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Airbnb Fights for Turf in Hometown San Francisco Housing Wars

  • Home-sharing company opposes ballot measure to curb its use
  • San Francisco one-bedrooms are renting at $3,500 a month

Airbnb Inc. is pouring millions into defeating a ballot measure that would curb use of the short-stay home-rental service in its San Francisco backyard.

A crush of highly paid technology workers is driving housing prices beyond the reach of the middle class, even as tourists flock to the short-term rentals instead of pricier hotels. The measure, which would restrict rentals to 75 days a year, has riled politicians at all levels. U.S. Senator Dianne Feinstein wrote an op-ed supporting the measure, while Lieutenant Governor Gavin Newsom, whom she endorsed, opposes it. So does San Francisco Mayor Ed Lee, a fellow Democrat who wrote the ballot argument against the measure, saying the ability to rent out apartments helps people pay their bills.

Airbnb, founded in 2008 and operating in more than 34,000 cities, is waging similar battles from New York to Los Angeles as officials seek to control commercial use of residential units and make more rentals available for permanent residents. In San Francisco, the technology boom has fueled rents and sparked protests over evictions and condominium developments in working-class neighborhoods.

The state’s fourth-largest city is at the center of the new economy and home to some of the world’s most well-known companies, including Twitter Inc. and Uber Technologies Inc. In recent years, technology jobs have shifted from Silicon Valley to San Francisco as competition increases for young engineers drawn to the vibrant urban environment. Backers of the measure say the city can’t spare rooms for visitors.

“The city has lost between 10,000 and 12,000 housing units that have been converted to tourist accommodations,” said Dale Carlson, co-founder of ShareBetter San Francisco, the sponsor of the ballot measure. “You’ve got residential units that are being marketed for their commercial potential.”

Rough Rents

The average rent of a one-bedroom apartment in San Francisco was $3,500 in August, $400 more than in New York, the second-most-expensive city, according to Zumper, an online listing service. The city’s median rent has increased 19 percent in the last five years, while the median home value rose 58 percent to more than $1 million, according to Zillow Inc., a Seattle-based real-estate website. A median-income renter in San Francisco can expect to spend 47 percent of his paycheck on rent, the company said.

Proposition F, as the measure is known, would limit short-term rentals to 75 days per year, regardless of whether the property is occupied by the existing resident, and would ban short-term rentals of suites or apartments attached to homes. Under current law, short-term rentals are restricted to 90 days a year if the resident doesn’t live there during that time, with no limits if he or she does. The city in July established an Office of Short-Term Rental Administration and Enforcement to uphold the rules.

Supporters of the ballot measure say hotel uses of San Francisco apartments remove affordable housing from the market. Opponents say the practice lets hosts earn extra cash, brings new visitors to businesses and contributes tax dollars to the city. The measure would encourage neighbors to spy on each other, because they can sue over perceived violations, opponents say.

Airbnb visitors generate more than $460 million in economic activity in San Francisco and paid more than $12 million annually in hotel taxes to the city, according to a study by the Land Econ Group requested by the company and sent to the San Francisco Board of Supervisors on Aug. 31.

Home-sharing allows thousands of middle-class families to make ends meet and stay in the city, Airbnb spokesman Christopher Nulty said in a statement.

“Prop. F is a hotel-backed measure that is falsely drawing a line between regular San Franciscans sharing their homes and a decades-long housing crisis,” he said.

Home Rule

The measure is the latest effort across the U.S. to restrict short-term home rentals. In Los Angeles, lawmakers proposed rules to prevent people from renting homes that aren’t their primary residence. Santa Monica lawmakers this year approved legislation to ban rentals when the primary resident isn’t there.

In New York, Attorney General Eric Schneiderman released a report last year concluding that as much as 72 percent of Airbnb reservations in recent years violated state law. His office partnered with other city agencies to investigate violations of building and safety codes and tax regulations.

Across the Hudson River in Jersey City, however, Mayor Steven Fulop this month offered a proposal that would allow residents to share their homes on Airbnb for up to 30 days, which would make it the first in the tristate area to do so. Airbnb would collect the city’s 6 percent hotel tax, which would increase revenue about $1 million a year, according to the mayor’s office.

Airbnb is part of the so-called “sharing economy” of San Francisco-based companies to emerge in recent years that allow people to profit off their home or car. Among them are Uber and Lyft Inc., which let drivers pick up passengers using their own vehicles. The companies are fending off regulations from New York to California aimed at extending rules governing cabs to the industry and keep it from driving taxis out of business.

Cities worldwide have grappled with how to regulate sharing-economy companies that operate outside existing rules, which didn’t anticipate these new business models, said Arun Sundararajan, a business professor at New York University.

San Francisco is “certainly not alone in recognizing that coming up with the right set of regulations, and coming up with the right division of responsibility between the government and the platform, is challenging,” he said.

Airbnb has donated almost all of the $8.4 million raised to fight the measure, while supporters have contributed $485,891, according to Oct. 19 data from the city Ethics Commission.

“Airbnb is used to buying influence and power,” Feinstein, the California senator, said in an Oct. 16 op-ed in the San Francisco Chronicle. “Don’t let Airbnb get away with it.”

Voters will consider two other housing-related measures in November. Lee, the mayor who is seeking re-election next month and has pledged to make housing a priority, has placed a $310 million bond measure on the ballot aimed at creating more affordable homes. Another measure would place an 18-month moratorium on market-rate housing construction in the city’s Mission District, a historically Latino neighborhood popular with young tech workers.

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