Why is SF tolerating Airbnb’s bad behavior?

Study shows company makes millions off illegal listings while SF fights lawsuit. Why put up with this?

The way the spun the new study on Airbnb was just fine: The platform does, indeed, hurt the city’s hotel industry (and hospitality is the second largest employer in the city, so it hurts jobs). The mayor, who is all about the “jobs agenda,” doesn’t seem to care about jobs for hotel workers, who not only lose shifts to Airbnb but lose their homes to evictions.

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

Airbnb rents out over half-a-million room nights (in San Francisco) every year, which translates into 50,000 housekeeping shifts (lost) out of hotels,” said Ian Lewis, research director of Unite Here Local 2, which represents some 12,000 hotel workers in San Francisco and San Mateo. His members are doubly impacted because they also “are on the front lines of the (housing) affordability crisis,” he said.

But there’s another side to the study, conducted by a respected national research firm and paid for by a hotel industry trade group. (The industry has finally figured out that Airbnb is a threat, and is (again, finally) working with hotel worker unions and community activists on the issue.)

The study shows that the city’s Airbnb regulations are a total sham. The law that is supposed to control short-term rentals doesn’t work – at all. There are huge numbers of illegal listings, and the city can’t or won’t control them.

At a debate in D5 a couple weeks ago, Sup. put out the line we have heard from Airbnb supporters repeatedly over the past few years. When she was asked about her vote on the Airbnb law, she said that she was concerned about the small operators, the hosts who rented out a spare room now and then to defray the high cost of living in San Francisco.

There are people who do that. The law the Breed rejected – requiring that Airbnb make sure all the units that it allows on its site are legal – would have no impact on those hosts at all.

The problem is that thousands of housing units have been taken off the rental market and turned – illegally – into full-time hotel rooms. The current city law isn’t perfect, but it does say that you can only rent out your own primary residence, and only for a limited amount of time.

The supes in June finally realized that the weak laws weren’t working, and passed a measure subjecting Airbnb to fines for every illegal listing it posted. The company has sued the city, and that’s now pending. The federal judge who heard the case today was a bit dubious about Airbnb’s claims.

In the meantime, we can see what’s happening in a city that has been overwhelmingly accommodating to Airbnb. (How accommodating? The law that then-Sup. David Chiu introduced was written in part by Airbnb lobbyists. And Airbnb’s top lobbyist, David Owen, tried to defend himself last night on NBC, but wound up saying, in effect, that since Airbnb thinks the new rules aren’t a good idea, it has no intention of following them.)

Let’s look at the numbers that the study turned up:

People who have two or more apartments or houses listed – by definition illegal listings – account for 1,463 listings in San Francisco. Those illegal listings grossed $28 million last year.

Also illegal: Entire homes or apartments listed for more than 90 days a year. That’s 1,352 properties, worth $58 million a year.

In fact, 73 percent of Airbnb’s revenue last year came from listings that violate the existing city law. More than $66 million came in from what everyone agrees is illegal activity.

So the city is fighting Airbnb in court, and thus far has not enforced the new rules. I don’t know why we’re even arguing about this.

The city has the right – now, with a simple vote at the Board of Supes – to make all short-term rentals illegal, and put Airbnb entirely out of business in the city.

If we had a mayor who knew how to lead and wasn’t so close to the likes of Airbnb investor Ron Conway, the city attorney could make it clear: Drop the lawsuit and follow the existing law, or we’ll shut you down entirely.

Airbnb operates in SF only because the city changed longstanding rules against short-term rentals and gave the company a special dispensation. Now it’s suing – because, let’s face facts, if Airbnb hosts had to follow the rules, nearly three-quarters of the company’s revenue in its home town would vanish.

The small operators Sup. Breed and others talk about? They would be fine. The criminal speculators who clear out entire buildings of tenants and turn them into hotels would be out of business.

Why are we still tolerating this?

  • Josh Thayer

    RIP journalism.

  • Lawrence Gordon

    Mr. Redmond. Please tell me how SF hotel occupancy rates are suffering due to home sharing? More hotels are being proposed, so the laws of micro economics seem to believe there’s little to no impact on hotel occupancy from home sharing. It’s easy to crunch numbers to paint a bleak portrait of how the “haves” are taking away from the “have nots”; however, the basis is outrageous. Not to mention how the small businesses in neighborhoods outside the hotel corridors benefit from revenue that would not otherwise present itself.

