Can Mayor Lee be part of an Airbnb compromise?

    Not if Ron Conway is at the table. There's too much money at stake for Lee's close ally and Airbnb investor

    It seems highly unlikely that the San Francisco supervisors will overturn Mayor Ed Lee’s veto of a 60-day limit on Airbnb and other short-term rentals in the city. Even if newly-elected Sup. Ahsha Safai defies the mayor and votes for an override, supporters of the measure will still be one vote short of the eight needed. The only wild chance is if the mayor’s appointee to the D8 seat decides to go against the person who appointed him or her in the first key vote on the board, which seems pretty unlikely.

    So the short-term rental company will continue to decimate the city’s housing stock. And as SF residents try to do their own damage control, it’s not clear what will happen at City Hall.

    Ron Conway is a huge impediment to reasonable Airbnb regulations
    Ron Conway is a huge impediment to reasonable Airbnb regulations

    Randy Shaw, who is close to the mayor, says Lee needs to “convene stakeholders to reach a compromise on short-term rental legislation.” He notes:

    The current law allowing hosts to rent to tourists year-round goes far beyond what Airbnb and the short-term rental market is supposed to be about.  It unfairly competes with the city’s hotel industry (which has to provide sprinklers and other safety features not required for apartment tourist rentals), and artificially reduces housing supply.

    Despite warring dynamics between the short-term rental industry and ShareBetter SF, Mayor Lee and Aaron Peskin know how to get these deals done.

    I agree with his critique of Airbnb and the recognition that something has to happen. But can a “deal” really be done? I’m not sure.

    The problem is that Mayor Lee is too close to Ron Conway, who is an early investor in Airbnb, and is looking at a huge, huge financial payoff if the company can successfully go public at a high valuation. (It’s funny – when I talk to political folks these days, even people who are friendly with the mayor, and complain about the Lee’s ties to the tech industry, everyone says, hey — it’s not the “tech industry.” It’s one guy. Ron Conway.)

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    And even modest regulations will cost Airbnb – and Ron Conway – a ton of money. According to the Financial Times, London’s annual limit of 90 days (not 60) would be a $400 million annual hit to the firm.

    Every time a city cracks down on illegal Airbnb listings, or tries to fight the move to turn residential units into hotels, it costs Airbnb money and slows the company’s potential for growth. That means lower returns for investors, a lower IPO price, and less cash to the Series A venture capitalists, including Conway.

    And San Francisco is a key city – it’s Airbnb’s home town, it sets the standard for lots of other cities, it’s a huge tourist town with a hotel industry that is one of the city’s biggest employers and that is highly vulnerable to economic conditions.

    Peskin is a supervisor who has worked closely with ShareBetterSF. But he’s not calling all the shots in that neighborhood, tenant, and labor-backed organization. And he’s not going to “get a deal done” that the Tenants Union, Local 2, and the wide range of neighborhood groups that are part of ShareBetterSF don’t support.

    And I’m not sure that there’s a “deal” those groups would support that Conway wouldn’t actively oppose.

    What this is really going to come down to is how willing the mayor is to tell Ron Conway that he’s going to lose tens of millions of dollars in IPO profits in the interest of saving rental housing in San Francisco, and that’s just the way it’s going to be. If Lee can’t say that to the person who has funded (or arranged for funding for) every campaign the mayor wanted in the past five years, including the efforts to keep progressives from limiting the mayor’s power this fall, there will be no “deal.”

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    And the fact that we are even having to talk like this shows how bad things are in San Francisco — just when we need to be standing up against Trump.

    Ron Conway’s 65, with a net worth of at least $1 billion. He could let this one go, and he’d be fine and never miss a meal. His grandkids will never have to work. But I’m not placing any bets on his willingness to trade his potential Airbnb stock windfall for the good of the city where he allegedly lives.

    • playland

      According to the Financial Times, London’s annual limit of 90 days (not 60) would be a $400 million annual hit to the firm.

      No, they did not say that.

      They said that it could result in a $400 million drop in bookings. They noted that:

      Airbnb charges a service fee of around 13 per cent of each booking, implying that the company’s London revenues for next year would be just over $100m.

      So the actual hit would be be would drop from about $152 million in revenue down to $100 million. London is also a bigger market than San Francisco and they are talking about 90 days vs unlimited, not 90 vs 60.

    • 4th Gen SF

      90 day limit is draconian. Loads of people need to stay in their home that own them & use AirBnB. Also, it helps the less wealthy visit places because the ABB rates are cheaper than hotels.

      • LibertyHiller

        Limiting people to running a hotel out of their home to one-quarter of the year is “draconian”? That calls for an Inigo Montoya headshot, if anything does.

        • playland

          Yes. But describing someone who rents out some space to a tourist 1-2 nights a week as “running a hotel” is a perfectly apt description, free of any hyperbole whatsoever.

