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.” 

 

 

 

 

Comments

It was never viable for the city to try and enforce a total prohibition on short-term lets, and even more so if the city is simultaneously deriving tax revenues from illegal acts. That has now been fixed, and such lets will be legal. No longer will people sharing their home be stigmatized as criminals for such a natural and positive act of sharing.

Nor can the city sanction the wholesale violations of rental leases by allowing tenants to sub-let without landlord consent. Almost every lease in SF expressly prohibits such sub-lets. And the register will be a vital source of information for landlords about tenants who violate their leases.

But it leaves open the ability for homeowners and investors to perform sublets. The 275 days rule will be impossible to enforce so I'm not sure why that is in there.

This is a reasonable attempt at reconciling all the inconsistencies that currently exist within the city's policies. Meanwhile those of us who use Airbnb can continue to do so.

Posted by Guest on Apr. 15, 2014 @ 11:11 am

Greetings! Very helpful advice in this particular post!
It is the little changes that will make the most important changes.

Many thanks for sharing!

Posted by Free slots online on Jul. 29, 2014 @ 10:25 pm

a sublet than they pay themselves for their rent for the same period?

Even the SFTU regards such "rent gouging" as unethical and they will not counsel tenants who get into trouble for doing that.

Posted by Guest on Apr. 15, 2014 @ 11:42 am

Good news for renters and Unions. Renters may now become landlords without the burden of having to actually buy a property or deal with onerous rent control laws, while the city gets to double tax. That means even more money in the union's pockets.

Posted by Snoozers on Apr. 15, 2014 @ 12:02 pm

doesn't provide any real protection for a tenant being evicted for doing that without prior landlord consent.

Therefore a tenant should get written permission from his landlord. The only way a landlord is going to agree is if the revenues are shared.

And the "rent gouging" prohibition in the rent ordinance is being upheld here.

Posted by Guest on Apr. 15, 2014 @ 12:29 pm

hypothetical: I own a condo in SF and spend 6 months of the year here. The other 6 months I am on location for work.

Chiu is saying that I can't AirBnB my unit out when I'm gone, assuming I register with the City and pay the tax?

this is his super special legislation we've been waiting for what, 2 years for?

Posted by guest on Apr. 15, 2014 @ 2:39 pm

So the restriction has probably been put in place just to make the SFTU happy but without any intention to enforce it which, in any event, would not be possible without some form of "house police".

Posted by Guest on Apr. 15, 2014 @ 2:55 pm

should be specific in his legislation that that 'hurdle' applies to renters, not homeowners. it isn't like he hasn't had enough freakin' time to come up with this legislation and make sure that it is solid.

give me a break. is it a coincidence that he drops this load of crap a week after Air BnB already agrees to collect the TOT, and has modified their website to give users a clearer head's up regarding local laws.

this guy is a complete joke.
a choice between him and Campos for the state assembly? Feh. None of the above is the only way to go on that one

Posted by guest on Apr. 15, 2014 @ 3:08 pm

replacement supervisor for D9.

Both Chui and Campos are losers, but i'd rather have Campos "disappear" than Chui.

Posted by Guest on Apr. 15, 2014 @ 3:26 pm

Me too, he's sooooo dreamy! I have his poster from Tiger Beat on my wall. I love is whitehead-covered cheeks and his beady eyes follow me when I walk around my bedroom!

Posted by Snoozers on Apr. 15, 2014 @ 8:50 pm

and I own a home here. That makes me not a resident?

Posted by Guest on Apr. 15, 2014 @ 3:43 pm

proving you wrong if you said you were here all the time.

Posted by Guest on Apr. 15, 2014 @ 3:52 pm

"I own a condo in SF and spend 6 months of the year here. The other 6 months I am on location for work."

and you're in the economic margins so shut the fuck up you avaricious asshat.

Posted by Guest in re: "this is ridiculous" on Apr. 15, 2014 @ 4:33 pm
Posted by Guest on Apr. 15, 2014 @ 4:53 pm

I have two homes in Aspen, one in Palm Springs, a flat in Paris, another in the UWS in Manhattan, a little beach house in Monaco and two homes in San Francisco.

This law will be a terrible hardship for me, I can't imagine what I am going to do.

Posted by guest on Apr. 15, 2014 @ 8:53 pm
Posted by Guest on Apr. 15, 2014 @ 9:02 pm

such an impressive use of "avaricious!" we're all very impressed with your deep thoughts and awesome vocab.

wtf does economic margins even mean? you think it is the 1%ers in SF who are using AirBnB to make rent/mortgage payments?

Posted by GuestD on Apr. 16, 2014 @ 6:21 am

What if a roommate wants to AirBnB their room, but the other roommates don't want that? Would this legislation allow that? If so, then you'd have the unfortunate situation of strangers staying in your household against your well. Same as to multi-unit buildings--residents finding strangers constantly in your stairwell, with no vetting from the landlord, really rubs against the grain.

