Caldwell 2015 Short-Term Rental Report

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Summer 2015 Enforcement Intern Alexandra Caldwell

Data and Analysis Report on Short-‐Term Rentals in San Francisco

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Table of Contents Abstract………………….…………………………………………………………………………….….. 3 Suffixes……………………………………………………………………………………………. 3 Overall Issue……………………………………………………………………………………… 3 Major Concerns…………………………………………………………………………………... 3 Part 1: The Data………………………………………………………………………………………….. 3 Hearings and Legislation ………………………………………………………………………… 3 Who are the Hosts?……………………………………………………………………………….. 5 Figures 1 and 2—Representing STR’s in each Zip Code…………………..…………………….. 6 Percentage of STR’s in Each Zip Code…………………………………………………………… 7 Supervisor Districts………………………………………………………………………………. 7 Figure 3: Total Applications in Each Supervisor District……………………………………….. 9 Figure 4: Total Approved Applications in Each Supervisor District ………………………....... 10 Figure 5: Total Denied Applications in Each Supervisor District…...…………………………. 10

Figure 6: Total Number of Applications to Register……………………………………………..11 Figure 7: STR Hosts who have Lived in the Same Place in SF by Zip Code…………………..…11

Number of STR’s on Each Street………………………………………………………………... 12 Part 2: The Analysis Hearings and Legislation……………………………………………………………………….. 13

Enforcement Policies in Other Major Cities…...……………………………………………….. 15 Figure from LAANE Report: Percent of Listing Type by City………………..………………… 20 Part 3: Conclusion…………………..………………………………………………………………….. 21 Endnotes…………………………………………………………………………………………………. 23

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Abstract: This report will define both legislative proposals put forth to Ordinance No. 218-14. The

amendments proposed by Mayor Ed Lee and Supervisor Farrell, as well as Supervisor Campos’ amendments regarding short-term rentals will be defined. The purpose of this report is to provide the Planning Commission with information regarding the average “type of host” that is currently using their home or apartment as a short-term rental platform in the city and county of San Francisco. Current enforcement mechanisms will be compared between major cities such as Los Angeles, New York City, Portland, and Austin, exploring which cities has seen the most effective method of enforcement. This data has been gathered and analyzed from the Planning Department’s registered short-term rental applications. All information was given voluntarily by short-term rental applicants. (Whether or not our records will conclude that there is an average “type of host”) the goal is to provide an unbiased report that will offer the Planning Commission data, in an attempt to understand who these hosts really are. Suffix’s used in Report:

Ø STR: Short-Term Rentals Ø BLA: Budget and Legislative Analyst Report 2015 Ø DBI: Department of Building Inspection

Overall Issue:

Ø Short-term rental hosts abusing the system, skyrocketing eviction rates, illegal short-term rental usage and group housing.

Major Concerns:

Ø Quality of Life Ø Community/Neighborhoods Ø Safety Ø Evictions

Part 1: The Data Hearings and Legislation— Current Enforcement in San Francisco:

Ø Fall of 2014, short-term rentals legalized with conditions Ø Allows permanent residents, which are defined as, ‘a person who occupies a unit for at least 60

consecutive days with the intent to make it their home—to offer short-term rentals.’ i Ø Requirements:

o Register with the Planning Department o Pay the City’s 14% transient occupancy tax by obtaining a Business Registration

Certificate

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o Un-hosted rentals are limited to 90 days per year while hosted rentals do not have any limitations on the number of days per year (365 days per year) ii

o Each listing is required to carry liability insurance of $500,000

Proposed Enforcement:

Ø Mayor Ed Lee and Supervisor Mark Farrell’s Amendments: o Treats hosted and un-hosted rentals the same—limiting all rentals of less than 30 days to a

maximum of 120 days a year. o New office of STR administration and enforcement: The Planning Department, Department

of Building Inspection, and The Treasurer and Tax Collectors Office to act as one division for registrations, enforcement and complaints.

o On top of building residents and neighborhood groups, neighbors and nonprofit housing groups would also have the ability to sue violators for attorney’s fees and an end to violations.

o These requirements were later amended at the Board of Supervisors hearing on July 14, 2015. Please see below for a more detailed description of the hearing results.

Ø Supervisor David Campos Amendments: o 60 day cap for both present and un-present hosts. o Adds platform violations as misdemeanors, on top of the already current hosts’ violations

as misdemeanors. o Registry Requirements—platforms prohibited from listing units not in good standing.

