Airbnb goes head-to-head with San Francisco lawmakers, again

The city's board of supervisors will decide next month whether to amend the "Airbnb law" that legalized short-term rentals in San Francisco.

Dara Kerr
Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
5 min read

San Francisco's board of supervisors vote to delay action on amendments to a law that legalized short-term rentals. A group of Airbnb proponents gathered in front of city hall on Tuesday, before the vote, to say the board should keep the law as is. Dara Kerr/CNET

Airbnb's legal problems in San Francisco aren't over.

The room- and home-sharing startup likely thought all was settled in San Francisco after a law was passed in October legalizing the service. But now it's facing more legal battles.

The city's board of supervisors must decide whether to pass amendments that could curtail the law, reducing how long some people are allowed to use the service. The board was expected to vote on the amendments during a hearing on Tuesday, but instead voted to delay further action until next month.

Airbnb wasn't taking its chances with the vote, however. The online service, which lets people sublet their rooms or entire homes to strangers, released a trove of data on Monday about its usage in San Francisco. The company also helped organize a press conference on the steps of city hall before the vote.

"Instead of continuing their effort to make misleading assertions about our community, opponents to home sharing should be spending their time doing what we do: finding ways to support the middle class," an Airbnb spokesman said.

San Francisco is one of the first cities in the world to make short-term rentals legal -- but it was a long road. City legislators held countless meetings and forums over more than two years to hammer out the bill, which faced opposition from a range of players, including hotel owners, affordable-housing advocates and landlords. And San Francisco isn't the only city where Airbnb faced roadblocks, lawmakers from New York to Los Angeles have also been wary of altering the law to allow for short-term rentals.

While cities debate the service's legality, the company's business has been booming. It's now offering more than a million listings with hosts in 34,000 cities in nearly 200 countries. The company takes a cut of every rental -- typically between 9 percent and 15 percent -- fueling its value to investors. Airbnb has raised $794.8 million since its founding in 2008, making it one of the top 10 highest-valued venture-backed companies in the world with a valuation of $10 billion.

Housing crunch

Airbnb says short-term rentals help "home sharers" make ends meet or pay off their mortgages, and they also bring in more visitors to cities where people might not be able to afford high-cost hotels. But critics of Airbnb say short-term rentals means cities lose the tax revenue hotels would pay, while also reducing rental stock. San Francisco is one of a handful of US cities that has begun receiving hotel taxes from Airbnb rentals.

Over the past several weeks, the city of San Francisco and Airbnb opponents have released reports alleging that short-term rentals are contributing to the housing crunch in the city. One such report, authored by San Francisco's Budget and Legislative Analyst's Office, said that Airbnb rentals are contributing to between 11 percent and 23 percent of vacant housing units being taken off the market.

Airbnb has countered with its own data, saying it isn't contributing to the low vacancy rate in San Francisco. Its report, released Monday, says that less than 2 percent of housing units in the city are being rented on Airbnb for the majority of days of the year.

"This report makes clear that the vast majority of Airbnb hosts are regular San Franciscans sharing the home in which they live and using the money they earn to pay the bills and make ends meet," the Airbnb spokesman said. The report "exposes just how much opponents of home sharing have been playing fast and loose with the facts."

It was the first time Airbnb had released data assessing its impact on a housing market.

Before the board of supervisors vote on Tuesday, Airbnb also helped organize a press conference where Airbnb hosts and various community leaders spoke out against the amendments. These speakers pointed to statistics, which have also been outlined by Airbnb, that say 72 percent of rentals listed in San Francisco are outside traditional hotel districts and the average listing is only booked around seven nights per month.

Matt Regan, senior vice president for the business advocacy organization Bay Area Council, said this debate isn't about Airbnb or short-term rentals. "It's really a debate about the lack of housing in the Bay Area," he said. "We were under-building before Airbnb existed."

San Francisco law

To legalize Airbnb, San Francisco had to amend its citywide zoning laws to allow for short-term rentals. Under the old law, temporary rentals were seen as commercial businesses and therefore not allowed in neighborhoods or buildings zoned for residential use.

Under the new law, people can rent their rooms or homes for up to 90 days per calendar year. One exception, however, are hosts who are present during the rental period -- they can lease rooms year-round. Anyone who rents their home on Airbnb also must sign up in a city registry, collect transient occupancy taxes and carry liability insurance.

However, the proposed amendments before the board of supervisors could change those rules. There are two separate proposals before the board. One was introduced by Mayor Ed Lee and Supervisor Mark Farrell and would impose a 120-day limit on the number of days residents could rent out their homes per year -- whether the residents are present or not. The amendment would also create an Office of Short-Term Rental Administration and Enforcement to enforce the law and serve as the place where residents could sign up for the city's short-term rental registry.

The other proposal, introduced by Supervisor David Campos, is much stricter. Campos wants to put a 60-day limit on Airbnb rentals per calendar year, while also requiring the company to file quarterly reports with the city.

During the board's discussion on Tuesday, Campos urged his colleagues to act on his proposal immediately. He said postponing action on the amendments until next month would be detrimental to the residents of San Francisco.

"I am here with a sense of urgency because of what's happening in my district," Campos said. "Hundreds of people are being evicted from their homes, we owe it to the public to act."

Supervisor Malia Cohen disagreed. "We should not be using a sledge hammer, we should be using a scalpel to carve through the legislation," she said.

Ultimately, in two separate votes, the board decided to delay further action on both proposals until mid-July.

After the decision to postpone the vote, a group of people who supported the amendments gathered in front of the board's chambers. Sue Englander, a self-proclaimed activist and teacher at City College, said she was angry the board "derailed" the vote. She believes the law passed last fall needs to be tightened.

"Airbnb folks are saying this is the only way to make ends meet. No. Airbnb is not always going to be there to be your safety net," Englander said. "Airbnb is smoke and mirrors that only feeds the corporate coffers."

Updated at 3:10 p.m. PT with information from Airbnb press conference.

Updated at 5:35 p.m. PT with information from the board of supervisors hearing on the amendments.