April 24 (Bloomberg) -- San Francisco sued five property owners for allegedly evicting long-term tenants so they could rent apartments to tourists through Airbnb Inc. and other online home rental services.
The owners violated local and state laws governing the use and conversion of residential properties to kick out the tenants, two of whom were disabled, City Attorney Dennis Herrera said in an e-mailed statement.
With the highest rents in the country and evictions at a seven-year peak, the lawsuits target illegal short-term rental conversions that are part of growing problem of fraud schemes profiting from San Francisco’s lack of affordable housing, Herrera said. Airbnb and other sites weren’t sued.
Airbnb, which is said to be valued at $10 billion under a financing deal with TPG Capital, provides a marketplace for short-term rentals of homes throughout the world. The San Francisco-based company faces a New York state probe into whether it violates housing and occupancy tax laws. Started in 2008, Airbnb lets users rent a couch, bedroom or house and makes money by charging a fee for each transaction. The company has listings in more than 34,000 cities, according to its website.
The owners of one San Francisco building near the high-rent Pacific Heights neighborhood charged from $395 to $595 a night for a four-bedroom, three-bathroom unit through VRBO.com and Homeaway.com after evicting tenants in 2005, Herrera said. Owners of another property near heavily visited Fisherman’s Wharf illegally converted apartments for tourists’ use in 2010, marketing the rentals on Airbnb.com for as much as $320 a night, he said.
“If a small number of predatory landlords are abusing platforms like ours to illegally evict tenants in search of a quick buck, we wholeheartedly support efforts to bring those landlords to justice and applaud the City Attorney for his actions,” Nick Papas, an Airbnb spokesman, said in an e-mail. “We have investigated and this user will be immediately and permanently removed from Airbnb.”
Herrera’s complaints were filed yesterday in state court in San Francisco. Herrera seeks disgorgement of illegal profits and penalties of as much as $200 a day for code violations.
“These defendants didn’t just flout state and local law to conduct their illegal businesses, they evicted disabled tenants in order to do so,” Herrera said in the e-mail.
Residential apartments in San Francisco can’t be rented for fewer than 30 days under city codes and some tenants who have rented their units through Airbnb are facing eviction.
San Francisco Board of Supervisors President David Chiu has introduced legislation that would allow residents to register with the city’s Department of Building Inspection for short-term rental of their apartments. Residents would get two-year approvals if they can verify the apartment as their primary residence, according to Chiu’s website.
Converting residential housing to de-facto hotels would still be prohibited under the proposed law.
David Hantman, Airbnb’s head of global public policy, said the proposal could be “problematic” because the registration system could make users’ personal information public, although he called the law “an important first step” to making it easier for users to rent their homes, according to his blog.
The cases are San Francisco v. Lee, CGC-14-538857, and San Francisco v. Yurovsky, CGC-14-538854, Superior Court of California (San Francisco).
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