Posted by Gizmo on Apr. 15, 2014 @ 4:59 pm

their tenants to sublet.

But if the landlord does then it would depend whether you were on the lease or not. If not, then your master tenants is also your landlord and you would need their permission.

I can see a few fights over this

Posted by Guest on Apr. 15, 2014 @ 6:46 pm

Yes, Gizmo. You see, in San Francisco, a master tenant is a landlord to his subtenants, except that he is not bound to abide by rent control laws like the property owner is. Sure, there's a rule against exploiting subtenants on paper, but it's nearly impossible to enforce. Tenants advocates decided it was in their best interests that they avoid embarrassing tenant vs tenant cases and focus on the truely evil property owners. Still, I suggest you visit the SFTU so that they can tell you to fuck off in person.

Posted by Snoozers on Apr. 15, 2014 @ 8:44 pm

Upshot of the story, as I see it: there is more of a need than ever for a short-term rental online bulletin board where those offering and those needing short term rentals can find each other and do business with each other directly, without any intermediary like Airbnb collecting money or taxes, collecting private information and giving it to the government, and without any "registration" and abundant red tape and intrusion on private property rights. Maybe this particular part of Craigslist needs to be amped up or another website needs to be created.

I don't understand all the complaining about the problems that short term renters bring to neighborhoods. THe short term renters that my friend has had have all been stellar people, better than most all of his tenants -- certainly far more grateful. Even if one has problems with some of them, whatever you don't like about them, you won't see long, because they are short term, meaning -- they will be gone soon!. By comparison, good luck trying to get rid of that neighbor tenant who screams obscenities at you or your child or partner, who dumps trash in your yard, who has loud parties on weeknights...because that tenant has "rent control" and " tenant's rights" and thanks to SF politics, his landlord cannot get rid of him, no matter what kind of hell he creates for everyone else. As a tenant, I voted against rent control when I could, because I knew that it would make my life worse when rent control meant that my landlord had his hands tied and could do nothing about my obnoxious, loud, nasty tenant neighbor. Get rid of rent control and excessive "tenant's rights" and guess what....landlords just might start being interested in having tenants again.

Rent control does nothing to make cities more affordable...as was stated on the KQED radio show recently, it simply blindly prefers those who came before. THose who are coming now get no benefit from it. It is totally oriented to the past, not to the future.

WHy would any sane landlord rent to a tenant who might turn out to be an obnoxious pig, and whom he might never, during the rest of his life, ever be able to get out of that apartment, when instead he could rent to a traveler from a foreign country, who is excited to visit the city and grateful to have a nice and relatively inexpensive place to stay?

I suggest that all landlords who don't want to be forced by the city into being stuck with rent control and with a nasty tenant for the rest of their lives, band together and create a website for short term rentals where they can obtain short term guests and do business with them directly without any intermediary, and without being monitored by Big Brother.

Posted by Guest on Apr. 15, 2014 @ 8:51 pm

Exactly. It must have a mechanism for rating and evaluating tenants and providers, but leave no transactional records.

Anyone who creates this application will probably be acquired by AirBnB. LOL.

Posted by Guest on Apr. 16, 2014 @ 1:38 am

This is a decidedly complex and new territory to legislate, so good on Chiu for figuring out how to move us forward in the right direction. Interested to see what amendments will be offered.

Posted by Me on Apr. 15, 2014 @ 10:05 pm

I don't even know how I ended up here, but I thought this post was good.
I do not know who you are but definitely you're going to a famous blogger if you aren't already ;) Cheers!

Posted by web page on Jul. 29, 2014 @ 11:01 pm

OK wow. Just called Supervisor Chiu's office. His legislation would KILL airbnb rentals.

Here's the deal.

The San Francisco rent statute says that you cannot sublet for more than you pay.

So, if you're a severely rent controlled tenant paying $1200 for a one-bedroom in a good neighborhood and you want to rent out your place on airbnb?

You can't charge more than $40 a night.

Who would want to do that?

Posted by Guest on May. 07, 2014 @ 10:21 am

This is usually done via an intermediary matchmaker who is
often an elderly socialite woman who is liked
and widely connected to many families. She can't mainly because you would most likely assume she didn't say the English properly.
The white board is now as spotless as when it was
first purchased for the office.

Posted by polish names on Jul. 15, 2014 @ 1:39 pm

I thought I posted this but it didn't show up.

I just called David Chiu's office.

San Francisco's Rent Statute stipulates that a renter cannot sublet for more than he/she pays.

So if you're a severely rent-controlled tenant in San Francisco and you're thinking about making big bucks off your desirable apartment, think again.

Let's say you pay $1200 a month for a nice one-bedroom in the Marina.

You're paying $40 a night. You can't rent it on AirBnB for more than $40 a night. That is built in to David Chiu's legislation according to the aide I just spoke with.

Nobody would want to do that.

Posted by Guest on May. 07, 2014 @ 10:25 am

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