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UncategorizedDemocratic Party in SF faces a question: Should Airbnb...

Democratic Party in SF faces a question: Should Airbnb pay its back taxes?

Obama wants to end tax breaks for big corporations; will his party in SF go along?

A community protest against Airbnb, which hasn't paid some $25 million in back taxes
A community protest against Airbnb, which hasn’t paid some $25 million in back taxes

By Tim Redmond

JANUARY 22, 2015 – The San Francisco Democratic Party has moved to the right in the past couple of years, but an unusual alliance is now pushing a measure to force Airbnb to pay its back taxes – and it may leave some committee members in an embarrassing spot.

The Democratic County Central Committee measure is sponsored by Sup. David Campos, state Sen. Mark Leno, and DCCC member Megan Levitan. It’s safe to say that Campos and Levitan are often on different sides on the panel.

It’s also likely that U.S. Sen. Dianne Feinstein, who has a lot of problems with Airbnb, will direct her proxy to vote for the resolution.

And Leno’s role puts him at odds with Assemblymember David Chiu, who sponsored the legislation that allows Airbnb to operate legally in the city and who strongly opposed an attempt by Campos to require the company to fork over some $25 million it owes in back taxes.

Now, at a time when President Obama is calling for higher taxes on the rich to help the middle class, how many members of the city’s Democratic Party are going to vote to let a big, wealthy company skip out on its local tax bill?

Here’s the text of the resolution, which will be on the agenda for the DCCC meeting Jan. 28:

WHEREAS San Francisco is facing a severe shortage of housing that is exacerbated by short-term residential rentals to tourists, through platforms such as Airbnb, a multi-national corporation valued at more than $13 billion which carries more than 5,000 San Francisco listings, two-thirds of which as reported by the San Francisco Chronicle on June 14, 2014 are for entire units, not shared dwellings; and

WHEREAS the San Francisco City Treasurer, over the objections of Airbnb and the Mayor, determined in April of 2012 that short-term residential rentals to tourists were liable for the same transient occupancy tax collected and remitted by hotels which funds are used to support numerous arts organizations and defray the costs of public services and amenities; and

WHEREAS, while Airbnb agreed to begin collecting and remitting transient occupancy taxes in October of 2014, the City appears to have made no discernible effort to collect back taxes from short-term residential rentals since his ruling that taxes were owed in April 2012, which taxes due from Airbnb alone are estimated to exceed $25 million and which could potentially pay for:

  • 125 new ambulances or
  • 200 new police officers or
  • 31 hybrid Muni busses or
  • 50 units of affordable housing or
  • Annual salaries for 250 nurses or public school teachers or
  • 8 million home-delivered meals for seniors or
  • Permanent housing for homeless families;

NOW THEREFORE BE IT RESOLVED that the Democratic County Central Committee of San Francisco demands the immediate payment of all past due taxes owed to the City by Airbnb and other so-called “hosting platforms,” and that if necessary, this matter be referred to the City Attorney to bring suit to collect all back taxes owed from short-term residential rentals to the City and County of San Francisco.

Seems simple enough. And passage would be a boost to the efforts by Sup. David Campos to pass through the new Board of Supervisors a measure similar to the one he tried to pass when Chiu’s legislation came up last year.

“It’s an interesting alliance that in itself reflects how across the board, people are not happy the Airbnb continues to dodge its taxes,” Dale Carlson, who is working on an Airbnb reform initiative, told me.

“This is America, you pay your taxes. They were told more than three years ago that the transit occupancy tax applied to them and they’ve had more than enough time. Now belly up to the bar and pay the tab.”

Meanwhile, while San Francisco can’t even figure out how to collect back taxes, the New York City Council is raking Airbnb over the coals.

Council members repeatedly insisted the site’s listings meant a headache for neighbors, often violate state law, and lead landlords to take already scarce housing off the rental market to use as lucrative illegal hotel rooms, worsening the city’s affordable housing crisis.

Sounds like San Francisco.

Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.
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48 COMMENTS

  1. @Gary – You were being nosy and being a bully, implying Dave would be happier elsewhere. Living in San Francisco doesn’t require one HAS to side and agree with The City’s progressives.

