Why are people so pissed off about Airbnb?
Short-term rentals are not a significant factor in SF’s housing shortage. So why are people going crazy about this one company?
Last year, I got the bright idea to try renting out a spare room in our house in Sunnyside, San Francisco, on the occasions when our family wasn’t staying with us.
I wasn’t sure that anyone would want to stay in our unglamorous part of town, but demand was surprising and immediate. I quickly found that this “vacation rental” was actually “temporary housing.” In addition to tourists and business travelers, a lot of my guests were SF residents — a family who needed a place to stay while their bathroom was being fixed, married apartment-hunters, a dad who needed a quiet place to work for a few days.
I’m now a member of a community of dozens of volunteers in SF trying to preserve private homesharing as an income source for people who need it, and a legal source of temporary housing for people who can’t afford hotels.
How do short-term rentals benefit people in San Francisco?
When the City passed its new legislation on short-term rentals (STRs), I spent hours getting our documents together and dealing with the Planning Department’s flailing around to get all the new procedures right. I obtained our business license, and then our STR (Short Term Rental) registration.
It wasn’t easy or cheap, and I possibly wouldn’t have known even how to do it if I hadn’t been part of this community of hosts. (Most hosts in SF haven’t successfully completed the process yet, but enforcement is ramping up quickly and harshly. More on that below.)
When I read the summary of Proposition F (then called “City and County of San Francisco Ordinance Amending the Administrative Code with respect to Short-Term Residential Rentals”), I was dismayed that someone would limit our right to rent out a room in our home, which would not otherwise be available as permanent housing, all in the name of “reasonable regulation.”
Then when I read the actual details of Prop F, I saw what it really was — not “reasonable regulation,” but rather a poison cupcake designed to kill homesharing entirely by terrifying hosts with new legal risks and reporting requirements. (Most of the hosts I know will stop renting immediately if it passes, due to the new legal risks it creates for them. And then many of them will have to move out of SF.)
And when I saw the first two videos promoted by Share Better, the organization behind Prop F, it was pretty easy to figure out why they were doing this.
This video (“A ‘Unique’ View of the World”) is pretty simple. It’s trying to make Airbnb rentals look unappealing and risky. It doesn’t take much sleuthing to find out that Share Better is a project of UNITE HERE, a union for hotel workers. Even Prop F’s main campaign consultant trumpets this connection on his LinkedIn profile. So now you know — Share Better started as a way to kill hotels’ competition.
Update: Smelling the blood in the water, the Hotel Association of NYC gifted another $250,000 to Share Better’s campaign for Prop F for a last-minute TV blitz. (Source: sfethics.org.) Remarkable that a trade group for NYC hotels would care so deeply about housing affordability in San Francisco, isn’t it?
But what really set me off, and activated me, was this video, “Save the Moguls”:
The “moguls” in corporate jets and country clubs weren’t anything like the hosts I’d met in SF. The ones I knew were families, young couples and singles, and senior citizens, trying to find some way to make it in this town we call home.
And although my spare room is no longer available, I’m still in this race. Not just because I’d like the option to rent that room in the future when our families aren’t there, but because so many of my peers in San Francisco depend on this income. Short-term renting is benefiting many people in this City, and Prop F would effectively end its legal practice, to the benefit of very few. So I’m in this race for them, the hosts of SF.
But what about everyone else?
Short-term rentals are a distraction from SF’s core housing issues
Housing in San Francisco is no longer merely expensive, it’s astronomical. The lack of subsidized “affordable housing” is the tip of the housing iceberg; unaffordability is now driving out even upper-middle-income earners. Rents have increased by 50% on average since 2011. Some property owners have been taking advantage of the situation by using loopholes to evict people from rent-controlled apartments and increase the value of their buildings.
In short, the whole city is under tremendous pressure, and the cost of living seems to be the only thing people in SF are talking about in 2015.
This explosion in rents is being driven by a lot of factors, including, on the demand side:
- Population growth of over 50,000 in just four years.
- Thousands of new high-paying jobs at some of the most successful new companies in the world, headquartered in SF, including Salesforce, Uber, Lyft, Twitter, Kabam, and Pinterest. (And Airbnb, too.)
- Thousands more new high-paying jobs at some of the most successful companies in the world, headquartered within driving or CalTrain distance of SF, including Google, Apple, Facebook, Adobe, Intuit, Genentech, and LinkedIn.
- A flow of venture funding into thousands of new companies. By one semi-dubious measure, VC funding is responsible for a third of SF rent.
- Thousands of new millionaires, enriched by IPOs, looking for homes to buy with cash.
- Widely-reported real estate investment (speculation) by foreign nationals and sovereign funds.
