While Supervisor Chiu moves forward with a proposed amendment to regulate short-term rentals in San Francisco, a more onerous ballot measure designed to greatly limit the “illegal use of housing for tourist accommodations” in San Francisco has been filed with the Department of Elections.

The preamble to the proposed measure which would establish the Neighborhood Preservation and Public Revenue Recovery Ordinance:

At a time when San Francisco faces its most severe housing shortage in more than 100 years, an increasing number of apartments, condominiums, houses, and portions thereof are offered and advertised as short-term rentals on websites, such as AirBNB and VRBO. In recent months, the number of such listings has exceeded 9,000. These listings contribute greatly to the disappearance of affordable housing in the City and County of San Francisco. To date, not a single online travel agency that advertises short-term residential rentals to tourists has paid the established Transient Occupancy Tax levied on hotels, despite a determination by the City in 2012 that they are liable for the tax. This ordinance is intended to stop the proliferation of short-term rentals through online travel agencies by requiring the registration prior to listing with an online travel agency; the verification of registration by the agencies prior to accepting listings; and allowing citizens to enforce the requirements through a complaint process.

Violation of the ordinance would be punishable by up to $10,000 per violation and 180 days in county jail, as proposed.  And yes, Airbnb would be considered an “online travel agency,” or broker, in the eyes of the ordinance.  The revenue from fines, over and above the costs of enforcing the ordinance, would be deposited in the City’s Housing Affordability Fund

Note the bounty for successfully prosecuting scofflaws, which had been bantered about, did not make the final cut, but the proposed ordinance would allow any person or entity to file a complaint, an action which is currently limited to the City or directly interested parties.

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Comments from “Plugged-In” Readers

  1. Posted by MissionGal

    Chairman Mao is singing and dancing in his grave that his ideology is still so alive in kicking in SF.

    • Posted by Mr. E.

      Please do explain. The regulation of short-term rentals (or, face it, hotels) seems different that communism at the hands of agrarian peasantry. Perhaps we should be discussing objectivism instead?

      • Posted by MissionGal

        The very reason why short term rentals became a problem is because of the rent control policy in SF:
        – Homeowners prefer to have guests who will hand back their properties instead of taking ownership since they can’t be evicted
        – Landlords do not want their rent controlled tenants to be subleasing their rental units and make $$$ on the property that doesn’t even belong to them

        If the City just butts out of the landlord/tenant situation, there won’t that many people doing this. It’s a lot of work and eventhough it is enjoyable for a while, it really is not for everyone.

        • Posted by Mr. E.

          Interesting.

          With respect to point #1: http://www.sfrb.org/index.aspx?page=962.

          WIth respect to point #2, it is too bad that landlords have to police their tenants to enforce their entirely appropriate and contractually valid prohibitions on subletting. Fortunately, such a violation is is just cause for eviction (see the prior discussion of point #1).

          With respect to point #3, I would imagine, from basic economics, that landlords would do whatever maximizes their utility. Thus, a number would gladly keep their units as short-term tenants – locking in rents for a year long lease may not nearly as valuable as being able to reset the price to the market every few days or weeks. Both long term and short term tenancies have costs.

          Should the City (or rather the County, in our dual status) butt out of the landlord/tenant situation with respect to the enforcement of rental contracts?

          • Posted by lol

            What if I need to get my place back this year, then have to re-rent in 5 years? This last lease can last forever. With renter protection rules, one OMI and you’re done.

            Rental rules in the rest of the US are working great. what makes SF so special they have to slant everything towards the tenant? What’s the trade-off? None.

            And the reason why: capitalism for many in SF is a dirty word. They fled America to create their nice little utopia in SF, except they couldn’t suppress the concepts of money or property. If they could, believe me they would…

            All they can do now is add one rule after another, and see it trigger another scarcity crisis followed by more price pressure followed by more speculation followed by more new rules to contain the negative effects.

            It’s similar to watching someone digging himself into a sand trap. You did something wrong. Don’t force it, think it through.

            Nice going, geniuses.

        • Posted by Mr. E.

