San Francisco passes 'Airbnb law,' one step closer to making rentals legal

The city of San Francisco passed a law Tuesday that would amend local zoning laws and allow residents to rent out their homes on a temporary basis.

The Board of Supervisors gave a second and final vote, 7 to 4, to support a bill legalizing short-term rentals, a key rule that would make services provided through room-sharing apps, like Airbnb and VRBO, legal in the city.

Under the current law, San Francisco zoning rules dictate that most residential rentals less than 30 days are illegal. These laws were designed to protect citizens from exploitative landlords who would otherwise turn apartments into impromptu hotel rooms and to ensure that residentially zoned locations are safeguarded for permanent housing.

During the Board of Supervisors' discussion on Tuesday, there was a lively debate about whether the city's laws should be changed. Board President David Chiu authored the legislation and encouraged his fellow supervisors to pass the bill swiftly.

"We are ready to take action and we need to take action," Chiu said. "The status quo is not working."

Earlier this month, the Board of Supervisors held a first meeting to discuss the bill and initially approved it by a 7-to-4 vote. Despite the law getting passed in two separate voting sessions, several supervisors voiced concerns about the legislation. Supervisor John Avalos has been especially critical of the bill and said Tuesday that he didn't support the legislation.

"I don't believe in the one-size-fits-all approach that this law takes," Avalos said. "I cannot support this legislation in this current form."

Other legislators have been apprehensive about legalizing short-term rentals. US Sen. Dianne Feinstein, a former mayor of San Francisco, penned an opinion piece against the law that published in the San Francisco Chronicle on Monday. In it, she said the legislators' moves were "shortsighted" and said if the law passed, it would "destroy the integrity of zoning throughout San Francisco, allowing commercial and hotel use in residential areas throughout the city." Feinstein's office declined to comment further now that the law has passed.

For its part, Airbnb has been mostly supportive of the bill. The legalization of short-term rentals could be a boon for it and similar services. Airbnb is a platform that makes a small profit when it pairs hopeful visitors with so-called "home sharing" hosts who are temporarily renting out their empty rooms, houses or apartments.

At any given time, nearly 5,000 San Francisco homes are available for short-term rentals through Airbnb, according to a survey by the San Francisco Chronicle in May. The privately held company has so far received almost $800 million in venture funding from 18 investors and now has a valuation of as much as $10 billion.

Airbnb has said short-term rentals boost the economy. Not only do these rental services attract tourists to neighborhoods not normally visited, Airbnb has said, but they also help "home sharers" make ends meet or pay off their mortgages.

"We want to thank the members of the Board of Supervisors and the countless San Franciscans who participated in this process," Airbnb said in statement on Tuesday. "This balanced and sensible legislation will help San Franciscans share their home and the city they love and earn a little extra money to pay the bills. We look forward to working with everyone to make this city an even better place to visit and call home."

Over the past couple of years, opponents of the legislation have attempted to introduce several amendments they said would help finance the city and better protect affordable housing, residential zoning and landlords. Among them was a requirement that Airbnb pay back taxes - which according to the Board of Supervisors is estimated to be more than $25 million -- and a limit of rentals to 90 days even when the host is present. The board rejected both of these amendments during its first vote on the bill earlier this month and again rejected both amendments in its second vote on Tuesday.

Now that the Board of Supervisors has fully passed the legislation, it will go to the desk of Mayor Ed Lee, who will either pass or veto the bill. The mayor's office didn't respond to requests for comment. In her op-ed, Feinstein urged Lee to veto the law and ask the board to re-examine both the bill and the rejected amendments.

"I believe there is a compromise solution, but it does not involve handing over the key to the city to Airbnb and other short-term residential rental companies," Feinstein wrote. "The board should re-examine this legislation and take another shot at getting it right."