          I’m sure that they have bell hops and chamber maids and a sleazy pickup lounge.

          • LibertyHiller

            Fine, they’re running a B-and-no-B, a boardinghouse, or an SRO. Take your pick, but no matter how much lipstick you put on that pig, it’s still a pig.

            • 4th Gen SF

              Better for the owners to be homeless then? Got it.

            • LibertyHiller

              Nice straw man you’ve built there.

              If they paid the same taxes to SF as a legitimate hotel, I’d have less of a problem with this sort of thing. It’s the “waaaahhh, we shouldn’t have to comply with the rules because our users are just sharing” BS from Uber, Airbnb, et al. that annoys reasonable people.

            • playland

              If they paid the same taxes to SF as a legitimate hotel, I’d have less of a problem with this sort of thing.

              Good news @LibertyHiller ! Airbnb has been paying the hotel taxes for two years now!

              https://techcrunch.com/2014/09/17/airbnb-sf-occupancy-taxes/

              A little knowledge goes a long way!

            • LibertyHiller

              How about the rest of the taxes legitimate hotels pay?

            • playland

              How about the rest of the taxes legitimate hotels pay?

              Such as? The city gets their tourist tax on every Airbnb night, the hosts get a 1099 and they even have to pay a tax on the resources (pots, pans, etc) that guests use.

              You need to try something else….Airbnb is fully tax compliant in San Francisco.

              Sorry.

            • LibertyHiller

              If you believe “hosts” are paying the tax on the resources their customers use, you are naive.

            • Government Shrinkage

              What resource might the guests be using pray tell? Electricity the hosts pay for? Water the host pay for? TOT the host pay for? The sales tax that guest pay into the city every time they buy anything? The taxes paid by the local businesses that result from the business the guests bring in?Enlighten us, please.

            • LibertyHiller

              You know how I know you’ve never run a business?

            • Government Shrinkage

              I’ve built and run three of them and sold them for tens of millions. So yes, please tell me how you know.

            • LibertyHiller

              Because you seem to be ignorant of the concept of property taxes on business equipment. (As playland pointed out, this applies to pots, pans, beds and other furniture, etc., etc.)

              You’re also under the delusion that SF keeps 100% of sales tax revenues; in reality, more than 3/4 of that goes to the state of California, and the remainder is whacked up between BART and The City.

            • 4th Gen SF

              But business property tax is by county and SF does keep that for it’s own coffers. Further, AirBnB people are paying BPT.

            • LibertyHiller

              Move the goalposts some more, please.

              If you believe that Airbnb “hosts” are paying business property tax on the furniture in their guest rooms, you probably also believe in the Easter Bunny.

            • playland

              If you believe that Airbnb “hosts” are paying business property tax on the furniture in their guest rooms, you probably also believe in the Easter Bunny.

              To @LibertyHiller – You are right once again! What a brilliant person. You can stop reading now — you already know everything.

              To anyone else –

              Of course he’s wrong.

              Next week the city will notify hosts using services like Airbnb and HomeAway/VRBO that they must submit an itemized list of all the “furniture, appliances, supplies, equipment and fixtures” used in their rentals, specifying the cost and acquisition date. After the assessor’s office calculates depreciation, this “business personal property” will be subject to a tax of slightly over 1 percent of its value.

              http://www.sfgate.com/business/article/San-Francisco-wants-Airbnb-hosts-to-pay-taxes-on-6906551.php

            • LibertyHiller

              And every one of them is going to report that honestly, right down to the fish forks and the grapefruit spoons. Surrrrre they are.

              I’m done here for now. You and 4th Gen have fun patting yourselves on the back, m’kay?

            • 4th Gen SF

              You have no idea about the Business Property Tax division of SF. You realize they check your IRS returns & you will receive a letter from them & they calculate what you owe them? Talk about never being a business owner in SF as you deridingly said to another poster….

            • Ragazzu

              Two whole years? That’s supposed to be laudable for a company that started more than eight years ago?

            • 4th Gen SF

              “Paying the same taxes” = higher rates for consumers. If you’re trying to travel on a smaller budget, you’re saying you shouldn’t travel? Only the wealthy should be able to travel well? And the homeowner renting out the place/room will have to charge more, but receive the same? Taxes aren’t an equalizer, they are punitive to the middle class traveling, and to the owners. Only the gov’t gets rich.

            • LibertyHiller

              It’s called “paying a fair share” — it’s one of our society’s cornerstones.

