By early last spring, it had dawned upon Rajat Sharma that his side hustle—running two short-term-rental units in a downtown Toronto condominium development—simply was not working out.
It wasn’t just the COVID-19 pandemic, although that certainly added to his woes, given that every single one of his Airbnb bookings ended up getting cancelled. The greater, and longer-term impediment, in Sharma’s opinion, was the stream of negative publicity that these particular buildings—sleek, curvilinear twin high-rises known as the Ice Condos—kept receiving, the most high profile of which were two shooting incidents, two years apart, which media reports linked to short-term-rental units, or STRs.
There was also a slew of maintenance problems that he blamed squarely on the property manager: broken elevators, broken light fixtures, water leakage. “Even if I wanted to, it’s hard to rent these units out now. I’ve removed my listings because I think it’s time for me to exit all of this,” he said.
Two shootings in under two years, a myriad of maintenance issues and an unusually high number of Airbnb bookings have made Ice Condos—twin residential buildings in downtown Toronto—a symbol of Toronto’s housing market crisis, with the short-term-rental boom squeezing the number of affordable long-term rentals in the city’s core. This fall, a governance battle has played out at the Ice Condos between owners for and against short-term rentals.
Sharma is an Airbnb Superhost—a designation the tech giant confers on hosts that have obtained a high rate of positive reviews. Yet behind the scenes, he is engaged in a bitter, multipronged battle with other owners and the condo board to oust the building’s property manager and revoke a rule that imposes strict controls on STR activity, according to multiple condominium owners and tenants who spoke with The Logic.
“It’s a complete circus out here,” said one owner, whom The Logic agreed not to name because he did not want to be “dragged into a Facebook fight” with other owners. “You’re getting bombarded with emails from all these folks about the STR rule or whatever, and meanwhile, your garbage chute is not working, there are 18 people crowded into an elevator in a pandemic and the security guards are sitting around chuckling.”
The owners have effectively split into two factions: those who want to preserve the viability of their investments in STR properties, and long-term landlords and tenants concerned about their quality of life. And as Toronto, like so many other cities across the world, grapples with how to regulate the STR economy, the fight over the future of the Ice Condos is heating up.
Construction on the Ice Condos complex was officially completed in late 2014, but residents had started moving in months prior, filling up the 1,343 units spread across two massive 57- and 67-storey towers. For people wanting to live in the heart of downtown Toronto, their location was ideal—located near the central intersection of York Street and Bremner Boulevard, steps from Union Station and connected underground to the city’s PATH system, a web of networked passageways linking 75 buildings around the Financial District and roughly 1,200 restaurants, eateries and retail shops.
One long-term Ice Condos tenant, Joyce Lim, said when she first moved to the Ice Condos in 2015, they were like a “luxury hotel.” Indeed, Lanterra Developments, the builder behind Ice Condos, erected the towers with wealthy young professionals in mind. The company owned Whitestone Property Management, a subsidiary that manages hundreds of furnished and unfurnished units in the buildings, targeting long-term renters. The development also appealed to traditional owners. “We bought our unit in Ice Condos as an investment property for ourselves, and found a long-term tenant who worked in downtown Toronto. Everything was great in the beginning,” said an owner in the building whom The Logic has agreed to refer to only as Jonathan because he is afraid of getting sued. (“I have a young family, I can’t afford all that mess.”)
But the Ice Condos came onto the Toronto housing market as the rental model was being upended. The Airbnb boom in the city had begun just years prior, the San Francisco-based company’s platform connecting the owners of houses, apartments and downtown condo units with people looking for affordable accommodations for as little as a night. A new cottage industry of STR companies was seizing the moment.
The two business models were naturally at odds with one another. Traditional landlords and property managers depended on the availability of vacant units on Toronto’s long-term-rental market, but that availability was eroding as individual owners and STR companies repurposed more of the city’s rental housing for the Airbnb model, tapping into demand from business travellers and tourists looking for quick getaways.
For Airbnb, high-growth cities like Toronto were a bonanza; the platform’s impact on a city’s housing market was often a secondary consideration. And the Ice Condos—brand new, with an unbeatable location for visitors and boasting hotel-style amenities like a pool, jacuzzi, boardrooms and a gym—offered exactly what people were looking for in a night or a weekend in the city.