Planning required, notifying neighbors upon receipt of completed application. o These requirements were later amended at the Board of Supervisors hearing on July 14,

2015. Please see below for a more detailed description of the hearing results.

Ø Share Better SF (Petition from the Public) o Limits short-term rentals to 75 nights a year whether or not host is present. o Requires quarterly reports to the Planning Department on the number of nights a unit is

rented to tourists. o Fines ‘hosting platforms’ (like Airbnb, VRBO, HomeAway, etc.) for listing unregistered

units. o Provides other building tenants, neighbors and neighborhood associations with notice

when a unit is registered as a short-term rental. o Allows other building tenants and neighbors to go to court to protect their rights to the

quiet enjoyment of their homes when the city fails to enforce the law.iii June 9, 2015 Hearing Results

Ø Supervisor Farrell requested for continuance, to postpone the vote for a month in an attempt for the supervisors to come to a consensus.

Ø Supervisor Campos opposed this idea of a continuance, supported by Supervisor Mar, Supervisor Avalos, and Supervisor Kim.

Ø The continuance passed with a 7 to 4 vote.iv

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July 14, 2015 Hearing Results

Ø Supervisor Campos’ proposed amendments rejected by a 5 to 6 vote. Changed amount of days to rent per year to 75 instead of 60. Supervisors in support of his amendments were Jane Kim, John Avalos, Eric Mar, and Norman Yee.

Ø The Board of Supervisors approved a first vote of an amended Farrell/Mayor law. Supervisor Farrell’s proposed amendments passed with changes introduced at the time of the hearing by another 6 to 5 vote. Supervisors in support of his amendments were London Breed, Julie Christensen, Malia Cohen, Katy Tang and Scott Wiener. Changes to the original amendments include: excluding the 120 day cap per year and re-introducing the initial legislation from February—which requires hosts of short-term vacation rentals to be present 275 days per year, and allows registered hosts when present to rent all 365 days per year and 90 days per year when not present or un-hosted.

Ø Additionally, 3 new requirements were adopted to the new law 1. Creation of a new “Short-Term Rental Office” to serve as a “one-step shop” for

applicants. 2. Hosts required to provide quarterly reports instead of annually, regarding how

many days they are renting out either a single, shared room, or an entire house. 3. Limits short-term rental vacation of units if there has been an Ellis Act eviction

within the past five years.v

Who Are the Hosts?— (Data gathered from the Registered Short-Term Rental Applications on File at the Planning

Department. All answers were submitted voluntarily by applicants.)

Ø Average amount of years an applicant has lived in SF: o 20 years

Ø Average nights renting per year when an applicant is not present: o 60 nights

Ø Average nights renting per year when an applicant is present: o 178 nights

Ø Average amount of years an applicant has lived in their current unit: o 11 years

Ø Total number of registered short-term rentals that are rent controlled: o 14 units

Ø Total number of units that are rented: o 68 renters

Ø Total number of units that are owned: o 590 owners

Figure 1

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Zip Codes

Average Length in Years STR Hosts Have Lived in SF by Zip Code

Number of Years

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Years

Zip Codes

Average Length in Years STR Hosts Have Lived in Their Unit by Zip Code

Number of years host have lived in their unit

Average number of years: 11

The following graph, Figure 1, displays the average length in years STR registered hosts have lived in San Francisco by zip code. The average length in years is 20.

Figure 2 shows the average length in years STR registered hosts have lived in their unit by zip code. The average length in years is 11.

Figure 2

[Type a quote from the document or the summary of an interesting point. You can position the text box anywhere in the document. Use the Drawing Tools tab to change the formatting of the pull quote text box.]


Average number of years: 20


Figure 1

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Percentage of STR’s in each Zip Code—

Which zip codes have the highest percentage of registered STR hosts? (Source: STR applications)

Ø 94110 — 15.6% Ø 94114 — 15.6% Ø 94103 — 7.7% Ø 94107 — 6.2% Ø 94118 — 5.0%

Which zip codes have the lowest percentage of registered STR hosts? (Source: STR applications)

Ø 94105 — 0.2% Ø 94132 — 0.5% Ø 94134 — 0.7% Ø 94102 — 1.5% Ø 94109 — 3.1%

Supervisor Districts— District 1 – Supervisor Mar

• Total applications: 51

• Total approved applications: 42

• Total denied applications: 4

o (5 applications awaiting review)

District 2 – Supervisor Farrell





District 3 – Supervisor Christensen





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District 4 – Supervisor Tang





District 5 – Supervisor Breed





District 6 – Supervisor Kim

• Total applications:18



o (1 application awaiting review)

District 7 – Supervisor Yee





District 8 – Supervisor Wiener





District 9 – Supervisor Campos


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0 20 40 60 80

100 120 140 160 180 200

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Total ApplicaGons in Each Supervisor District

Total ApplicaMons in Each Supervisor District




District 10 – Supervisor Cohen





District 11 – Supervisor Avalos

• Total applications: 22 • Total approved applications: 19 • Total denied applications: 2

o (1 application awaiting review)

The following graph shows the total number of applications received by the Department in each supervisor district.