  2. @Fishchum, nice morphing of this discussion into me being nosy. I asked someone who is perplexed and obsessed with San Francisco progressives why they live here – presumably there are many other options that will certainly cause less anxiety to him.

    @Sam, all of your comments were deleted from a previous thread this week, and some of your comments were deleted from other threads for good reason and nobody cared. You and Dave are here to pick fights, turn every issue into a progressives vs whoever, and you are both dishonest in pretending to engage in thoughtful discourse.

  3. That is a big part of the problem with this city i.e. it is stuffed with misfits and people who are not flexible and cannot adapt or be mature..

    This city cannot afford to be an asylum for everyone who can’t deal with a few challenges. If you want to live here then be an adult and deliver added value.

    When someone tells me that SF is the only place they can live, alarm bells go off. We all have to grow up and face a difficult world, and we don’t need passengers.

  4. Who cares WHY people move and/or live here? They do it for all sorts of different reasons – what business is it of yours?

  5. @Fishchum, no it was a QUESTION. I moved to SF from an ultra-conservative region because living among redneck/libertarian idiots was suffocating me.

    Don’t tell me what my intent was.

  6. @Gary – No, but even a child could see the implication. You’re implying Dave would be happier anywhere else in the US because they “share his ideology” (which isn’t even true).

    Just because someone disagrees with you doesn’t mean it’s OK to insinuate that they’d be happier elsewhere.

  7. @Fishchum “. . .WTF are you doing in San Francisco?” – the question – is not the same as “leave San Francisco” in the eyes of anyone who isn’t an idiot.

  8. San Francisco has been pulled between the Barbary Coast set and the bourgeois propriety set in fits and starts since inception. There is no natural ground state.

    With Feinstein and progressives united against the libertarians and relatively few AirBnB “hosts,” a well crafted campaign can with with margins similar to the Prop Bs.

    The wild west ends when San Francisco abandons land use controls and goes down the superhighway to Houston.

  9. @ 4th Gen Sf’er – I was replying to Gary’s comment that Dave should leave San Francisco because the rest of the country “shares his ideology”. To the best of my knowledge, living in San Francisco doesn’t require that you have to think the way “We” think.

  10. “…while Obama wants higher taxes, it is not the case that the voters–” BZZZZZT! Ooooh, no, wrong, sorry, We have some lovely parting gifts…

  11. Nice work, Ryan. I asked a question about policy and tactics, and you responded with a personal attack.

    Even if we accept the $25mm figure on its face, that simply isn’t very much money in a city with an $8.6 billion annual budget, and where $25mm is sufficient to build (at most, and under wildly optimistic assumptions) 50 units of affordable housing. Yes, better than nothing, but hardly enough to put a dent in the housing crunch, and along the way it will likely galvanize opposition from the many thousands of homeowners shown on that new infographic created by anti-eviction mapping project. Plus, this measure doesn’t even require that the money be used for housing.

    Point being, collecting Aibnb back taxes seems like a legally dubious move that would require substantial political capital to pass, even though it would do little or nothing to address San Francisco’s housing crunch — Airbnb rentals would still be legal, after all.

    From that perspective, the effort seems driven more by moralistic rage to punish Airbnb for being Airbnb, rather than by any hard-nosed impulse to actually improve the lot of struggling San Franciscans. And in that sense, Ryan, I can see why you might find it appealing.

  12. TCP/IP was developed by the military which puts liberals in a sticky situation.

    The WWW, including HTTP and HTML, were developed initially by CERN, the European particle physics center and standardized by international committees of volunteer arch geeks.

    The only participation by the private sector in any of this was in donating resources towards the standardization efforts knowing full well that the end product would be in the public domain. I got to work with some guys (most all guys) who were all into computer science, I was fortunate to find myself as a competent engineer amongst some of the best minds in academic and applied computer science research during that period.

  13. Dave, I suspect the $25 million is pure speculation. Someone counted the number of listings on Airbnb, make some assumption about how many nights a year they were occupied, and multiplied that by the hotel tax rate.

    The first and last of those can be reasonably guessed. But the occupancy rate is anyone’s guess. My guess would be that they assumed 100%, meaning that the 25 million is a huge over-statement.