Today, the buildings have an unusually high rate of STR listings on platforms like Airbnb, and are awash with maintenance problems and serious governance issues, according to court filings and conversations with multiple condominium residents and owners.
According to information obtained from the building’s property manager, Duka Property Management, and STR watchdog Inside Airbnb, over 50 per cent of the buildings’ units are consistently rented out on a short-term basis, mostly on Airbnb.
Many of those listings are run by single hosts that own or represent multiple properties. For example, February data from Inside Airbnb shows an entity called Aaira Suites had 14 Airbnb listings at the Ice Condos, while another entity by the name of Simply Comfort had over 20.
Many Ice Condos owners and tenants who do not operate STRs are weary of the endless short-term-visitor traffic, which they deem to have eroded the sense of security and community in the soaring dual skyscrapers that market themselves as luxury dwellings. They suspect Sharma and others are seeking free rein to run their operations—which are essentially full-fledged businesses—without interference from security or the property manager. Sharma vehemently denies this, insisting that he takes no sides in the Airbnb debate, and simply wants a building that is well maintained.
All told, there are about 250 owners and representatives of owners on the pro-STR side at Ice. There is no small amount of money at stake for them. One of Sharma’s supporters is Asim Rahman, who runs Whitehall Suites. By the end of April, Rahman said he owed various condominium owners—including three at Ice Condos—up to $70,000 in unpaid rent as a result of cancelled bookings, a figure that has since ballooned to over $300,000. He used the word “bleeding” to describe the state of his STR business. At its peak, Rahman said, Whitehall operated 45 rental units, mostly condominiums, concentrated in Toronto and Mississauga, Ont. The company used Airbnb and Booking.com as its platforms, raking in well over $4,000 a month for some units through multiple short-term stays.
Unlike some buildings, the Ice condominium corporation’s bylaws don’t ban STRs. But in response to a November 2019 court ruling that allowed the City of Toronto to start enforcing stricter rules on STRs, the condo corporation made various amendments to Rule 9 of its bylaw. One amendment requires all STR guests in the buildings to register with the security desk when they enter and provide government-issued identification—like a driver’s licence or a passport.
A Duka employee, whom The Logic agreed not to name because his employer had not authorized him to speak to the media, said that in the months since the amendment, only about 100 STR guests had registered. “That tells us there are a lot of them that are not registering,” he said.
Rule 9 is one of the central points of contention in the battle between the pro- and anti-STR factions that heated up this fall.
In late October, Sharma filed a requisition in Ontario Superior Court calling for an emergency meeting for Ice Condos owners—an effort, he says, to unite owners throughout the buildings against Duka. Both pro- and anti-STR owners told The Logic they were frustrated with the condition of the buildings, and believed Duka could do a far better job with maintenance.
A judge ruled that Sharma’s requisition was effectively void because he did not notify unit holders as is required, and did not use the proper form to deliver the minimum amount of signatures required to call for a special meeting.
The requisition, however, contained some demands that on the surface appeared contradictory to the Sharma faction’s alleged pro-STR stance. While it called for the “removal” of Duka and Elite Security as the building’s property manager and security company, respectively, it also called for the repeal of Rule 9 of the condo corporation’s bylaws in favour of the City of Toronto’s new STR rules.
“This rule is no longer relevant to the Corporation as it was created long before the City of Toronto regulated short term rental activity. Now that the Corporation is following the guidelines of the City of Toronto’s short term rental by-laws, this rule has become redundant and its existence and enforcement is impacting the Corporation’s resources and finances,” Sharma’s requisition reads.
It was an odd request, given that the City of Toronto’s new rules, which will start being enforced on Jan. 1, 2021, require STR owners to register with the city, and allow them to rent only their principal residences for terms less than 28 consecutive days. Secondary properties can be rented only for longer terms. Sharma’s two Ice Condo units, which had earned him Superhost status, would not be permitted under the new bylaws.
But Jonathan and a group of at least 40 other condominium owners believe Sharma and the owners’ group he leads really only want the repeal of Rule 9 because it insists that all STR guests register with building management.
“Rule 9 is all about short-term-rental accountability,” said the Duka employee. “We have a form that allows us to collect data to know who’s who and to use it as a basis for enforcement,” he added.
