www.sfplanning.org
Executive Summary
Administrative Code Text Change
HEARING DATE: APRIL 23, 2015
Date: April 16, 2015
Project Name: Amendments Relating to Short-Term Rentals
Case Number: 2014-001033PCA, 2015-003861PCA, and 2015-004765PCA
[Board File No. 141036, 150295, 150363]
Initiated by: Supervisor Kim/ Introduced October 7, 2014
Supervisor Campos/ Introduced April 14, 2015
Ma
yor Edwi
n Lee, Supervisor Farrell/ Introduced April 14, 2015
Staff Contact: Aaron Starr, Manager of Legislative Affairs
aaron.starr@sfgov.org, 415-558-6362
Reviewed by: AnMarie Rodgers, Senior Policy Advisor
Recommendation: Recommend Approval with Modifications
ADMINISTRATIVE CODE AMENDMENTS
Sponsors Supervisors Kim and Breed: Short Term Rental Ordinance, Duplicated File.
The proposed Ordinance sponsored by Supervisors Kim and Breed (hereinafter “Kim Ordinance”) would
amend the Administrative Code’s provisions on Short-Term Rentals (hereinafter “STR”) (Chapter 41A) to
prohibit certain residential units that have been the subject of an Ellis Act Eviction from use as short-term
residential rentals and provide for private right of action to enforce the requirements of Admin Code
Chapter 41A; and making findings of consistency with the General Plan and the eight priority policies of
Planning Code Section 101.1.
The Way It Is Now:
1. Units that have been subject to an Ellis Act Eviction
1
are not prohibited from being used as a STR.
2. The City may institute civil proceedings against a Hosting Platform
2
, Business Entity
3
, or Owner
4
,
but only following the filing of a complaint and the determination of a violation by the Planning
Department.
1
Administrative Code Section 37.9(a)(13)
2
Hosting Platform is defined as “A person or entity that provides a means through which an Owner may offer a
Residential Unit for Tourist or Transient Use. This service is usually, though not necessarily, provided through an
online platform and generally allows an Owner to advertise the Residential Unit through a website provided by the
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3. Interested Parties
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may only institute civil proceedings against a Business Entity or Owner and
only following the filing of a complaint and the determination of a violation by the Planning
Department.
The Way It Would Be:
1. Units that had been subject to an Ellis Act Eviction within the last five years could not be used as
a STR.
2. The City could institute civil proceedings against a Hosting Platform, Business Entity, or Owner
at any time.
3. Interested Parties could still only institute civil proceedings against a Business Entity or Owner
and only following the filing of a complaint and the determination of a violation by the Planning
Department; however two additional private rights of action would be allowed, which are as
follows:
(a) Non-profit Organization that has the preservation or improvement of housing as a stated
purpose in its articles of incorporation or bylaws may institute a civil action against the
Owner or Business Entity, if within 5 years prior to the date of the filing of the Complaint, the
Owner or Business Entity terminated the tenancy of one or more tenants in the building
using the Ellis Act, where the tenant was served with a notice of eviction after October 7,
2014. An Interested Party may institute a civil action under this subsection only if (1) the
Interested Party has filed a Complaint with the Department; (2) 30 days have passed since the
filing of the Complaint; (3) after such 30-day period has passed, the Interested Party has
provided 30 days’ written notice to the Department and the City Attorney’s Office of its
intent to initiate civil proceedings; and (4) the City has not initiated civil proceedings by the
end of that 30-day period.
(b) Non-profit organization that has the preservation or improvement of housing as a stated
purpose in its articles of incorporation or bylaws and has existed as such for no less than five
years from February 1, 2015, may institute civil proceedings against an Owner or Business
Entity of a rent-controlled building of at least three Residential Units for injunctive relief. An
Interested Party may institute a civil action under this subsection only if the Interested Party
has (1) filed a Complaint with the Department; (2) 45 days have passed since the filing of the
Hosting Platform and provides a means for potential tourist or transient users to arrange Tourist or Transient Use
and payment, whether the tourist or transient pays rent directly to the Owner or to the Hosting Platform.”
3
Business Entity is defined as “A corporation, partnership, or other legal entity that is not a natural person that
owns or leases one or more residential units.”
4
Owner is defined as “Any person who is the owner of record of the real property. For the purposed of the City’s
STR regulations, the term "Owner" includes a lessee where the lessee is offering a Residential Unit for Tourist or
Transient use.”
5
Interested Parties is defined as “A Permanent Resident of the building in which the Tourist or Transient Use is
alleged to occur, any homeowner association associated with the Residential Unit in which the Tourist or Transient
Use is alleged to occur, the Owner of the Residential Unit in which the Tourist or Transient Use is alleged to occur,
the City and County of San Francisco, or any non-profit organization exempt from taxation pursuant to Title 26,
Section 501 of the United States Code, which has the preservation or improvement of housing as a stated purpose in
its articles of incorporation or bylaws.”
