Nothing makes sense — except the billions that company is reaping by avoiding local regulations

In Airbnb World, logic makes no sense
In Airbnb World, logic makes no sense

By Tim Redmond

MAY 18, 2015 – The City Planning Department essentially admitted today that there’s no good way to enforce the laws against short-term rentals without forcing Airbnb to give the city data on how many nights the units it brokers are used for tourist housing.

But John Rahaim, the planning director, still said he opposes legislation that would make that data available to his agency.

It was a remarkable moment in a remarkable hearing at the Land Use and Transportation Committee, marked by bizarre twisted logic as politicians sought to find ways to justify the continued abuse of the city’s laws by a company that has the strong support of the Mayor’s Office.

It was a continuation of what happened at the City Planning Commission, where the staff, and one of the commissioners, turned 180 degrees on a key issue after getting a text from the Mayor’s Office.

The situation is relatively simple: Airbnb – which is by far the dominant player in the short-term rental market, although not the only one – keeps track of its customers. The company knows how many apartments or houses each customer offers on the site. It knows how often those places are rented, for what periods of time. And it already shares that information with the government, specifically the Internal Revenue Service, which needs to track the rental income of each host.

The city already limits the number of nights that a unit can legally be rented and bars people from renting out anything except their primary place of residence.

But there’s no way for the planning staff to know how many nights a place is on the market without the data that Airbnb has – and so far, refuses to turn over to the city.

The Planning Department staffers are well aware of that flaw in the law. Ann Marie Rogers, a senior staffer, has testified that the department simply couldn’t enforce the rules without the booking data.

But Airbnb and its allies are resisting, saying that there are privacy issues here. Sup. Mark Farrell said a requirement that Airbnb report on its hosts would be the same as asking Google to use its GPS software “to tell us anytime someone goes one mile an hour over the speed limit.”

(Actually, no: Airbnb and short-term rentals are business operations, and the city constantly requires data from businesses, including confidential financial data that’s used to collect taxes.)

Today, Rahaim testified that there’s no need to force Airbnb to give the city anything. “There are other ways to get that data,” he said.

Wait:  It’s a privacy problem if the city gets data on how often rooms are rented out – but the city is going to “find other ways” to get the same data? But don’t worry; that’s just the beginning of the twisted reality of Airbnb World.

Rahaim talked about using web scrapes, but the reality, as Scott Sanchez, the zoning administrator, noted, it’s all going to be about complaints.

That means the law would only be enforced if a neighbor complained – and had some sort of information to show that a unit was rented more than the allowable number of nights.

Farrell has complained that laws expanding the rights of individuals to file lawsuits over Airbnb violations would “pit neighbors against neighbors.” But the Planning Department’s strategy is to turn neighbors into spies.

Oh, and by the way: As housing activist Calvin Welch testified at the hearing, there are now some 10,000 complaints about short-term rentals, and the city can’t possibly find the staff time to investigate even a small fraction of those.

Santa Monica, which is about one-eight the size of San Francisco, is allocating more than $400,000 to aggressive enforcement — not “complaint driven.”

When Sup. David Campos asked Rogers to come up and explain why she had said in the past that the city needed booking data but now says it isn’t necessary, she said she had never meant to imply that the data was critical. “I said it would be helpful to have that data,” she noted.

She was unable to explain how else the city would be able to figure out how many nights a unit was posted for rent.

Campos asked Rahaim: If you are not going to require booking data and you’re not going to impose fines on the companies that list unregistered rentals, how are you going to enforce the law?

Rahaim: “We have been enforcing the law for years.”

Campos was fairly calm; I was stunned. There has been zero enforcement of the short-term rental market since Airbnb arrived on the scene. Zero. That’s why the supervisors passed a law last year. There’s been virtually zero enforcement since it went into effect.

There’s no secret what’s going on here: The Mayor’s Office has sent the word down to Rahaim and his staff not to mess with Airbnb. “Part of the challenge here is that staff have presented information, and now the planning director is changing that information,” Campos said. “I think it’s sad.”