And on the supply side:
- Against that population increase of 50,000, we built just 7,500 units since 2010. Not much is getting built, for a variety of reasons.
- Even more importantly, San Francisco has an inventory of 30,000 fully vacant units, again for a variety of reasons. It’s a shameful surplus amid a critical shortage.
So in this context, what is the impact of short-term rentals on housing in SF? It’s hard to be precise, except that it’s small. A much-disputed but much-cited report by the SF Board of Supervisors’ Budget and Legislative Analyst estimated that about 1,900 units might otherwise be available for long-term renters. This was based on two assumptions: (1) that they’d otherwise be part of the stock of available housing and not merely part of the 30,000+ intentionally vacant units in SF, and (2) that Airbnb hosts who advertise their listings as an “entire home” are actually listing a full unit, and not just a room/bath.
This second point should not be underestimated. Anyone who uses Airbnb semi-regularly can tell you that the host-determined classification of “entire home” must be taken with a more than a grain of salt. Exaggeration is commonplace on the Internet. (“SHOCKING: OkCupid analysis shows 90% of American men are over 6 feet tall.”)
Airbnb, for its part, estimates 348 full-units, based on its own rental data. Take that with its own grain of salt. (The SF Chronicle, in its own analysis, projected a number more than but close to 350.)
Under the current law, these full-time STRs are all already illegal. And as they’re removed from the market by enforcement (more on that below), there’s no evidence that most of them will become long-term rentals, even in this landlord-enriching environment.
Either way, Airbnb’s impact on the SF housing market is minuscule compared with the 30,000 permanent vacancies.
Aside from Prop F, we have two other ballot initiatives to vote on next month. Prop A is a widely-supported $310M bond to add more affordable housing units in SF, towards the mayor’s ambitious (some say, unrealistic) goal of 30,000 new affordable units in four years. Prop D would add 1,500 more units at Mission Rock. One would think that the people who care deeply about housing would be knocking on doors to build these new units, instead of focusing on STRs.
Unlike the 30,000 vacancies, the City has standing legal remedies for short-term rentals. The current law may not get us 100% of the way there, but existing illegal STRs are doomed, and the recent monster penalties assessed by the Planning Department are an early warning shot to STR abusers.
So why are some people so obsessed with Airbnb?
It starts with Share Better.
As I mentioned before, Share Better is a political project of UNITE HERE, a hotel union. It is based in NYC, and this out-of-state group has contributed about half the campaign budget for the SF initiative. (Source.)
In addition to the videos you can watch above, Share Better has been pushing hard on their social media accounts exclusively around these themes:
- People are being evicted for Airbnb rentals. (Already illegal, by the way. Prop F has no new eviction protection and won’t make evictions any more illegal. In fact, eviction isn’t mentioned at all in the text.)
- Some Airbnb hosts and guests have had bad experiences. (Undoubtedly so; it’s a platform business.)
- Airbnb is a corporation that acts in its own interests, including profit-seeking behavior. (They’re spending a lot of money to prevent getting banned in their home city.)
Yes, everything Share Better publishes for the campaign focuses on Airbnb as the singular enemy. Their posters read “Fix the Airbnb Mess.” Their website, their ads, their promoted Facebook posts, their graphics, everything hammers Airbnb by name.
The anti-Airbnb fervor has stuck and even caught fire. Witness the “F*** AIRBNB” graffiti vandalism of the No on F campaign’s office in the Richmond. Or observe the recent anti-Airbnb protest staged in North Beach with coffins and Grim Reapers. Or search Twitter for “Prop F,” and consume reams of anti-Airbnb invective.
But numbers-wise, this is a bit like blaming the federal budget deficit on NPR and Planned Parenthood. It’s an intentional misdirection from the major sources of housing insecurity.
Airbnb owns zero apartments in SF. Airbnb is just the company du jour serving the act of housing people on a temporary basis, and it’s one of many — more than 60 — serving this now-obvious consumer demand. But in Share Better’s materials, you’ll see and hear little about the hosts who are participating in this new marketplace to keep themselves from being evicted, or the guests who are looking to short-term renting as an alternative to SF’s meager temporary housing options.
So what about these “moguls” who are renting out their rooms and homes?
People have been renting their SF property on a short-term basis since the Gold Rush. And hotels suck, especially if you’re traveling with a family. They’re designed to optimize sleeping, grooming, and working on a laptop, at the expense of everything else.
Hotels are also very expensive. Did you know that SF’s hotels are now the most expensive in the whole damn world? And no wonder — as tourism and business travel has surged, hotel construction has been next-to-nil. In fact, we’ve opened exactly one big hotel in 20 years. We’re so short of hotel rooms that Salesforce had to dock a cruise ship for its recent conference here. Just wait until the Super Bowl crowds arrive in February.