Figure 3

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Total Approved ApplicaGons in Each Supervisor District

Total Approved ApplicaMons in Each Supervisor District

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Total Denied ApplicaGons in Each Supervisor District

Total Denied ApplicaMons in Each Supervisor District

The following graph shows the total number of approved applications the Department has received for each Supervisor District.

The following graph shows the total number of denied applications the Department has received for each Supervisor District.

Figure 4

Figure 5

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94102

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Total Number of ApplicaGons to Register

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Hosts

Zip Codes

STR Hosts Who Have Lived in The Same Home The EnGre Time in SF by Zip Code

Number of Hosts that have lived in same unit enMre Mme in SF

The following graph shows the number of hosts who have lived in the same unit the entire time they have lived in San Francisco. Zip codes 94110, 94114 and 94117 are the top three zip codes that have the highest percentage of people that have lived in the same unit the entire time they have been a San Franciscan resident.

Figure 6

Figure 7

§ Number of units that have applied to legalize

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Diamond St. 2 Dolores St. 6 Downey St. 2 Duncan St. 2 Elizabeth St. 3 Eureka St. 2 Filbert St. 4 Fillmore St. 2 Florida St. 5 Folsom St. 4 Fulton St. 2 Golden Gate Ave. 4 Grand View Ave. 2 Grove St. 7 Guerrero St. 5 Hancock St. 2 Hayes St. 3 Henry St. 2 Ivy St. 2 Kansas St. 5 Kirkham St. 2 Leavenworth St. 2 Lexington St. 4 Liberty St. 2 Lippard St. 2 Lyon St. 6 Market St. 2 Masonic St 2 Mission St. 4 Mississippi St. 5 Missouri St. 2 Moraga St. 2 Moultrie St. 2 Noe St. 3 Nordhoff St. 2 North Point St. 3 Oak St. 5

Church St. 3 Clayton St. 3 Clipper St. 4 Collingwood St. 2 Congo St. 2 Cresta Vista Dr. 2 Culebra St. 2 De Haro St. 2

Number of registered short-term rentals on each street

The following table displays the number of short-term rentals registered on each street for every street that contains two or more.

Street Name Number of Units 4th St. 4 5th St. 2 7th St. 2 10th St. 2 14th St. 3 15th St. 8 16th St. 2 17th St. 4 18th St. 2 19th St. 2 20th St. 10 21st St. 4 22nd St. 2 24th St. 3 25th St. 6 26th St. 4 28th St. 2 33rd St. 2 40th St. 5 41st St. 2 45th St. 2 48th St. 5 Alabama St. 2 Albion St. 2 Andover St. 3 Anza St. 2 Ashbury St. 2 Baker St. 2 Bay St. 2 Belvedere St. 2 Broad St. 2 Broderick St. 4 Bryant St. 3 Buchanan St. 2 Buena Vista St. 3 California St. 2 Capistrano Ave. 2 Carl St. 2 Carolina St. 5 Caselli St. 2 Castro St. 9 Cesar Chavez St. 3

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Part 2: The Analysis Hearings and Legislation—

On June 9th, 2015, the Board of Supervisors voted to continue both ordinances amending the Administrative Code to revise the Residential Unit Conversion Ordinance. The first ordinance proposed by Supervisor David Campos, amended the cap to 60 days per year for renting a residential unit both hosted and un-hosted. It would also require hosting platforms to verify that a residential unit is on the city registry prior to listing, be removed as a listing if ever renting for tourist or transient use for more than 60 days, and provide proper information and documentation to the Planning Department. Other requirements would include: “remove a listing once a residential unit has been rented for tourist or transient use for more than 60 days in a calendar year, and provide certain usage data to the Planning Department; revise the definition of interested parties who may enforce the provision of Chapter 41A through a private right of action to include permanent residents residing within 100 feet; amend the private right of action provisions to allow for a private right of action against hosting platforms and create an additional private right of action against owners, business entities, and hosting platforms under certain circumstances; provide for criminal penalties against hosting platforms in violation of this Chapter 41A; and affirming the Planning Department’s determination under the California Environmental Quality Act.” vi

The second ordinance proposed by Supervisor Farrell, amended the cap to 120 days per year both hosted and un-hosted. The requirements include: “revise the definition of interested parties who may enforce the provisions of Chapter 41A, through a private right of action to include permanent residents residing within 100 feet of the residential unit; create an additional private right of action under certain circumstances; create an Office of Short-Term Residential Rental Administration and Enforcement staffed by the Planning Department, Department of Building Inspection, and Tax Collector’s Office; and affirming the Planning Department’s determination under the California Environmental Quality Act.”vii Supervisor Farrell requested that the vote of these ordinances be moved to the next month, July 14th, 2015. The move was seconded by Supervisor Tang and the motion passed with a 7 to 4 vote of continuance.viii According to the data that was used in this report pulled from Accela, the Department’s permit tracking software, the average amount of years a registered host has lived in San Francisco is 20 years. The average amount of years a registered host has lived in the unit they are currently residing in is 11 years. There is also a fairly large number of people who have lived in the same home their entire time living in San Francisco. In total, there are currently 111 registered hosts that have lived in the same house

