SF Apartment : January 2016


Election Reflection

by Charley Goss

The November 2015 election had voters deciding on many housing-related propositions, and there is already talk of another busy ballot for next year. Below is an in-depth look at the results of three of the 2015 measures: Propositions F (short term rentals), C (expenditure lobbyists) and I (Mission moratorium). Additionally, we’ll look toward what’s coming next in 2016, and how electoral decisions could impact you over the next several years

Proposition F: Short Term Rental Control Measures Fail
Of the various 2015 ballot measures, SFAA’s members will likely most directly be affected by Proposition F’s rejection by voters. Much has been written about Prop F and short term rentals in the news, but it may be helpful to understand how the vote impacts you, your tenants and your ability to use short term rentals in the future.

Prop F was placed on the ballot by a citizens’ initiative: a collection of signatures from San Francisco residents. The citizens’ initiative occurred following several months of legislative hearings at the planning ccmmission and the board of supervisors that resulted in a law that was viewed by many stakeholders as flawed and unenforceable. Those hearings provided some regulatory structure and framework for short term rentals, but many SFAA members noticed that their tenants’ Airbnb behavior was continuing unabated, without their tenants abiding by the newly crafted law and its registration requirements.

Prop F proposed to do a few main things. First and foremost, it required all hosting platforms—websites, message boards and services used to facilitate short term rentals—to only list fully registered units and rooms. In other words, only units that had already registered with the city and county of San Francisco and that were able to meet all of the city’s registration requirements would be eligible to be listed. The measure also aimed to institute a registration process requiring potential hosts to prove the unit was their primary place of residence, and to get the permission of the building owner and building residents prior to registering.

This system would have created a network of enforcement for property owners and building residents alike by requiring this permission to be in place prior to a short term rental being listed online. Additionally, short term rental platforms themselves would be held responsible for posting noncompliant, illegal unregistered listings offered by profit-seeking tenants or by building owners who had illegally emptied their buildings for short term rental use.

The proposed law also would have capped both hosted (short term rentals where the host is present) and unhosted (short term rentals where the host is absent) stays at 90 days. Without a hard cap on both hosted and unhosted rentals, the city bears the burden of proving whether or not an individual is sleeping in their own apartment after the short term rental has been used more than 90 nights a year.

By leveling the playing field between hosted and unhosted rentals, an enforcement agency would more easily and accurately be able to verify whether or not a short term rental unit was being used within the guidelines of the law or was being abused and converted into a full-time short term rental unit.

There was much made about a provision in Prop F that sought to ban the use of short term rentals in inlaw units, but in reality, under the current law, almost no short term rentals are able to be legally conducted in inlaw units. The reason for this is that inlaw units citywide are almost exclusively tenant-occupied, rather than owner-occupied. Under the current law, tenants cannot conduct short term rentals if their lease prohibits subletting—and almost all leases citywide currently prohibit subletting. In short, Airbnb use in inlaw units will almost always be illegal, regardless of Prop F.

The last major provision of the proposition had to do with enforcement and the private right of action, and allowed for interested parties (including the building owner, building residents and neighbors within 100 feet) to sue to enforce the law, even if the city had opened up an investigation into the short term rental unit without finding a violation. Because the previous law had gone without enforcement for so long, there was fear that any new law that was passed would also not be enforced. Prop F aimed to give the city a chance to open an investigation and pursue enforcement action, but also allowed private citizens to sue to enforce their rights under the law. This is the same way many other laws are currently enforced. After receiving feedback that the only way the law would be enforced was if attorneys could recoup the cost of the investigation, Prop F included the awarding of attorney’s fees in its section on private right of action. The private right of action provision was a point of contention during the election, but many still believe it is the only way the law can be fully enforced.

Because Prop F Was Voted Down, Existing Law Prevails
Here is a summary of existing law regarding short term rentals:
  • Individuals can only host short term rentals in the home in which they live (their primary place of residence). Landlords cannot conduct short term rentals in their vacant units—only in their home.
  • Tenants cannot host short term rentals at all if their lease prohibits subletting. Tenants can host short term rentals if their leases do not prohibit subletting, but this may lead to other issues regarding nuisance, noise, liability and concerns from neighboring residents.
  • Individuals can conduct short term rentals for 90 days a year when they are present, and an unlimited number of days a year when they are not present.
  • Individuals owe the hotel tax on their short term rentals, which should be paid quarterly.
  • Individuals must report quarterly to the city the number of nights they have conducted short term rentals.
  • Insurance is required. Many short term rental services offer a level of insurance protection, but hosts should get their own insurance for short term rentals, as renter’s insurance and rental-income building insurance will not cover claims resulting from short term rental use.
  • Business licenses are required.
  • Enforcement is a requirement, but in actuality does not often happen. Because the city has stated its enforcement is only complaint based, there is not movement to get short term rental hosts registered with the city.
  • There is thought that with the failure of Prop F, a new solution to the short term rental problem can be legislated at the board of supervisors. Only 2016 will tell.

Proposition C: Lobbyist Reporting Passes
Proposition C passed overwhelmingly, and while the law is simple enough—to require lobbyists to disclose their contacts with elected officials and any potential payments to such—it will be very interesting to see how the law is applied. Currently SFAA and other industry groups already register their contacts with and contributions to elected officials, while many other nonprofit advocates (including those that receive serious amounts of funding from the city) contact and lobby elected officials in the darkness of the night without ever having to report their actions publicly. It will be interesting to see which other community groups will begin to have to report their interactions with members of the board of supervisors under Prop C.

Proposition I: Mission Housing Moratorium Defeated
Thankfully, in the midst of an untenable housing and affordability crisis, Proposition I, the Mission moratorium, was defeated. If passed, Prop I would have stopped the construction of thousands of market rate units, and this stoppage would have prevented hundreds of affordable units from coming online as well. San Francisco’s affordability problems affect all of us, and it is clear that we do have a housing problem, but stopping the production of housing in a housing shortage simply was not the correct solution. The presence of Prop I on the ballot was used successfully as a tool to gain dedicated funding for affordable housing in the Mission, and the defeat of Prop I means that we as a city must continue to work to address our very real housing shortage and affordability problems in the coming year.

Even though it’s only January, it’s already time to look forward to what’s coming next year. We already know that a measure to increase the affordable housing requirement for new developments will be on the ballot, and we expect to see some reiteration of 2014’s Proposition G, which proposed a 25 percent tax on the resale of residential property. We’re also likely to see a measure that deals with street tree maintenance. Aside from other housing-focused measures, there will be elections in 2016 for supervisors for Districts One, Three, Five, Seven and Nine. Looking forward, it will be crucially important to support moderate candidates in their efforts as they run for office locally at the board of supervisors, and also in statewide elections for senate and assembly. 

Charley Goss is the government and community affairs manager at SFAA. He can be reached at 415-255-2288, ex. 14.