Supervisor Chiu’s proposed amendment to San Francisco’s Administrative Code Chapter 41A which allows for civil penalties of up to $1,000 a day for renting, or re-renting, an apartment in San Francisco for less than 30 days is back in front of San Francisco’s Land Use and Economic Development Committee this afternoon.

Once again, Supervisor Chiu’s proposed amendment would extend the existing, but for the most part overlooked, restrictions against renting an apartment in San Francisco for less than a 30 day occupancy to tenants or guests of corporate entities that rent such apartments and allow for civil actions for violating said restrictions to be brought by certain non-profit entities, not just the City or a resident in the building, as an “interested party.”

To be clear, the proposed ordinance specifies that even where a business entity has a long term lease for an apartment, if the business entity leases or permits the use of said apartment by an employee or guest for a stay of less than 30 days, such activity will be deemed illegal under Chapter 41A and subject to a civil penalty of up to $1,000 per day plus attorney’s fees.

And yes, if the prevailing interested party in any civil action brought for renting an aparment in San Francisco for less than 30 days is a permanent resident in the building or a non-profit organization, then the interested party shall retain the entire monetary award.

Speaking of violations, potential hit lists, and airbnb, a plugged-in reader reports:

My brother had an airbnb exec renting an apartment from him in the early days of the site. His apt had a non sublets clause. She put the place on the site, rented out the two bedrooms practically every other night, and was making more than she was paying in rent until we kicked her out. Only found out cause other people in the building started asking us why there were new strange men coming out of her apartment every night. Needless to say there were various theories circulating….

There are currently 2,518 apartments in San Francisco listed as short term rentals on airbnb alone.

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Comments from “Plugged-In” Readers

  1. Posted by FormerAptBroker

    Sounds like you would make some good money if you printed up some flyers telling people how to make money with Airbnb then turn them in if they do it and pocket the fines…

  2. Posted by Jimmy (No Longer Bitter)

    That’s just insane.
    Not having visited this site in months, its nice to see that San Francisco hasn’t changed one bit!

  3. Posted by Brahma (incensed renter)

    What’s insane is that Airbnb has attracted millions of dollars of venture capital to build what is essentially a business helping ill-informed people be illegal hotel operators.
    This is just shameful. If I were working at Y Combinator, I’d stop telling people what I did for a living.

  4. Posted by Steve

    Does it get any more pro-hotel, pro-intrusive, anti-startup, anti-renter than this? I don’t think so. God forbid you try to recoup some of the outrageous cost of living here…when you’re out of town for a few days. This is horrible.

  5. Posted by Invented

    Tell 15,000 hosts who are renting

  6. Posted by Planbster

    We loved renting our downstairs when Airbnb got started, and used it throughout our year living in Europe. Airbnb just makes sense for families who want to travel, but can ill-afford to purchase every meal out and pay for two hotel rooms. Shame on You SF for limiting who can visit SF and how they must visit SF. If this is about not taking rental units off the market, then can’t the City figure out a better way to monitor that than throw the proverbial baby out with the bath water?

  7. Posted by Dubocian

    I’m all for this ordinance. Our residential housing stock are not hotel rooms, tired of them being treated as such. Allowing tenants to sublet their apartments to visitors causes significant harm to landlords (through increased wear & tear, damage to common areas from constant luggage being carried through, etc.); disruption and potential safety issues to neighboring tenants; annoyance to those in neighboring buildings, etc. And it defrauds the city of transient occupancy taxes and results in illegal and unfair competition with hotels.

  8. Posted by Fishchum

    I can’t understand why there’s any debate at all about this. Subletting is usually not allowed under most rental agreements and condo owners are usually forbidden from doing this by their HOA.
    What is the justification by the people renting out their apartments on Airbnb? San Francisco is really expensive and I want to recoup some of the rent I pay? I’m really puzzled.

  9. Posted by derrysf

    ‘Anti-renter?’ How about the rights of the other renters in the building? Random people coming and going with their luggage at all hours, copies of the building entry and common spaces keys circulating uncontrolled through hundreds of hands? No way.

  10. Posted by NJ

    So what you are saying is, under this legislation, a company would not be allowed to let an employee stay in the company’s leased corporate housing for a few days. LOL!
    [Editor’s Note: That’s correct.]

