San Francisco Proposes Uphill Path to Legalizing Airbnb

The president of the San Francisco Board of Supervisors has a plan for “short-term residential rentals.”

A proposal now before the San Francisco Board of Supervisors would legalize “short-term residential rentals” of the sort you can book on Airbnb.

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David Chiu, president of the San Francisco Board of Supervisors, plans today to introduce legislation that would legalize “short-term residential rentals” a la Airbnb. On its public policy blog the company is calling the proposal, which is two years in the making, “exciting news” that represents “a critical step towards recognizing the benefits of home-sharing.”

It’s the latest move in a nationwide tug-of-war between companies like Airbnb and local regulators. But there is a lot in Chiu’s plan that, by formalizing Airbnb, could make it harder to be an Airbnb host.

Under Chiu’s proposal, short-term rental hosts will, for one thing, be required to join a registry established by the city’s Department of Building Inspection. That registry would demand an application and a $50 renewal fee. It would also be public, though with names of individual hosts redacted. If city rules are violated, DBI can prohibit the offending hosts from listing their homes on any rental platform for one year. Presumably the registry helps enforce that regulation.

Airbnb could do much to make complying with the registry easier on hosts. Who says the host must be the one to pay $50, or that he or she has to join the registry directly? But it does induce friction into the process. On its blog, Airbnb pointed to the registry as one example of the “provisions in this proposal that could be problematic to our hosting community.”

Other parts of the proposal would drag Airbnb from the sharing economy fringe and into the economic mainstream. As the primary check on “hotelization,” or the conversion of long-term housing into transient rentals, Chiu’s plan limits allowable properties to primary residences that the primary renter lives in for at least 275 days a year — all of which must be provable with a full two years’ worth of records. There’s no hard-and-fast limit on how many days a property can be rented on a short-term basis. But the residency requirement means that those offering up their entire home are, in practice, capped at three months of renting out their space.

Other restrictions are less burdensome but still present. The proposal would require that sites like Airbnb notify users of their specific local tax and legal obligations, something that Airbnb has has largely hidden away. Those in rent-controlled buildings can’t charge more in a month than they pay any landlord. And the legislation requires $150,000 in homeowner’s insurance, renter’s insurance or property damage coverage, though Airbnb says its platform already provides the necessary protection.

Chiu has, though, included in his draft some additional legal protections. When it comes to laws governing evictions, the legislation would carve out an exemption for first-time violations of city rules on home-sharing that were “cured” within 30 days. And the law clarifies that short-term rentals do nothing to harm a building’s status as a residential property.

Airbnb has tried in its own way to comply with local laws. It recently announced that it would begin voluntarily collecting and remitting relevant taxes in Portland and San Francisco. Last week it changed its terms of service to state that it will do the same wherever it operates.

But all this remains something of an existential threat to Airbnb. Much as the discussion around the company has, by its design, centered on the sense of community it engenders. No doubt some of the appeal has been how inexpensive even very attractive rentals can be, and how easy the technology makes matching renters and rentees. The increased cost of participation — either monetary costs, like the hotel occupancy tax that starts at 14 percent in San Francisco and will now be tacked onto rentals, or time costs, like keeping the paperwork needed to comply with a city registry — can make it less worthwhile to be a host.

It might have hundreds of millions of dollars in the bank, but for Airbnb to make it the company will need to carve out local laws that strike a perfect balance. San Francisco, the company’s home city, is as good a place as any for that to happen. Big cities, what with all their tourists, are important to Airbnb. But in New York, for example, there’s been increased attention on the idea that Airbnb is behaving badly. On Monday, for example, the New York Post reported that Manhattan prostitutes are using Airbnb apartments for short-term trysts, cycling through clients in “sex sessions.”

That story provoked a strong reaction from Liz Krueger, the state senator who authored a 2010 law that prohibits some short-term rentals in New York State. Kruger quickly issued a “Statement on the Use of Airbnb for Floating Brothels“ that slammed Airbnb for feeling free to ignore the city’s various housing laws, saying “What do they care? They don’t live in these buildings.” That sort of tension in New York ups the stakes for Airbnb in San Francisco. It would love to have a city where it can function freely and fruitfully, with the full blessing of the law.

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Nancy Scola is a Washington, DC-based journalist whose work tends to focus on the intersections of technology, politics, and public policy. Shortly after returning from Havana she started as a tech reporter at POLITICO.

Tags: san franciscoshared cityairbnbcity councilssharing economy

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