Chenery St. 2 Oakwood St. 2 Ord St. 2 Page St. 5 Parker St. 3 Pierce St. 2 Pine St. 3 Precita St. 4 Prospect St. 2 Rhode Island St. 2 Ripley St. 2 San Jose St. 2 Santa Marina St. 2 Scott St. 2

Shotwell St. 3 Shrader St. 3 Steiner St. 2 Sunview St. 2 Tennessee St. 2 Turk St. 2 Union 2 Valley St. 2 Waller St. 3 Webster St. 5 Whitney St. 2 Winfield St. 3 Wisconsin St. 2

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or apartment the entire time they have lived in San Francisco, out of the 658 applications that our department has received in the past five months. Based on this data, these are potentially the “true home-sharers”. This group tends to be empty nesters who have recently vacated bedrooms due to children leaving the home, and/or who may be struggling to afford their rent and make ends meet. However, those are only a fraction of the actual hosts using Airbnb and other similar hosting platforms. The main issue with short-term rentals is when bad actors abuse the system. For example, when owners of entire apartment buildings or condominiums are operating as illegal de facto hotels and take away long term housing. When looking at the data, there are some residents who have lived in the same home for 85 years, while others have only lived in their current dwelling for 1 year or less. When asking the question, “Who Are the Hosts?” the answers seem to be ambiguous. Unfortunately from the research that has been done, there is not one overarching category that every applicant for short-term rentals seems to mold into, but instead two completely opposing groups.

Since the start of registration in February of 2015, applications have been deemed ineligible for the following reasons: failed to submit the required documents needed to be reviewed by the Planning Department staff to verify the applicant’s primary residency, within a reasonable period of time afforded to them by the Department, or the staff has found proof that the renter or owner of the proposed short-term rental unit was not, in actuality the permanent resident of the pending unit, or lastly, that there was an open DBI or Planning Code Violation. According to the gathered data, on average, applicants plan to not be present 60 nights per calendar year, while the mode is estimated to be 90 nights per calendar year. When hosts are present, on average, applicants plan to rent 178 nights per calendar year while the mode is estimated to be 275 nights per calendar year. These numbers indicate that the average applicant plans to rent out their entire, shared, or single room unit to guests when they are not present for only 30 days less than the legal cap, while un-hosted applicants are renting out their unit on average for almost half the legal cap. Unfortunately, these numbers only represent a small proportion of the actual 5,000 listings on Airbnb and do not include the other estimated 1,200 listings on other hosting platforms such as VRBO, Flipkey, Roomorama, Wimdu, and countless others.ix This sample size may not be entirely reflective of the universe of hosts as they represent the “good actors” by following the law and registering before they rent out their single or shared room, or entire home. It is difficult to make extensive conclusions about the short-term rental market from the data provided, when only looking at roughly 700 applications out of the estimated 6,200 currently on the market as listings.

Another legality issue is driver’s license. The Enforcement Division at the Planning Department has noticed multiple applicants that have driver’s license that will show a different address than the dwelling unit they are attempting to “share”. Often times, applicants have renewed their driver’s license, changing the address from their previous address, fairly recently to when they have submitted their application. The California DMV License Renewal Requirements are defined below for further clarification on changing ones address or renewing ones license. According to the California DMV License Renewal Requirements, every five years your California license must be renewed.x Depending on your driver’s license status (valid, expired, suspended, or lost/damaged), you can renew either: online, by mail, by phone, or in person, whether you have moved within the state or not. According to the California Department of Motor Vehicles, anyone is allowed to change their residence or mailing address for their California Driver License, Identification Card, vehicle, or vessel.xi Before filling out a change of address form, one must have their last issued vehicle or vessel registration card with them. A change of address does not require an in-person visit to a DMV office, however there are a few ineligibilities for registering online if a person: does not have a California Driver License or California Identification Card, does not have a social security number, has a Commercial Driver License (CDL) issued by California and your residence address is in another state, has an Army Post Office or Fleet Post Office address, or has an address outside of the United States. For U.S. citizens, the law requires that voter registration is also updated when moving to a new permanent residence. These driver licenses that were submitted automatically became a concern for staff on the validity of their residency if the average length of living in a unit in San Francisco is 11 years based on the applications submitted.

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Enforcement Policies in Other Major Cities in the United States—

o San Francisco, California

§ See page 1 for legislation active at time of publishing

§ As of Thursday, July 2nd 2015, New Agency Announced by Mayor Ed Lee

• Office of Short-Term Rental Administration and Enforcement will manage rental

applications as well as coordinate efforts to pursue violators of the city’s laws

and complaints.