  11. Posted by nancydrew99

    I can see why travellers like to use AirBnB. BUT, as a landlord, I don’t want my tenant turning a rented apartment into a vacation rental. Unknown people (safety issue), sublet (lease issue), wear and tear (maintenance issue), not to mention my tenant has the benefits of rent control, so why should he be getting rich off of my apartment? Also, as a owner, if I were to rent out my apartment as a short-term rental on AirBnB, I think it’s fair for the City of San Francisco to ensure that it’s regulated so that it’s safe and I am not operating a de fact illegal hotel.

  12. Posted by NJ

    I think folks are missing the purpose of this legislation. The Anti-AirBnB ordinance already exists. This proposed amendment simply extends it to leased corporate housing and allows non-profits to enforce it. Take a look at the changes:
    http://www.sfbos.org/ftp/uploadedfiles/bdsupvrs/committees/materials/lu120299tdr.pdf
    Folks, if you don’t want your neighbors handing out keys, then put the restriction in the HOA.
    [Editor’s Note: As we wrote in April:

    As we first reported earlier this week, Supervisor Chiu’s proposed amendment to Chapter 41 of San Francisco’s Administrative Code wouldn’t make it unlawful to rent an apartment, or room therein, for less than a 30-day term of tenancy in San Francisco, for that practice is already against the law and subject to both Civil and Criminal penalties.

    The proposed amendment would, however, open the doors for any non-profit “which has the preservation or improvement of housing as a stated purpose in its articles of incorporation or bylaws” to institute proceedings for injunctive and monetary relief against anyone violating Chapter 41, something the City of San Francisco has the right to do as well but hasn’t pursued.

    We’d be willing to bet there are, or will be, a few non-profits that won’t turn a blind-eye to the violations if empowered.]

  13. Posted by DanRH

    Question/statement: this must apply to VRBO listings as well, if they rent less than 30-days.
    Unless, I guess, if that rental is already listed with the city as a ‘hotel’ (thinking about some of those Bed N Breakfast places that also sometimes list on VRBO).

  14. Posted by DanRH

    I should have asked / added: if the listing on VRBO is a house (vs. an appartment), then it’s ok?

  15. Posted by NJ

    ^I think a house would be okay. The ordinance’s definition of “Apartment Unit” is poorly worded, but a reasonable reading of it seems to be that it refers only to buildings having four or more units. (See PDF linked above.)
    [Editor’s Note: The definition of an Apartment Unit per Section 41A.4.a:

    Room or rooms in any building, or portion thereof, which is designed, built, rented, leased, let or hired out to be occupied, or which is occupied as the home or residence of four or more households living independently of each other in dwelling units as defined in the San Francisco Housing Code, provided that the apartment unit was occupied by a permanent resident on or after February 8, 1981.

    The emphasis on the “or” is ours (i.e., we don’t believe the four or more units interpretation is correct).]

  16. Posted by Denis

    I just don’t think this is something that needs massive, punitive legislation. Leases should contain no-sublet clauses that are explicitly enforced. HOAs should also have some sort of stipulation that temporary sublets are a violation. It’s not that complicated. Otherwise, if there are no landlord/tenant issues, tax it. The End.

  17. Posted by eddy

    Is these something new about this “proposed amendment” to the “for the most part overlooked” restrictions here that are causing a repost of this topic, again?
    Folks, if you are renting your apartment and you sublease it to someone, either through Abnb or some other means, you are giving your landlord the right to terminate your lease (unless your lease allows for subletting, which is unlikely).

  18. Posted by NJ

    Editor:
    I don’t believe the “or” that you highlighted definitively answers the question. The clause “as the home or residence of four or more households” may be interpreted to modify the entire clause starting with “which is built…” — in which case my interpretation would be correct.
    It should be noted that you left a comma out of your quote, and the presence that comma actually makes your reading better under a literal interpretation. But I think the legislation is simply poorly worded, and my reading was the intended one. Otherwise, everything after the bolded “or” would be essentially superfluous.
    [Editor’s Note: Great catch, the missing comma has been returned. And at the very least, we can agree the definition is poorly worded. Cheers.]

