app to rent a room for $20 per night,” Smouse explains.  “I’ve seen situations where mobile week-long meth labs have popped up and then disappear.  The lack of enforcement could foster this kind of illegal activity.”

Smouse estimates that he has turned down 30% of his potential business volume, simply by following the City Code and occupancy limits — even if others aren’t.

He notes that there are several Airbnb listings for third-floor accommodations — something that the City Code does not allow but seems to selectively enforce.  He notes that 326 Buffalo Avenue and 742 Park Place are just two examples operating in such fashion. The Code does not allow for three family homes or short term rentals above a second floor.

Other properties — like 624 Buffalo Avenue, 615 Buffalo Avenue, and 608 Buffalo Avenue — all have third-floor residential apartments units, which the City had restricted in its 2017 regulation.

And Smouse notes that these are easily gleaned from publicly published Airbnb listings.  He worries scores of properties are likely operating right now without hardwired fire and carbon monoxide detectors.  He also notes that the City has no minimum insurance coverage requirement for vacation rental properties — and he wonders if it puts the City in legal jeopardy.

“The cost of complying with all of the City’s regulations is akin to a 10% tax on those of us who follow the short-term rental laws,” Smouse admits.  “Plus, the vacation rental insurance costs $1,500 to $2,000 per year.”

Since most of Airbnb properties are operating without permits, or even tax ID numbers, he doubts that they carry insurance.

Other Cities have responded to the economic and housing impacts of Airbnb in different ways.  New York City has taken a hardline approach to code enforcement, dedicating three police officers to the task.  First-time violations result in a $2,500 fine, and second-time violations carry a $7,500 fine.

Many European cities have been so impacted by the success of Airbnb that cities like Paris have begun experiencing rapidly rising housing costs and a shortage of workforce housing inside the city.  In order to combat that accelerated gentrification, some policy responses have included a limit on the number of days per year that a private residence is allowed to be rented.

“Everyone thought that this sharing economy would be controllable, but right now everything is way out of whack,” Smouse concludes.

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