    • Rosemarg

      I didn’t sign up to live next door to a hotel when I bought my property.

    • RedMarble

      The hotel next door is illegal in my residential community and the bay area owner makes good money. When I moved into my Residential neighborhood, which is zoned residential today, I did not ask for the hotel next door. They didn’t file zoning permits, parties just started showing up. Aurbnb is bad for communities and their flood of ads shows how they damn well know they are operating illegally and UNethically throughout the country. No one is really renting a “room” in a person’s house it is a fake smoke screen. This is BS…rich people stealing ever more from the world.

    • Geek__Girl

      Calling the people cashing in on Airbnb “have nots” is hilarious….

      • Do Something Nice

        Because the only way to help the ‘have nots’ is to first enrich the 1% by creating a company that is valued at over $25 billion.

    • Paul Mills

      So, Mr. Gordon. You would find it acceptable if I started a car repair business in the driveway next to your dwelling? It wouldn’t affect the overall business of the automobile repair industry so it’s ok, right?

  • debutante

    “How does facilitating the rental of an unregistered short-term unit constitute a lawful transaction?” US District Judge James Donato asked of Jonathan Blavin, an attorney representing Airbnb.


    Don’t miss the Oct. 28 San Francisco premiere of COMPANY TOWN—the powerful new film from Snitow-Kaufman Productions.

    Co-presented by San Francisco Vision.
    Get your tickets here: http://www.roxie.com/ai1ec_event/company-town/

    ‘The once free-spirited city of San Francisco is now a “Company Town,” a playground for tech moguls of the “sharing economy.”

    Airbnb is the biggest hotel. Uber privatizes transit. And now these companies want political power as well.

    Meanwhile, middle class and ethnic communities are driven out by skyrocketing rents and evictions–sparking a grassroots backlash that challenges the oligarchy of tech. Is this the future of cities around the world?

    • Paul Mills

      Good stuff. Thank you. I live on Lombard Street and a few weekends ago the city stopped by a lemonade stand some kids had set up. The cops made them close it down (no license, operating in city right-of-way, etc). 5 doors down from that location is a new illegally created AirBnB unit. The situation has become absurd with how the city decides to enforce its zoning code.Send the cops in to clear our the kids but let AirBnb continue on effectively evicting people? Is any part of the zoning code legally enforceable if the city decides not to enforce a big chunk of it?

      • debutante

        Woah. Shutting down a kids’ lemon aid stand? What in the world is wrong with San Francisco?

    • sebra leaves

      Correction, they don’t want the power they are buying it.

  • Do Something Nice

    If politicians won’t do the job, there are ways around it. Here is what housing actvists have been doing in Barcelona:

    “Barcelona residents fed up with the huge increase in illegal apartment lets in the city through accommodation sites such as Airbnb found a novel way to protest the problem on Tuesday.

    As part of an ongoing campaign to protest what they say is a virtual siege from tourists, the members of two local activist groups in the Catalan capital rented a holiday apartment near the city’s cathedral using Airbnb. They picked up the keys, entered and then called the town hall asking them to arrange an inspection of the property.

    Municipal Inspectors who turned up to carry out a spot check confirmed the owner of the apartment – who also advertises four other properties on Airbnb – did not have the necessary paperwork to rent out the apartment.

    That owner would now be banned from renting out the apartments, the officials said.”

    Not only are they banned, but they are fined as well. Can there be a class action suit against all illegal AirBnB rentals hosts and AirBnB in San Francisco? AirBnB has deep pockets.

    More info here:

    http://elpais.com/elpais/2016/09/21/inenglish/1474448447_260419.html

    • flight505

      That’s fantastic.

      I have reported dozens of illegal listings to the Office of Short Term Rentals, and they really are understaffed. Some of the listings actually have permits to operate but they could only get those by make fraudulent claims and then committing perjury when the signed the paperwork. Maybe we need to start having criminal charges brought against people.