SF has also always had a supply of temporary housing, both legal (hotels, SROs) and illegal (almost everything else). Airbnb became the largest dedicated platform in the space, and it was its acceleration of this new market that finally drove the Supervisors to take action in February this year and create a first regulatory framework for STRs. This was popularly known as the “Airbnb law.”
Unlike Airbnb, another hot SF tech start-up that’s also a $25B corporation, hosts are a pretty sympathetic lot. They’re people just like you. And they frankly don’t care that much about Airbnb the company; they just want to maintain the experience and the income from hosting. This is very easy to understand for most people.
So of course Share Better is going to try to maintain focus on the $25B corporation and also unfairly portray the hosts as globe-trotting robber barons. And to get what they seek — the end of homesharing — they’ll need to get people to believe that a corporation and “moguls” are causing our eviction anxiety.
Thus, the target-Airbnb communications strategy. It’s the only strategy that makes sense for them.
But there’s still that law the City passed a few months ago…
The City just enforced $155,000 in “unenforceable” fines
When the Supes passed the original law in February, a Planning Department employee called it “unenforceable.” This is the “I voted for it before I voted against it” moment of truth that Share Better and its supporters frequently cite.
Finding inevitable flaws in this original law, the Supes amended and tightened it in July. It was also then that the Planning Department opened a dedicated STR Enforcement Office.
Two weeks ago, Supervisor David Campos, the Board’s major opponent of STRs, hauled the director of this new Enforcement office — just three weeks into his new job — to testify on the progress of enforcement. To Campos’s disappointment, he heard that the office is enforcing the hell out of this unenforceable law, to the tune of $155,000 in fines in the first two weeks. And they promised larger actions to come.
What are they enforcing? Under the current law (not Prop F, but the current law):
- A person may not short-term rent a home that isn’t their primary residence. (So no moguls, except if it’s their own mansion.)
- A person who rents out their entire home can only do it for 90 nights a year. (It’s estimated that it takes 211–290 nights/year to equal the revenue from a full-time renter, albeit with a lot more cleaning, work, and worry.)
- Everyone who rents even for one night needs to first register with the city, get a business license, and pay hotel taxes. (Airbnb recently became the first company to qualify to collect taxes on behalf of hosts.)
- Anyone can report a transgressor to the City, or even sue them to force them to stop renting and pay their back taxes and penalties.
- A tenant needs to inform their landlord if they’re renting out the unit (as if they were subletting).
In short, the current law strives to remove STRs as an option for the commercial landlords who are hoarding the 30,000 vacancies, while preserving the true housing-neutral homesharing which many San Francisco residents are enjoying, both as hosts and guests.
The hosts I’m volunteering with are registered and compliant. They hold regular workshops to help get other hosts compliant. (The City isn’t much help.) They want to see illegal STRs forced off the market by the City more than anyone, because operating outside the law provides unfair competitive advantages.
Proponents of Prop F claim that the law can only be enforced if Airbnb “gives up the data,” meaning sending a report to the City of exactly who’s renting and on which dates. They decry Airbnb’s unwillingness to hand over to the government the entirety of their customers’ private activity as an example of their corporate arrogance and general uncooperative spirit. (This type of warrantless data collection, besides being challenged by the likes of Consumer Watchdog, was probably rendered illegal last week when Gov. Brown signed the Electronic Communications Privacy Act.)
Somehow, most other laws can be enforced by peace officers and regulators investigating and prosecuting. One would think that this law could be prosecuted similarly, given how all the business is conducted on a public website.
A ballot initiative is a great way to ruin something forever
I won’t go too deeply into all that’s screwed up about the initiative. You can review my last piece if you’re interested. I want to get into why this initiative is ill-advised, not just broken.
Prop F is written like a legal tantrum against one entity, Airbnb. Granted, the proposition doesn’t mention Airbnb by name, and it acknowledges that other hosting platforms may exist. But the critical defect here is that this proposed regulatory structure is based entirely on Airbnb’s 2015 marketplace model. This is a monumentally bad idea: On the Internet, companies and business models rise and fall very rapidly, and successful companies quickly iterate and even pivot drastically when conditions change.
This isn’t to say we shouldn’t regulate tech-driven marketplaces. But if you want to regulate a new and dynamic market like STRs, the ballot is the worst possible way to do it.
For those who are new to California politics, ballot initiatives are designed to end-run the legislature entirely and permanently. To make this work (or rather, “work”), their text is completely untouchable by lawmakers if passed; only the voters can amend them, which means every election we get to vote on a bunch of propositions meant to fix the unintended consequences of prior ballot initiatives.
(They can also be overturned by a judge if they’re deemed unconstitutional. Like remember a few years ago when California voters passed a law that said “gay people can’t get married”? That was not a great moment for our direct democracy.)
