Analyzing the $8 million corporate campaign to stop effective regulation of short-term rentals
By Sara Shortt
Disclosure: I would find it funny if anyone ever called me a “paid shill,” but I do work as the Executive Director of the Housing Rights Committee of SF, a nonprofit tenants rights organization that offers free counseling for San Francisco tenants in all types of housing, including rent-control, SROs, public housing and Section 8. I am a long-time SF resident and while I hope that people read things before they vote, I actually hope that they get involved in local issues beyond just reading.
OCTOBER 13, 2015 – To Emey (and the people who are wondering whether to believe the $8 million Airbnb campaign):
I really enjoyed your recent piece – the dramatically titled “I Have Read Prop F, and It is Way Worse Than You Think” – that is getting passed around the Internet. I know that if you say something enough, people are bound to believe it, so I thought I’d respond via an open letter. And with Airbnb, the primary funder of No on F, spending $8 million on a fear campaign to spread lies about Prop F, – I thought it would be a good opportunity to set the record straight. Never believe everything that a multi-billion-dollar corporation tells you. Unfortunately, big corporations lie all the time when it’s profitable – as thousands of VW owners just found out.
There’s a lot of fun stuff in your piece to address – a lot of which is addressed in the recent piece “I Have Read Prop F And It’s Perfectly Normal” – but I think it’s important to educate voters about what’s happening with housing in the city, the effects of short-term rentals and why I think we must pass Prop F to protect our neighborhoods.
First, let me get this out of the way: You say, “It’s actually really hard to find the text online” and “…you’ll see exactly why they don’t want you to read the text.” Really? Have you ever used Google? I typed “text prop F sf” in the search bar and…hey, here’s the text of Prop F! In 20 seconds. (p.s., all that money Airbnb spent on Google ads is working: The No on F link pops up at the top even if you search for Pope Francis. Glad all that money is getting the company something.) I guess you can fault the campaign for not including a link on its website, but to say the text is hard to find is ludicrous.
Now, on to the real issue:
Airbnb is Not Helping the Housing Crisis, It’s Making Things Worse
I’ve worked on tenants’ rights and affordable housing here in the city for about 20 years, and right now, our housing situation is the worst that I’ve ever seen. There have been about 10,000 evictions since 2010, most fueled by real estate speculation and the new profit found in renting to high-paying tourists rather than long-term tenants (who have, you know, rights and stuff). Ellis Act, owner move-in, nuisance violations, illegal intimidation – you name it and it’s happening now. Every tenant in the city knows that if he or she has to leave an apartment, their time in San Francisco is over.
I think what I find most fascinating (and troubling) about the discussion around Prop F is how Airbnb and the other 60 or so hosting platform companies get a complete pass on any responsibility for what their business model is doing to neighborhoods and housing markets, and the fact that they intentionally turn a blind eye to the many abusers on their sites who openly break the law (more on that later). Ignoring the law and undoing years of carefully thought out housing regulations isn’t an innovation, it’s simply putting profit over people. This isn’t the “sharing” economy, it’s the profit economy — and right now, Airbnb is profiting off of our housing crisis.
Prop F didn’t come out of nowhere, and it was not created in the backrooms of the hotel industry. I am part of the coalition of tenant and housing groups that moved to put it on the ballot when it became clear that City Hall was going to cater to corporations like Airbnb rather than solve the short-term rental issue.
San Francisco and literally hundreds of cities all over the world are dealing with the fact that the Airbnb model has gutted the basic foundation of housing regulations in every city where it exists (let’s not forget that Airbnb was illegal in SF from its start in 2008 to February 2015, ignoring the law while city government did nothing). We have a severe housing crisis and Airbnb is making it worse: Rather than use much-needed housing for residents, we are instead using it for tourists. For cities like San Francisco with extremely tight housing markets – including Berlin, Paris, Barcelona, and New York City – the problem is even worse. For more information on the importance of regulating short-term rentals, read here.
“What concerns us is when someone purchases one or more properties with the aim to turn them into tourist rentals. We don’t have enough properties to house Parisians.” said Ian Brossat, Paris’ deputy mayor in charge of housing.
Deputy Mayor Brossat could have been speaking about San Francisco.
- More than two thirds (68%) of all short-term rentals in San Francisco are for entire homes/units, not spare rooms.
- Airbnb and VRBO alone account for roughly 4,500 entire homes and apartments removed from the San Francisco rental market. They’ve taken away 1,000 units more than the 3,500 new units San Francisco built in all of 2014.
