Dear SF Tax Collector,
You know the $12 million in hotel taxes?
Don’t spend it all in one place.
Love, Airbnb
— From a series of Airbnb ads in San Francisco, October 2015
Last fall, Airbnb was embroiled in a nasty battle to beat Proposition F, which would have strengthened regulations on the short-term home rental start-up and its competitors. The company spent more than $8 million on deceptive ads to scare the daylights out of anyone using the service (“Don’t let the government in your bedroom!”). Proponents of Proposition F spent almost nothing and still got 45 percent of the vote, but ultimately the pricey ad assault paid off and Airbnb defeated the measure.
That was just fine with moderates on the Board of Supervisors like Julie Christensen. Handpicked by Mayor Ed Lee to represent District 3 after David Chiu went to Sacramento, she told me in an interview that Proposition F was nothing more than a way to “stick it” to Airbnb. She and other supervisors also claimed that further regulating the vacation rental start-up would stifle their innovation, which is just plain malarkey — let’s not forget that Apple managed to invent the iPhone while following the same pesky rules as any other for-profit company. The bottom line is that Airbnb and other “sharing economy” upstarts (yes, I’m talking to you, Uber) have no interest in following rules, because their very business model depends on breaking them.
Under public pressure, the Board of Supervisors passed a short-term rental ordinance in February 2015 requiring hosts to register with the city and remit hotel taxes. Since San Francisco’s mantra is “More bureaucracy is better,” the Office of Short Term Rentals was established to oversee the new rules, but (surprise, surprise) they haven’t had much luck with enforcement. Had Proposition F passed, it would have required Airbnb and similar companies like HomeAway and FlipKey to help with that enforcement. Airbnb puts out a lot of press statements saying that they “really hope to work with the city to make things right,” but behind the scenes they’re fighting tooth and nail to do just the opposite.
A year after the new ordinance went into effect, just over 1,600 of Airbnb’s nearly 10,000 hosts had registered. That didn’t sit well with Aaron Peskin, who beat Christensen to win back his old District 3 supervisor’s seat last November. A vocal critic of Airbnb, it took Peskin’s return to give progressives a voting edge, but more notably, it took his political prowess to garner unanimous agreement from the oft-divided board to amend the short-term rental law. The new commonsense verbiage, which would force Airbnb to take responsibility for monitoring its moneymaker, is fair and to the point: Hosting platforms must refuse listings that lack a registration number or face penalties of up to $1,000 a day per illegal listing.
Airbnb immediately filed a lawsuit with the U.S. District Court of Northern California saying the new requirement would violate its First Amendment rights, leaning on that stalwart web company crutch, the Communications Decency Act. The CDA, and in particular Section 230, was passed by Congress two decades ago to help strengthen what was then a budding Internet economy by shielding online companies from the actions of their users. That the Internet is now a thriving multibillion-dollar juggernaut and the antiquated, terribly vague CDA needs overhauling is a whole other column, but as the law stands now, Airbnb could win the case. To head off Airbnb’s claims, Peskin and fellow supervisors David Campos, Eric Mar, and John Avalos introduced new language removing the prohibition on displaying unregistered listings but fining companies each time they accept fees from guests who book those properties (sites such as Craigslist that simply publish listings without acting as intermediaries would be exempt).
Of course, none of this time-consuming, convoluted legislation would be necessary if Airbnb would just grow up and be a responsible corporate citizen. The pre-Peskin Board of Supervisors and Mayor Lee bear a large chunk of responsibility for kowtowing to tech companies that set up shop here, lavishing them with tax breaks and giving them carte blanche to behave like insolent, arrogant teenagers. I’ve never understood why San Francisco can’t stand up to start-ups. In the real Silicon Valley where I’m from, household names like Google, Apple, and Facebook play by the rules and it hasn’t hurt them. In fact, they could buy and sell most of the unprofitable, overvalued firms here, which subsist on the venture capital equivalent of welfare. But Airbnb seems to think San Francisco should be grateful for its mere existence and the million bucks a month in hotel taxes generated by their few registered users. We know they feel that way because of the obtuse, out-of-touch series of ads they plastered on bus stops and billboards last October that said things like, “Dear Public Library System: We hope you use some of the $12 million in hotel taxes to keep the library open later. Love, Airbnb.”
If Airbnb’s privileged young executives stepped out of their bubble for a few minutes, perhaps they would see the undeniable effect they’ve had on the city’s housing stock. In a May 2015 report, San Francisco’s independent budget analyst Harvey Rose estimated that in some neighborhoods Airbnb units comprise as much as 40 percent of potential rentals, and that 2,000 entire housing units — nearly 25 percent of available vacancies — have been removed from the market because of Airbnb. The report also drew comparisons between Airbnb and evictions, pointing out that in the Mission, for example, there were 315 hosts last year and 323 evictions.
While some of Airbnb’s most passionate supporters are so-called “casual hosts” who use the service to supplement living expenses, Rose’s analysis focused on the impact of “commercial hosts,” who are booked in excess of 58 days a year and consider short-term rentals as a steady source of income — in other words, they’ve turned their vacant houses into hotels, which is illegal. Not to say those casual hosts don’t break the law. One host, who spoke to me on condition of anonymity, said that he makes upward of $4,000 a month renting out rooms in his flat on Airbnb. When I asked why he hasn’t registered with the city, he said, “I can’t. My landlord doesn’t know I’m doing it and my lease doesn’t allow subleasing.” Turns out he’s been living for more than two decades in a rent-controlled apartment where he pays $500 a month. “Airbnb allowed me to quit my job and travel a bunch,” he beamed. While short-term rental foes focus on landlords evicting tenants to make money off of Airbnb, many hosts are tenants making money off of landlords without their knowledge or permission. And they, too, contribute to the housing shortage by not renting vacant rooms to residents. It’s a massive mess that only Airbnb has the power to fix, but I don’t see that happening unless they’re dragged kicking and screaming by court order.
If I could post an ad in a bus stop, it would read, “Dear Airbnb: You’re not a very good neighbor. For all that talk about being innovators, you’re really just out to make millions for your founders and investors, even if that means breaking the law while hiding behind your users and the First Amendment. Grow up, Airbnb. You’re a big business now — time to follow the rules. Love, Susan.”