“That’s the whole reason why [Sharma] is trying to get us to vote for the removal of the management company and the security company,” Jonathan said. “I mean, I don’t like Duka, either, the building is not maintained well, but I think there should be very strict enforcement on who goes in and out of this building. There should be a paper trail.”
Regardless of whether STRs are allowed in the Ice Condos, identifying and cracking down on an illegal STR operation is not easy, according to Allen Atamer, the founder and CEO of Harmari Short Term Rental Compliance, a Toronto-based startup that provides condo boards and cities with intelligence on Airbnb hosts. Harmari has identified 42 STR companies in Toronto that have 10 or more active listings—many of them, he said, are run out of the Ice Condos.
Condos, Atamer said, are generally more difficult to police because guests are sometimes told to pretend they are friends or family of the owner. “Or they meet on Airbnb, then they take the conversation offline by exchanging phone numbers with the guest and making an offline booking for the same unit advertised on Airbnb.”
This is exactly what happened at a recent party at the Ice Condos, said Atamer. “The neighbours said, ‘I swear this unit next door is a party, it’s an Airbnb,’ but Airbnb themselves, when they provided customer service, they were unable to locate the booking.”
Sharma insists he does not have an ulterior motive, though he did not explicitly respond to a question on what exactly about Rule 9 he was unhappy with. He’s frustrated that he and his group of condo owners are seen as simply pro-STR, and adamant any insinuation that he is trying to circumvent the condo bylaws to reinstate his own Airbnb operations is a “lie.”
Rule 9, he said, only benefits Duka and Whitestone Rentals, a company that offers long-term rental options in the Ice Condos and other downtown developments and which Sharma believes has taken a hit from the growth of STR businesses. (In a statement emailed to The Logic, Fisnik Basha, a longtime Duka executive and the property manager of Ice Condos, said Whitestone owned “around 60-70 units” in the two towers. He declined to say whether the proliferation of STRs in the Ice Condos had hurt Whitestone’s revenue.)
“See, the short-term-rental story is already finished. Whether I want something or not is immaterial,” Sharma told The Logic. “The building management has made a hype out of Airbnb…. Airbnb can’t be blamed for everything.”
These tensions came to a head on the afternoon of November 23 at the condo corporation’s annual general meeting, a frustrating virtual exercise that lasted six hours, according to Jonathan. Though a judge had shut down the demands Sharma made in his initial requisition, the condo board had agreed to put them all up to a vote that day, except Sharma’s request to oust Duka. “Duka knows that as soon as owners unite, they will be replaced by one of the better property-management companies. So they organized the AGM at 1 p.m. on a working day so most owners were not able to join,” Sharma said.
Though it took two days to count the votes (which Duka attributed to technical issues), Jonathan’s faction came away happy, with the election of two anti-STR candidates to the condo board. Duka, too, came out victorious, as a majority voted to uphold Rule 9, much to Sharma’s chagrin. He insists that Duka “failed to conduct the AGM in a fair manner,” and intends to continue organizing, making reference to a group of condo owners in a Thornhill, Ont. building, also managed by Duka, that moved to turf its board due to maintenance issues and rising fees. “I heard they threw a party once they won. I can’t wait for that day,” he said.
The bigger question remains how to handle Airbnb and other STR platforms, and all the unintended consequences of the changes they’ve unleashed in Canadian communities. While Duka plans to crack down on how STRs operate at the Ice Condos once the City of Toronto’s new bylaws come into effect in the new year—“Starting January, we are going to work with the City to enforce the law,” the Duka source said—that may just result in an unhappy medium in which neither side is satisfied.
For Dustin William, a long-term tenant who has lived at his Ice Condos unit for over four years, there are no good actors in this entire saga. He said he has made well over 100 complaints to management and security about guests who do not comply with the rules of the condominium, only to see nothing done.
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“I want to see a full ban on STRs and Airbnbs in the building. The developer did not build the common elements to withstand the amount of traffic the building sees each day … elevators always out of order, walls always scratched, fire-alarm pull stations get pulled on a regular basis, leading to false fire alarms,” he said. “I could go on.”
For his part, Jonathan said his concern is simply the value of his property. “To be honest, I regret buying a unit in this building. If I had only known what it would turn into, I would have done things differently.”