When San Francisco passed a measure legalizing short-term rentals (better known under brands like Airbnb) earlier this year, it contained so many rules that the Board of Supervisors must have thought – briefly – that they had the situation firmly in hand. It quickly became apparent, however that short-term rentals were one of the city’s fastest-growing and least compliant industries, and the board is reconsidering what can be done to take control.
When the Board of Supervisors meets today, it will look at proposals by District 9 Supervisor David Campos and District 2 Supervisor Mark Farrell and Mayor Ed Lee.
One difference between the two is the allowed rental period: Campos would limit hosts to renting out units to 60 days a year, while Farrell and the mayor favor 120 days. The current legislation allows unlimited nights if a host is present and 90 days if a host is absent from the unit.
Analysts weighing in on the proposals in the board’s information packets agree that removing the distinction between hosted and non-hosted nights is a plus because it saves the city from trying to distinguish between the two.
However, the chief difference in the two proposals is what each requires of so-called hosting platforms like Airbnb – the only parties with specific information on who is renting out rooms and for how long. Campos wants the hosting companies to share responsibility for compliance; Farrell and the mayor would put the onus on the city.
In the board’s thick information packets, which contain a wealth of commentary about short-term rentals, city officials and analysts say that compliance is critical. With it, they conclude, short-term rentals can work to everyone’s advantage—generating revenue for landlords and hotel tax income for the city. Without it, some commercial hosts will inevitably abuse short-term rentals – many housing advocates say they already are – and take units off the market to worsen the city’s housing crisis.
The experts disagree on the degree to which short term rentals have already affected the city’s housing crisis. The legislative analyst says some 1,900 units have been taken off the market and the city’s chief economist says there’s not enough data to calculate the impact.
Everyone agrees, however, that compliance with city regulations has been conspicuously absent. Although the city began requiring hosts to register with the city earlier this year as of May 1 only 579 of the 6,113 listings on Airbnb had done so, according to the board packet.
Airbnb, the largest company in the so-called sharing economy, has refused to share any information with the city, citing hosts’ “privacy.”
Campos’s proposal asks organizations like Airbnb to verify that a residential unit is on the City Registry before it is listed on the hosting platform and to remove a listing once the host has reached the allotted 60 days.
Campos also calls for quarterly reports from hosting platforms.
Farrell’s proposal leaves enforcement to a newly created office of short-term rentals that would include representatives from the Planning Department, the Department of Building Inspection and the City’s Tax Collector.
Campos’ proposal resembles recommendations the Planning Commission made in 2014, according to the board packet. The commission also wanted to track the number of nights a host lets out a unit and to require hosting platforms to provide rental information on a quarterly basis.
Letting the city take charge doesn’t get high marks in the board packet. The Budget and Legislative Analyst finds that “even if all hosts applied, the Planning Department would have a very limited capacity to monitor compliance with current regulation without additional information on host bookings.”
While it acknowledges that short-term rentals provide some economic benefits, the commentary in the board packets indicates that the more critical consideration is whether it is diminishing the supply of long-term rentals.
The City’s Comptroller writes, “On a net basis, a housing unit withdrawn from the market to be used for short term rentals produces a negative impact on the city, even if the unit generates host income, visitor spending and hotel tax every day of the year.”
Lacking compliance, many officials agree, that impact is more likely.
Ted Egan, the city’s chief economist, found in his analysis that a host would have to rent out a unit for more than 121 days for it to make more economic sense to take a unit off the long term rental market.
For that reason, he favors the Farrell proposal because it would allow more short-term renting while also discouraging the withdrawal of housing units.
At the same time, Egan notes that he is basing his conclusions on the assumption that the proposal is enforceable. When asked why he made that assumption when there is no enforcement mechanism in place, he wrote in an e-mail, “I can’t think of a situation in which we did an economic impact report on legislation, but didn’t assume that the legislation would be enforced if passed.”
But as experience suggests, that assumption may be unwarranted.