  19. Posted by DanRH

    Denis: I hear u but it’s does get complicated. Ex: u buy a SFH on a block in SF. 5yrs later, there’s 1 house on the block that is full time VRBO. No biggie..kinda nice actually. Maybe u even use it for your relatives.
    1yr later there’s 2 others doing this on the block.
    1yr later there’s 3 others doing this on the block.
    So slowly it shifts the occupancy designation (w/out any sort of real planning). No new renters/owners move in. Long time owners have since moved. You’re left with a transient block. You’ve benefited vacationers and the original owners, to the detriment of people hoping to rent/buy/”live” on that block and those already living on the block.
    My personal view is very ‘block’ specific. What makes for a good block? Good neighbors. Good neighbors generally = people “living” on that block (whether they be renters or owners, no difference to me).
    If the cost of visiting SF is too high, that’s a separate issue. Make more hotels / etc.

  20. Posted by SciLaw

    We just used AirBnB in Barcelona. Rented a 3 bedroom and in the process flooded the kitchen of the owner underneath our unit. This elderly Spanish gentleman came up to our unit at 2 am and tried to talk to explain to us in Spanish what was going on. We had to log onto a computer to understand what he was saying. Definitely has drawbacks for other owners/tenants in a building. Absolutely no upside to the neighborhood.

  21. Posted by Brahma (incensed renter)

    At a sufficiently higher level of abstraction, this really has little to do with landlord/tenant issues; for anything that is illegal, anything at all, there is going to be a subset of people (like the commenter above) who will convince themselves that they are not causing a problem and that they should be able to avail themselves of the illegal behavior.
    And this self-justification is especially easy to arrive at when it’s in your economic self interests (“…makes sense for families who want to travel, but can ill-afford to purchase every meal out and pay for two hotel rooms”) to do so.
    I wouldn’t call this “massive, punitive legislation”; if people listing on VRBO or AirBnB were being prosecuted criminally, then perhaps that’d be an accurate assessment.
    The fact is that people are getting away with behavior that was illegal well before AirBnB arrived on the scene, and the ongoing flagrant violations are what necessitates legislation making the existing prohibitions easier to enforce by enabling third parties to do so.
    Everyone in San Francisco should be applauding David Chiu for tackling this. He’s a hero on the side of the rule of law in my book. The people behind AirBnB should be ashamed of themselves.

  22. Posted by lol

    DanRH,
    I think one of the reasons landlords would do that is to avoid being locked at a specific rent by local laws. Of course there’s the search for a good ROI, supposedly better with daily rate, but with occupancy rates and the work to make this happen, I am not sure there is such a big difference in profits.
    Chiu understands that very well. Rent control is a slow-motion train wreck and this is more obvious as years go by.
    Supply is way lower than demand due to sticky subsidized tenants, market rents are insane while a good chunk of the population pays less than 1/2 curent market rates.
    If people cannot rent out thru airbnb, then it will be something else soon. Tenants who underpay want their cake too (the gravy train never stops), and landlords have a tendancy to resist rules detrimental to their interest and will try to legally get around them one way or another.
    Chiu and others keep whacking the mole that keeps popping its head up, slowly breaking the system they defend in the process.

  23. Posted by eddy

    The grass is always greener I guess. Unless its astroturfing. This is a hot bed topic so I guess now I understand better why all the traffic driving posts. I think the editor said it best, “we can agree the definition is poorly worded.” OK, so I’m taking that quote out of context :) but still, I’m having a real hard time believing that the city that bent over backwards to get twitter in here, square, zynga, etc. is going to alienate one of the major businesses in the ecosystem that proudly boasts its HQ as San Francisco. This is like trying to ban toys with happy meals, which of course was enacted, or the taxi commissions beef with UberTaxi. Last I checked you can still get a toy with a happy meal (albeit with a token fee) and you can still hail an “Uber” (sans-taxi in the name) on your iPhone. Someone please wake me this becomes a real issue.
    This is the most interesting fact:
    April 2, 2012: AirBnb Units in SF: 1938
    Oct 10, 2012: AirBnb Units in SF: 2518
    source: socketsite

  24. Posted by bossmillion

    Someone explain the enforcement of this, from neighbors to cops to lawyers or how ever else you can imagine. thx

  25. Posted by CH

    The bit about an airbnb exec losing her lease by using airbnb is classic.
    “This is like trying to ban toys with happy meals, which of course was enacted, or the taxi commissions beef with UberTaxi.”
    No it’s not. This is – mostly – about enforcing existing rental rules and regulations. The corporate bit is a little wacky.

