Pando

San Francisco lawmakers vote 10-0 to force Airbnb hosts to register with the city

New law could see up to 75% of SF Airbnbs removed from the site in July

By Dan Raile , written on June 8, 2016

From The Sharing Economy Desk

Last month, the technorati lost its collective mind as Austin passed a law that would make it harder for ridesharing companies like Uber and Lyft to operate in the city.

Yesterday, San Francisco lawmakers passed a new law that could dramatically restrict Airbnb’s ability to operate in this city and… almost nobody seemed to notice.

Airbnb’s “Austin moment” came on Tuesday afternoon when San Francisco’s Board of Supervisors voted unanimously in favor of a law that will force Airbnb to list only units that have been registered with the city.  

Currently less than a quarter of San Francisco units on Airbnb are registered. The vote means, absent a last minute registration rush, the number of SF Airbnb listings will plummet when the new rules take effect on July 27th.

The law also affects VRBO, Craigslist and any other service that lists less-than-thirty-day rentals in San Francisco. Each will be required to provide a registration number with every such listing. It has been two years since this measure was first proposed, and Airbnb has fought tooth and claw against it every step of the way. Until yesterday, they’d always won.

The 10-0 vote means a mayoral veto -- Airbnb’s last hope to stop the law -- can be overridden. Airbnb will face fines of up to $1,000 per day per unregistered listing, and potential prosecution. Previously, only hosts could incur such penalties. Airbnb witheld information about the unregistered units on its platform, on privacy grounds, causing difficulty for the city in sniffing out bad actors.

This looks to be the end of a struggle years, and millions of dollars, in the making.  

The last time this proposal came up at City Hall, it was quashed in the eleventh hour by a Planning Commissioner who changed her vote after being chastised by text messages from the mayor’s office, according to documents obtained by the San Francisco Examiner. It’s easy to see how this could be a major hurdle for the company in its hometown, and for those electeds who benefit from Airbnb’s campaign contribution largesse.

Only Airbnb knows the breakdown of the 75% of its hosts in San Francisco who have not yet been registered. How many are tenants breaching lease agreements with unwitting landlords, who can’t risk the exposure? How many are remotely and illegally operating around-the-clock hotels? How many have just shied away from registering after reading all those apocalyptic emails from Airbnb about the horrors of the registration system?

Will the number of Airbnb listings in San Francisco go down by the full 75% on July 27th? Half? At this point, nobody seems to know.

A concise prepared comment from Airbnb’s press relations team hints that the company hasn’t given up the fight, referring to the new law as “legally-questionable” and concluding “we are considering all options to stand up for our community and keep fighting for real reform.”

The “real reform” that Airbnb now wants, and is rallying its community around, is the improvement of the registration system, which they have long characterized as byzantine and invasive. The law actually takes this up, in an amendment added yesterday by Supervisor Scott Wiener, a self-described “friend of Airbnb.” His amendment pushes the Office of Short Term Rentals to streamline its registration process, something it can largely do on its own already.

Note that Airbnb is not rallying its community to oppose the idea that it should share its hosts’ pre existing legal liability for non-compliance.

Under a heading marked “Background/Not for Attribution” below the brief official statement sent to Pando, an Airbnb spokesperson appended a bulleted list of additional arguments against the law. Pando had not previously agreed to any background/non-attribution agreement.

Most of Airbnb’s “background” bullets are tangential complaints against the registration system. But there are also bullets attesting to expert legal opinions claiming that the new registration requirement is a violation of federal law. You’d be surprised how much of the language of such un-attributable, unsolicited “background information” finds its way into print.

Matt Dorsey, press secretary for the City Attorney’s office, was more forthcoming.

“I'm aware that some advocates for Airbnb and other tourist rental platforms have argued that the proposed amendments somehow violate federal law.  I'm also aware that "the threat of costly litigation" is the kind of bellyaching typical of those who lack persuasive policy arguments.  I don't think their legal view is shared beyond fervent libertarians and those actively engaged in the practice -- lawful and otherwise -- of tourist rentals in residential properties.   

You can feel free to quote me saying all of the above.”

