Chiu introduces legislation to regulate Airbnb and short-term housing rentals UPDATED

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Board President David Chiu

After more than a year in development, Board of Supervisors President David Chiu is introducting legislation today to legalize and regulate the short-term housing rentals facilitated by Airbnb and other online companies. But the legislation won’t address all the concerns of Airbnb’s critics — from landlords to tenants to labor to neighborhood associations — and it’s unclear why it took so long to develop.

Yet the introduction of legislation is the latest in a rapid series of developments surrounding the scofflaw but politically connected SF-based Airbnb, which announced a couple weeks ago it would finally collect and pay the transient occupancy taxes it has been dodging in recent years, and it issued new terms of services to its SF hosts making it clearer that short-term rental aren’t legal in San Francisco.

As the Chiu legislation says, “Under Chapter 41A of the San Francisco Administrative Code, renting a residential unit for less than a 30-day term is prohibited. Similar prohibitions are found in the Planning Code. These restrictions are designed to prohibit owners, businesses, and residents from converting rental units and other residences in the City from longer-term residential use to tourist use.”

The most significant change the legislation makes to the lawless status quo is legalizing most short-term rental and limiting them to just 90 nights per year, the flip side of the legislation’s requirement that residents physically occupy their units at least 275 days per year.

“You have to be physically present in your apartment for 275 days,” Chiu told the Guardian.

This legislation changes that prohibition for permanent city residents (which it defines as living in the city at least 275 days per year and 60 days in a row and with an intention to make the unit a permanent dwelling) who maintain liability insurance and register with the city -- a requirement that could help landlords more easily identify and evict tenants who are breaking their leases by subletting (while names will be redated from the publicly available list, addresses won’t).

“This has been a difficult process but we didn’t see any other way around the issue but to do a registry so we know who’s doing these rentals,” Chiu told the Guardian.

The legislation doesn’t give many new protections to tenant renters, such as attempting to give them greater rights to sublet their units, and it explicitly reinforces city laws against charging guests more that tenants pay for their rent-controlled units. But it does prevent landlords from immediately evicting them after the first offense.

Airbnb and other companies would also be required to specifically notify San Francisco hosts about local laws and restrictions, which would be a step further than Airbnb’s recent move.

Chiu’s office will hold a press briefing on the legislation at 1pm before formally introducing the legislation at today’s Board of Supervisors meeting, so check back later for updates.  

UPDATE 5PM:

In a press conference this afternoon inside City Hall, Chiu told reporters there has been “an explosion of short term rentals” in San Francisco in recent years, and even though they’re been illegal, “the current reality is these laws are broken everyday and enforcement in difficult.”

He described four major components of the legislation: distinguishing being unacceptable and reasonable short-term rentals, code compliance and enforcement, regulation of Airbnb and other rental platforms, and ensuring that taxes are paid on these rentals.

While Chiu said he wants to allow people to supplement their income by occasionally hosting paying guests, he said the legisation really targets “the worst offenders that have taken entire units off the market and turned them into year-round hotels.”

Planning Director John Rahaim, who also spoke at the press conference, said his office has been inundated with complaints and needed the tools to act: “This is an important issue we’ve been hearing about for quite some time.”

Significantly, Chiu said his legislation extends the short-term rental controls to buildings with two or more units, which have been increasingly targeted by owners seeking to skirt rent-control restrictions.

Ted Gullicksen of the San Francisco Tenants Union, who worked with Chiu on crafting the legislation and spoke at the event, said his group is currently working with the City Attorney’s Office to help residents of eight small apartment building who were recently evicted by landlords seeking to make more money through short-term rentals.

“We’ve identified thousands of units that have been removed from the rental housing stock,” Gullicksen said.

While the legislation goes a long way toward addressing the situation, there are still some tricky hurdles to navigate. For example, although the legislation prevents tenants from charging more than they pay in rent, it does so on a monthly basis, potentially still allowing tenants to cover full month’s rent while living in the units at least three-quarters of the time -- a provision sure to draw opposition from landlord groups such as the San Francisco Apartment Association, who consider that stealing.

Landlords will also likely use the registry to find tenants who violate no subletting clauses in their leases. Although the legislation prevents such tenants from being evicted for a first offense, they would need to comply with orders to desist. And those who don’t register would be blacklisted from using the sites, under a provision that requires the companies to cooperate with the city.

Airbnb issued a statement commending Chiu for introducing the legislation and supporting the goal of legalizing its operations, but it took issue with specific provisions and promised to rally its customers to help shape the legislation, which won’t like be considered in hearings until this summer.

“There are certainly provisions in this proposal that could be problematic to our hosting community, including a registration system that could make some of their personal information public, so there is much work to be done to ensure that we pass legislation  that is progressive, fair, and good for San Francisco and our hosting community,” Airbnb wrote. “But this is an important first step, and it is just the beginning of what promises to be a very long process during which the entire Board of Supervisors will look at this proposal, hear from all sides—including our community—and make decisions about how to proceed.”

Mayor Ed Lee, who has been a steadfast supporter of Airbnb -- a company invested in by Lee’s biggest political benefactor, venture capitalist Ron Conway -- today seemed to signal his tentative support for the legislation, without committing to its details. Previously, Lee had supported Airbnb’s two-year effort to stonewall the city and refuse to pay its taxes, even after the Tax Collectors Office concluded they were owed, a position that became untenable as problems associated with short-term rental mounted.

“We were focused on helping an industry begin, but I believe with some smart regulation -- particuarly now that Airbnb and perhaps others have indicated they want to pay the taxes associated with those rentals -- I think we have a way forward. But we’ll get into all the details,” Lee told us following his monthly appearance before the Board of Supervisors.

As to whether he supports limiting short-term rentals to 90 days a year, Lee said, “That’s an open question. There needs to be some guidelines established because we do have very congested neighborhoods and I know that companies like Airbnb want to be good neighbors as well.”