SF: Airbnb, Craigslist rentals need to 'play by the rules' (Q&A)

San Francisco officials are bringing down the hammer on short-term rental services like Airbnb and Craigslist by introducing legislation this week that holds organizations accountable, and forces residents to apply for the right to rent out their homes.

The proposed law will require residents to sign on to a new registry identifying them as people who are using their homes for limited short-term rental. It will also set terms for the length of stay and address safety concerns. In order to qualify, you must be a permanent San Francisco resident who lives in the home for at least three quarters of the year.

"If you have a second home or you're trying to turn a vacation home into a year-round Airbnb rental, that's not what we're going to allow," San Francisco Supervisor David Chiu said Monday after announcing the new legislation. "We do not want people to set up a hotel business. Our job is to protect permanent residential housing."

If hosts don't comply, they'll be blacklisted from the services so they can't list their properties for rent until they meet the requirements set by the legislation.

It's a hometown fight for Airbnb, a popular peer-to-peer service that's based in San Francisco, but it's a global issue. Cities want to collect hotel taxes from residents who are putting their homes on the rental market through online services, while making sure desirable housing isn't taken off the market and turned into makeshift hotels permanently.

Airbnb says it's actually helping residents supplement their incomes so they can afford to live in places like San Francisco. The company says there are a total of 350,000 Airbnb hosts and 550,000 listings all over the world. In San Francisco alone, its listings bring in 180,000 visitors that contribute millions of dollars to the local economy, according to Airbnb.

In addition to holding hosts responsible, Chiu's legislation will also directly target services, like Airbnb, that enable homeowners and tenants to rent out their homes temporarily. The friction between these services and local government has been an ongoing battle. In recent years, the company's existence has pushed governments from around the world -- especially in areas with housing shortages -- to write new laws and execute enforcement tactics in order to keep up with the fast-growing company.

In New York, the issues around Airbnb have been especially heated, with officials initially issuing a man a $2,400 fine for renting out his home to a guest, a violation of the state's illegal-hotel law. Officials ended up reversing the decision. Shortly after, the New York attorney general's office began seeking Airbnb records to try and find hosts who may be violating the law.

San Francisco has faced similar problems, and Chiu is hoping this new proposed law can protect the city's increasingly expensive housing stock while allowing companies like Airbnb to keep operating. Chiu said that in the past companies have sidestepped the responsibility of hosts adhering to city rules. This proposed law is meant to fix that.

"We need everyone to play by the rules, and just because there have been platforms that have said, 'well, we are simply facilitating this, we're not the ones actually doing this' -- from our perspective that's not going to be an excuse," he said.

If the companies don't comply, they'll essentially be operating illegally in the city and will face fines of $1,000 a day, according to Chiu.

Airbnb has already said it would comply with a lot of the guidelines set forth by the new legislation, which also includes collecting taxes from hosts and ensuring that hosts have an adequate line of insurance to cover these short-term stays.

"This proposal, while not perfect, brings us closer to transparent, fair, progressive home-sharing rules. These can be tough issues, but we are absolutely committed to working with policymakers in San Francisco to craft solutions that make the city stronger and ensure the Airbnb community can continue to thrive," David Hantman, head of Global Public Policy for Airbnb, wrote in a blog post. "This work is particularly important to us because San Francisco is our home and it always will be."

The company argues that it actually helps to preserve housing stock by keeping residents from losing their homes. According to the company, 75 percent of Airbnb hosts who rent their homes in San Francisco use the money they make to pay rent. Additionally, 18 percent of hosts who own rent their homes, and 15 percent who own their homes have used their Airbnb income to avoid eviction or foreclosure.

While Chiu acknowledged that there are residents who use Airbnb for these reasons, he said there are also those who are illegally turning their homes into year-round hotels. He spoke with CNET about why he thinks the proposed law is a necessary regulation for this growing industry. His answers have been edited for clarity and length.

Q: What do you hope to accomplish with this legislation?
Chiu: In recent years, we've seen an enormous explosion in the number of short-term rentals, mostly facilitated by a variety of online hosting platforms. What we found in San Francisco was that we really don't have a regulatory structure to deal with this. In fact, we've had many laws broken every day around these issues. Enforcement has been incredibly difficult. It's estimated that there's been 100,000 incidents of short-term rentals every year but our blanket prohibitions and enforcements are really not working. What I propose is a very different and comprehensive regulatory approach based on months of work with, and feedback from, a variety of stakeholders in a number of areas.

We are finally going to directly regulate hosting platforms like Airbnb, VRBO, Craigslist, and all of those platforms, to require them to notify their users about short-term rental laws and all applicable city laws and collect all taxes related to this. This is a critical issue when we're bringing hundreds of thousands, if not millions, of visitors into our city. We as a city incur enormous expense: police, fire, street-cleaning. Our hotels pay a tax to the city and we want to ensure that our hosts using these platforms in San Francisco are also paying their fair share of taxes.

Is there a ballpark figure for how many violations have been reported to the city?
Chiu: There really isn't, because there have been a number of departments. There have been very different actors involved with this. There have been owners and landlords who have been chasing tenants for this. There are tenants who found owners, or landlords being overly onerous in how they treat this. There have been dozens of complaints to city departments on this but not a really good system on how to move forward.

Are the companies cooperating? How are you going to enforce this law with companies?
Chiu: If you're a housing platform and you want to engage in this business of facilitating short-term rental, you need to agree to notify your users about these laws. We're not going to allow these companies to operate in our city if they don't play by the rules here in San Francisco. If it turns out that the hosting platform is facilitating residential rentals in our city and violating city law, this legislation will say that those housing platforms should not be operating in our city. We need everyone to play by the rules. There have been platforms that have said, 'well, we are simply facilitating this, we're not the ones actually doing this,' but from our perspective that's not going to be an excuse. We need our platforms to work with the city, to comply with the city rules, and to make sure their users and hosts are complying as well.

One of the concerns Airbnb brought up was around the registration program. If a user registers, they're essentially allowing their information to become public information. What would you say to residents who might be concerned about this?
Chiu: We need to have some ability to enforce the rules, and so part of our proposal is to require any resident that wants to, to engage with the city so we know who's doing it, we know who to court taxes from, and if there are complaints brought, we know who to approach with those complaints. We do know that we are going to get complaints about this from people who are engaged in activities that they shouldn't be engaged in, and this is why we need this registry, to really have some abilities to enforce these laws. One of the things we do is if it turns out there are complaints, we are not going to reveal the names of the individuals involved, but the address and location of this activity is something that we would have that could be accessible to the public.

You must be watching what's been happening in New York, where the state has also been having issues with short-term rentals. Does what's happened there help shape this legislation?
Chiu: I think it's fair to say that San Francisco and New York and all our cities have been grappling with how to deal with this. And my understanding is that only New York and San Francisco were pushing on a lot of common issues, particularly around the importance of asking all the housing platforms to step up when it comes to taxation, to alert hosts to their obligation and responsibilities under the law. And here, in San Francisco, we're in the middle of an affordability crisis, so we have specific issues and needs related to San Francisco on scarce housing, which is why, for example, we do not want to allow people to have second homes to be rented short-term by owners. We don't want to allow tenants to have multiple places to create a side business, we only want to allow this kind of activity if you are a permanent resident.