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Complaint; and (3) after such 45-day period has passed, the Interested Party has provided
written notice to the Department and the City Attorney’s Office of its intent to initiate civil
proceedings.
Sponsors Supervisors Campos, Mar and Avalos: Amendments to the STR Ordinance
The proposed ordinance sponsored by Supervisors Campos, Avalos, and Mar (hereinafter the “Campos”
ordinance) would amend the Administrative Code to revise the Residential Unit Conversion Ordinance
to: limit short-term rental of a Residential Unit to no more than 60 days per calendar year; require
Hosting Platforms to verify that a Residential Unit is on the City Registry prior to listing, 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 useage data to the Planning Department; prohibit short-term rental of certain
“in-law” units; 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; and 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.
The Way It Is Now:
1. An Interested Party is defined as “A Permanent Resident of the building in which the Tourist or
Transient Use is alleged to occur, any homeowner association associated with the Residential Unit in which
the Tourist or Transient Use is alleged to occur, the Owner of the Residential Unit in which the Tourist or
Transient Use is alleged to occur, the City and County of San Francisco, or any non-profit organization
exempt from taxation pursuant to Title 26, Section 501 of the United States Code, which has the
preservation or improvement of housing as a stated purpose in its articles of incorporation or bylaws.”
2. The City may institute civil proceedings against a Hosting Platform, Business Entity, or Owner,
but only following the filing of a complaint and the determination of a violation by the Planning
Department.
3. Interested Parties may only institute civil proceedings against a Business Entity or Owner and
only following the filing of a complaint and the determination of a violation by the Planning
Department.
4. Non-hosted rentals are limited to 90-days a year and hosted rentals are unlimited
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.
5. Hosting Platforms are not prohibited from listing a Residential Unit that does not maintain good
standing on the City’s Short-term Residential Registry
7
.
6
The actual text states that The Permanent Resident must occupy “the Residential Unit for no less than 275 days out of
the calendar year in which the Residential Unit is rented as a Short-Term Residential Rental,” the effect of which is to limit
non-hosted rentals to 90-day.
7
Short-Term Residential Rental Registry is defined as “A database of information maintained by the Planning
Department that includes information regarding Permanent Residents who are permitted to offer Residential Units
for Short-Term Residential Rental. Only one Permanent Resident per Residential Unit may be included on the
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6. The Permanent Resident must submit a report to the Department every year regarding the
number of days the Residential Unit or any portion thereof has been rented as a Short-Term
Residential Rental; however, Hosting Platforms are not required to report the number of nights a
Residential Unit was occupied as a Short-Term Residential Rental.
7. Dwelling Units authorized under Section 207.3 of 715.1 of the Planning Code, also known as
Accessory Dwelling Units (ADUs) or in-laws, are not prohibited from being used as a STR.
8. The Planning Department is required to redact the name of the Permanent Resident included in
the STR register for records available for Public Review.
9. Existing law provides for misdemeanor criminal penalties against an Owner or Business Entity
who violates Chapter 41A and unlawfully rents a unit as a short-term rental.
The Way It Would Be:
1. For the definition of Interested Party, “Permanent Resident or owner residing within 100 feet” would
be added to the definition and “the Owner of the Residential Unit in which the Tourist or Transient
Use is alleged to occur” would be deleted from the definition.
2. The City could institute civil proceedings against a Hosting Platform, Business Entity, or Owner
at any time (the same change as prescribed in the Kim Ordinance’).
3. An Interested Party would be able to institute a civil action against the Owner, Business Entity or
Hosting Platform for injunctive and monetary relief prior to the Department finding that a
violation has occurred if the Interested Party has filed a Complaint with the Department; 60 days
have passed since the filing of the Complaint; after such 60-day period has passed, the Interested
Party has provided 30 days’ written notice to the Department and the City Attorney’s Office of its
intent to initiate civil proceedings; and the City has not initiated civil proceedings by the end of
that 30-day period.
4. Both non-hosted and hosted rentals would be limited to 60-days a year.
5. Hosting Platforms would be prohibited from listing any unit that did not maintain good standing
on the City’s Short-term Residential Registry.
6. Permanent Residents would still be required to report to the Department how many times their
unit had been rented over the past year as a STR, and the Hosting Platforms would now be
required to report quarterly to the Planning Department the number of nights the Residential
Unit was occupied as a Short-Term Residential Rental. Further, if a Hosting Platform has
information that a unit has been used as a STR for more than 60 days, they would be required to
immediately remove such listing from its platform.
7. ADUs or in-laws approved under Section 207.3 or 715.1 of the Planning Code would be
prohibited from being used as a STR.
8. The Planning Department would be required to redact the street and unit numbers of any
residences included in the STR register, in addition to the name of the Permanent Resident.
Registry at any given time. The Registry shall be available for public review to the extent required by law, except
that, to the extent permitted by law, the Department shall redact any Permanent Resident names from the records
available for public review.”