• Loopholes:

§ For example, critics have stated the following: o Hosting platforms such as Airbnb will not provide their data to

the public which makes it difficult to enforce the law. o New amendments proposed by Supervisor Christensen requires

hosts to file quarterly reports on how many nights per year they are renting out their apartments, as opposed to the hosting platform submitting those reports which will make fabrication difficult to detect.

o New York City, New York

§ Current Legislation:

• Entire residential rentals for 30 days or less are illegal.

Ø The 2011 New York State multiple dwelling law states:

§ A residential dwelling unit, such as an apartment building, must be used for “permanent resident purposes” –the property must be occupied by the same person or family for 30 days—unless the property is a licensed hotel, bed-and-breakfast or hostel.xii

Ø Loopholes:

§ It is legal to rent a room in NYC if you occupy your home/apartment at the same time and all parts of the dwelling are available to the paying guest. However, individual leases or condo/co-op bylaws may prohibit this activity.

§ Exceptions for family members — The Class A Multiple Dwelling law defines family as:

§ “A ‘family’ is either a person occupying a dwelling and maintaining a household, with not more than four boarders, roomers or lodgers, or

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two or more persons occupying a dwelling, living together and maintaining a common household, with not more than four boarders, roomers, or lodgers.” xiii

New York City in particular, has focused on ensuring that Airbnb’s expansion does not continue to corrupt the housing industry. The new law that was initiated in 2011, The Multiple Dwelling law, illegalized any type of short-term residential rental.xiv Although these types of rentals have been completely banned, there is however a couple of loopholes which allows people to use their home as a short-term rental. For example, the term “family” is loosely defined which allows leeway for people to disobey the current law. Another loophole is the legalization of a rented room in someone’s home if the host is also living there full time and all parts of the dwelling are available to the paying guests. There is no required registration for this type of renting, potentially a highly problematic concern.

New York State Attorney, General Eric Schneiderman, has even issued Airbnb with subpoenas to receive information on exact addresses and revenues generated by Airbnb listings.xv After these subpoenas were issued, the Attorney General’s office found that “more than 72% of Airbnb’s New York City revenue was generated by illegal listings.” That wasn’t the only surprising news that was found out either, “the Attorney General’s report also found that commercial hosts dominated the New York City Airbnb market.” xvi

o Los Angeles, California

§ 5 example cities in LA:

1. Avalon

§ Title 9, Chapter 8, Section 9.8.404 (d) outlines that Transient Rental Use is considered only if a Conditional Use Permit is applied for. As stated in Title Finance, Chapter 3, Section 3.3.403, a Transient Occupancy Tax of 12% shall be collected and remitted. xvii

2. Hermosa Beach

§ Short-term rentals less than 30 days are not allowed except in commercial zones when all permits have been obtained. Chapter 3.32, Transient Occupancy Tax, states: for occupancy of any hotel or hospital as defined, each transient is subject to and shall pay a tax in the amount of ten percent of the rent or bill charged by the operator. xviii

3. Santa Monica

§ Article 9, Chapter 9.04.02 – The housing is designed for use by individuals who will reside on the property for a minimum stay of at least 30 consecutive days, but who otherwise intend their occupancy to be temporary. The housing is intended for use by persons who will maintain or obtain a permanent place of residence elsewhere. The housing includes some or all of the following amenities: Maid and linen service, Health club, spa, pool, tennis courts, or memberships to area facilities, Business service centers, Meeting rooms, Fully

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furnished units including a combination of some but not necessarily all of the following: furniture, appliances, housewares, bed linens, towels, artwork, television sets, stereos, VCRs, CD players, fax machines, and Internet access, and/or Valet parking. xix

4. Long Beach

§ Every transient will pay a tax of 12% total of the rent for their occupancy in any room, space, or portion thereof in a hotel. “Hotel” means any apartment house, auto court, boarding house, bungalow court, club, hotel, inn, lodging house, motel, rooming house, camp, studio, dormitory, tourist home or other structure, private or public, or portion thereof, within the city offering or renting to transients for lodging, dwelling, or sleeping purposes, in guestrooms for compensation, and shall further include any trailer court, trailer spaces, or combinations of such spaces and trailers, including mobile homes, timeshare units not occupied by the timeshare owner or a guest of the owner, and docked boats and ships, occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes. No transient occupants are allowed unless the use is also approved and licensed as a hotel, as stated in the Zoning Definitions. xx

5. Manhattan Beach

§ Title 6, Chapter 6.24, Ordinance No. 2160 – Must obtain a permit, all advertising will include permit, must acquire all occupants information/maintain for one year, must provide a copy of “Good Neighbor Brochure”, must collect TOT. xxi

o Ordinance draft proposed by the City and County of LA Councilmember Mike Bonin and Council President Herb Wesson on June 2nd 2015:

§ Authorizes a host by right, to rent all or part of their primary residence to short-term visitors, permitting someone to rent a spare room, a back house, or even their own house while they are out of town.