      Here are two:

      272 Guerrero (Ellis acted in 2005). The hosts state that they live in the unit above the rental: https://www.airbnb.com/rooms/8506292?s=T-kKMm7M

      748 27th Street. The “host” even states this in her listing: “Possession of a San Francisco Short-Term Rental Registration Certificate certifies that the registration certificate holder has agreed to comply with the terms of the San Francisco Short-Term Residential Rental ordinance (San Francisco Administrative Code Section 41A).”

      https://www.airbnb.com/rooms/1106534?af=43747432&c=criteo_us

      1314 Eddy Street is a three bedroom two bathroom house that has never been occupied by the current owners. I first reported it in March. Somehow that complaint got lost, so I resubmitted on April 25. My complaint is still under review. They have recently removed the false statement that they only accept 30+ day rentals, which would exempt them from the ordinance. The most recent tourists left today and the house keeping crew that they always use is back again right now. That house is one of five that the owners run as hotels (by their own admission).
      https://www.airbnb.com/rooms/11338538?s=Xoqkxa9G

      This is 817 Oak St. They’ve been busted twice. Most recently they lied to the city planner saying they only rent for 30+ days, so the Planning Department determined that there was no violation. Except that a minimum stay at that hotel is just two days. I told the planner that that was the case, but they don’t have the resources to go after them. The owners don’t care about their privacy, either, since they’ve been on a reality tv show discussing the man’s butt waxing options.
      https://www.airbnb.com/rooms/10945285?s=MCH6zTtx

      This is 1432 Grove. The unit is an accessory buildings that was permitted for home office use. It’s owned by an intellectual property attorney – not that he’s an intellectual, just that is the legal practice he runs – alongside his illegal practice of running an unlicensed hotel. It’d be cool to see him disbarred for committing fraud, which is exactly what he did when he applied for permits for the building. https://www.airbnb.com/rooms/9218585?s=skXVKxw2

      • sebra leaves

        It is ridiculous for citizens to spend their time investigating these corporations. The city should impose reporting standards and the corporations should comply or be fined.

        If AirBNB was a bar and they refused to show their bar tab and pay their alcohol tax, they would lose their liquor license. What gives some businesses the right to operate outside the law while others are forced to comply with stiff regulations?

        If citizens are doing the work for AirBNB and the city should they not demand payment for their time?

  • Geek__Girl

    Lee doesn’t have a lot of choice. He has already spent the money Conway has given him. Seriously, the answer is quite simple. Airbnb should be required to obtain proof the appropriate registration has been made, or face crippling fines. Of course, they don’t want to verify registration, because they would lose about, oh, 83% of their listings. People are not that willing to use them, if they actually have to pay taxes.

    • francis_t

      That’s not AirBNBs job, just like it’s not Comcast’s job to police the Internet or 48hills or Facebooks job to certify that everything posted on their sites is true. AirBNB is just an intermediary, like a Title company, that takes a cut for providing a service

      • sebra leaves

        The cities that AirBNB operates in have the right to impose reporting requirements from AirBNB if that entity wants to operate in those cities. AirBNB has the information, all they have to do is share it with the city.

  • Cole Ryan

    I get that you don’t like tech companies, but this article is so full of shit, the toilets are jealous. Seriously, hotels are not in dire straits in SF

    SF Hotel prices are already not just the highest in the nation, but highest in the world, and you want to add 500,000 extra room nights‽ They are already pushing to create more hotels (in places where we could instead have high-density long-term rentals); “doing something” about AirBNB, still leaves the exact same economic incentives in place, and just allows the hotels to fulfill it, with the exact same effects on our shorty long-term rental situation.

    But, I guess if you just hate tech companies and tech workers, maybe non-tech short-term rentals are preferable to tech-based short-term rentals?

    • debutante

      In May of 2015, the San Francisco Budget Analyst performed an independent study of the impact that Airbnb/VRBO short term rentals are having on former rental units; this analysis was requested by the Board of Supervisors. The study concluded that in D5’s Haight area alone, between 32 and 43% of vacant rental housing units were listed on Airbnb/VRBO. The study drew a clear distinction between “casual hosts” and “commercial hosts”; commercial hosts were defined as “those not supplementing living expenses, but treating short-term rentals as a steady source of income.” Airbnb has consistently flouted the laws that all other businesses must follow. Why does Airbnb get a pass? People are not so much hating on Tech; rather people despise a lawless corporation valued at $25 billion that has contributed mightily to SF’s affordable housing crisis.
      http://archives.sfexaminer.com/sanfrancisco/sf-report-says-units-rented-for-short-term-reduce-long-term-housing/Content?oid=2929888

      • Cole Ryan

        I have conservative friends who hate immigrants because they are here illegally. As he’s also against making it easier for them to immigrate here legally, I conclude he’s just racist.