So with Prop F, the inevitable unintended consequences will be unfixable by our city government. We’ll be stuck with them, and also stuck with the people who will profit from the new marketplace Prop F creates semi-permanently.
This was the main thrust of the SF Chronicle’s endorsement against Proposition F, even as they admitted the early attempts at legislative regulation have been “tepid.”
There is an overriding issue that compels a no vote: The very fact that it is on the ballot and could not be altered or even voided without another public vote. This is exactly the wrong way to try to impose regulation on a fast-evolving practice that, for all its side effects, has been a plus for both the tourism industry and some residents who need the income to make ends meet.
Not everything is unchangeable, actually. Some things will get killed in court, and then we’ll be in for a real mess.
What would happen if Prop F passes?
After the requisite court battles have settled, including challenges under the aforementioned Electronic Communications Privacy Act and also the recent U.S. Supreme Court ruling City of Los Angeles v. Patel, it’s more than possible that the Proposition’s reporting requirements will be deemed illegal and/or unconstitutional.
If the “HAND OVER ALL OF YOUR CUSTOMERS’ DATA” requirements are no longer in place, then our shiny new regulatory car will have lost its wheels, and we’ll be stuck with an undriveable and unfixable hulk of steel. That would be our new regulatory regime.
But after the inevitable litigating, Prop F would birth an entirely new model of short-term renting.
Every host who is paying attention would probably stop hosting if Prop F passes. Talk to one, and you’ll hear this. The new requirements are too onerous, and the legal risks are too perilous. Unlike the existing city law, Prop F would sacrifice the little guy to more effectively nab a few big scofflaws. Many of these small hosts will no longer be able to afford to live in SF, and they’ll move away, opening units for wealthier new residents (or perhaps adding to the inventory of permanent vacancies).
But STRs will not die. They’ll adapt quickly. After all, the STRs that Airbnb has helped bring to the market are clearly serving tremendous needs for thousands of people. To think people’s desire to participate in this economy will dissipate is silly and wishful. The customers are there, and the commercial landlords will figure out how to serve them.
Airbnb probably won’t want to pivot its business model to serve SF under the new set-in-stone regulatory regime. It has the rest of the world to serve, after all. But it doesn’t take much business acumen, legal knowledge, and imagination to see how different or new companies could take advantage of Prop F’s loopholes, and especially take advantage of its inability to adapt given the inflexibility and latency of the ballot process.
Nobody can articulate how Prop F would benefit San Franciscans
How much new housing would Prop F add? How many evictions would it prevent?
Probably close to zero, and Share Better knows it.
This is why I got involved in the movement to defeat Proposition F. STRs need to be regulated thoughtfully and fairly, and neither of those goals are achievable via the ballot process.
I’ve really enjoyed meeting new people via this campaign. I really want them to stay in SF. So I hope you’ll join me in voting No on Prop F. And if you’re on board, please join our communities on Facebook and Twitter, and join us on the web, too.
(No, we are not affiliated with Airbnb or any other company you may dislike.)
If you don’t care about me, the writer, I suggest you skip the next three paragraphs. I’m only including it because my identity was such an issue in my last post about this issue.
It took about a week after I published “I Have Read Prop F and It is Worse Than You Think” to see a response to the arguments. But prior to that, the responses mostly focused on me, the author, not the issues to which I was trying to draw attention.
I really want to make this post about the issue, not myself, but apparently nobody believes anything you write on the Internet unless you show them your papers. So if you don’t feel the urgency to spend 30 seconds Googling, here goes: My wife and I have lived in SF for a long time. I’m a political progressive by American standards, and I’ve voted in every election since 1992. My kids go to SF public schools, and my mother-in-law is in assisted living here. Like a lot of you, our family is challenged by the cost of living, which requires us to maintain two careers at full speed, especially with the cost of elder care.
Once again, I mean no offense to people who have supported this ballot proposition or advocated for tenants. Although I’m fortunate enough to own a home today, I have been a tenant for most of my life, as are most of my friends and family.
When I first spoke out about my opposition to Prop F several months ago, before it was even called that, a supporter of the initiative threatened me on a public Facebook page, called me out by name and address, and even referenced what my kids looked like. (He later removed the post when I flagged it.) I know most people aren’t like this, but it was enough to make me approach this situation cautiously.
What I’ve found is that offline, people are willing to have reasonable disagreements about this issue. After my neighborhood association meeting a couple weeks ago, I spent 10 minutes discussing the issue with someone who disagreed with me fundamentally on it. It became clear we weren’t going to change each others’ minds, but I was grateful to meet a new neighbor.
And I hope that, even if you’re on the other side of this issue, that we can continue to share this wonderful city together.