By Tim Redmond
OCTOBER 1, 2104 — The remarkable thing about the Land Use Committee’s decision on Airbnb Monday was how few substantive amendments were offered to Sup. David Chiu’s bill.
After delaying the vote for two weeks because committee members wanted time to consider changes to the legislation, the panel moved it forward by a 2-1 vote – largely in its original form.
Sup. Scott Wiener added stronger insurance requirements and a mandate that tenants inform landlords if they are renting out their apartments as hotel rooms. An amendment by Sup. Malia Cohen added a requirement that safety information be posted on the inside of the front door of every short-term rental.
But the measure will go to the full board largely intact — and it will face a major fight over a series of critical changes.
Sup Jane Kim proposed the only significant change – she wanted a 90-day annual limit on all short-term rentals, including “hosted” rentals when the owner or tenant is at home. The current law would allow unlimited rentals when a “host” is present.
Enforcing the rules that differentiate the two types of rentals would be impossible, she said. In fact, the city would have to monitor the whereabouts of every single host all the time; they might as well have to wear GPS devices.
Kim made the point that a lot of critics of the Chiu bill have discussed: At a certain point, a shared-rental unit becomes not an occasional homeshare but a business. If you want to run a bed-and-breakfast inn, she said, you can go through the planning process and get a conditional-use permit.
She asked Scott Sanchez, the zoning administrator, how hard it would be to get a CU, and he said that most of those applications are approved.
“It’s a process that we subject many small businesses to, and it’s often on the [Planning Commission] consent calendar,” he said.
The difference, of course, is that neighbors would be notified that someone is applying to run a B&B – and planners would have a chance to discuss whether there were too many of those businesses in one geographic area.
But Kim’s proposals had no support, so she will have to offer them as amendments when the bill gets to the full board.
Instead, the committee (with Kim dissenting) approved what amounts to, in Randy Shaw’s words, a rezoning of the entire city, allowing a new type of business in every single residential neighborhood.
And, Kim noted, there’s already been a significant loss of affordable rental housing stock to these businesses. “I have met tenants who have been evicted because the landlord wants to do permanent Airbnb,” she said. “We don’t want to encourage that.”
When the measure goes to the full board, it’s likely a broad range of amendments will be offered. Critics of the Chiu plan would like to see three major changes: They want an expanded “right of private action” – which means neighbors, neighborhood associations and nonprofits could sue to enforce the law. They want a limit of 90 days a year on all rentals – and they want Airbnb and other host platforms to monitor the use by local hosts and report that information to the city.
And they want Airbnb to pay several years’ worth of back taxes – money everyone agrees the company owes.
The toughest battle is going to be over Airbnb reporting information to the city. The company insists it won’t do that – but if a reporting rule isn’t in the legislation, the whole thing is pretty pointless, since it can’t possibly be enforced.
Chiu’s legislation relies entirely on self-reporting. And even the Planning Department seems to agree that self-reporting alone won’t be very effective.
“The city can’t tell if it’s the 95th day or the 104th day,” Calvin Welch, who is one of the sponsors of a possible ballot initiative on the issue, told me.
There’s also a move to exempt all single-family owner-occupied homes from the 90-day limit, something that could turn huge swaths of residential neighborhoods into hotel districts.
And there’s another key element that has received little attention. The Airbnb legislation could mean the end of housemates in San Francisco flats – a traditional form of affordable housing for young and working-class people that is directly threatened by the shared-housing model.
Imagine you have the master lease on a four-bedroom flat in the Mission. As Fernando Marti, co-director of the Council of Community Housing Organizations, notes, if you check the “private room” listings on Airbnb, you’ll find a lot of them for as much as $199 a night. The average rate is about $120 a night.
So instead of getting housemates to share the flat with you, those rooms become Airbnb hotels – and even with a 90-day limit (7.5 days a month), the income from an average room is going to be $900 a month. And if the “hosted” units are exempt from the 90-day limit, we could be talking $3,600 per room, per month.
“Goodbye housemates. Goodbye San Francisco working class,” Marti notes.
Homesharing, Wiener said at the committee meeting, is here to stay – “the genii is out of the bottle – and if it were happening on the sort of casual level that we’ve seen in the pre-Airbnb era, nobody would care much.
The problem is that Airbnb, because it’s a business that needs massive growth to please its investors, including mayoral confidant Ron Conway, can’t be satisfied with a modest number of occasional users. The company doesn’t care about San Francisco’s loss of rent-controlled housing, or about landlord-tenant issues, or about the transformation of residential units into commercial hotels. It cares about making more money off more and more users – and that’s just not compatible with the needs of San Francisco.
Of course, if San Francisco strictly limits Airbnb and puts a crimp in its growth model, that could hurt chances for a get-rich IPO for its initial investors, including Conway.
The whole matter gets more complicated by the potential of a ballot measure that would pretty much shut down short-term rentals. If the Chiu legislation is approved without significant changes, Welch said, it’s entirely possible that measure will be on the November, 2015 ballot, along with the mayor’s race.
And maybe that’s around the same time Airbnb decides to start talking about its IPO.