          @ lol:

          I am not defending our current rent control regime; I agree it distorts the market. However, we’re discussing bans or regulation of short term tenancies, which tenancies, while beneficial to landlords, do have negative externalities to neighborhoods. And yes, I admit I was calling out the hyperbole (and intellectual dishonesty) of the comment re: Maoism. Perhaps we need a Godwin’s law for Socketsite, except it would apply to communism as opposed to Nazism?

          • Posted by san FronziScheme (formerly known as lol)

            We can’t claim Godwin’s law for accusations of communism in SF simply because a portion of the most extreme of the progressives are actually closeted communists. The only reason they are not calling themselves that is because communism doesn’t go well historically with democracy, and the minute you go against democracy in this country you’ll lose all credibility or support.

            No, you have to “help the people”, make them “stay in their homes”, against “greedy speculators” (never ever mention the word “capitalism”) and punish punish punish people whole have more wealth than you.

            Nah, Godwin’s law doesn’t apply.

        • Posted by Mr. E.

          @ lol

          We can’t claim Godwin’s law for accusations of in simply because a portion of the most extreme of the are actually closeted . The only reason they are not calling themselves that is because doesn’t go well historically with democracy, and the minute you go against democracy in this country you’ll lose all credibility or support.

          No, you have to “help the ”, , against “” (never ever mention the word “”) and punish punish punish people .

          Seems intellectually lazy to me. . .

          • Posted by Mr. E.

            (hmm. . . sorry, my bracketed text was removed).

            We can’t claim Godwin’s law for accusations of (Nazism) in (the Republican Party) simply because a portion of the most extreme of the (conservatives) are actually closeted (fascists). The only reason they are not calling themselves that is because (fascism) doesn’t go well historically with democracy, and the minute you go against democracy in this country you’ll lose all credibility or support.

            No, you have to “help the (corporations)”, (with tax breaks and lower regulatory burdens) , against “(tax and spend liberals)” (never ever mention the word “(corporatist)”) and punish punish punish people (who are different than you).

            Seems intellectually lazy to me. . .

          • Posted by san FronziScheme (formerly known as lol)

            I get your point, and it will be valid in the right context, but in the case of SF this is fairly accurate.

  2. Posted by jill

    so happy to see this. I hope they ban any rentals that are <90 days

  3. Posted by Keepitup

    The preamble of this ordinance is full of lies and misinformation. I think it’s going to be challenged. To make a absurd statement asserting that “affordable” housing is being lost to the “hotelization” of SF housing is pure BS. Who determines what is “affordable”? If the tourist unit in question is suddenly placed back into the market and rented at market rates, is that studio @$2500 per month “affordable”? If a one bedroom unit is rented as a tourist unit then suddenly changed to a market rate unit is $3200~3600 per month “affordable”?

    How does Calvin and company support their absurd statements with facts?

    How do they support this statement with facts? “No hotel taxes are being paid to the city by the owners/operators of these unit”? This is a out and out lie and unsupported by facts. I know for a fact that there are several operators renting in the illegal tourist space paying the hotel tax. The SF tax collector has estimated this “sharing model” brings in an estimated $2M+ annually in hotel taxes, not to mention the amount of sales taxes paid by tourist.

    Anyway, if this passes tourist will just rent in the east bay and visit SF. This sharing model is not going away….it’s just going to move out of SF. And guess what…..housing will remain astronomically expensive for anyone wanting to live in SF.

    Go ahead Calvin make my day………..Place gun on foot…..pull trigger…..BANG!

    Anyone who thinks passing stupid legislation like this will make housing in SF “affordable” is just as stupid.

  4. Posted by Keepitup

    Correction…….. to Transient Occupancy Taxes for hosts being paid to the city.
    Lets say that the number of units in SF = 9000 units.
    Let’s say the average annual rental income = $20,000 annually.
    The tax is 14%.
    $20,000 x 14% x 9000 = $25,000,000 in tax revenue if all tenants, and owners paid the taxes due. This is a subjective number…it could be much higher or lower. Some operators rent for $40 a night some for $400. Some for 10 months some for 1 month.

    One operator I know pays a estimated $500,000 dollars in taxes to the city.

