A New York judge fined an Airbnb user $2,400 this week for renting out a room in his apartment, arguing the three-night rental violated the city’s “illegal hotel” laws. The popular San Francisco-based online site that allows users to offer their homes as temporary rentals has also been accused of disrupting local housing markets and failing to charge city taxes. Forum discusses what the ruling may mean for Airbnb and its users locally, and for other participants in the so-called share economy.

Show Highlights

David Chiu, president of the San Francisco Board of Supervisors and Supervisor for District 3
David Hantman, global head of public policy for Airbnb
Tomio Geron, reporter for Forbes

  • Beth Grant DeRoos

    So if someone allows someone to live in one of their rooms and doesn’t accept ‘payment’, but does accept dinners out, use of the car or other non money payment it would be legal?

    Does that mean parents cannot charge their kids rent once they turn 18, and move back home?

    Also reminds me of the guy who instead of having sex with someone for money, calls it a date and instead of the dinner and movie apologizes for not taking the person to dinner and the movie and feels so bad that he insists with a wink that the person take the money he would have spent on the dinner and movie. Which city officials call illegal sex or prostitution.

    • thucy

      This whole AirBNB thing is a sticky ball of wax for urban dwellers. For one, in most places in the world, AirBNB services violate standard lease agreements. Two, living in densely packed urban areas brings with it a special set of responsibilities – it is simply disruptive to the normal flow of family life in an apartment when a neighbor decides to turn his unit into a temporary hotel. I know that’s hard to conceptualize when you live on a nice couple of acres, but from London to Paris to New York, entire generations of good Catholics, good Jews, good atheists, and good everyone else have negotiated urban life in apartments. In my experience in those cities, there are reasonable expectations amongst neighbors – not least of which is that we have a vague sense of who our neighbors are, and that we can trust them around our children, nephews, nieces, etc. And that they don’t unpack “pests” with them (see: bedbugs, fleas, hookers, Pentecostalists.)

    • SF Jazzer

      Beth…I think you are missing the point. When your kid moves back home, he/she is not a stranger renting your room short-term. There is no comparison with letting your room to be used for personal guests where you don’t accept a nightly room rate versus renting to a stranger that is travelling through San Francisco and wants to rent your room for a specific nightly rate.

  • Yrsa Hrolfsdottir

    I love AirBnB. I could not afford to travel with my family without sharing somebody else’s home where I can visit the sites but come “home” to cook and wash my own clothes, AirBnB is a wonderful service. If cities hungry for hotel tax revenue ruin it for us poorer travelers, they will lose out on the money in sales and restaurant taxes they do get from us and their merchants, concert sites, and tourist venues, like museums and historical sites, will lose out collecting what free cash we do have to spend because we saved money on decent shelter in your cities. Do you charge youth hostels hotel tax?

    • thucy

      Do you work for Air BNB? Or are you just an investor eager to cash in on upcoming AirBNB IPO? This post reads almost exactly word-for-word like the one that popped up on a BusinessWeek article on AirBNB.

      For the record, youth hostels are regulated. They have to conform to actual hygiene standards. They have rules about noise. About drinking. And so on.

      • SF Jazzer

        I have no problem with paying taxes on the income that I make through Airbnb or any short-term rental website. But Airbnb should take the responsibility of adding these city-related taxes to the potential renter’s amounts.

    • SF Jazzer

      Yrsa…if you can afford to go to concerts and museums, then I think you can afford to pay the city which you are visiting a bit of city tax. But I agree it should not be the same tax rate as hotels charge for short-term rentals.

      • Yrsa Hrolfsdottir

        I do not work for AirBnB. I do not have any investment in them. I do not own a property I can rent through them. I am a supporter as I have used them. I have enjoyed meeting my hosts and staying with them. I am a receptionist in a hospital working hard as a single parent to give my two sons all the advantages I can on my own. I live simply so they can attend college. We share a two bedroom apartment in the Sacramento area where my youngest son uses the dining room for a bedroom. I want them to know they are not bound to one place or one income status by virtue of their birth.

        I believe that a well rounded education includes travel abroad so one can gain a broader different world perspective. I make 32k a year before taxes and yes, I pay lots of taxes. I buy discount tickets through work, attend matinees, and use AirBnB. This way my children grow into adults with a greater world view.

        After two years of saving, last summer, my son travelled with a couple of friends with his passport, an International Student Identity card for the discounts Europe provides students, a youth hostel pass, a Eurail Pass and AirBnB. He saw Spain in its financial trouble where people rent their spare rooms in Madrid and Barcelona so they can pay their mortgage and the bank does not foreclose on them. I paid sales taxes for groceries bought at Safeway and SF restaurant taxes when we eat out, parking fees and the bridge tolls gladly so I can explore a city I dearly love but I could not sit around a table with a home made meal celebrating my mother’s 75th birthday with her children, grandchildren and great grandchildren while attending the Dutch Queen’s Day Event without AirBmB. I tried. I appreciate your judgment that I could afford to pay for multiple hotel rooms, but I could not. And as far as hygiene, it was far above any hotel I have ever stayed in and we left it as clean as we found it. I am sad that everything in this country must be taxed until it become unaffordable for working class people.

  • Conny Lingus

    NYC is just upset that so many visitors are getting away without even a SINGLE bed bug bite. How dare those freeloading tourists! If you go to NYC, you ought to pay with your money, and your blood. Them’s the rules.

