San Francisco proposes 60-day hard cap on Airbnb rentals

While a decision is expected any moment in Airbnb’s federal lawsuit against San Francisco, The City is already proposing to further restrict short term rentals.

San Francisco’s relationship with Airbnb has only soured since The City legalized short term rentals some two years ago. Airbnb is blamed for exacerbating the housing crisis and contributing to a rise in evictions.

There are presumably many violators since hosts must register with the city but a limited number of the suspected total number of people engaging in the practice have. The City has received 2,207 applications to register, of which 1,717 received approval. There are currently 1,655 active registered hosts.

Board of Supervisors President London Breed has introduced legislation that would impose a 60-day hard cap on the total number of days a housing unit could be rented out as a short term rental.

Breed told the San Francisco Examiner Thursday that when she supported the initial law she said The City would have to be prepared to revise it if it wasn’t working well. “We still have challenges,” Breed said.

Currently, registered hosts can, without limit, rent out housing units as short term rentals if they remain onsite, literally hosts, but only for 90 days annually if they are not present on-site as hosts. With a low number of registered hosts and challenges in enforcing the law, San Francisco is apparently ready to crackdown.

Breed’s legislation, which is co-sponsored by Supervisors Aaron Peskin and David Campos, would place a hard cap of a total of 60-days that a unit could be rented as a short term rental no matter if the host is present or not.

Several critics of the 2014 law legalizing short term rentals argued it was impossible for The City to police if a host was present or not. Breed’s proposal addresses that criticism. “That has been a real challenge for The City,” Breed said.

Breed said she chose 60-days after determining it was the right balance between not being so lucrative to encourage people to keep the units off the rental market but long enough to help people earn significant supplemental income.

“You can still make decent money,” Breed said.

Those who registered or submitted a completed application to register with The City prior to Tuesday (Oct. 11) are grandfathered in to the old rules. In order words, good behavior gets rewarded.

Registered hosts would continue to have to live on the premises for at least 275 days of the year, a provision that was part of the 2014 law intended to ensure long-term residents are engaging in the practice.

The legislation will also authorize nonprofit tenant advocate groups to sue over alleged violations, a private right of action provision long called for by tenant advocates and critics of the short rental law to help with enforcement. The proposal also shortens the duration from 135 days to 30 for when legal action could be taken if The City doesn’t act on a notice of violation.

Airbnb provided a statement by email in response to the proposal. “Instead of fixing the broken registration system, we are concerned this proposal will add one more barrier to compliance for hosts. We remain ready and willing to work with the city on meaningful solutions that protect housing and enable middle class San Franciscans to share their homes.”

Peskin said that the regulations just aren’t working. “These common-sense amendments are based on independent analysis in an attempt to weed out the bad actors who are exacerbating the City’s housing crisis, while letting mom & pop hosts make ends meet,” Peskin said in a statement. “I commend President Breed for taking decisive action and crafting a package that rewards those who respect San Francisco’s laws and who have registered their units and are paying their taxes.”

The legislation comes after Airbnb sued San Francisco in late June over an added regulation approved by the Board of Supervisors earlier that month requiring short-term rental companies list on their websites only legal housing listings or face fines of up to $1,000 per day.

Specifically, it required short-term rental websites to post registration numbers on listings or email the number and name of the host to The City’s Office of Short-Term Rentals.

Airbnb’s lawsuit filed in U.S. District Court argued that the legislation ran afoul of the federal 1996 Communications Decency Act, which protects internet freedom by placing “content-based restrictions on speech by imposing civil and criminal penalties on Airbnb as a result of the publication of content.”

The lawsuit also argued the law would deal a significant blow to the company.
“Given the substantial criminal and civil penalties for non-compliance, and the burdensome verification process, hosting platforms like Airbnb likely would over-remove or not publish lawful and registered listings,” the lawsuit stated.

Campos had introduced with the support of Peskin the law Airbnb sued over after it was approved unanimously by the Board of Supervisors on June 14. Mayor Ed Lee did not sign the legislation.

“It’s disappointing but not surprising,” Campos said at the time about the lawsuit. “We’re confident in the end we will prevail.”

When Airbnb announced the lawsuit on its blog, the company said, “While we have attempted to work with The City on sensible, lawful alternatives to this flawed new ordinance, we regret that we are forced to now ask a federal court to intervene in this matter.”

Then City Attorney Office’s spokesperson Matt Dorsey said that The City law is “not regulating user content at all – it’s regulating the business activity of the hosting platform itself.”

Leading up to the board vote on the Campos legislation in June, Airbnb had contributed more than $200,000 to more moderate candidates and ballot measures in the June 8 election, which drew some criticism that the company was trying to buy influence.

The so-called Airbnb law was controversial from the start.

In October 2014, then Supervisor David Chiu, who was in a tight assembly race against Supervisor David Campos, passed legislation at the board legalizing short term rentals in a 7-4 vote even as the company was not paying the hotel tax on those rentals, which were going on despite being illegal.

Chiu prevailed in that race in a campaign that received significant financial support from Airbnb and its investors, such as tech investor Ron Conway, who is also Mayor Ed Lee’s prominent backer. Previously, rentals under 30 days were illegal in San Francisco.

Enforcement of short term rentals has remained at the forefront of political debate. Last November, Airbnb spent more than $9 million to defeat Proposition F, which would have increased regulations on Airbnb.

This November, there are six races in full swing, including Breed’s re-election bid, for seats on the Board of Supervisors. The outcomes will determine if the progressives, which have favored tougher restrictions on short term rentals, will retain a majority bloc, which has been in place for about a year since Peskin beat last November the mayor’s appointee to the District 3 seat.

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