    Also note that some of the lets through Airbnb are for more than a month, in which case the hotel tax would not apply anyway.

  14. You do notice that there is no documentation behind the $25 million, don’t you? Doesn’t that tell you something?

    #progressivesmakeupnumbers

  15. 25 million a modest amount of money? relative to what? the city budget? your personal net worth? I’m pretty sure it would have more of a meaningful impact on affordable housing than zero dollars collected from airbnb. How completely out of touch does a person have to be to even say something like this in all seriousness and attach their actual name to it?

  16. Hey TechDouche, your tech was developed by the U.S. of A., as was the infrastructure and educational system that made it possible.

    By the way, genius, it’s spelled “atheist.”.

  17. Don’t just make shit up, Spam. Pew Research results show that “by two-to-one (44% to 22%), the public says that raising taxes on incomes above $250,000 would help the economy rather than hurt it.

    Better pay up, Spam!

  18. Reply to Fishchum & Marcos – Maybe but IDTS to Marcos, but FC – wrong, SF has always had a “leave me the f alone spirit”. This will not fly.

  19. People in SF will not vote against AirBnB at the ballot box! lol that is hilarious you think they would.

  20. I don’t know if the past taxes amount of modest or great – do you have any sources for that?

    I’m not setting the ‘progressive’ agenda and I am not affiliated with any political group. That said, my opinion is that the back-taxes issue is secondary to the issue of displacement of renters by AirBnB rentals.

    But, as we are probably going to see many new ‘sharing economy’ businesses emerge over the next decade (see AirPnP if you want to know where you can pee), I do think it is important to use a ‘heavy hand’ to force all of these new businesses to comply with existing laws and codes from day one.

    Also, I would establish a committee or even a department for new businesses to consult about existing laws that pertain to them and even have the opportunity to make a case that they should be exempt.

    Pissing-off many government officials around the world may feel good now, but long-term it is going to harm AirBnB (and Uber). As I wrote on another thread, due to serious issues and abuses that could have been easily prevented by sensible AirBnB policies, our HOA is in the process of banning AirBnB rentals in my building. Once in place, leans will be placed upon any unit that is rented on AirBnB, VBRO, etc, even if that unit is rented to a tenant and the tenant is providing the short-term rental on AirBnB. Unfair? Probably. Enforceable? Yes.

    Back to your question, I don’t care who is the ‘standard-bear’ as long as they are successful.

  21. I understand. You lost the vote, there has to be a reason other than the other side made more sense. There had to be payoffs involved. And SEIU NEVER provides financial support on Progressive votes.

    But can you provide any documentation on the “$750K in campaign support from Ron Conway and friends” that you apparently familiar with?

    Let me save you the trouble. It wasn’t $750k. Ron Conway wasn’t the main benefactor, Reid Hoffman of LinkedIn was, and Hoffman has been supporting David Chiu since long before AirBNB was ever an issue.

    But anyway, keep on spreading baseless theories and exaggerations. That’s the way that Progressives will eventually get ahead, right?

  22. Oh…wait… yes, Chiu steered this with the support of Ed Lee. And if you don’t think political contributions are rewarded with favors, and certain votes are rewarded with favors, you are naive.

  23. “Ultimately, I think was a political payoff to Airbnb by David Chiu in return for $750K in campaign support from Ron Conway and friends.”

    This is true…it should have been voted on by the entire Board of Supervisors, not just David Chiu.

    Oh…wait…

  24. Airbnb knows some of them and would probably turn them over, if they receive a subpoena to do so.

    But what about all the other people, from all the other sources including craigslist. What about all the people who established offline relationships so that they could cut out the middleman.

    I just think that we’re going to have a hard time explaining to the judge that we are only looking into Airbnb because we consider Ron Conway to be a political enemy. Just don’t think it’s gonna fly.

  25. The issue of relevance is a good one. Which prompts these questions…

    Is this the cause progressives really wants to rally around?

    And with David Campos as the standard-bearer?

    And given the (relatively modest) amount of money the back taxes might yield, and the fact that collecting those taxes would not have a meaningful impact on San Francisco’s affordable housing inventory going forward, what are the opportunity costs for progressive activists?