    That said, SF seems to be operating its own insect blood bank. See here:

  • Livegreen

    Whether its a future air BNB tax or any kind of business license, cities like San Francisco and Oakland will do zero about the underground economy. There are thousands of undeclared businesses that don’t pay taxes, and they get a competitive advantage over those that do. Yet the cities do almost zero to find them.

    Instead they lean harder on businesses that have made the mistake to be legal. The third world underground economy is already here.

    • Nothing third-world about it. Those businesses provide valuable services to their community.

  • thucy

    AirBNB model: helping the lower-middle-class to reduce housing availability for other lower-middle-class people, thereby reducing the political power of the lower middle class.

  • LTF

    This article is about someone in New York who owes 40K in fines because of renting out his apartment via AirBnb.

    • thucy

      THAT was an amazing NYTimes article:

      “Airbnb’s spokeswoman, Kim Rubey, did not answer either question on the phone and e-mailed a statement several hours later that didn’t really answer them either. I’ve reprinted it in full (and dissected it in detail) on our Bucks blog. The company is “constantly re-evaluating how to do its job better,” the statement said.

      “Or is it? Many people believe that living on the Web grants them membership in an exalted class to which old laws cannot possibly apply. This sort of arrogance takes your breath away, until you realize just how brilliant a corporate strategy it is. If you stopped to reckon with every 80-year-old zoning law or tried to change the ones that you knew your customers would violate, you’d never even open for business.”

      • SF Jazzer

        The tenant who rented his room while he was away should have been aware of the law and checked with his landlord first. If he had been there while the guest rented his room, that would have been no consequences and he would not have been cited for breaking the law. But I agree that Airbnb should be making their hosts in every city aware of the city’s short-term rental laws and the risks involved if the host breaks the law when a host registers to become a host. There should be a series of questions that a host has to answer…like if he is a renter or an owner? Does the renter’s rental agreement allow for sub-leasing? And provide the exact link which states the law on short-term rentals for potential hosts to read before they register.

        • thucy

          “Does the renter’s rental agreement allow for sub-leasing?”

          Seriously? How many leases have you signed in how many cities that allow for short-term sub-leasing? This is not a New York or SF restriction – name one city where such short-term sublets are permitted to renters.

  • SF Jazzer

    I am a condo owner who lives in San Francisco who has an extra bedroom and when I don’t have personal guests, I want to be able to rent this extra bedroom to short-term guests. I don’t see how my activity takes away from the “rental stock” as both David Chiu or the San Francisco Housing Authority claim? And what right does the city have to tell me how many nights I can have a short-term paying guests. I live in my condo and need this additional income to pay for the high mortgage payments and property taxes as a San Francisco home owner and resident.

    • But you see, it’s not really your condo. It’s the people’s condo. It’s part of the housing stock and Supervisor Chiu knows best who should live in it. You’re just the guy who they blackmail into shoveling money at them.

    • thucy

      ” I don’t see how my activity takes away from the “rental stock” as both David Chiu or the San Francisco Housing Authority claim?”

      I replied earlier, but the comment was lost in the system.

      The answer is that if you really need the cash, you might otherwise (absent AirBNB) rent to a working resident. Literally! Even a working first-year medical resident at UCSF is only earning $45k annually – she can’t compete with the tourists you’re renting to.

      • And if the Supervisor’s council didn’t make it so hard to build housing in San Francisco by limiting building heights to such dinky little things, this wouldn’t be a problem in the first place.

      • atlld

        So misinformed! Someone making a modest income is often EXACTLY the person who rents via AirBNB. Do you really think a typical [wealthy] tourist is going to stay in someone’s spare room? And to your other comment, renting to a medical student implies complete loss of use of the room, as opposed to reserving it for your own uses generally while renting it out on occasion on specific dates that you dictate.

        The primary reason the city of SF is now getting involved is that they smell a new source of money. If the money wasn’t there, there would really be no issue here.

  • Chiu is ridiculously hypocritical. The reason why there is a shortage of housing in San Francisco is because of things such as rent control which make housing construction harder and less profitable. If he really cared about housing availability and letting people who want to live in San Francisco, he would follow the logical conclusions of economic research in those areas and liberalize housing and construction. Instead, he just wants to pile on more restrictive regulation. Land use restrictions and rent control really are liberal’s global warming. The science and logic denial is nauseating.

    • thucy

      You’re so right – government regulation is so bad. Look at all the progress the economy made after we repealed pesky regulations like Glass-Steagal. And instituted new bans on regulations through the CFMA! That really worked.

      • You’re right. Every single law, regulation and prohibition is obviously equal and repealing laws or regulations is always bad. Look at all that horrible stuff that happened after we repealed mandatory racial segregation.

        • thucy

          Right, you just conflated the repeal of regulations on commercial activity with overthrowing outdated human rights abuses. Hey, if you’re a moral relativist, why not?

          • I’m not conflating anything. You’re the one who is saying that because the repeal of particular regulations of the financial services industry led to a bad outcome, then the repeal of unrelated regulations of the building construction, land use and housing policies must also be a bad thing. I’m simply pointing out that this reasoning makes no sense. If you want to draw parallels between Glass-Steagal and rent control, feel free. But if the only commonality you can point to is that they are both regulation of commercial activity, then your contribution to this conversation is misleading at best. Is all regulation of commercial activity always a good thing?

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