Airbnb used to be so simple. San Franciscans could easily rent out rooms to visiting tourists and charge whatever they wanted without paying hotel taxes or abiding pesky housing laws. Yet with new regulations going into effect next month, things are about to get a whole lot more complicated for Airbnb hosts. But will they abide the new regulations or just keep cruising along?
Just before the MLK holiday weekend, the city posted detailed procedures for obtaining a “Short-Term Rental Registration Number,” which include getting a business license and liability insurance policy, pulling together your lease and two current documents proving it’s your primary residence, providing a signed affidavit and $50 check, and then scheduling and attending an in-person interview with Planning Department staff. Who’s going to really do all of that? After all, short-term housing rentals are illegal now and they’re still going to be illegal when the controversial new legislation — which was narrowly approved in October by the San Francisco Board of Supervisors after a big, divisive public hearing — goes into effect on Feb. 1. The city isn’t even going to start scheduling interviews until Feb. 2, and officials didn’t state any deadlines for complying. Personally, I need deadlines. Airbnb and its hosts have gotten accustomed to ignoring city laws and rulings with impunity. It was so easy to make some extra cash on Airbnb, something that came in handy during the Great Recession, so this SF-based company got huge. Like, $10 billion in valuation on Wall Street huge.
The only problem was Airbnb rentals weren’t legal in San Francisco, which officially deems it “hotelization” that breaks housing, zoning, and tenant laws. Nobody here seemed to really care about the rise of Airbnb for a long time, particularly because the Mayor’s Office loved the tech industry and Mayor Ed Lee’s biggest political fundraiser is venture capitalist Ron Conway, an Airbnb investor.
But in early 2012, the hotel owners and unions started squawking about how these Airbnb tourists weren’t paying the same 15 percent transient occupancy tax that the tourists in hotels did. So the San Francisco Treasurer/Tax Collector’s Office held a public hearing on the issue, which was heavily but unsuccessfully lobbied by Airbnb and its hosts and supporters, and concluded that the tax was indeed owed.
Almost a year later, I broke the story in the Bay Guardian that the company and its hosts had simply ignored the ruling and refused to collect or pay the tax (“Airbnb isn’t sharing,” 3/19/13), which continued until just a few months ago when the company finally tacked on the tax. The city’s booming housing market and eviction epidemic soon ignited public concerns about housing units going to tourists instead of locals, and more journalists started to publicize the illegality of Airbnb’s business model and its impact on the city.
So then-President of the Board of Supervisors David Chiu last year crafted the legislation that created these new rules, right before he decamped to the California Assembly. Progressive critics of the legislation wanted Airbnb to pay about $25 million in back taxes and limit the neighborhoods and time limits on hosting (it limits full-home rentals to 90 nights per year but hosted stays are unlimited). They lost, but some are threatening to go to the fall ballot with stricter rules. The new regulations are also being challenged in federal district court by Airbnb competitor HomeAway, and there’s a hearing this Friday, Jan. 23, on its motion for a preliminary injunction to prevent the city from enforcing the rule limiting rentals to a person’s primary residence. City attorneys say they’re confident the ordinance is sound and will stand.
So Airbnb hosts will now have the chance to get legal, and many certainly will. My friend Catbird from Potrero Hill, who turned me onto Airbnb in 2012 and has appeared in my stories a few times, says she’ll do whatever it takes to protect rentals that are now her main source of income. That includes buying a $36/month liability insurance policy, something that she said wasn’t available before the regulations: “Because it’s a legitimate thing, the insurance companies can now underwrite it.” But she also acknowledges that many hosts won’t jump through all those hoops, particularly because the short-term rental ban has been so difficult to enforce. Even with some new enforcement procedures and funding, crackdowns will still be complaint-driven. So if most Airbnb hosts are getting away with it now, most will probably assume that they’ll keep getting away with it, right?
Of course, Airbnb could certainly force hosts to register, refusing to take their money until they provide their Short-Term Rental Registration Number. But the company hasn’t made any of such noises yet, and for some reason, I don’t expect it to.
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