San Francisco Supervisor, Mayor Proposes Tighter Regulations On Short-Term Rentals, Airbnb

San Francisco Supervisor Mark Farrell and Mayor Ed Lee are backing a new set of tighter regulations on short-term rentals and their biggest hosting platforms like Airbnb.

After years of avoiding the subject, the city’s legislative body finally legalized short-term stays last fall and put certain controls on them, including requiring the host to register with the city. But even after these new regulations came into effect in February, only a few hundred out of the thousands of hosts had registered with the city.

So now Farrell is now proposing amendments to these laws. They come at a critical time for the city, which is in the midst of an enormous housing shortage. The city has built fewer than 10,000 housing units over the last five years, while adding about 100,000 employed residents in the same time period. A San Francisco Chronicle study found 5,000 Airbnb listings on a single day of scraping the site last year.

The revisions also come at a critical time for Airbnb, which is facing regulatory battles in desirable urban and coastal areas across the United States. Portland, another early pioneer of Airbnb legislation, also got tougher on enforcement this year after being the model city that cut the very first deal with Airbnb on taxes and regulation in the country.

Farrell said today: “I fully believe that we should support home sharing in San Francisco, but in a way that protects affordable housing in our City, creates a regulatory environment that is simply and enforceable, and removes red-tape for people who are looking to share their residences.”

The proposed changes include:

• Capping hosts at 120 days per year. Before, hosts could do 90 days of non-hosted rentals or unlimited number of days for hosted rentals. They found it was too hard to distinguish between or regulate hosted versus non-hosted rentals, (especially because the planning department only had the equivalent of two to three full-time employees to track and enforce thousands of listings).
• Creating a new Office of Short-Term Rental Administration and Enforcement that will be staffed by the Planning Department, Department of Building Inspection and the Tax Collector’s office. It’s a one-stop shop on the fifth-floor of the Department of Building Inspections where members of the public can apply to be hosts. The city is not budging on making hosts physically come in for an in-person meeting to register with the city. Jess Montejano, a legislative aide to Farrell, told me that they had heard too many “horror stories” from the City Attorney’s office about hosts committing fraud and forging documents like utility bills.
• Lastly, the legislation expands the a private right of action so that nearby property owners and neighbors living within a 100 foot radius of a hosted property can issue complaints if a host is violating the city’s short-term rental law. Montejano says this isn’t as extreme as what opponents of the new legislation are pursuing in a law that they may put before a citywide vote through a ballot initiative in November. “That coalition is pushing a law that would create a new cottage industry of fly-by lawsuits. We want to make sure that we have a proper review process from the city’s end and give residents the ability to bring suit if they felt like they had exhausted all options under the city law.”

I’ve embedded the legislation here:

New proposed Airbnb regulations

What does Airbnb think?

• Airbnb is obviously against about the 120-day cap on all rentals. They cited a couple who rents out their guest room in order to pay for the man’s Parkinson’s medical bills.
• They’re still concerned about the registration process, which they feel is too onerous. Here’s a chart one of their hosts made of the process below:But I should point out that Airbnb, which already has a lot of this information about its hosts, has resisted reporting data on platform activity to the city out of privacy concerns. Some legislators at the California state level are proposing laws that would require that platforms report data to cities and counties. A totally separate San Francisco coalition may also put a law on the November ballot that would require that Airbnb and other platforms report data. Airbnb has called this and another proposal from supervisor David Campos a “Trojan horse proposal that effectively bans home sharing by demanding that the government receive sensitive personal data about thousands of City residents, and would pit neighbor against neighbor in frivolous legislation.” The company is also concerned that if it is forced to report sensitive data, its base will get siphoned off to other platforms that are less cooperative or don’t remit taxes to the city government. Montejano said, “It’s easy to focus on Airbnb. For lack of a better word, they’re the sexiest platform. But they’re the only platform that is actively willing to engage. There are plenty of other platforms like your Homeaways, VRBOs and Craigslist, but it’s really difficult to track their information.”

Airbnb Letter to London Breed

But there’s another coalition of property owners and affordable housing activists that may put an even more stringent measure on the ballot later this year:

Dale Carson, a spokesperson for the group called ShareBetter, was critical of the new proposal:

This legislation moves us in the wrong direction. It exacerbates the incentives to illegally convert residential units to tourist accommodations. It completely indemnifies Airbnb and other hosting platforms that are aiding and abetting illegal activity. And it denies regular people the opportunity to effectively defend their own homes and neighborhoods.

The Planning Department has made it abundantly clear that the Airbnb legislation passed by the Board of Supervisors last fall is unenforceable. By failing to penalize hosting platforms that violate the law and denying regular San Franciscans their day in court, the amendments proposed today will make the unenforceability problem much worse.

Fortunately, in November, the voters of San Francisco will have the opportunity to establish meaningful, enforceable rules for short-term tourist rentals.