  26. Posted by Dubocian

    I think I’ll start leaving AirBnB promotional brochures under my long-term tenants doors. Perhaps they’ll take the bait, then I can evict them for violating their lease.
    I’m not serious about that, but I certainly wouldn’t discourage any landlord with unpleasant tenants to try it.
    AirBnB is a bit like a pimp, encouraging people to pursue an illegal activity and then taking a cut of their profits from doing so. They should be ashamed.

  27. Posted by DanRH

    Thanks @lol, and thanks for pointing out that stat. That is pretty interesting.
    Anyway, I should state:
    – I’m an overall big fan of AirBnB. But I would like it (and VRBO) to play by the rules.
    – I’m really tired of seeing long-time owners skirt around the rent laws by doing this ‘I’ll list on VRBO’ thing. Sure, it seems innocent ‘oh, come stay in our cute little cottage’ but in reality, either rent it out normally or don’t. Decide. Instead you’re getting the best of both (high per night / no hassle of long term renters / pissing off your neighbors).
    I’m perhaps fine with a repeal of rent-control. I just would rather the above happen through votes/etc., vs. having this ‘sorta legal / sorta illegal / fine if I do it but not if too many of my neighbors do it’ type thing going on.

  28. Posted by eddy

    @CH, the rule says you can’t serve a toy with a happy meal. For a token fee, you can buy a meal with a happy meal. TLC would have you believe that only licensed taxis are allowed to carry passengers in a taxi. Uber drops “taxi” from their name and all is fine. So what loophole, other than taking advantage of the fact that this has never verified as being enforced, will Abnb find to get around this thing if it ever becomes an issue? Will the city basically chase them out of the city? This is the question. And bossmillion raises a fair question on enforcement.

  29. Posted by EH

    So wait, this ordinance is to allow snitches? Why not just allow landlords who care about this stuff to inititiate proceedings, which so happens to be the current law? WHat’s Chiu’s goal here?

  30. Posted by BobTheBuilder

    @EH: it’s Mr. Chiu throwing a bone to the Tenants’ Union at election time. Pure and simple. Guess who will be doing the enforcing and pocketing the fines? Guess who will then launder that back to the campaigns of Chiu, Mar, Campos, Avalos and so on?

  31. Posted by I'masnitch

    Yes sir reeeeee I am starting my own non profit business tomorrow! I see a gravy train a coming down the tracks! No way am I going to let the tenants union get a corner on this market !!!
    Wow what a way to make a living! Chiu should run for President …he’s come up with a whole new cottage industry for anyone living anywhere who’s non profit business is chartered properly. And I have no doubt this could add 1000’s of new jobs to our depressed economy !!!
    All I need to do is peruse the vacation rental Ad’s and bingo….file one lawsuit a day and wait for the bucks to roll in!
    Thanks Chiu…..I love it…you made my day.
    Sf is becoming more like Cuba everyday….maybe it should change it’s name to Snitchville….lol
    First the garbage police now the tourist police…next you’ll have to show photo ID to get into the city and prove you live in a rent controlled apartment.
    Yes sir reeeeee….easy street here I come…

  32. Posted by anon

    Outrage! Actually enforcing a law that a democratically elected legislative body put on the books? Stalin! Castro! Mao!
    This should pass. But there will be no gravy train. As soon as a couple dozen lawbreakers pay ugly fines, word will get around that it’s not worth the risk. That’s how civil enforcement works.

  33. Posted by Anon1

    They should leave the law as they found it. Wording it like this will only lead to lawsuits, and weighing in on corporate rentals is bizarre. But the renters who are popping up here and there acting as if they have a right to lever their landlords’ properties? Comical.

