What the Airbnb settlement means

A big win for better enforcement -- if the city can make sure it happens

I am going to let Doug Engmann, former chair of the Pacific Stock Exchange and president of the SF Planning Commission, make the point about the city attorney’s settlement today with Airbnb:

It’s a game changer. If other American cities follow San Francisco’s lead and hold Airbnb accountable for facilitating illegal activity, it could have a material impact on the company’s revenue and $30 billion valuation. Venture capitalists, private equity funds and institutional investors should be having second thoughts about an enterprise with a business model that ignores local laws, deprives working families of needed housing, and disrupts the lives of tenants, property owners and neighbors.

City Attorney Dennis Herrera announced yesterday that the tech giant had dropped its ill-conceived suit against the city. The city clearly had the upper hand: Cities can regulate land use; cities get to decide where hotels go and where residential areas go.

Airbnb took the city to court today. Why are we putting up with this?
Airbnb folds on its lawsuit

And it looked horrible for Airbnb to be suing its hometown.

So Herrera was able to set out terms that are largely favorable to the city – and that set a national precedent. Airbnb has agreed to what the city wants, thanks to legislation by Sups. David Campos and Aaron Peskin.

And what the city wants is simple: Airbnb, and other “homesharing” hosts (this isn’t sharing, by the way, it’s a commercial transaction) have to agree not to list any properties on their sites that don’t have a local license.

In exchange, the city agreed to make it easier to get a license, which is fine.

But the settlement shifts the burden of proof off the city and tenants and neighborhoods, which have complained for years about illegal Airbnb units, and forces the platform that is making huge amounts of money when landlords evict tenants and turn apartments into hotel room to comply with local law.

The settlement came just days after a hearing at the Board of Supes Government Audit and Oversight Committee at which city officials admitted that Airbnb’s claims of wanting to be a good neighbor were utterly bogus.

The vast majority of the Airbnb units in San Francisco are currently illegal. If the company actually follows the law, thousands of new housing units could come on the market.

The only thing the deal doesn’t do is go back five years, find all the illegal evictions, and give those tenants back their homes, at the rent they used to pay.

Maybe we can do that next.

And the city still has a huge enforcement job ahead: Landlords will continue to break the rules unless there are consequences.

In the meantime, maybe this will send a message to the tech industry in general (including Uber): You can’t just break the law and later ask to be legalized.

And I hope that Assemblymember David Chiu, who as a supe allowed Airbnb to operate without the rules that are now in place, and all of his supporters, including Sups. London Breed, Mark Farrell, Katy Tang and Malia Cohen and now-Senator Scott Wiener, look back on this and realize they were wrong.

Mayor Ed Lee, who told the Chronicle that this settlement was just dandy, was a big supporter of the legislation that allowed Airbnb to operate legally — without this new provision. For three years, his administration has done very little to crack down on the thousands of illegal operators.

Now the city’s going to have to enforce its new law — and make sure that about 6,000 unregistered listings are removed from the short-term rental market. We will see how that goes.

  • voltairesmistress

    I think that many owners of the 6,000 unregistered units will register them and continue to rent them out part of the year to visitors. But this legislation will make operating as a year-long hotel more difficult and less lucrative. So if that puts a good portion ofnthese units back into then residential rental market, that is a great thing. Finally, some sensible balance that allows true home sharing and short term vacation rentals without taking away rentals for residents. It took a while for politicians to wise up. This is a good compromise between unrealistic and stodgy prohibition on the one hand and misuse of rental stock and tax evasion that existed before.

  • MorganDriver

    Funny how there is no mention of tenants who break the rules…..

  • playland

    Tim writes:

    But the settlement shifts the burden of proof off the city and tenants and neighborhoods, which have complained for years about illegal Airbnb units, and forces the platform that is making huge amounts of money when landlords evict tenants and turn apartments into hotel room to comply with local law.

    The NY Times stated it correctly. The burden is on the city, not Airbnb.

    Under the settlement between the city and the companies, Airbnb and other services like HomeAway will collect data from people who rent their homes out for less than a month on their sites. San Francisco will use that information to vet and register hosts.

    Also, when Tim says that “thousands of new housing units could come on the market” it is worth noting that there is no study that supports that level. The city’s Legislative Budget Analyst said that their best estimate was that there were 1,251 units short term rented for over 90 days a year. Not all of those would become rental units. Other studies had similar numbers as the BLA.

    • 4th Gen SF

      SF sounds like the Gestapo with this legislation or the old USSR. Very scary controlling stuff & it won’t make those owners of the units very hospitable to renting these units out either. Also, if owners get together and take this to SCOTUS, which they could to declare it unconstitutional…..I imagine they would have a case. The new USA gov’t is much more libertarian, less nanny-state.

  • Lawrence Gordon

    As a legally operating airbnb host since day one that STR registration went online, I am very happy that this settlement came to fruition. I do not condone illegal hotels or evictions any more than the next guy.

  • Brookesia

    “You can’t just break the law and later ask to be legalized.”

    While I’m certainly no fan of AirBnB disregarding our laws and feel fortunate that a makeshift hotel hasn’t yet popped up next to me, I’m not sure that this is necessarily the strongest argument to make.

    For better or for worse, this is precisely the position that’s been taken in SF on a wide range of other issues such as illegal immigration or medical marijuana (which is still in violation of federal law). I’m not saying that I support anything like mass deportations or closing down medical marijuana facilities (quite the contrary), but we need to be careful with our messaging. Picking and choosing when it’s OK to break a law isn’t all that persuasive.

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