In “The other Silicon Valley,” Al Jazeera takes a look at how California’s tech boom affects the working class. This is part three of a seven-part series.
SAN FRANCISCO — For countless travelers around the world, Airbnb and other home-sharing services are a convenient alternative to traditional hotel and hostel bookings. To countless owners and renters, those services are a good way to convert their home or a spare room into extra cash. But Mike Casey, the longtime president of the hotel workers’ union UNITE HERE Local 2, sees something very different when he looks at Airbnb and comparable websites: an existential threat.
“There’s probably several hundred jobs a year that are lost as a result of people selecting Airbnb over a unionized hotel,” he said. “But probably of even greater impact than that is the impact it’s having on affordable housing.”
Casey cited a March 2015 report from left-leaning advocacy group the Los Angeles Alliance for a New Economy (LAANE), which says the prevalence of Airbnb units in Los Angeles gives landlords and homeowners an opportunity to seek tourism dollars where they would have otherwise rented housing to city residents. As a result, the report’s authors say, Airbnb is helping constrict housing supply and drive up rental costs. LAANE also alleges the growing popularity of Airbnb could kill hotel jobs and replace them with a handful of lower-paying domestic worker gigs.
San Francisco “is going to be like Manhattan very soon, where there’s the pretty well-off and affluent and then there’s the very poor and there’s not much middle class or working class left,” said Casey. He believes Airbnb is accelerating that transformation — but not without a fight.
Local 2, its allies on the Board of Supervisors and other San Francisco groups are embroiled in a prolonged struggle to impose tighter regulations on short-term rental businesses. They face opposition from other city officials, local Airbnb renters and the company. Whatever the outcome, San Francisco’s regulatory skirmish over Airbnb has the potential to influence how short-term rentals are regulated in other cities around the country.
While Local 2 and its allies have assailed Airbnb for what they say is its role in fueling San Francisco’s housing crisis, the company insists it serves as an economic boon to the city. According its website, Airbnb “generates approximately $56 million in local spending and supports 430 jobs” in San Francisco. And rather than contributing to the city’s affordability crisis, the company argues, it is helping San Franciscans remain in their homes by providing them with an extra source of income.
Airbnb declined to comment on the record, but Airbnb CEO Brian Chesky addressed the criticism in a recent interview with the radio program “Marketplace.”
“I’m totally sympathetic to the complaints. Ultimately, we want to enrich the cities we’re in. When we launch, these other externalities happen,” he said. “That being said, I fundamentally believe Airbnb is a really good thing for the city of San Francisco, New York, many other cities.”
In the same interview, Chesky seemed to reject the notion that Airbnb displaces unionized hotel jobs. “As we’ve grown, hotels have grown. Hotels have record occupancy rates,” he said. “And a lot of people, when we launched, thought we couldn’t coexist. But we are fundamentally a different way to travel.”
In March the market research firm PKF Hospitality Research projected a record 65.6 percent occupancy level in 2015. As for housing costs, University of British Columbia professor Thomas Davidoff, in a research paper commissioned by Airbnb, found that short-term rentals exert some upward pressure on citywide rents — roughly a $19 difference per month in San Francisco. The effect may be largely confined to the more desirable neighborhoods where Airbnb listings are most prevalent.
Airbnb and similar businesses are already regulated under an October 2014 city ordinance that formally legalized home-sharing arrangements and set up a registration process for the rooms being put on the market. The legislation was sponsored by then-Supervisor David Chiu, who is now a member of the California State Assembly. It was passed in the midst of a hard-fought Assembly race between Chiu and fellow Supervisor David Campos, an opponent of the legislation. Two Airbnb investors sided with the ultimately victorious Chiu, donating thousands of dollars to his campaign.
Airbnb praised the legislation in a statement released shortly after the vote, saying it was “a great victory for San Franciscans who want to share their home and the city they love.”
Back to the drawing board
The company should be pleased, according to some of the leading city advocates for tighter regulation. Casey said his union was shut out of the negotiation process, and Campos — who recently introduced an amendment intended to strengthen regulation of home rentals — said Airbnb “essentially drafted this legislation.” Shortly after the law was implemented, the city’s Planning Department declared that it was impossible to enforce in its current form.
“In a very short period of time, it’s become very clear that it’s not workable,” Campos told Al Jazeera, roughly one month into the law’s implementation. “There is simply no way of verifying that people who are supposed to be registered are in fact following the rules. And in fact, as of a couple of weeks ago, only a few dozen people had registered, when we know there are thousands of people who are using Airbnb.”