  26. I doubt the city can even identify the property owners who have worked with Airbnb during the period in question. I’ll bet that Airbnb can though.

  27. “Airbnb only agreed to start collecting this tax on the understanding that the past is written off. We should honor their willingness to co-operate by waiving this spurious claim.”

    This needs to be documented.

    “The SF tax collector already has all the powers he needs to go after these taxes. If he is not doing that, then my guess is that he knows that he cannot prove the tax is due, and is not confident of winning in court.”

    This may be true, but if it is, the tax collector should say so and why. The city should not forfeit millions in uncollected taxes without an explanation to the rest of us unfortunate taxpayers.

    Ultimately, I think was a political payoff to Airbnb by David Chiu in return for $750K in campaign support from Ron Conway and friends.

  28. Megan Levitan is life partner of Dale Carlson who was the money man for the San Francisco Information Clearing House (Hestor lawyer, Welch policy person, Cazanave shin kicker/enforcer) which is the nonprofit corporate parent of the Council of Community Housing Organizations, Calvin Welch’s affordable housing nonprofit cartel. That is why Levitan supports this.

  29. 1) Diane Feinstein is not a progressive.

    2) I spoke of ‘legislating AirBnB out of business’ as the leverage we have. But even if it did come to outlawing AirBnB (which it won’t), the tourist industry was very healthy before AirBnB and it will be healthy if AirBnB was shuttered.

    3) I often post links to back-up fact when I post facts – I posted several links on 48 Hills yesterday. What I posted above is an opinion, just as what you posted is an opinion. If you are referring to my response to you on a previous thread about AirBnB, one assumes that if you have the capacity to post here, you also have the skill set required to do a quick search in Google.

    Frankly, I don’t give a shit about “progressive”, “right-wing” and other labels. But you and your brethren seem obsessed, often devolving the discussion of anything that doesn’t fit your warped vision of the world as being ‘communist’.

    But please, do carry-on. Those who focus on ideologies and not the issues are becoming less relevant with each passing day.

    Good riddance.

  30. Just say no to big government stealing my money. We made the money we keep it. All the people complaining are poor losers who are mad they aren’t smart enough to make money. Really all of you tax successful people need to get over ancient tired religious ideas:

    “15 Then the Pharisees went and plotted how to entangle him in his words. 16 And they sent their disciples to him, along with the Herodians, saying, “Teacher, we know that you are true and teach the way of God truthfully, and you do not care about anyone’s opinion, for you are not swayed by appearances.[a] 17 Tell us, then, what you think. Is it lawful to pay taxes to Caesar, or not?” 18 But Jesus, aware of their malice, said, “Why put me to the test, you hypocrites? 19 Show me the coin for the tax.” And they brought him a denarius.[b] 20 And Jesus said to them, “Whose likeness and inscription is this?” 21 They said, “Caesar’s.” Then he said to them, “Therefore render to Caesar the things that are Caesar’s, and to God the things that are God’s.” 22 When they heard it, they marveled. And they left him and went away.” https://www.biblegateway.com/passage/?search=Matthew+22%3A15-22&version=ESV

  31. Good questions about the Progressive bashing, Here is one example why Progressives deserve to be ridiculed:

    “AirBnB can be legislated out of existence in San Francisco. That is the leverage.”

    So Airbnb helps to create something that thousands of people use and like and it allows more visitors to come to our city for longer stays. Apparently it is going to create a lot of revenue for the city going forward — just look at how worked up people are over the first two years worth.

    On top of that, they are headquartered in the city, they pay their business taxes and provide jobs to thousands of local people who then go out and spend money in San Francisco.

    But hey! We can legislate the out of existence! Because we don’t like them.

    They are located here which gives us the ability to make their lives miserable and to send a clear message to anyone else who might want to bring jobs here.

    Quick answer: No you can’t, because you are a silly little, powerless minority. The guy who wrote the Airbnb bill just won Tom Amiano’s seat over David Campos, who then lost for BOS President 8-3. The new President of the BOS is a moderate….from the Haight.

    Deal with it.

    And one last note, @GarySFBCN. I provide sources and provable facts when I post here, you state meaningless hyperbole without any effort to tie it to facts and then hope that people somehow believe you.