  34. Posted by Jimmy (No Longer Bitter)

    I find the wording of this bizarre. Could a company (say, Twitter or Google) rent an apartment for the use of its employees while they are in SF?
    What if you rent out a place for a month + 1 day, but for some reason the tenant leaves before 30 days are up?
    The wording is so convoluted and bizarre, it can only lead to lawsuits. Why include non-profits as an “interested party”? The definition would normally extend only to people who either live in the building, own the building or own the condo in question.
    The entire exercise reeks of a communist mind-control plot.

  35. Posted by sfjhawk

    “So what you are saying is, under this legislation, a company would not be allowed to let an employee stay in the company’s leased corporate housing for a few days. LOL!
    [Editor’s Note: That’s correct.]”
    I’m not sure I’m getting the same reading from the original post wording of “restrictions against renting an apartment in San Francisco for less than a 30 day occupancy to tenants or guests of corporate entities that rent such apartments . . . ” If the corporate entity is the ‘renter,’ and the employee simply uses the apartment and technically isn’t a ‘renter,’ how does this apply to this use case?
    +1 Anon1 and the hyperbole being thrown around: “communist mind-control plot!” “SF = Cuba!” Isn’t the landlord the business owner here?
    Disclaimer: I’ve used Airbnb while traveling and it’s a great service if you’re on a budget and don’t need your bed made every day (or the breakfast buffet), and I’ve heard great stories of how people/families in developing countries/vacation destinations are improving their quality of life by the increased income services like Airbnb enable them to make (e.g. Rio). I do agree that this is simply enforcing existing laws in SF.

  36. Posted by moz

    Interesting how everyone assumes the tenant is leasing these places. Most of the places available in my neighborhood appear to be for lease for the owner.

  37. Posted by Brahma (incensed renter)

    EH: Because in case you haven’t been around, you know, San Francisco, there are a fair number of absentee landlords who only care about raking in their rent and couldn’t care less about the conditions in their building.
    In those cases, tenants “hosting” on AirBnB can make the lives of their neighbors and other residents in the same building a living hell by turning their unit into an illegal informal hotel and so their needs to be another mechanism for enforcement.
    And I love the people justifying using AirBnB on the grounds that some people using it “can ill-afford to purchase every meal out and pay for two hotel rooms”. Since when is being able “to afford” a patently discretionary recreational expenditure grounds for violating the law? How do we verify, in advance, that someone can’t afford something and so they can be excused from adhering to the law?
    Isn’t everybody “on a budget”? Does that phrase mean anything at all?
    I can “ill-afford” to pay Holland America for a stateroom on a cruise to Cabo San Lucas. Does that mean it’s okay for me to go anyway as a stowaway? Shame on You, U.S. and Mexican lawmakers who have make sneaking on board a cruise ship illegal and thus limiting who can visit Cabo San Lucas via a sea route!

  38. Posted by Anon1

    That “ill afford” comment was absurd. As if raveling abroad itself is not a luxury. Man. Go to the Grand Canyon, then.

  39. Posted by SFwatcher

    This should be between tenant and landlord and between landlord and HOA/neighbors as long as they pay taxes accordingly.
    Let the city officials concentrate other problems.

  40. Posted by Bounty Hunter

    Thanks Chui, can’t wait to get started as a new bounty hunter hunting down scofflaws. Seems to me $1000 bucks a day is fair price for the head of a landlord or tenant committing the ultimate crime of renting to corporate tenants.
    I promise to do my best to bring law and order and justice to the streets of San Francisco…be sure to watch my new TV series where I file lawsuit after lawsuit clogging the courts of SF with needless endless litigation against corporate scofflaws …Yes sir be sure to watch….SF Tenant Bounty Hunter, coming to a local TV station near you soon….

  41. Posted by abc123

    Does anyone know when the law take effect?

  42. Posted by The Hitman

    This legislation unanimously passed the board of supes today and this lawyer personally believes that the only reasonable interpretation of the language is that it only applies to building with 4 or more units. However, President Chiu noted today that he is working on additional legislation to focus on “shared housing resources” such as AirBnB.