              It’s interesting that you think the government is rich. If that’s the case, why is our infrastructure in such poor shape? (Hint: Taxes are how one pays for sanitation, education, irrigation, public health, roads, clean water, public order, mass transportation, bridges … y’know, the basic trappings of civilization. )

            • 4th Gen SF

              Our infrastructure is in poor shape because of the choices our gov’t makes. It does not prioritize infrastructure, never has. Let’s hope that starting on Jan 20, 2017, infrastructure will be more of a priority & less bureacrats will be making a living on our $. I will give BO some credit for throwing a few pennies to some infrastructure. Trump wants 1 trillion on American infrastructure and I believe that will happen with the GOP dominating every national govt’l structure.

            • LibertyHiller

              “The choices our government makes” because anti-tax advocates believe that all this stuff just magically happens.

              Where is Trump supposed to find an extra $1 trillion while simultaneously cutting taxes *and* throwing more money down the rathole of our military-industrial complex?

              The federal government employed 2.67 million people in 2014, according to the Office of Personnel Mgmt. (Civilians only, that is.) That’s pretty much where it’s been for the last 15 years; under Reagan and GHW Bush it was 3 million. Meanwhile, between 1980 and today, the population increased by 100 million people, which would indicate to a rational observer that the government is far more efficient today than it was back then.

              So, even if Trump got rid of 1 in 3 “bureaucrats” and they’re all making $100,000/yr (which they are not), that’s $88.1 billion/yr in cost reductions, which would leave him only $162 billion/yr short of the goal. (Isn’t math fun?)

              So, where’s the rest of the money supposed to come from? Oh, by the way, you just put 881,000 taxpayers out of work. That’s not going to affect the greater economy whatsoever, is it?

            • 4th Gen SF

              Awesome about putting 881k government employees out of work actually. More cuts and more management salaries should be lower, not higher.

            • Ragazzu

              They’re hardly the most at-risk in this city. Again, cry a river for owners.

            • 4th Gen SF

              But homeowners pay the majority of taxes which keeps this city running.

            • 4th Gen SF

              you already said that.

      • Ragazzu

        Cry a river for S.F. homeowners.

        • 4th Gen SF

          Do you own a home or condo inside SF?

    • curiousKulak

      Maybe a different perspective is needed. Instead of decrying how such and such a measure will “cost”, maybe opponents (and the Mayor should be included in this as well – if you want him to curtail Abnb) should start at Zero and point to how much ABnB will legitimately make under the new rules. Otherwise, trying to carve a piece out of the illegitmate pie he/they think they’re entitled to will only result in bad feelings.

      However, I will take issue with the idea that Abnb is “decimating” the City’s housing stock. I think the City has done that to itself (disincentivizing more traditional uses), and Abnb and others are simply taking advantage of that.

      • playland

        However, I will take issue with the idea that Abnb is “decimating” the City’s housing stock.

        Well the “decimating” part isn’t even close to being true.

        The city’s Legislative Budget Analyst said that their best guess at the number of units being Airbnb’d 90+ days a year was 1,251 and the worst case was 2,990. They put this worst case at about 0.8% of the city’s rental stock.

        And not all of the 0.8% would go back on the rental market if Airbnb went away. Some people need the space seasonally for family and others just don’t feel comfortable committing to a permanent tenant.

        • 4th Gen SF

          TY for the actual info! Tim catastrophizes all the time. Like every single day he has a story.

          • Geek__Girl

            And the right wing ignores facts… It appears that quite a sizeable piece of available housing is gone. Great if you are a greedy landlord, not so great for those in need of housing.

        • Geek__Girl

          Nice job of misusing statistics… Seriously, comparing the actual housing lost to the total housing in San Francisco? Lame. How does it compare to the current available units? Well, apartments.com list 2259, so that does not bode well for your argument.

          • playland

            Oh, I see. If those apartments hadn’t been Airbnb’d for all these months they would have remained vacant and available the whole time!

            Thanks! Your logic is simply…..fascinating.

            • Geek__Girl

              You logic is simply…..absurd.

              They would have been available, and likely rented, helping take pressure off of the rental market. Aren’t we always told that we need more housing? Or is that only when it is developers looking to build, build, build?

    • LKR1

      Off topic but my prediction for the SF political showdown of 2017 will be between incoming HUD Secretary Ben Carson and San Francisco Mayor Ed Lee.

      • jhayes362

        And who would win that one pray tell?

      • LKR1

        the one with the highest IQ

    • Brian T

      This blog’s fascination with Airbnb is bordering on pathological. There are folks on all sides of this issue, but somehow Tim thinks it all comes down to the corruption of Ed Lee by Ron Conway in a convoluted plan for Ron to make more money in a future Airbnb IPO. Give me a break. 55% of voters voted against Prop F, you don’t have enough board of supervisor votes to push through something that the majority of voters voted against. Maybe that’s why Ed Lee vetoed it. Democracy. Checks and Balances. Please re-read your middle school civics lessons.