He also criticized a provision of the law that caps short-term rentals at 90 days per year when the owner is not occupying a room in the unit but does not mandate any cap when the owner is staying there. Said Campos, “There’s simply no way of knowing whether the host is actually present.”
Supervisor Scott Weiner, who voted for the current version of the law, told Al Jazeera that one month was not long enough to judge whether the regulation is effective. He criticized the Planning Department for calling the law unenforceable so early into its implementation.
“I think the Planning Department needs to do its job and make every effort to properly administer this legislation rather than coming out of the gate a month after the legislation is in effect and declaring it unworkable,” he said. “I was very, very surprised to hear those remarks from the Planning Department."
The amendment introduced by Campos — along with fellow supervisors Eric Mar and John Avalos — would allow the neighbors of renters to sue them over alleged violations of the law, impose a 60-day cap on rentals regardless of whether the host is present in the apartment and require companies like Airbnb to turn over information about the hosts who use their services.
That last provision may be the most controversial. Airbnb has denounced any proposal that would “fundamentally alter the online privacy protections that most Californians have come to expect.” The consumer advocacy group Consumer Watchdog has agreed, calling such policies “an unwarranted intrusion into users’ privacy [that] inappropriately requires the home sharing platform to do the enforcement work that should be rightfully done by the city.”
Campos, nonetheless, has pressed forward, as has Casey. Local 2 is part of a coalition called Share Better San Francisco, which is pressing for a ballot measure similar to Campos’ legislative proposal. Opponents of that measure, including the editorial board of The San Francisco Chronicle, argue that changes to short-term rental regulatory policy should be made by the Board of Supervisors. Judson True, a legislative aide to Chiu who also worked for him during his time on the Board of Supervisors, told Al Jazeera that working through the board “in a collaborative way” was preferable to locking in sweeping changes through a single popular vote.
“It’s not surprising that the mayor and some supervisors might see a need to tweak the law, and that’s why it makes sense for this issue not to be settled at the ballot box,” he said.
To that end, Mayor Ed Lee and Supervisor Mark Farrell have proposed their own changes to the law, which would set a cap at 120 days and create a city agency, the Office of Short-Term Rental Administration, to enforce regulations. The mayor’s proposal does not require Airbnb and other companies to turn over information regarding their users. In a recent op-ed for The San Francisco Examiner, Campos derided the compromise measure, saying it “leaves major loopholes that make it impossible for the city to enforce the law” and fails to penalize short-term rental services for regulatory infractions.
At the same time, Airbnb and some of its users are pushing for a relaxation of the Planning Department’s guidelines on how to legally register. Departmental rules require hosts to appear at the department’s office in person, submit an application, provide documentation proving they are permanent residents of their domiciles, obtain a certificate from the Treasurer and Tax Collector’s Office and provide proof of liability insurance, among other hurdles.
“There are lots of ways in which we think the red tape can be simplified and made more streamlined,” said Peter Kwan, the founder of Home Sharers of San Francisco, a group of short-term rental hosts loosely affiliated with Airbnb. “I think that a lot more can be done electronically. We are sitting in the heart of Silicon Valley. It’s, to me, astounding that this city still would require an applicant to telephone and leave a voice mail, wait for them to call back to make an appointment and then turn up in person to submit the application. We should be able to do this all online."
Kwan, a 54-year-old retiree, said he keeps a spare room in his house for when his sister visits from Hong Kong. When she isn’t occupying the room, he rents out it out through Airbnb. The money he derives from hosting “certainly helps,” he said, but “the pleasures of hosting are equally if not more important than just the monetary compensation."
“I also found myself really enjoying being a host,” he said. “There is joy in showing visitors the neighborhood and the city I’ve come to call home."
Short-term rental is relatively recent phenomenon, and attempts to regulate it are even more recent: Airbnb was founded in 2008, and San Francisco’s short-term rental legislation officially went into effect barely three months ago. In other words, there is no standard for how cities should deal with short-term home-sharing — particularly cities in the midst of serious housing crises. Without any clear examples to follow, San Francisco will probably spend a long time grappling with how best to regulate companies like Airbnb. The city’s current regulatory model is likely to be in just the first of many iterations.
Whatever the final result, proponents of tighter regulations are under no illusion that policing Airbnb will solve broader affordability issues. Campos said that cracking down on some Airbnb rentals would free up much-needed housing stock but that building more affordable housing would still be essential.
“We know that to maintain the level of displacement that we have right now — in other words, so that we don’t have more people evicted or displaced in this city — we need to make more housing that’s affordable available to people,” he said. “We need to, in the next few years, create about 15,000 new units of affordable housing.”
For emphasis, he said it again: “New units."