  43. Posted by Think this way...

    So there are a few things I have to say here…
    * If an owner of an apartment/condo uses airbnb and makes great money at it, does this not increase property values through increased capitalized valuation? Neighbors should be elated about this.
    * If airbnb guests come and go, they’re only going to go to places that are kept in immaculate condition, always clean, free of trash, free of debris, free of clutter, free of safety/fire hazards – isn’t this better than most lessees/owners who are slobs?
    * What’s the difference between the person who travels often and has someone stay at their house to watch their pets, or have housekeepers come in weekly, or repairmen or contractors? Just because money is exchanged this is suddenly sinful?
    * What happens when you’re getting harassed by your HOA for “suspected rental activity” – a good way to test this is to ask friends to bring a suitcase and stay at your house while you’re out of town.
    * What if you just have a lot of friends over, or a lot of visitors, or order a lot of takeout food, or buy a lot of stuff on amazon and have delivery people over frequently? Or if you have your home listed for sale/rent and strangers are coming over all the time?
    * What if each short-term rental person signs a 31 day lease, but it can be terminated prior to that – the person signs the lease, then the new “landlord” hands them a termination on the checkout date.
    * What about people who just have roommates – this isn’t a sublet, because a lease conveys possession of an entire address, tax id, apartment/condo, etc… you’re not leasing here, by the definition of a lease in most states… you’re not giving up possession.
    * Shouldn’t municipalities love this? If the market becomes more affordable, and during compression periods when people would normally stay in other cities or simply not travel to a city (where they spend money), this increases the number of people coming to a city each year… a key goal for most cities!
    Just food for thought…

  44. Posted by Brahma (incensed renter)

    NPR had a story on Airbnb today about a New York City web designer who “hosted” on Airbnb in an apartment he didn’t even own, and now he’s on the hook for about $30,000 worth of fees and fines (he volunteered to “take care” of the fines that were going to be levied on the landlord who actually owned the place) for operating an unlicensed hotel.
    He’s contesting it in court. And his argument? Well, just that it’s important for his financial well being that he not have to pay the fees and fines for violating the law. Because he “feels that the punishment doesn’t fit the crime” and “believes he broke no laws.” Uh huh.
    Airbnb has their shills out all over the place now, and I wouldn’t be surprised if the above comment from “Think this way…” is part of the organized pushback from the company.

  45. Posted by eddy

    I’m over the whole airbnb argument. It’s an interesting situation to observe. Look at how uber has overcome its challenges. Perhaps cities will come to embrace it. but, who really cares.

  46. Posted by tim

    I am a landlord that used airbnb last summer and the extra income was great. We rented out our home that we live to airbnb people. For the most part, it turned out well and most of our guests were wonderful.
    However, one day, we had a difficult guest making unreasonable demands and we asked them to leave and find another place. They refused! We were terrified that we would run into problems and they might not move out.
    I called airbnb and they told me that I had to follow “eviction” proceedings and they couldn’t help me if a guest refused to leave. OMG! I have been a small time landlord for over 20 years and this freaked me out.
    Can you imagine my family and I locked out of our home and having to pay thousands of dollars to evict someone?

  47. Posted by diemos

    The law is meant to balance the rights of all parties to a transaction.
    When you give up the restrictions on operating your home as a hotel you give up the protections as well.

  48. Posted by Brahma (incensed renter)

    What diemos said. In addition, a lot of that “extra income” you thought “was great”, was really due to the externalities that were not priced in to what the airbnb “guest” agreed to pay you.
    Your neighbors weren’t expecting to live next door to an ad-hoc motel when they acquired their homes (and that’s one answer to eddy’s “but, who really cares” quip, above). Try to think of something other than your own selfish interests next time.

  49. Posted by Keepitup

    @tim
    I think this is a BS story.
    …”I called airbnb and they told me that I had to follow “eviction” proceedings and they couldn’t help me if a guest refused to leave. OMG! I have been a small time landlord for over 20 years and this freaked me out…..”
    “Can you imagine my family and I locked out of our home and having to pay thousands of dollars to evict someone?”
    The airbnb guest don’t get a lease. They get a receipt. And they are not a protected tenant if they haven’t been in possession for over 30 days. Less than 30 days they are a guest. So if it’s your home you move back in and tell the guest they now have new room mates like it or not. If they get nasty call the cops and have them removed for trespass.

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