      Then there is the nonsensical logic of this blog’s fight against Airbnb. Airbnb reduces supply and that pushes up prices for rental units. Tim believes supply and demand impact prices! But when developers want to build new homes that Tim has fought against for DECADES, that doesn’t impact prices. Tim doesn’t believe supply and demand impact prices. Give me a break!

      • playland

        This blog’s fascination with Airbnb is bordering on pathological.

        I don’t know if you are aware of this but Conway reportedly once made a remark about destroying the Progressive movement in San Francisco, which I think explains the pathological fascination with Airbnb.

        Whenever Airbnb goes public there will be a headwind from the prospect of local regulation. Conway still hasn’t finished counting the money that he made from Google, Facebook and Paypal, among others. Anything that SF does regarding Airbnb will not even result in a rounding error to his bank account. FWIW, Ashton Kutcher invested more than Conway did in Airbnb.

        And you’re right…it is pretty funny that AIrbnb is the ONE instance where supply and demand has any effect on San Francisco rentals.

        • Sanchez Resident

          Mr. Redmond is a union supporter. Hotels in the City employ union workers. AirBNB may have an effect on hotels and thusly their union employees. This may account for the targetting of AirBNB by Mr. Redmond.

          • playland

            True…that certainly is another factor. I remember that Mr. Redmond once published a long expose about Airbnb funding electoral campaigns but he somehow failed to mention that the hotel union (Unite Here) was doing the exact same thing on their side.

            Regarding hotels, San Francisco can not afford to ignore the fact that tourists like Airbnb. It gives them travel options that hotels don’t. For the city to deny them Airbnb would be like closing Alcatraz and the cable cars because they were using non union resources.

            • 4th Gen SF

              FWIW, the friend that works in a hotel mentioned above that is always full, worked in union hotels & got fired but now at the non-union hotel, they LOVE him. The hotel union did nothing to help my friend out & the union hotels are really awful, with horrible food for the help. Non-union hotel has AMAZING food for the help & he is totally happy. He’s lasted there the longest too.

              I say this as a person who supports unions but they are really lagging behind these days & do not help workers.

            • Ragazzu

              “I say this as a person who supports unions”—from the guy wrote, on the same page, “destroying the progressive movement in SF would be fantastic.”

              Don’t bother bolstering your arguments with bogus progressive claims. Nobody buys it.

            • 4th Gen SF

              I’m not a progressive. I have never claimed to be. I’m not just on one side, no one should be. Diversity of opinions.

            • Geek__Girl

              Sure…your all over the right.

            • LibertyHiller

              I’m pretty sure the cable cars are union operations like the rest of Muni. Or are you referring to the tourist traps on rubber tires?

            • playland

              Sorry…bad example…I was trying to make the point that we should be very aware of the preferences of tourists. They like Airbnb, it allows them to stay longer and they spend more money in the neighborhoods.

              So there is a cost of minimizing the availability of Airbnb rooms. Yes, identify and shut down the bad actors who use Airbnb improperly, but, no matter how much you don’t like Ron Conway, don’t do anything that will make SF a less desirable tourist destination.

          • 4th Gen SF

            FWIW I have a friend who works a working class job in a hotel & they are always full.

        • 4th Gen SF

          IMHO, destroying the progressive movement in SF would be fantastic but not sure it could really be accomplished. SF is kind of sedentary but who knows?

      • Geek__Girl

        Lee vetoed because he is sold out. The proposition failed because Airbnb and Conway poured out a lot of money to defeat it.

        • Brian T

          Geek_Girl throws out opinions and conclusions; never backed up by facts. She’s clarvioent and can see into the mind of Ed Lee! By her logic, whoever spends the most on a proposition wins! Let’s see, the most ever spent on a proposition in SF was the soda industry fighting Prop V. They spent $20M and lost 68-32. These are complicated issues but it’s all black and white to her.

          Opinions are like _____. Everyone has one.

          • Geek__Girl

            Are you ACTUALLY trying to deny that Ed Lee is under the control of Ron Conway? And no, you are creating a classic straw man. Spending money doesn’t always work, but it can. The first time a soda tax was proposed, it lost badly. There was a lot of editorials and opinions expressed about how the soda industry had spent money to defeat it. The second time, that effort backfired. No, not black and white, but people are often swayed by a flood of mail opposing something. Especially if there is not enough money to counter it.

            • Brian T

              Does Conway have influence? Sure. Does he have undue influence? Maybe. Does he “control” Lee? I doubt it. Our opions differ, but neither of us can present it as fact as you do.

              You originally said Prop F failed BECAUSE of money. Now you say people are often swayed by money / mail. That’s a reasonable opinion. I think people are rarely swayed by money / mail. I think SF voters are pretty savvy and all the mail / ads don’t have that much influence and can actually backfire. Our opions differ, but neither of us can present it as fact as you do.