§ Prohibits hosts from renting units or buildings that are not their primary residence or are units covered by the Rent Stabilization Ordinance (RSO), forbidding speculators from creating a syndicate of short-term rental properties, and prohibiting the loss of valuable rental housing stock.

§ Captures Transit Occupancy Tax (TOT) from all hosts

Due to the rise in Airbnb’s popularity in the most populous city and county in the country, Los Angeles, there has been a major shortfall of housing units.xxii This has led to low vacancy rates and skyrocketing rent prices. This theme of increasing rent prices is not just apparent in Los Angeles but a reoccurring theme around the country in many major cities. The only rentals that seem to not be negatively affecting

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the housing market is the true home sharing; the initial idea of short-term rentals or bed and breakfast, that legally hosts guests for short periods of time and promotes a true sharing economy.

o Portland, Oregon

§ Legalized in 2014 xxiii

§ Requirements include:

Ø Rent out one or two bedrooms over-the-counter

Ø $180 permit after inspection

Ø Must notify neighbors

While some municipalities have attempted to ban short-term rentals altogether, such as New York City, others such as Portland and Austin have changed legislation in an attempt to make enforcing the law slightly easier for officials. The intention with stricter requirements and legislation is that landlords running illegal hotels will be caught, providing more vacant and available housing. Airbnb designated Portland its first “Shared City” –“meaning the company and the city had determined to work together to create a regulatory framework that would allow the city to collect hotel taxes in exchange for creating a new category of housing in its planning code—the “Accessory Short-term Rental (ASTR). ” xxiv Whether or not this relationship has been successful or mutually beneficial, the idea of creating a “Shared City” relationship between all cities using Airbnb seems as though it would create a trusting environment where “true sharing” is not only both parties priority, but also the ultimate goal of the business model.

o Austin, Texas

Ø Owners of Short-Term Rentals (STR’s), sometimes called Vacation Rentals, are required to obtain an operating license (Ordinance No. 20130926-144). This law applies to all properties (including rooms and guest houses) rented for less than 30 consecutive days.xxv

Ø Requirements:

§ Find the short-term rental license application for your type (Type 1, Type 2, Type 3)

§ Submit all of the following to Austin Code:

§ Application § $285 fee § Proof of Property Insurance § Proof of Payment of Hotel Occupancy Tax (if applicable) § Certificate of Occupancy OR Certified Inspection

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§ Call 3-1-1 to complete a service request for an appointment, or walk-ins are accepted

§ Allow 3 to 5 business days for processing and approval

§ Post the operating license* (which will arrive by mail) and a copy of the vacation rental information packet in a visible area in the rental property

Ø There is a cap on the number of non-owner occupied (Type 2) and multifamily/commercial (Type 3) short-term rentals allowed in each census tract of the city. The list shows the number of licenses available in your area (map). Use the Census tract lookup tool to find your tract code.

Before one of the busiest holidays of the year, July 4th, Austin Texas decided to be overly prepared for the chaotic weekend they were about to face. New travelers, friends and family visiting, loud backyard parties, and an increase of cars parked around the city— a team of police, fire, and code enforcement officers stood on standby between the hours of 10p.m. and 4a.m. ready to receive complaint calls from angry neighbors. Cities such as New York City and Austin have made stricter legislation a priority, in order to protect the true primary residents of their cities.

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The figure below was taken from the LAANE Report by Roy Samaan from March 2015. This graph gives a visual representation of the difference between whole units, private rooms, and shared rooms being utilized in the three major cities: New York City, Los Angeles, and San Francisco. Each city has similar percentages between whole units, private rooms and shared rooms. This graph is shown to demonstrate that although these three cities hold many similarities, they all have different short-term rental laws. New York City’s enforcement mechanisms are currently the strictest, being illegal. However, each city has reported bad actors finding loopholes to those laws and regulations. Unfortunately, even though these cities differ on short-term rental laws, each city is still faced with people abusing the system and successful enforcement mechanisms have yet to be reported.