- In addition to Airbnb and VRBO, over 60 other companies offer short-term rentals to tourists, meaning SF may have lost up to 10,000 units to full-time tourist accommodation. That drives up rents. And it incentivizes evictions.
The Current Law Is Unenforceable
The No on F side says that we already have a law and should give it a chance to work. But we already know the law doesn’t work. It was built to fail by Airbnb’s friends in City Hall. Let’s look at a couple of examples: Emily Benkert has 10 active Airbnb listings. Do you think she is the primary resident of each of them, as required by the current law? She’s definitely not registered with the city. Or take Fergus O’Sullivan, who has left a trail of evictions and illegal tenancies. Or maybe Vic Wang who has no less than 28 active Airbnb listings. Working folks renting a spare room to make ends meet? Yeah. Right.
We also know from experience that the city did nothing for years when short-term rentals were illegal (2008-2015) prior to the new law and the city did no enforcement against even the most obvious violators.
For example, there have been 350 complaints re: short-term rentals filed with the city since the beginning of 2014 and only nine notices of violation. Only 2% of complaints are actual violations and all nine of these were issued just weeks before this current election? Coincidence?
And virtually nothing is being done about these abuses.
Why? Because the current law is unenforceable, and that’s intentional. In the midst of the city’s worst housing crisis in over 50 years, the law allows people like Emily and others to take multiple units and homes off the market and illegally list them on sites like Airbnb with no repercussions. And in the meantime, Airbnb continues to make money off these illegal listings.
As of September 2015, only 600 out of the 5,400 SF listings on Airbnb have actually registered with the city. Yes, that’s right – 90% of Airbnb’s listings are illegal — but under the current law, nothing happens.
“We have no way of enforcing” the new law, said Planning Department communications Manager Gina Simi.
That’s not me talking, it’s the city’s own Planning Department. In a memo earlier this year the department called the current law “unenforceable” and laid out the ways that the current law can be flouted:
- Without Airbnb providing its data to city officials, city regulators can’t be sure that every host on the site is registered and paid up.
- Officials who are supposed to enforce the law have no way to know whether somebody was or wasn’t in the house for 90 days.
- The $50 registration fee isn’t enough to cover the cost of administering the law.
What the law needs, according to the Planning Department, is:
- Booking data from the online services, so the department can crosscheck to see that rentals being offered are registered with the city.
- A straight cap on the number of days any unit can be rented out per year. Current law limits rentals of unit to 90 days if the owner isn’t home — something that’s “virtually impossible” to prove.
- A way to cover the actual cost of administering the law, which the two-year, $50 registration fee doesn’t come close to doing.
Were any of those suggestions included when the Board of Supervisors amended the law in July? NO. Rather than give the law teeth with real enforcement mechanisms, as their own Planning Department requested, all the supervisors added was window dressing, the new Office of Short-Term Rental Administration that has no new enforcement powers.
Airbnb and Other Companies Could Stop Abuse Right Now But Refuse
Here’s the kicker, Emey: Airbnb and the other companies could put a stop to the vast majority of short-term rental abuse by simply allowing only units or homes legally registered with the city to be listed on their site. No registration? No listing. Pretty simple. they refuse, despite the clear number of bad actors abusing the system, because they make money off of those illegal listings. Thanks Airbnb!
Criminal Penalties? You’re In Jail? Really?
The criminal penalties section, including the penalty being a misdemeanor, comes directly from the current law, you know the one that Airbnb now asks you to “let work”, – we didn’t invent this nor did we create the penalties for misdemeanors. Try reading Supervisor Chiu’s legislation before you try to scare folks about Prop F.
Not knowing about a law isn’t an excuse if you end up breaking it. This applies to almost every law, not just Prop F.
Spying On Your Neighbors? What Planet Do You Live On?
I’m not even sure where to start with this. The billboards with people using binoculars to spy on each other? Incentivizing people to spy? Puh-leeze.
Prop F simply lets San Franciscans protect our neighborhoods when City Hall can’t or won’t. Right now, if you see Airbnb abuse – say, apartments in your rent-controlled building illegally turned into tourist hotels, disrupting life for everyone – there’s not much you can do. Prop F at least gives you a chance to make your case in court and have a shot at getting it fixed but that only happens if the city fails to act.