The Committee spent a lot of time arguing about numbers. The Budget and Legislative Analyst reported that a significant percentage of the city’s rental housing stock has been converted to hotel rooms. The city economist, Ted Egan, said that taking those housing units off the market hurts the economy, because higher rents take money out of consumers’ pockets. (That, by the way, is an excellent argument for strict rent control.)

Then Farrell and Sup. Scott Wiener tried to challenge the Budget Analyst, saying that the report was flawed in its data collection. And Egan said he didn’t like the way the Budget Analyst had collected data. And everyone fought for a while.

But they were fighting over the exact problem that we started with: We don’t know exactly how many units are taken off the market for how long and by whom – because Airbnb won’t turn over that information.

Maddening.

As I expected, the testimony from supporters of Airbnb laid out exactly how the company will fight a fall ballot campaign, if there is one. There will be fliers featuring people who couldn’t possibly stay in San Francisco without using home sharing.

(The Campos legislation wouldn’t stop them from renting out rooms in their homes. They would have to register, as they do now. They would be limited to 60 days a year, which isn’t unreasonable. If someone wants to rent out rooms for more than that, he or she just needs to get a permit for a traditional bed and breakfast inn. At any rate, the retired people, the woman who went through a divorce and wants to save her house … they are not the problem. The landlords who take units off the rental market because they can make more money off Airbnb are the ones Campos is trying to control. If you need data on that, just read the comments on 48hills from all the property owners who say they only rent on Airbnb because they don’t want to be under rent control. That’s the problem.

(And, of course, people who are looking for extra income could rent out their extra room to a housemate. But as one person testifying said: “What I am hearing is that these people have a space to rent, but they don’t want to deal with long-term renters because tenants in San Francisco are pesky, they come with rent control and protections against eviction.”)

Then we will hear about the horrors of having the government collect private data on how often a room is rented out. I completely fail to understand this: I’m not for having Facebook report on its users favorite links to the NSA (although the NSA already tracks that kind of info.) I’m not for Google turning over my search requests to the FBI (although Google already shares that info with advertisers so they can better sell me products).

But when you rent out a room or an apartment on Airbnb, you are running a business. And when you run a business, you get regulated by the city. And when you get regulated by the city, the city collects data on your business.

I have never heard of the city tax collector inadvertently releasing proprietary business data used to collect taxes.

More: Quintin Mecke, a local activist, pointed out that Airbnb’s own terms of service say that company “may access, preserve, and disclose any of your information if required by law.” He added: “The idea that there is any privacy involved …. Just read your own terms of service.”

(Mecke got a laugh out of the crowd when he said: “I am impressed that any of you could keep a straight face when the Planning Department said the best enforcement it could do was to talk to neighbors.”)

And we will hear that Airbnb doesn’t actually drive up housing costs. That’s an interesting argument; it appeared today on Beyond Chron:

Few of the units taken off the rental market by short-term rentals meet the standard definition of “affordable housing.” Yet I don’t hear anyone claiming that we shouldn’t care about their loss because they cost more than working people can afford.

The idea is that every vacant apartment is already too expensive for any working-class person, so it makes no difference if it’s rented to a rich tech worker or to a tourist.

But that ignores the unfortunate reality that landlords are evicting tenants who were paying well below market rate to turn apartments into hotel rooms. Welch made it clear earlier in the day: In a housing crisis, the most valuable (and cheapest) affordable housing is existing rent-controlled stock.

The bottom line here – and bottom line is the right term – is that Airbnb’s entire business model has been based on people violating the law. Short-term rentals are illegal in most American cities. Tighter regulations would impact the market share of this company, which at some point is going to go public and make its founders and investors a huge amount of money.

One of those investors, who will stand to profit handsomely, is Ron Conway.

That’s why there’s so much pressure on the supervisors. There are billions of dollars at stake.

Both the Campos measure and the competing Farrell measure were sent to the full Board without recommendation.