  32. SF progressives have certainly associated themselves with plenty of dumb battles, but even they know that trying to collect Airbnb taxes from individual homeowners would be both pointless and insane. So they go after the easier target, which also happens to make a good scapegoat for the moment because TECH.

  33. Why is it that posts from you or Sam devolve into bashing progressives? Both of you are obsessed and your bashing adds nothing to the discussion. I must ask WTF are you doing in San Francisco? We are about .01% the area of the entire US, and the rest of the US shares your ideology.

    Regarding THE ISSUE, AirBnB can be legislated out of existence in San Francisco. That is the leverage.

    Oh, and there’s the ballot box too.

    And AirBnB didn’t stand-up to pass-on the taxes moving forward. No, they had to be forced to do so.

  34. Actually he makes a key point there that apparently goes right over the heads of Progressives. The tax collector now has a huge, expensive job going forward tracking every hosting event (VRBO, Roomarama, craigslist, etc…) and making sure that the city gets their cut.

    So AirBnb stood up and said that we will guarantee that you get every dime from the stays that we are involved in. Which they didn’t have to do. Expedia, Priceline and the rest don’t do that (they collect a tax estimate, pass it along to the host and stop right there).

    If you look at what the tax commissioner wrote on his site he called what Airbnb is doing a ‘convenience’ but not necessary.

    Anyway, the truth doesn’t matter here…we’re dealing with Progessives gasping for anything they can. Honesty is a luxury at this point.

  35. Yes, Obama called for more taxes on corporations and wealthy individuals. But you omit the part where Congress has zero percent probability of passing any such tax hikes. The GOP just won back the Senate and has the biggest majority in the House since 1946.

    So while Obama wants higher taxes, it is not the case that the voters, Congress or even his own party supports that.

    And if the Dems nationwide do not support higher taxes (and they voted to extend the Bush tax cuts) then why should our local DCCC?

    In any event, as Dave notes, it is not clear that the hosts should not be pursued rather than Airbnb, because Airbnb never collected these monies. The tax should come from the party who directly profited from the transactions i.e. the hosts. But of course Tim would rather bash Ron Conway.

    The SF tax collector already has all the powers he needs to go after these taxes. If he is not doing that, then my guess is that he knows that he cannot prove the tax is due, and is not confident of winning in court.

    Airbnb only agreed to start collecting this tax on the understanding that the past is written off. We should honor their willingness to co-operate by waiving this spurious claim.

  36. Only in San Francisco, would politicians be lining up on different sides over a simple case of tax evasion.
    I don’t always agree with Senator Feinstein, but she is spot on in going after these scofflaws who are ruining the quality of life for many of us.

  37. It would be great if Tim or somebody else could explain why they keep calling this AirBnb’s taxes. Because it isn’t, you know…true. Here is what the tax commissioner actually said:

    “this Office promulgated a regulation clarifying that both website companies and hosts are jointly and severally responsible for the payment of the full amount of TOT for any short-term rentals”.

    Source: http://sftreasurer.org/statement_TOT_102114

    So what he actually said is that either the host or the AirBnb type company is on the hook. Tim and the others need to leave out the part about about the hosts being equally responsible (and then they wonder why their credibility is non existent).

    It is just so much easier to make believe that the hosts are not responsible at all and Ron Conway’s company has to pay up.

    And the money from decades of craigslist people? Are any Progressive enemies involved? No? Then we don’t care about that money.

    It is the hosts who have 91% of the money, they initiated the transaction and the had every opportunity to write out a check to the city to cover the expenses of the guest that they housed.

    Also, the $25 million figure is totally bogus. It comes from an estimate that of the next two years going forward and assumes that it also applies to the past two years, as if there has been no growth over that period.

  38. Hell yes, those taxes should be paid. But I don’t trust Feinstein’s motives. Isn’t she part owner of the Hotel Carlton? If so, can we know what her motive really is?

    And since AirBnB is the fiscal agent between the customer and business owner, hit them for the taxes and let them get work to get reimbursed from their clients.

  39. And what is stopping our tax collector from collecting yesterday? This is all puffery. Cue Peskin, etc. in 5…4…3

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