San Francisco legalizes short-term rentals amid housing squeeze

After months of debate and three public hearings lasting hours, San Francisco amended longstanding housing laws Tuesday to allow for short-term rentals through online services like Airbnb.

The decision to legalize and regulate short-term rentals touched upon some of San Francisco's most politically charged issues like rent control and the current housing climate of high rents and evictions. At the same time, the debate highlighted how hundreds and potentially thousands of residents are unable to afford living in The City without getting money from paying guests facilitated by services like Airbnb.

The Board of Supervisors voted 7-4 Tuesday to legalize short-term rentals, defined as those of less than 30 days, and imposed regulations, under a proposal introduced by board President David Chiu. Dissenting were supervisors John Avalos, Norman Yee, Eric Mar and David Campos, who is running against Chiu in November's Assembly race.

In a statement released after the vote, Chiu called his proposal a “balanced approach.”

“We can protect our City's housing units from being converted to hotels, while also allowing short-term rentals on a limited basis to help residents afford to stay in their homes,” he said.

Short-term rentals in multiunit buildings and single-family homes will now be permissible if a host registers with The City, pays a $50 fee every two years and lives in the housing for nine months out of the year. There would be no cap on the number of hosted stays a registered tenant can offer.

As many as 14 amendments were proposed by the board during the three-hour hearing, including a clause allowing nonprofits to sue without having to wait for The City's administrative process in suspected cases of violations. The board agreed to postpone a debate on the right-to-action clause, which was proposed by Supervisor Jane Kim, and a proposed 90-day cap for hosted or nonhosted stays was defeated.

“My concern has always been about The City's ability to enforce this legislation,” Kim said.

Explaining his call for a 90-day cap on stays, Avalos said, “We are facing a real shortage of available housing for tenants.”

Some of the more spirited comments came from Campos, who argued the legislation should include a provision that back taxes should be paid before it would take effect. He estimated Airbnb owed The City as much as $25 million from failure to collect the 14 percent hotel tax.

Airbnb recently announced it would start collecting the hotel tax on Oct. 1, without mentioning back taxes. It's estimated the service could generate about $12 million in hotel taxes annually.

Tuesday's vote is the latest change to local policy to promote a technology industry that had helped San Francisco climb swiftly out the Great Recession. Other policy changes have included switching from a payroll tax to a gross receipts tax, the so-called Twitter tax break for the mid-Market Street area and a pilot program to allow commuter shuttle buses to use Muni stops for a fee.

A second and final vote on the legislation will occur next week.

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