    So go ahead Calvin make my day…place gun to foot…pull trigger……BANG! Who loses……city loses and housing remains astronomically expensive for anyone wanting to live in SF.

  5. Posted by Brahma (incensed renter)

    Well as someone who’s been a victim of AirBnB “guests” in the past, I’d be glad to see this make it into law, but I suspect it won’t. San Franciscans have a sense of fair play, even for craven greedheads who willingly violate the law. Making a violation a criminal matter punishable by up to “…180 days in county jail” is a bit over the top for what should be treated as a civil matter.

    And for “Keepitup” at 5:15 am, I think what they are referring to is the fact that the companies that operate the relevant websites, such as AirBnB and VRBO, aren’t acting as middlemen and ensuring that the taxes are collected, just as Amazon until fairly recently didn’t collect California Sales Taxes on items it sold and delivered to California residents. Just because you know of “several operators renting in the illegal tourist space paying the hotel tax” doesn’t mean that the majority of those renting in the illegal hotel space arent’t paying the hotel tax. Getting the companies that are facilitating these illegal hotels operations would ensure that everyone is playing by the rules.

  6. Posted by invented

    PSST Someone tell Craigslist that they might become a travel agency and they”ll need to either shut their accommodations section or create a big infrastructure for reporting registrations etc. (which we all know CL loves and thrives on).

    Would a roommate for let’s say a 6-month stay enjoy the privilege of paying a 14% hotel tax?

    Meanwhile, and as before — David – until the city addresses its years of tepid planning and absence of any real housing goals (30,000 new units are coming ANYWAY Lee notwithstanding your low-rise zoning — and without your lifting a finger).

    Stay tuned who will be scapegoated next. It won’t end here.

  7. Posted by Brahma (incensed renter)

    MissionGal wrote:

    The very reason why short term rentals became a problem is because of the rent control policy in SF…If the City just butts out of the landlord/tenant situation, there won’t that many people doing this. It’s a lot of work and even though it is enjoyable for a while, it really is not for everyone.

    All one needs to do to show that MissionGal is wrong is to look at the breadth of third party companies that will do the “work” for anybody who wants to put a unit on AirBnB and the like and go into the illegal hotel business.

    From SFgate back in March, Airbnb spawns array of companies to aid hosts:

    Companies that assist Airbnb hosts are springing up in the Bay Area, piggybacking on the hospitality service’s popularity.Some assume all the duties of an Airbnb host — from decorating and greeting guests to cleaning — in exchange for a cut of the booking fees. Others offer a la carte services.…Most of the new companies are small and just a few months old; almost all were started by people who were Airbnb hosts themselves.”I kept running into the issue of managing my guests when I wasn’t there,” said [the founder of ] Guesthop in June and said growth has been strong. “There are over 6,000 Airbnb listings in San Francisco so there’s plenty of work here,” she said.

    The fact that there’s several companies in this space and that there’s enough profit to be made off of AirBnB to cover overhead and expenses for the “host” and still pay subcontractors means that if S.F. didn’t regulate illegal internet-listing hoteliers, there would be more people doing this, not less.

    Who are you trying to kid?

    • Posted by san FronziScheme (formerly known as lol)

      The point of MissionGal is that there is a big incentive to do airbnb because of rent control. And there is room for a new type of business like hosting assistance services. Is the problem illegal hotel activity or what pushes people to go that way?

      Say you build a crosswalk at a dangerous spot that drivers cannot see and it causes roadkill, will you blame pedestrians for jaywalking in a safer spot a few yards away? Landlords are learning from the roadkill stories and will prefer what’s safer for them, even if they get ticketed. Now if we could move the crosswalk that would be smarter.

  8. Posted by Brahma (incensed renter)

    I disagree, people putting property on AirBnB just want more money, and don’t mind violating the law as long as they are making more money. AirBnb’s “innovation”, if you want to call it that, is they figured out a way to monetize the greed of scofflaw landowners using the internet.

    An enterprising econ grad student could either prove or disprove you and MissionGal’s hypothesis by looking at similar cities that don’t have rent control, and have lots of property advertised on AirBnB, VRBo and the like and running pretty straightforward statistics to show who’s right.