Lawsuits are how we protect our rights when government won’t help. Lawsuits helped right the wrongs done to victims of tobacco industry lies and Enron’s fraud. What the No on F side doesn’t want you to know is that what they really fear isn’t neighbors suing neighbors, but rather neighbors suing Airbnb and other web hosting platforms for breaking the law.
With regards to neighbors suing neighbors, you still have to get and pay for a lawyer. You have to do intensive, rigorous investigation. And you have to actually provide strong evidence to prove your case. You may get your costs back, but only if you win. Not a guarantee – you need a strong case. Seeing someone enter or leave a home once with suitcases isn’t enough to clear that bar.
We have experience with this. The expedited condo conversion law had a provision that condo conversions would be halted if a lawsuit was filed — not won, just filed – and there were predictions of the courts being overrun by lawsuits, just like No on F says now. In the end no lawsuits were ever filed.
This section also came from the current law:
In addition, an owner, or, business entity in violation of this Chapter or a Hosting Platform in violation of subsection may be liable for civil penalties of not more than $1,000 per day for the period of the unlawful activity. If the City or the interested Party is the prevailing party, the City or the interested Party shall be entitled to the costs of enforcing this Chapter 4A, including reasonable attorneys’ fees, to the amount of the monetary award, pursuant to an order of the Court.
That’s what Prop F does – it simply gives interested parties (neighbors) the right to take action to ensure that the law is enforced. This is how Americans have protected themselves from corporate abuse since the 1800s. In Prop F, it simply means that if the city doesn’t take action or resolve your complaint in 90 days, then you have the right to sue to ensure that they do. Why? Because we don’t trust City Hall to enforce the law, since it hasn’t enforced the current one.
If you really believe a multi-billion-dollar corporation is spending $8 million on the No on F campaign because it’s deeply concerned about your privacy rights (read Airbnb’s terms of service – you don’t have any privacy) or cares about your relations with your neighbors, I’ve got a bridge to sell you.
Banning In-Law Units for Short-Term Rentals (ABSOLUTELY)
To answer your questions, yes: Prop F does ban the use of in-law units for short-term rentals. This might be the first true thing that the No on F side has said, and the provision is there for a good reason.
The city spent years working on legislation finally passed in 2014 to legalize an estimated 30,000 to 50,000 in-law housing units, specifically to increase affordable housing opportunities for working families who live in San Francisco, not tourists. It makes no sense to turn around a year later, in the midst of a massive housing crisis, to suddenly use those same units for short-term rentals to visitors. Owners of in-law units would not be harmed because those units are not their primary residences.
But if you don’t believe me, then check out what then-Supervisor Chiu said about in-law units in his own press release.
“As housing costs have skyrocketed and working families are struggling, we must act quickly to address San Francisco’s affordability crisis,” said Board President David Chiu. “That’s why I’m introducing legislation that will create a pathway to legalize tens of thousands of in-law units, which will help tenants live in safe, affordable housing and homeowners have a good, long-term economic investment.” (November 2013; emphasis added)
$8 Million Dollar Fear Campaign
One question I had before this campaign started was whether or not Airbnb would spend more fighting Prop F than the $10 Million PG&E (another benevolent corporation) did in 2008 to fight Prop H, an initiative to create public power in San Francisco. Or whether or not the company would spend more than the real estate industry did last year to fight Prop G, the real estate speculation tax.
See a pattern? Any time citizens try to regulate corporations, they respond by spending millions to stop it. Like any other corporation, Airbnb is fighting fair, reasonable regulations by making the simple idea of regulation seem radical, or dare I say, “extreme.”
Unfortunately, we know from sad experience that big companies lie to protect their profits. Just ask any Volkswagen diesel owner.
I can say pretty safely that in all my years of political involvement that I have never been on the same side of a local issue as Dianne Feinstein. But as a former mayor, she understands what short-term rentals are doing to the city and why it matters so much.
Other cities like Santa Monica, Berlin, Paris and Barcelona banned Airbnb. Prop F does nothing of the sort — it simply sets fair, reasonable rules for those wishing to rent out an extra room from time to time, or their entire house when on vacation. Prop F holds corporations like Airbnb accountable by limiting ‘hosting platforms’ to listing only units that are properly registered with the City, so the city can enforce the law. It’s not rocket science. We’re just trying to reasonably regulate one of the most vital assets – housing – that the city has in the face of a wealthy tech industry that wants to commodify absolutely everything without regard for who it hurts along the way.
Being held accountable is why Airbnb is spending $8 million against Prop F.