SF Supervisor's Airbnb Proposal Would Legalize Some Short-Term Rentals

By Jon Brooks and Lisa Pickoff-White

San Francisco is considering regulating home rental vacation services like Airbnb in hopes of reducing illegal short-term rentals.

Supervisor David Chiu proposes to let residents rent their dwellings for a period shorter than 30 days, currently illegal for owners and tenants alike. But those who want to legally rent their residences short-term will have to comply with some stiff requirements, and landlords could still prohibit the rentals through language in a lease.

Under Chiu's proposal, tenants or landlords who want to become Airbnb "hosts" would need to register with the city, prove they occupy the unit 75 percent of the year and pay the same taxes as hotels. Airbnb has already agreed to pay San Francisco's 14 percent hotel tax.

Chiu said the legislation was aimed in part at people who are contributing to the housing shortage by using their homes mostly as hotels.

"We have had the worst offenders, who have been taking entire units off the marketplace," he said. "Tenants who've been renting multiple units in order to turn most of them into de facto hotels, and owners and landlords who've been evicting tenants to do the same."

New Rules for Short-Term Rentals and Hosting Services

Under the new rules the Department of Building Inspection would create and maintain a registry of permitted hosts. Residents would have to apply and pay a fee to the department to obtain a permit. To qualify, residents need to meet several requirements:

• residents need to have lived in their unit for at least 60 days,
• be able to prove that they live in the unit for at least 275 days a year,
• hosts who live in units with rent control could not charge short-term visitors more than they are paying to their landlord,
• hosts would have to pay San Francisco's hotel tax,
• and hosts would have to maintain rental or homeowners insurance for at least $150,000 worth of property damage.

The legislation also regulates "hosting platforms," like Airbnb or VRBO. Those companies would have to notify hosts about the city's regulations, and remove listings that do not have a permit for up to a year.

Evictions on the Rise

The Chronicle has been reporting that evictions of San Francisco tenants who have been renting out their residences short-term through Airbnb are increasing. "Since 2012, the Planning Department has witnessed a surge in complaints about short-term rentals, normally from neighbors," the paper wrote last week. "The agency is now actively investigating about 85 people offering their spaces on Airbnb, VRBO and the like.

The report quotes a tenants attorney who said eviction notices in the city were "reaching epidemic levels."

Time reports Chiu's legislation offers some protection for tenants who find themselves on the wrong side of city regulations:

The legislation ... protects tenants from being evicted right away for listing their apartment on a site like Airbnb. Currently, the law gives a landlord the authority to evict someone if the renter is violating the city’s prohibition against short-term rentals, no questions asked. The new law says that tenants who meet all the criteria and registered with the city would be protected from such evictions. Tenants who hadn’t registered would also get a chance to remedy their behavior (i.e. stop renting out their apartment) on the first offense, assuming their lease is silent on the issue.

But if their lease is not silent on the issue, then they're out of luck. Any legalization of short-term rentals in Chiu's legislation would not override restrictions against them stated on a lease. "(S)o if a resident has signed papers agreeing not to rent out their apartment to anyone else, the new law would likely not protect them from eviction," Time wrote. "As landlords get hip to the reality of the sharing economy, it’s possible that many leases will prohibit short-term rentals of any kind."

Airbnb, which is based in San Francisco, said in a statement that it was reviewing the proposal and looked forward to working with policymakers.

Tenant groups applauded Chiu's bill, while advocates for property owners said it does not adequately address their concern that short-term renters could pose a safety and health risk to other tenants.

"People that are using a unit for transient use typically aren't as careful as they are when it's their primary residence," Janan New, executive director of the San Francisco Apartment Association, told the Chronicle. "We would prefer the status quo to anything else - and we are not in support of creating another dysfunctional bureaucracy."

San Francisco Planning Director John Rahaim says he supports the sharing economy.

"We think it's great for the city, we think it's great for sustainable development," he said. "The primary concern, and both from our standpoint and the standpoint of the complaints we hear, is almost exclusively around owners and tenants who are vacating their units entirely and using them as hotel rooms."

A San Jose City Council committee will discuss imposing a hotel tax on short-term rentals Wednesday.

Other cities, including New York, have similar prohibitions.

New York's attorney general has demanded that Airbnb turn over data about New York City residents who have put listings on the site as part of an investigation into whether they are breaking a state law barring sublets for fewer than 30 days if the occupants are not present.

On its website, Airbnb warns hosts to be aware of the laws in their city, noting that some restrict people's ability to host paying guests for short periods.

"I'm very happy to see a move toward creating a regulatory infrastructure of Airbnb hosting at all," said Arun Sundararajan, a New York University professor who studies the sharing economy.

Sundararajan said the CPUC's regulation of ride services like UberX and Lyft sets a good precedent for balancing regulation and innovation for the sharing economy.

"It represents a new kind of partnership where the government lays out some guidelines and delegates the responsibility for regulation to the platform," he said. "EBay is not responsible for monitoring actively, but eBay is responsible for stopping the sale of something if it's pointed out that counterfeit or illegal activity is taking place. The challenge for holding the sharing economy platforms to the same standard is we haven't had clear guidelines for what is and isn't illegal."

Read Chiu's proposal:

This post includes reporting from Mina Kim and The Associated Press