In the midst of a housing crisis, millions to own Airbnb

In the midst of a housing crisis, Quebec will provide $30 million in aid to a controversial short-term rental company that operates 389 apartments in Montreal, including many on Airbnb.

Dominique Cambron-Jules and Jean-Francois Cloutier, investigation office

Quebec in recent months has allocated a down payment of $6 million to the American giant Sonder. The rest will follow over the next four years.

The company offers dozens of Airbnb accommodations in Sud-Ouest, Ville-Marie and Plateau Mont-Royal, where the housing crisis has emerged.

“It is a company that has caused a net loss in conventional housing and a monopoly on rental shares,” denounced Cedric Dassault, spokesperson for Regroupement des Comités Logements et Association de Tenants du Québec (RCLALQ).

Accommodations in Montreal are also available on the Sonder platform and in particular on Booking.com and Hotels.com.

Many apartments are located in areas where short-term rent is now prohibited, according to municipal regulations, but where the company benefits from a “grandfather” or exemption.

play with words

The Company and its partners use the terms hotel, hotel apartment or tourist residence, but in all cases, these are full accommodations.

For example, in Plateau Mont-Royal, a former publishing house has been converted into a “hotel” with 54 apartments.

Sonder also runs accommodations in a building on Rue Saint-Denis where a medical clinic was to be located, but operates as a “hotel” (See other text below).

At Ville-Marie, a project on which Sonder works, Penny Lane obtained a special permit in 2017 to allow him to rent 58 apartments short-term. Valerie Blunt had voiced her opposition, but the decision was adopted by Coderre’s previous administration.

The company defends itself by saying that it respects the regulations.

“Sonder works with its Montreal real estate partners, often to renovate properties in need of repair and help bring commercial properties back to market,” said company spokeswoman Fiona Storey.

The Quebec loan, announced in 2020, aims, among other things, to create a growth center and 700 jobs in Montreal. However, the first installment of the loan has yet to be drawn down, according to the company.

However, the visit of our investigative office to the planned site of the center allowed us to see many empty spaces. Sonder says it employs more than 160 people in Montreal, but has not yet reopened its offices in the wake of the pandemic.

stricter regulations

Benoit Doris, a Montreal housing official, would not comment on Sonder, but he wants stricter regulations.

For its part, the Quebec government believes Sonder is “operating within a legal framework where zoning allows.”

“The accommodations offered by Sonder, like hotels, are not the result of the transformation of rental buildings into accommodation establishments,” said Mathieu Saint-Amand, press officer for the Minister of Economy, Pierre Fitzgibbon.

What is a probe?

  • Co-founded in 2014 by Montrealer Francis Davidson
  • Davidson subcontracts Airbnb by offering wine and valet parking to its guests
  • In 2017, Sonder moved its headquarters from Montreal to San Francisco
  • In 2019, the company was valued at more than $1 billion, according to Forbes
  • The stock was listed on Nasdaq in January 2022, and has since lost nearly 80% of its value
  • Manages 6,300 properties around the world
  • Present in 35 cities in ten countries

How it works ?

The company signs long-term lease contracts with real estate owners.

She takes care of decorating and subletting rental accommodation on various platforms, including Airbnb.

Sonder communicates with customers almost exclusively via the Internet or mobile phone.

With Nicholas Brewer

$460 for 2 days at 3 1/2

Sonder rents Airbnb apartments like this one in the Sud-Ouest region.

Charles Mathieu pictures

Sonder rents Airbnb apartments like this one in the Sud-Ouest region.

Booking a Sonder listing on Airbnb is like stepping into a rental apartment building that may serve long-term tenants in Montreal.

Charles Matthew, investigation office

Our Bureau of Investigation spent the night of May 30-31 in Richmond, a building in Griffintown where 47 condominium units are being sublet by Sonder on three floors.

The property was booked on Airbnb. We definitely had to rent for two nights. Total cost: $460.22 The bill includes a $100 cleaning fee, GST, QST and 3.5% housing tax.

After payment, we were redirected to the California-based company’s app to continue the process.

When the request was approved, access codes to be used to enter the building and room were sent to us.

Arrival

When we arrived, we had to manually fill in the register of entrances and exits to the building.

There was only a security guard working not for Sonder but for the owner of the building.

Read the instructions sent to us “Unlike traditional hotels, many Sonders do not have front desk staff”. We can ask questions about the phone app to Kate Anne, a Sonder employee in the Philippines.

The door of each room is equipped with a touch keypad with numbers.

