Vacation Rental Sites Could Go Belly-Up If Forced To Pay Like The Rest Of Us

by Denise Sullivan

It hasn't been a great month in public relations for the so-called "sharing economy," at least here at the industry's ground zero, not-so-affectionately known as San Francisco 2.0. Here, even regular citizens-- and not even particularly politicized ones-- are starting to get hip to what unfettered capitalism and unregulated business looks like in their town now that the umpteenth Uber driver was accused of threatening a female passenger with sexual violence, followed by Airbnb's appallingly tone-deaf ad campaign calling out public works and employees. The home-sharing app stirred further controversy as its misguided billboard and bus shelter ads sparked questions of the financing of the No on F measure they fiscally sponsored. Going to vote next Tuesday, if F passes, it could  result in tightening existing regulations on the books by actually enforcing them, which would mean a new dawn for vacation rentals, and a bummer for the pure profit margin of Airbnb.

The No people, meaning Airbnb, believe that registration of units and thus, regular payments into the hotel tax pool, will open the door to neighbors "spying" on neighbors. In a classic case of employing scare tactics, Airbnb's rhetoric is the kind that has long had people voting against their own best interests and contributed to the nation's slow drift to the right. Taking this matter to the ballot has fooled only some of the people, though so far it's been totally successful in another regard: At pitting neighbor against neighbor, and generally turning otherwise rational humans into stark raving monsters; Facebook friends are officially becoming frenemies and mere mention of Airbnb in town has pretty much been grounds for cooling out and winding down longstanding relations. As of today, the ballot recommendations of venture capitalist Ron Conway are making the rounds: He's voting No on F. Now if it were me, that would be enough to swing my Yes vote, but sadly, even  the most educated and engaged among us are still waffling and think No is a go.

Yes on F voters are rightly irritated and concerned: They want to limit rentals and track hosts according to the regulations on the books already in place. They see unregulated vacation rentals tying-up precious housing stock, driving rents upward, and keeping our town more friendly for tourists while it grows increasingly hostile to residents and everyday workers and people. Add to that, our normally quiet and tight-knit neighborhoods are turning into hotel zones, with faceless parades of daily newcomers wheeling suitcases in and out of units that could more effectively be put to use as permanent housing for an expanding as well as aging workforce. Last Spring the City of Santa Monica successfully voted to enforce pre-existing vacation rental regulations, and guess what: It has not destroyed the influx of tech businesses, workers, vacation renters or new residents. At all.

Santa Monica, Calif., is cracking down on Airbnb and the rest of the short-term rental industry. Tuesday night, the Santa Monica City Council adopted its home-sharing ordinance, which bans the rental of an entire unit for less than 30 days and requires those who take part in allowable home-sharing to obtain a business license from the city and pay a 14% hotel tax. The law takes effect June 15. The city says proceeds from the hotel tax will help pay for enforcement officers and an analyst to find illegal rentals online.

The ordinance makes a clear distinction between what Santa Monica officials term "home-sharing" and "vacation rentals." Home-sharing requires the primary resident of the space to live "on-site during the visitor's stay." Vacation rentals, as defined by Santa Monica are any rentals 30 days or less in which the guest "enjoys the exclusive private use of the unit." The new ordinance deems vacation rentals illegal if the property is only approved for permanent residence.

Around 100 protesters organized by Airbnb gathered outside Santa Monica City Hall Tuesday afternoon before the vote, according to the Los Angeles Times. Arlene Rosenblatt, a Santa Monica homeowner who lists her apartment on Airbnb told the paper, "It's such a blessing for us to have this money... We need to have these regulations changed."

But in an interview with NPR, Santa Monica Mayor Kevin McKeown said vacation rentals aren't good for his city. "When a landlord or other property owner takes a unit off the housing market and uses it for vacation rental, there is no permanent resident on the site, we've lost that part of the fabric of our community," McKeown said. "And the people who are coming to stay are not directly supervised, so they, being on vacation may, in total innocence, may be coming and going at two or three in the morning. They may be not aware of the noise they're making for the neighbors. The neighbors aren't sure who the people are. You end up with somebody you don't know who has the keys to the building, to the parking garage. You don't who they're going to bring in with them. And you don't have that connection."

Santa Monica isn't the only city to push back against Airbnb and others in the short-term rental industry. We previously reported that New York's attorney general found that almost three-quarters of New York City bookings break the law, and that the state is owed $33 million in hotel taxes. An increasing number of cities across the country are starting to institute hotel taxes on Airbnb rentals. The pushback has even gone international, with Spain fining Airbnb $40,000 and threatening to block its website.

Opponents would have you believe they need to rent out their rooms and in-law apartments to supplement their incomes in an increasingly expensive San Francisco which is of course a point well-taken, BUT: If they aren't already registered and reporting, they are likely among the one in 10 hosts presently operating illegally. Only a fraction of San Francisco's approximately 10,000 rentals are currently registered with the City and yet Airbnb claims a share from those rentals-- without penalty. The fact that they have poured more than a reported $8- $10 million into the No on F campaign should again be enough to make doubters understand: a No vote on F stands to further benefit Airbnb-- a company with a $10 billion valuation-- while robbing city coffers and services of income. If that's not enough to persuade people to vote Yes, there's really no reasoning with anyone. Check back with us next Wednesday for results on this and other matters pending in San Francisco where the style of "sharing" is likely coming to a charming and beloved city in your state or country soon-- if it hasn't already.