Supervisors weigh possible legislation on corporate rentals

Companies seen as skirting city rules on short-term rentals, hotels

San Francisco Supervisor Hillary Ronen on Tuesday asked the Board of Supervisors’ Budget Legislative Analyst to prepare a report on the impacts of “corporate rentals” in San Francisco — a sore point for city officials working to address The City’s housing crisis.

The rental of housing units through third party companies or landlords for limited tenancies of 30 days or more is technically legal. It has been condemned in recent weeks, however, for capitalizing on a loophole in existing city laws restricting short-term rentals.

“These are hotels, pure and simple,” said Ronen in a statement to the San Francisco Examiner, who called the trend “mind-boggling” and said that corporate rentals abuse “California law that defines rentals over 30 days as housing.”

The BLA report will aim to provide a clearer picture of the issue of corporate rentals and their impacts on The City’s housing stock and on tenants in the context of informing future legislation or policy changes, according to Ronen’s office.

The research will, among other things, examine how many businesses are operating within the corporate rental model, their impacts on permanent housing opportunities, and explore concerns from tenants as well as from the hotel industry.

Ronen estimated that there are more than 100 corporate rental units in the Mission District alone, and many more throughout the The City. An aide in Ronen’s office indicated that the goal is to work on legislation to address corporate rentals by the fall.

While corporate rentals are operating in both new developments and in existing, rent-controlled buildings, the news last week that a new development at 2100 Market St. still under construction will soon be added to the list enraged members of the Planning Commission. Its developer, Brian Spiers, confirmed that he leased 52 of the units to Sonder, a corporate housing startup that will rent them as part of its “boutique residential service” portfolio.

Both Spiers and a Sonder spokesperson argued last week that corporate housing should not be equated with hotels, and described it as a model that meets a growing demand for transitional housing.

But Ronen said on Tuesday that this service exploits “a loophole that says rentals over 30 days are housing, not hotels, even though they are clearly marketed for temporary stays.”

“This completely upends the argument that we hear all the time that we can build our way out of our housing crisis,” she said. “What we need is housing for people who will make San Francisco Their home, who will enroll their children in our schools, who will become members of the community. Instead, developers are taking advantage of our efforts to streamline and expedite construction, and what does it get us? Not housing, that’s what.”

Supervisor Rafael Mandleman, who is a cosponsor of Ronen’s request for a report on the matter, said that while many issues divide City Hall, corporate rentals isn’t one of them.

“It’s happening in many district and it’s a problem,” said Mandelman, adding that the City is facing challenges around “finding corporate rentals” and around enforcement.

At last week’s hearing, the San Francisco Planning commission began imposing a requirement on two developments it approved that the newly constructed units would not be used as corporate housing.

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