        You don’t like commercial hosts because they are operating illegally. As they do *not* contribute the affordable housing crisis (which you incorrectly claim, despite my explaining why they don’t in my previous comment), and as you are against making it easier for them to operate legally, I can only conclude that you must be some kind of anti-tech bigot.

        I can explain again why they don’t contribute to the affordable housing crisis again, if you’d like?

        • Ragazzu

          Proposals to add more hotels to SF does not disprove arguments that Airbnb drives up rents. But your comments certainly prove that you have a techie persecution complex. You need to grow a thicker skin if you’re going to wade into SF political wars.

          • Cole Ryan

            Aww, it’s touching that you’re concerned about my psychological wellbeing, but if the overt bigotry (https://imgur.com/BX0iga5.jpg https://65.media.tumblr.com/01550f15c5fb52427c0edcc918307eca/tumblr_o96sf6objb1rpxmrio1_400.jpg) hasn’t faxed me, I don’t think the softcore bigotry here is going to do the trick either 😊

          • Ragazzu

            The graffito on the image you linked to and Redmond’s article above are two entirely different things. An article critical of one big tech firm and its political allies is not the same as a blanket hatred of individual tech workers. Can’t you tell the difference?

          • Cole Ryan

            Usage of the N-word and membership within the KKK were very different than criticisms of the civil rights movement, but for some reason, I bet the former group of people was just a subset of the latter

          • Ragazzu

            Grasping at straws. Bye.

          • Cole Ryan

            Lol, bye.

            Out of curiosity, does the idea that a former bastion of progressive ideals, like SF, might one day be more known as a tech city instead? (You know, kind of like how “some people” are scared by the idea that white Americans will one day be just another minority?)

          • RedMarble

            I wonder, Mr. “Tech” if you have considered this. If your precious “job” is so great, and you are making so much money, why do you need to invade other neighborhoods? OR, is your tech bound air bnb rental actually NEAR your job? Hardly likely.

          • Cole Ryan

            Wow, by trying to live just about anywhere, I’m now an invader. Yes, I must certainly be the bigot here.

            Or is there a place I could possibly live without being an invader?

          • debutante

            Tone is important. Profanity diminishes your argument. A civil debate with opposing points of view could result in solutions or change some minds. Isnt that why we comment?

        • debutante

          Sorry Cole but the SF Budget Analyst’s study trumps your and my opinion. Facts are facts. Opinions and beliefs are not facts. The study found that in the Haight 32-43% of illegal listings were former rental units. The data supports that short term rentals are cannibalizing rental stock. i do not appreciate your putting words or claims in my mouth. A central registry for each and every Airbnb listing would solve this problem; Airbnb has fought against transparency and a registry tooth and nail. More transparency and the registration are simple solutions.

        • debutante

          Sorry Cole but the SF Budget Analyst’s study trumps your and my opinion. Facts are facts. Opinions and beliefs are not facts. The study found that in the Haight 32-43% of illegal listings were former rental units. The data supports that short term rentals are cannibalizing rental stock. i do not appreciate your putting words or claims in my mouth. A registration number for each and every Airbnb listing would solve this problem; Airbnb has fought tooth and nail against transparency and a centralized registry. More transparency and the registration of all units are simple solutions and they should be implemented NOW.

          • Cole Ryan

            If you are against tech-based short-term rentals eating up the long-term rental stock, but you are okay with hotel-based short-term rentals eating up long-term rental stock, you *might* be a bigot.

            Yes, short-term rentals are cannibalizing long-term rentals. As you do not *also* oppose hotels cannibalizing long-term rentals (which has *also* definitely been happening), I assume you are not opposed to this phenomenon in general, so much as you are opposed to AirBNB/VRBO. Hence, I assume you must be a bigot.

            I actually wouldn’t have much of a problem with AirBNB registration numbers to enforce Ellis Act laws, if they weren’t always introduced with all sorts of other bullshit (pardon my profanity), like the 90 days restrictions, and 1 unit limits. None of these are applied to traditional short-term rentals, and it seems ridiculous that they would get applied to tech based ones. (Well, they *would* seem ridiculous in a city that didn’t have all of the anti-tech graffiti that this one does)

          • RedMarble

            Hotels are taxed, and must produce the proper permits within the building code. The only bigotry displayed is yours.

