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S.F. Supervisors OK New Airbnb Rental Regulations

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By Mark Wilson, Esq. on October 09, 2014 12:39 PM

By a 7-4 vote on Tuesday, the San Francisco Board of Supervisors passed a law permitting the operation of Airbnb rentals in the city.

The law establishes some regulation of Airbnb rentals, but not as much as Airbnb's opponents wanted.

Finally, Some Regulation

Here's what the new ordinance provides for:

  • Only a "permanent resident" can offer short-term rentals. This means no more living in one place but renting out other places purely as rental properties. (Hosts must also be a "natural person," not a corporation.)
  • Hosts must register with the city, collect the city's hotel tax, and keep records of compliance with the ordinance.
  • Rentals of entire homes are limited to 90 days per year (because hosts must live in the unit for at least 275 days per year to qualify).
  • Hosts have to carry $500,000 in liability insurance and comply with building codes.
  • Hosts who rent their units are considered to be subleasing to short-term tenants, so they can't charge those tenants more than the host is paying in rent.
  • Failure to comply with notices of violations of the ordinance can subject a host to civil and/or criminal penalties, including fines of $1,000 per day and county jail time.

Not Everyone's Happy

This is a big change from the city's current law, which banned short-term rentals of less than 30 days to keep unscrupulous landlords from preventing tenants from establishing tenancy and the protections it comes with. Not everyone was happy with the ordinance, though. Tech Crunch reported on the three big things that Airbnb opponents didn't see:

  • Limiting all rentals to 90 days, not just whole-home rentals (this was suggested by the Planning Department but dropped in subsequent versions of the ordinance).
  • The two city departments responsible for enforcing the law -- the Planning Department and Department of Building Inspection -- are already understaffed, and the registration fees don't cover the cost of hiring new inspectors.
  • No one has to pay the estimated $25 million in back hotel taxes. This is the big stickler, but also one that everyone wants to avoid. As Tech Crunch noted, if San Francisco made Airbnb pay all its back taxes, then so would every other city where Airbnb hadn't paid for years.

Essentially, the opponents are concerned that, whatever the law is, the enforcement provisions are so weak that it's in a host's best interest to flout the law and hope that the city won't notice. At least it's better than nothing, which is what we have right now. The ordinance will go into effect February 1, 2015 -- assuming Mayor Ed Lee signs it.

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