Airbnb Legislation Story

New Airbnb Legislation Could Transform Character of San Francisco

By: Andrew Noerr

            After years of debate and protest in San Francisco, the city has finally acted upon the Airbnb crisis. Mayor Ed Lee on Monday signed a new law that makes Airbnb legal in San Francisco after the Board of Supervisors voted and approved of it by a tally of 7-4. It had technically been an illegal hotel business since it was first established in 2008.

            As noted by Patrick Hoge of the San Francisco Business Times, this comes at the heels of vigorous debate that had occurred between members of the Board of Supervisors in San Francisco about whether to make Airbnb legal in a city that is suffering from an immense housing crisis. The San Francisco-based company serves as a middleman, allowing property owners, tenants, and landlords to rent out their space to anyone from all over the world. They would post the info about potential vacancies on the Airbnb website, and then people seeking to temporarily stay in the city can rent out rooms or even entire homes for whatever price is demanded by the person allowing the space to be rented.

            However, this new legislation has not resolved the controversy that has surrounded this issue in San Francisco. Tim Redmond of 48hills.com has noted numerous times that a combination of landlord groups, tenant protection activists, and hotel workers have all opposed the Airbnb legislation due to the potential impact that the new legislation could have on the housing crisis in San Francisco, the ability of the city to collect taxes from Airbnb, and the concept of community that is lost when rooms or apartments are rented out by tourists instead of being occupied by long-term residents.

            Mara Math, a counselor at the San Francisco Tenants Union, said, “I’m disappointed about the legislation. It does not address the fundamental problems of Airbnb. It didn’t even include the proposed amendments that we wanted.”

            There were numerous amendments that were proposed to the legislation. One would be that all rooms on Airbnb could only be rented out for 90 days per year. Another proposed amendment was that Airbnb would only become legal if they paid their back taxes first, as they owe approximately $25 million. Those taxes would be the money that they owe to San Francisco that they haven’t paid since the company was first established in 2008.

Ultimately, these amendments were not passed, although the Board of Supervisors did agree to some other suggested amendments. One is that neighborhood groups, tenants, and non-profit organizations are allowed to sue Airbnb if they are not following the law. Examples of this include someone on Airbnb renting out an entire home for less than 30 days, as that is still forbidden in San Francisco, or if someone rents out a room in a building that has been subject to Ellis Act evictions in the past.

Still, the failed attempt to limit rentals to 90 days per year has alarmed many people who are concerned about the health of the housing market in San Francisco. If one looks at the Airbnb website and checks how expensive it is to rent a room in the city, one will notice that prices range anywhere from $70-$199 per night, although they are usually on the more expensive side. Since there are no limits to how long a room can be rented, landlords or others could simply allow a room to be rented out all year by numerous customers through Airbnb instead of making the room available to residents of San Francisco.

“The San Francisco Tenants Union doesn’t like Airbnb because landlords have been evicting tenants so that their property can turn into Airbnb hotels,” Math said.

Indeed, it can be more lucrative for landlords to rent out rooms through Airbnb to tourists than to rent them out to long-term tenants. Through Airbnb, for example, if a private room is posted for $150 per night, the landlord could make $4,500 per month off that room. In comparison, if one looks at Craigslist and checks how much a private room costs for long-term renting, prices range from $700-$2,000 per month. This, according to Math, has instilled fear into many people about the motives of landlords for evicting tenants in San Francisco.

Another hot issue with the Airbnb legislation is the desire from many people for the company to pay its back taxes. According to Mai-Cutler, it owes around $25 million in taxes in San Francisco, as it should have been paying taxes that commercial hotels must pay annually. The amendment that would have forced Airbnb to pay those taxes was denied though, as it was ambiguous as to how the company would pay them and how long it would take. This issue has stirred its own controversy among many people in San Francisco.

“(San Francisco residents) inherit the financial burden from Airbnb not paying their taxes,” Math said. “That money would go into the General Fund to benefit the residents of San Francisco. Instead, we’ll get asked to sign on for bond measures for things such as libraries or roads that should have already been funded by those taxes.”
            One last protest that people have brought up is that the concept of having housemates in one’s home will soon cease to exist. Redmond of 48hills.com said that more homes could become Airbnb hotels and be filled with tourists looking to stay on a short-term basis, and the community feeling that is prevalent among long-term residents in San Francisco would diminish.

“I enjoy my housemates,” said Victor Gavallos, a senior undergraduate at USF who lives in the Richmond District. “Having housemates means that I always have people that I am close to at home. We have our own micro-community that is supportive, and I can turn to them when I need it.”

            After much debate, the Airbnb legislation was still passed by Mayor Ed Lee, and according to the CBS San Francisco report, it will be in effect starting on February 1, 2015. Other rules were included in the legislation such as people who allow their rooms to be rented out must be San Francisco residents, they must live in the unit for at least nine months per year, they must register with the city first, have liability insurance, and pay a 14% hotel tax in San Francisco. Even with these rules, some San Franciscans have lamented that the city has lost some of its character as a result of the new legislation.

            “It’s bad for community,” Math said. “The San Francisco Tenants Union is here to protect the interests of tenants, and we know that this is bad for what makes San Francisco a great city.”