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Part 3: Conclusion— This report was conducted to provide an unbiased overview of what is currently happening in the short-term rental market in major cities, with a special focus on San Francisco. All data that was used was drawn from the short-term rental applications on file at the Planning Department beginning February 2nd of 2015 through June 8th of 2015. All information was given voluntarily by each applicant. The purpose of this data was to scope out similarities and differences between the short-term rental hosts in San Francisco. The focus was meant to be on the registered short-term rental hosts are as opposed to the other thousands of hosts that currently have illegal listings on the market. The data has shown commonalities among zip codes and Supervisor Districts using short-term rentals, however it is difficult to provide an answer to the question, “Who are the Hosts?” Many of the applications accepted or approved by the Planning Department represent the true home sharers; the people who obeyed the law and registered with the Department as it is required to do so in the city and county of San Francisco. When Airbnb was first founded in 2008 by Brian Chesky and Joe Gebbiaxxvi, the initial idea of the company was simply true home sharing in order to make ends meet and afford their rent. By simply providing short-term living quarters and a free breakfast to people traveling that were unable to book a hotel, the idea seemed to fit perfectly into the already existing sharing economy. Shortly after AirBedandBreakfast launched, later changed to Airbnb, the third co-founder joined the team, a technical architect and recent grad from Harvard, Nathan Blecharczyk. Just one year later in 2009, the company expanded to not just sleeping on air mattresses but instead renting out entire rooms, apartments, homes, castles, boats, and even private islands. It didn’t take long for the company to receive its one millionth booking in 2011, and shortly after in June of 2012, Airbnb announced its 10 millionth booking. However, 75% of those bookings came from outside of the United States.xxvii The company was expanding and growing at an exuberant rate—not just in the United States, but around the world.

Airbnb’s business model connects hosts to travelers throughout the world through a marketplace platform model which allows transactions to process without Airbnb having to own the rooms itself, as hotels do for example.xxviii Platforms such as these have the potential to give the hotel industry some tough competition. However, according to an article that was released in May of 2015 in the Business Insider discussing the hotel industry and the U.S. economy, there is currently a supply shortage in the hotel industry. The average daily rate of hotels is currently at an all-time high.xxix Due to the extremely high occupancy rates of hotels throughout the country, hosting platforms such as the $25 billion dollar corporation, Airbnb, offers an alternative way to accommodate travelers. In 2014 there were 4,798 listings on Airbnb and almost two-thirds of those listings were for entire houses or apartments.xxx In just one year there were a little over 1,000 listings added to Airbnb’s site. San Francisco’s rent is currently up 15% from 2014 and with an average rent of more than $3,400 a month, the most expensive city to rent an apartment in the United States.xxxi This has made affordable housing scarce and also influenced many landlords to operate their apartment buildings or condominiums as illegal hotels—giving travelers a chance to experience traveling in a non-traditional way. These illegal short-term rental units are one of the main reasons people are being evicted out of their homes by landlords and left without a home. This is the problem. This is what makes enforceable legislation a challenge. While there is a group of people who are legally using their home as a short-term rental, the majority has not even registered with the Department. The supervisors of San Francisco have been working diligently the past 5 months brainstorming new amendments as well as additions to the already existing short-term rental legislation. Finding a solution that makes everyone happy with the law has seemed to be impossible thus far. The number of days per year hosts should be allowed to rent their home both hosted and un-hosted has stemmed most of the debate between the San Francisco Supervisors. However, in the most recent vote of amendments, Supervisor Farrell’s legislation passed with the addition of Supervisor Christensen’s amendments, keeping the cap of how many days for both hosted and un-hosted the same: 90 days for un-hosted stays

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and 365 days for hosted stays.xxxii The ShareBetter SF petition also qualified for the November ballot, receiving 10,000 signatures from supporters and other advocators against Airbnb. The petition asks for 75 days for both hosted and un-hosted stays as well as requiring Airbnb to fine unregistered units that are listed on their website.xxxiii

As of right now, the biggest change in the legislation is the new office of short-term rentals which will focus all of its attention on the intake of applications. This office will be a “one-stop shop” at the Planning Department. The next four months until the ballot measure in November will test whether or not there is an increase in applicants to register, as slightly stricter legislation has been implemented. The Planning Department continues to enforce the changing legislation, however continues to be challenged by the growing number of illegal listings on the market. The mission of the department reads:

…under the direction of the Planning Commission, shapes the future of San Francisco

and the region by: generating an extraordinary vision for the General Plan and in neighborhood plans; fostering exemplary design through planning controls; improving our surroundings through environmental analysis; preserving our unique heritage; encouraging a broad range of housing and a diverse job base; and enforcing the Planning Code.xxxiv

In other words, the Planning Department hopes to make improvements to the city to the best of its ability— economically, socially, environmentally, and culturally, by still ensuring historical preservation. However, the thousands of bad actors abusing the system make it difficult to carry out that function. The future of San Francisco will negatively be impacted if this legislation continues to provide loopholes for those bad actors. This is an extremely controversial topic and deserves the utmost priority, as it is vital in the future and success of San Francisco.

