NEW YORK (MainStreet) — Call it a "big step forward for the sharing economy.
Until early October action by the San Francisco Board of Supervisors, any owner renting out an Airbnb property was officially in violation of a city ban on rentals of less than 30 days. But in sweeping action the Supes struck that ban - effectively legitimizing many (not all) Airbnb rentals. That change is scheduled to take effect in February and, until then, observers believe San Francisco will be lax about trying to police Airbnb listings.
Sharing economy experts have been quick to say that the San Francisco law will shape Airbnb's political agenda as it resolves disputes with other municipalities. New York City had been especially outspoken and, suggested observers, Airbnb now is likely to head to Manhattan for a face-off that aims to persuade New York to enact a law similar to San Francisco's. The new law there has benefits both for the company and the city, which now will collect room taxes and also a $50 registration fee from every Airbnb owner.
For its part, Airbnb called the Supervisors' vote "a great victory."
"This is good for everyone," said Tad Devlin, a lawyer in the San Francisco office of Kaufman Dolowich Voluck. "People will use Airbnb whether it's legal or not and now, in San Francisco, it is legal."
He added: "There are questions that still need to be resolved. There will be trailing litigation." That's because the law settled some big questions but there remain many more.
For instance: some owners are potential losers. A catch in the San Francisco measure is that only "permanent" city residents - defined as living there 275 days in a year - can put property up on Airbnb. Does that mean those who own pied-à-terres that they occupy only occasionally cannot legally rent out their unit via Airbnb. The law as written so indicates but, quite probably, there will be attempts - including lawsuits - to alter that.
San Francisco also is in effect capping the number of rentals per host at one. That is because it simply is not possible to occupy multiple properties for 275 days each.
However, in a detailed analysis of Airbnb listings, the San Francisco Chronicle had found that about one-third of the Airbnb inventory is controlled by people with multiple listings. Their legal status going forward is cloudy. This likely will trigger still more litigation and lobbying.
Another wrinkle: the restrictions do not apply to an owner who is renting out a spare bedroom. That apparently can be put on Airbnb every night of the year without running afoul of the laws.
Come February, owners will also be obliged to pay taxes on their rentals. A winner there is Airbnb, which had been threatened with tax bills of several years of occupancies in the city. That demand now is off the table. Its obligation now is to collect taxes from owners and forward the dough to the city.
Airbnb applauded the city's actions which appear to end six years of squabbling. The company said in a statement: "The legislation that moved forward tonight will give regular people the right to share the home in which they live and make it fair to share in San Francisco. This vote was a great victory for San Franciscans who want to share their home and the city they love. We look forward to working with everyone as we move forward."
Still other - thorny - issues remain clear as mud. Most condominium Codes, Covenants and Restrictions (CC&Rs) which set out the rules for living in a community typically ban short-term rentals. In some buildings, all rentals are banned. That would seem to eliminate a significant portion of the potential Airbnb rental pool in San Francisco.
In many cases, too, renters would be in violation of their leases - and risk eviction - were they caught putting apartments or even rooms into the Airbnb inventory. Most standard leases disallow sublets without permission. By most counts, about two in three residencies in San Francisco are rentals.
These are cavils, however. Devlin summed up the bottom-line of what this decision means, not just in San Francisco, to Airbnb and the sharing economy: "Now it's legitimate. There are legal guidelines. Questions are getting answered."
--Written by Robert McGarvey for MainStreet