          • Cole Ryan

            AirBNB’s are taxed too. And permits wouldn’t be a problem for AirBNB if it weren’t for all of the other ridiculous overregulation being applied that does not get applied to traditional hotels.

          • RedMarble

            If, by ridiculous regulation, you mean zoning and other permits and regulations and taxes well then I guess you just clearly identified the elitism in which you dwell. Wherein such things as common good and civic responsibility are lost in the ether of non-human contact and the resulting self-absorbed prevalence of the offense to begin with I suppose.

          • Cole Ryan

            As the article mentions, and I’ve mentioned elsewhere, AirBNB’s are limited to 90 days, and 1 address. Regulations that would never be applied to traditional hotels.

            But you can go ahead and just assume the worst if you want, I wouldn’t expect anything different from you

      • francis_t

        Maybe progressives should ask themselves why people prefer the hassle of renting to someone different every night, and he associated risks, when renting to a single long term tenant would be a lot easier. Maybe the fact that you’ll ultimately have to pay the tenant $50K to move so you can move your mother or a relative into a unit you own? I rent two properties out but would NEVER be a landlord in SF. If I was forced to be, I’d charge as much as I could knowing I’d eventually have to buy off the tenants when I decided to retire.

  • OpenFullHeart

    If car rental companies can quickly type in a prospective auto renter’s driver’s license and find out if that person has a valid license, short term rental websites can just as easily verify that each and every listing on their website has a license. Each city has to organize its licensing into a database but if auto companies can do it, everyone can.

    Air BnB and their ilk have no problem accessing credit card data bases to get paid/ They can also access whether the units they list are legally licensed.

    And make each repeat violation of each unit not in compliance higher and steeper.

    If Ed Lee would just act like the people’s mayor and the supes would look after the people’s interests, this problem would evaporate.

    Make ’em obey the law . . . and don’t let the predators write the laws.

    • flight505

      Some of the listings actually have permits to operate but they could only get those by making fraudulent claims and then committing perjury when they signed the paperwork.

      Here are two listings with permits that can’t legally receive a permit:

      272 Guerrero (Ellis acted in 2005). The hosts state that they live in the unit above the rental:
      https://www.airbnb.com/rooms/8506292?s=T-kKMm7M

      748 27th Street. The “host” even states this in her listing: “Possession of a San Francisco Short-Term Rental Registration Certificate certifies that the registration certificate holder has agreed to comply with the terms of the San Francisco Short-Term Residential Rental ordinance (San Francisco Administrative Code Section 41A).” The unit is not eligible for rental at all because the “struggling middle-class host” lives in the house at the front of the lot.

      https://www.airbnb.com/rooms/1106534?af=43747432&c=criteo_us

      I think it’s time to start having criminal charges brought against people.

  • sebra leaves

    Why are we still tolerating this? Why indeed Many other cities have pushed them back. When does a “sharing” industry become a ‘taking” industry?

  • francis_t

    Meh–that’s just how things are in San Francisco. If you don’t like a law you simply ignore it. Kind of hypocritical to ignore laws you don’t like (drug laws, panhandling laws, immigration laws, etc) and then be shocked when others do the same. One of the things I like most about SF is that our government is SOOO bad I can pretty much do what I want with few worries. That, and the ridiculous housing laws that let me pay 700 a month rent while renting out the two buildings I own for a total of $5K in income. Gotta love it!

    • debutante

      Airbnb hosts and property owners in D5 unanimously agree: London Breed is the best supervisor the district has ever had!

  • heycarlos

    Hi Tim! Always love reading your stuff. However one major error you and others are making when you say “The small operators Sup. Breed and others talk about? They would be fine.”

    That is sadly not even close to true. The vast majority of “small operators” that actually do benefit from AirBnBing their extra room are *renters* not owners of their units. And almost all of these renters cannot register their units as their leases prohibit subletting and the Office of Short Term Rental notifies the landlord when a unit is registered.

    When I went to register my unit right after the newest law passed this summer I expected a big line at the Office of Short Term Rentals. I asked the folks there why there wasn’t a rush and they said “most people cannot register their units as they are renters”.

    So just so we are all clear the only small operators who can register their units are people who own their units and these are not the majority of “small operators”.

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