Inside the apartment, the apartment is approximately 550 square feet, which is a TV with Google Chromecast, washer and dryer and a kitchen with dishwasher, oven, refrigerator and air conditioner.

Our investigative office tried speaking to the on-site tenants and landlords to find out about their experience. However, we came across a building manager who asked us to stop questioning them.

Buildings are equipped for Sonder

From 43 properties to a hotel

Cours de Brésoles project in Old Montreal.

Pierre Paul Paulin’s photo

Cours de Brésoles project in Old Montreal.

In 2017, the City of Montreal sold a heritage building located a stone’s throw from the courtroom to Cours de Brésoles inc.

In very poor condition, the building was sold at a loss of $1.4 million, following a public call for bids.

The company initially submitted a project for 43 housing units for the city. Six months after receiving his permit, the builder amended his application to convert the building into a “hotel” of 46 apartments. It will be put up for short-term rent by Sonder – upon completion of the reconstruction.

“The project would not have been viable without the contract with Sonder,” says the head of the owner company, Alberto Bernardi. The project builds on the agreement with Sonder from the start. »

He explains that these will be luxury spaces for business travelers.

Clinic Become “Airbnb”

A building run by Sonder opposite CHUM.

Pierre Paul Paulin’s photo

A building run by Sonder opposite CHUM.

In 2017, the town of Ville Mare agreed to modify the zoning of a building on Saint-Denis Street to create a medical clinic and offices. Two months after receiving its permit, Développements Quorum Mtl entered into a lease agreement with Sonder, then asked the city to amend its permit to develop 21 apartments.

These are now available for short-term rental, particularly on Airbnb.

Developer Quorum Mtl has not responded to an email.

A 52e the hotel ?

probe

Photographed by Jean Francois Cloutier

A lease agreement was signed at the end of 2021 by Sonder with Swatow Developments to lease four floors of Plaza Swatow, in Chinatown. The largest shareholder in Swatow is a company numbered in Quebec with shareholders in the Seychelles and the British Virgin Islands. “There are already 51 hotels within a one kilometer radius of Chinatown. Do we really need 52e the hotel ? said Mai Qiu, a member of the Chinatown Task Force.

Disagreements in the United States

Short-term rental giant Sonder has been embroiled in numerous disputes and controversies in the United States in recent years.

In New York, a building near the New York Stock Exchange, where Sonder was subletting dozens of apartments, has been the focus of at least three lawsuits. In April 2020, two long-time residents of the building sued the owner and Sonder over what they claimed was a nightmare caused by Sonder’s presence. Among other things, they denounced drug smuggling and harassment in the building. They claimed “Sonder is the worst neighbor anyone could imagine”. According to the court record, settlement discussions were taking place in November 2021.

in Boston, Boston Herald It was reported in late 2019 that Sonder had received multiple fines in connection with the short-term lease. “These were 9 potential fines, and they were all dismissed because they were incorrectly issued to a compliant property, or to property that was not operated by Sonder. We did not have to pay any fines and our property complied with Boston laws,” the company defended itself via email.

In San Francisco, Sonder filed a lawsuit in July 2020 against a building owner to terminate their lease, citing the impact of the pandemic. An agreement was reached, but the landlord in turn sued Sonder last year because the tenant who was to leave as per the agreement was still present.

In Long Island City, Sonder was sued in August 2020 by the building’s owner for $2.5 million for breach of contract. Sonder was expected to rent an entire hotel. “We exercised a contractual right to terminate which we retained for non-compliance with the terms of the contract,” Sonder justifies.

turbulent past

Sonder has already found itself in a hot seat in the past for its ways of doing things in the city.

Jean Francois Cloutier, investigation office

In 2017, the show invoice On Radio Canada it was revealed that Sonder illegally rented, without obtaining the slightest license, a hundred houses in the capital. The company’s CEO, Francis Davidson, then admitted to operating “in the gray” and not having any licence, even though it was clearly required by law at the time.

He boasted of owning one of the largest short-term rental companies in the world.

journalist report subway Three years ago, it also revealed that the company was still renting an apartment on Airbnb until late 2019 without obtaining a permit.

attempt to evacuate

In addition, in 2019 and 2020, a project to convert a building to the court ended up. Then the tenants claimed that they had been evicted from a six-unit building in Little Burgundy to make way for a short-term rental project that Sonder would manage.

A judge in the Administrative Housing Court rejected the building’s owner’s request, because she considered the city was preparing to legislate against the planned use.

The owner appealed the ruling, but then withdrew. The project with Sonder never saw the light of day, according to one of the tenants involved at the time, Charlotte Jacob Maguire. However, she says she still feels bitter about the experience.



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