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Endnotes

i Budget and Legislative Analyst’s Office, “Policy and Analysis Report,” sfbos.org, last modified May 13, 2015, http://www.sfbos.org/Modules/ShowDocument.aspx?documentid=52601 ii “Ordinance No. 218-14,” sfbos.org, last modified October 7, 2014, http://www.sfbos.org/ftp/uploadedfiles/bdsupvrs/ordinances14/o0218-14.pdf iii “Share Better SF,”sharebettersf.com, last modified June 14, 2015, http://www.sharebettersf.com/sharebetter-the-petition-airbnb/ iv City Hall Board of Supervisor’s Hearing. June 9, 2015. v City Hall Board of Supervisor’s Hearing. July 14, 2015. vi “Legislative Research Center,” City and County of San Francisco Board of Supervisors, sfbos.org. vii City Hall Board of Supervisor’s Hearing. June 9, 2015. viii Office of Economic Analysis, “Amending the Regulation of Short-Term Residential Rentals: Economic Impact Report,” sfcontroller.org, last modified May 18, 2015, http://sfcontroller.org/Modules/ShowDocument.aspx?documentid=6457 ix Joshua Sabatini, “Airbnb Rentals Cut Deep into SF Housing Stock,” sfexaminer.com, last modified May 14, 2015, http://archives.sfexaminer.com/sanfrancisco/sf-report-says-units-rented-for-short-term-reduce-long-term-housing/Content?oid=2929888 x Change of Address, California Department of Motor Vehicles, dmv.ca.gov, last modified 2011,http://www.dmv.ca.gov/portal/dmv/?1dmy&urile=wcm:path:/dmv_content_en/dmv/online/coa/welcome xi Ibid. xii Jessica Dailey, “An Introduction to New York’s Short-Term Rental Laws,” curbed.com, last modified March 25, 2013, http://ny.curbed.com/archives/2013/03/25/an_introduction_to_new_yorks_short_term_rental_laws xiii Ibid. xiv Ibid. xv Elliot Mest, “New York City Debates Airbnb Pros and Cons,” internationalmeetingsreview.com, last modified January 22, 2015, http://www.internationalmeetingsreview.com/hotel/new-york-city-debates-airbnb-pros-and-cons-100951 xvi Roy Samaa, “Airbnb, Rising Rent, and the Housing Crisis in Los Angeles,” The LAANE Report. last modified March 2015. xvii Bianca Barragan, “The Few Places in Los Angeles Where Airbnb’s Might be Legal,” curbed.com, last modified March 24, 2014, http://la.curbed.com/archives/2014/03/the_few_places_in_los_angeles_where_airbnbs_might_be_legal.php xviii Ibid. xix Ibid.

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xx Ibid. xxi Ibid. xxiii Elliot Njus, “Portland Tries to Make Peace with Airbnb as ‘Sharing Economy’ Moves into the Mainstream,” oregonlive.com, last modified January 31, 2014, http://www.oregonlive.com/front-porch/index.ssf/2014/01/airbnb-style_vacation_rentals.html xxiv Roy Samaa, “Airbnb, Rising Rent, and the Housing Crisis in Los Angeles,” p.30, last modified March 2015. xxv “Austin Code Department—Vacation Rental Licensing,” Austin Texas Gov. austintexas.gov, http://austintexas.gov/str xxvi “Airbnb,” Wikipedia.org, last modified July 17, 2015, https://en.wikipedia.org/wiki/Airbnb xxvii Ibid. xxviii Ibid. xxix Myles Udland, “The Hotel Industry is Sending a Clear Signal that the US Economy is Not Grinding to a Halt,” businessinsider.com, last modified May 31, 2015,http://www.businessinsider.com/hotel-industry-economic-signal-2015-5 xxx Carolyn Said, “Window into Airbnb’s hidden impact on S.F.,” San Francisco Chronicle, last modified June 2014, http://www.sfchronicle.com/business/item/Window-into-Airbnb-s-hidden-impact-on-S-F-30110.php xxxi Biz Carson, “The Fight Between Airbnb and San Francisco Just Got Nastier,” businessinsider.com, last modified May 15, 2015, http://www.businessinsider.com/san-francisco-report-blames-airbnb-for-housing-shortage-airbnb-strikes-back-2015-5 xxxii City Hall Board of Supervisor’s Hearing. July 14, 2015. xxxiii “Share Better SF,”sharebettersf.com, last modified June 14, 2015, http://www.sharebettersf.com/sharebetter-the-petition-airbnb/ xxxiv City and County of San Francisco Planning Department. Sf-planning.org, last modified August 26, 2013, http://www.sf-planning.org/index.aspx?page=3575 Images on page 1: Humphrey, Julia. “San Francisco Bridge” The Best Restaurants in San Francisco. Ideal Magazine. Web. 8 July 2013. “San Francisco House” A Division of William Lilly and Associates. San Francisco Green Point Rater California Living and Energy. Web. 2013. “Downtown San Francisco.” Photo Everywhere.Co.Uk, Web. Detta, Gillar. “San Francisco Cable Car.” Word Press. Web. 2014

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