As for those fervent libertarian legal views, Airbnb suggests it should be protected against liability for unregistered listings under Section 230 of the Communications Decency Act, the same federal law which protects Youtube or Facebook from being liable for illegal or tortious content on their platforms. Thus Airbnb would turn the registration requirement issue into a referendum on internet freedom, as the company blog attests. The “background information” which Airbnb offered to reporters after the vote links to the EFF’s explanation of this platform protection.

Reached by phone last week, EFF Senior Staff Attorney David Greene said the Communications Decency Act was “likely to pertain” and that the law defines “platforms” broadly, though he was unfamiliar with the details of the legislation.

“What the law says is that you are responsible for content you create yourself, but not for content others contribute to your platform…That’s not to say everything that Airbnb does is protected, not saying it can’t be regulated, but it can’t be regulated insomuch as it is a platform,” Greene said.

That seems an awfully skinny plank for a heroic last stand. Airbnb invoked the CDA in similar fashion in 2012 as it fought to avoid paying San Francisco hotel taxes, but ultimately stood down and paid them without suing the City.

Until yesterday, Airbnb fought off this regulation with every ounce of its rosy brand. It flooded civil inboxes with form-mail, filled the airwaves with dystopian horror campaign ads, invoked Edward Snowden early and often, injected a lot of cash into local politics and whipped up its hosts to lobby on its behalf. It hired a prominent national Democratic campaign operative, who vowed to export this model of corporate community organizing to Airbnb’s operations around the world. At the same time, it took on nearly $2 billion worth of heightened investor expectations to become a behemoth of the current Silicon Valley startup wave. It spent millions in opposition.

And then it lost.

The supervisors who wrote the new law won by focusing exclusively on the ‘registered-units-only’ provision, leaving little wiggle room for Airbnb and its supporters in city government. Past efforts attempted larger overhauls of the Short-Term Rental rules put in place in 2014. Last year, Airbnb was able to pick such proposals apart. Everyone from the Mayor to Airbnb paid lip-service to the idea that short-term renting requires some regulation to avoid abuses. This left them with few cogent counter arguments against this latest, vastly simplified proposal.

“Airbnb has had an unfair advantage that allowed them to grow as scofflaws. Without this law the previous legislation is just window-dressing. As much as they don’t like it, there is a government role, and our message is pretty simple: pay your taxes and don’t facilitate illegal stuff,” said Supervisor Aaron Peskin, author of the latest legislation, last week in North Beach.  

“This issue has done something no other issue could, by bringing these groups of people together,” he said, referring to the alliance of tenants rights advocates with landlord associations, hotel workers unions and hotel associations which all backed the bill.  

Now Airbnb has done one better, uniting the entire Board of Supervisors against it. Well almost the entire Board. Supervisor Mark Farrell, who co-authored the mayor’s legislation last year, was deemed by the City Attorney to have a conflict of interest due to his venture firm’s investment in Hipmunk, which has business with Airbnb. He did not vote. The remaining supervisors found a way to bury the hatchet, or perhaps save face.

Airbnb operates in 34,000 cities across the globe. Many of those have soaring rents, social friction over gentrification and legal traditions of housing regulations. All of them have governments. Officials, and Airbnb investors, will watch with interest to see what Airbnb does next.

Can it be both regulated and successful?

* * *

And yet. Despite the years of tortuous prologue, yesterday’s culmination at City Hall was not well-attended. No hosts. No union delegations. No major media. Where was everyone?

I can vouch at least for the business editor of the San Francisco Chronicle, former Valleywag editor Owen Thomas. He had just finished an appearance at a local marketing conference, where he conducted an on-stage interview with Airbnb’s Head of North American Operations. The after-lunch session, entitled “Where Travel Meets Local,” steered well away from any whiff of controversy or politics while discussing Airbnb’s global impact on local communities and its product pipeline.  

In a better world, Airbnb could get back to the fantastic marketing it does so well and put all these rough episodes behind it. It could encourage and assist its hosts in an earnest registration drive, and work with the city to streamline the registration process. Of course that does not seem to be the world we are living in, or the type of change Silicon Valley would promise. It’s not a world of maximum return on investment.

There are signs of hope, though. Last week, during the final session of public comment before this latest proposal went to the Board for a vote, a contingent of Airbnb hosts was on hand. As usual, they’d been outfitted with matching stickers. But whereas in the past these came in a range of glossy colors and strident slogans, Thursday’s stickers were plain black ink on dull red squares, and said simply: Focus on Solutions.