    Honestly, what do you think such a study would show?

  9. Posted by san FronziScheme (formerly known as lol)

    You do not get much more money from airbnb than you would with a regular rental after all the costs are taken into consideration.

    BUT

    1 – You are certain that the rent you will collect in 10 years will be in line with the market at the time. It could be less or it could be more.
    2 – You are certain that you will have access to your place almost whenever you like. This is perfect for the mobile lifestyle that more and more people want to live. I am getting my crash pad back this summer in Paris. With a regular tenant that wouldn’t be possible.

    Airbnb for me is a way to ensure income security and access to MY place. A sticky rent controlled tenant fails to meet these 2 needs.

    For you Brahma, everything seems to boil down to money. It talks more about you than about all the strawmen you are creating…

  10. Posted by Jake

    There was a study published last year by researchers at Boston U. School of Management (Research Paper No. 2013-16). You can find it online for free if you want. The study focused on Texas which does not have rent control.

    They found “Airbnb penetration is negatively correlated with hotel revenue.”

    From an SF Biz Times news summary:

    The study used data collected from San Francisco-based Airbnb on over 22,000 stays in the state of Texas over the five year period from 2008 to 2013, and quarterly hotel revenue tax data from over 4,000 hotels in Texas dating back to 2003.
    Unsurprisingly, it concluded that the room and apartment-sharing site disproportionately impacts lower-end hotels, which have fewer amenities and services. Bookings on its site also affect hotels with little to no conference space.

  11. Posted by Brahma (incensed renter)

    it’s not lazy, it’s a rhetorical tactic.

    People invoke the “communist” label when they want to cut off discussion. And that’s usually because they don’t want the discussion to get into whether or not the person resorting to calling their opponents “communists” have a legitimate claim.

    If one can scare their opponent into submission by calling him or her a “communist”, one can immediately put him on the defensive because he has to spend time on the label rather than getting to the heard of the matter actually under discussion.

    Like in this case, where property owners decide on their own that they can operate hotels in areas not zoned for it, and of course it’s justified for the sole reason that it makes them money. You can’t intellectually defend that position, so it’s easier to call your opponents “communists” or make an indirect reference to it by bringing up Mao.

  12. Posted by san FronziScheme (formerly known as lol)

    That tells me one thing: people will limited budget also want value. To compete these hotels have to provide more value.

    This is a similar issue to the illegal taxi / ridesharing model. People are ready to pay taxi fares but also want friendliness, flexibility, service.

    Not that I condone any of these illegal models. but there’s a need and the traditional providers need to listen.

  13. Posted by Jake

    Sure, though part of the value they’ve been getting in SF is by not paying a 14% hotel tax. Even when that is added the short-term AirBnb rentals could still pressure the dodgier motels. Wonder if some of them won’t end up being torn down and replaced with new housing.

  14. Posted by san FronziScheme (formerly known as lol)

    airbnb will collect the hotel tax starting this summer. Chances are this will end up being split. I will not be subject to it since my stays are 31 days minimum. But that’s still a good point.

    I would point out the fact that the comfort you get on airbnb for the price of a “dodgier” hotel is still much better, even when the tax is taken into consideration.

    Plus, one point I have made many times is the fact that the center of gravity of SF has moved towards the Mission, the Castro, Noe. But the hotel capacity has not moved and it still stuck in the Nob Hill, North Beach, Fisherman Wharf area. People are getting more sophisticated in their visits and the traditional hotels cannot easily follow suit. How many decent hotels in the Mission?

  15. Posted by Jake

    As long as you pay your income tax on it. Average hotel stay in SF is 3 days and even for AirBnb it is less than a week.

    SF collects about $250 million/year in hotel tax. Would hope they break out the amount from ‘hosting platforms’ in the future.

    60% of hotel rooms are in the Union Sq / Moscone area. Plenty of neighborhoods could be better served by more small scale offerings.

  16. Posted by san FronziScheme (formerly known as lol)

    True, we would need hotels in other areas. But it seems like the return is much better on condo buildings. The new projects that have popped out between VN and Noe on Market Street would have been perfect for that. Maybe the city could do some zoning magic…

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