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9. The proposed ordinance would allow for misdemeanor criminal penalties against a Hosting
Platform, as well as an Owner or Business Entity, who violates the requirements of Chapter 41A.
Sponsor Mayor Edwin Lee, Supervisor Farrell: Amendments to the STR Ordinance
The proposed ordinance Sponsored by Mayor Edwin Lee and Supervisor Farrell (hereinafter the
“Mayoral” Ordinance) would amend the Administrative Code to revise the Residential Unit Conversion
Ordinance to limit short-term rental of a Residential Unit to no more than 120 days per calendar year,
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, and direct the Mayor to 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.
The Way It Is Now:
1. Non-hosted rentals are limited to 90-days a year and hosted rentals are unlimited.
2. An Interested Party is defined as “A Permanent Resident of the building in which the Tourist or
Transient Use is alleged to occur, any homeowner association associated with the Residential Unit in which
the Tourist or Transient Use is alleged to occur, the Owner of the Residential Unit in which the Tourist or
Transient Use is alleged to occur, the City and County of San Francisco, or any non-profit organization
exempt from taxation pursuant to Title 26, Section 501 of the United States Code, which has the
preservation or improvement of housing as a stated purpose in its articles of incorporation or bylaws.”
3. All STR functions, including registration and enforcement, are administered by the Planning
Department.
4. The Planning Department is required to redact the name of the Permanent Resident included in
the STR register for records available for Public Review.
5. The Planning Department is not required to include information on the Department’s website
about any pending or resolved Complaints regarding violations of Chapter 41A.
6. The City may institute civil proceedings against a Hosting Platform, Business Entity, or Owner,
but only following the filing of a complaint and the determination of a violation by the Planning
Department.
7. Interested Parties were eligible for civil penalties if the Interested Party won a lawsuit against a
violation of Chapter 41A.
8. Interested Parties may only institute civil proceedings against a Business Entity or Owner and
only following the filing of a complaint and the determination of a violation by the Planning
Department.
The Way It Would Be:
1. Both non-hosted and hosted rentals would be limited to 120 days.
2. The definition of Interested Party would be amended to include “Permanent Resident or owner
residing within 100 feet,” the same languages that is proposed in Campos ordinance.
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3. The proposed Ordinance includes a provision directing the Mayor to set up a STR Office that
would be staffed by the Planning Department, Department of Building Inspection and The Tax
Collector’s office.
4. The Planning Department would be required to redact the street and unit numbers of any
residences included in the STR register, in addition to the name of the Permanent Resident.
5. The Planning Department would be required to include information on the Department’s website
about any pending or resolved complaints regarding violations of Chapter 41A.
6. The City could institute civil proceedings against a Hosting Platform, Business Entity, or Owner
at any time (the same change as prescribed in the Kim ordinance and the Campos ordinance).
7. Only the City may be entitled to civil penalties if it wins the lawsuit, not an Interest Party.
8. Interested Parties would be able to institute civil proceedings against a Business Entity or Owner
if the following conditions are met: (1) The Interested Party has filed a Complaint with the City;
(2) The Planning Director has not made a determination that there is no violation of Chapter 41A
or no basis for an investigation; (3) 105 days have passed since the filing of the Complaint and an
administrative hearing officer has not issued a final determination regarding the Complaint; (4)
After the 105-day period passes, the Interested Party notifies the City of its intent to file a lawsuit;
and (5) The City does not file its own lawsuit by the end of the 30 day notice period.
BACKGROUND
Existing Regulations
With a valid Short-Term Residential Rental Registration number, a Permanent Resident
8
may rent out
their Primary Residential Unit for periods of less than 30 nights without violating the requirements of the
City’s Residential Unit Conversion and Demolition Ordinance (Administrative Code Chapter 41A) or the
Planning Code. This includes renting a portion or the entire unit while the permanent resident is present
for an unlimited number of nights per year and renting a portion of the entire unit while the permanent
resident is not present for a maximum of 90 nights per year.
In order to obtain a Short-Term Residential Rental Registration number, the following conditions must be
met:
1. The applicant must be the Permanent Resident (owner or tenant) of the residential unit that they
intend to rent short-term.
2. The applicant must obtain a San Francisco Business Registration Certificate from the San
Francisco Treasurer and Tax Collector’s Office.
3. The applicant must obtain liability insurance in the amount of no less than $500,000 or provide
proof that liability coverage in an equal or higher amount is being provided by any and all
hosting platforms through which the applicant will rent the unit.
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To be a Permanent Resident, the applicant must live in that specific residential unit for at least 275
nights of any given calendar year. New residents must have occupied the specific unit for at least 60
consecutive days prior to applying for the Short-Term Residential Registration. Applicants may only
register the specific residential unit in which they reside.
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4. The applicant’s residential unit must not have any outstanding Planning, Building, Housing, Fire,
Health, Police, or other applicable City code violations.
5. The applicant may only register one residential unit.
6. Residential units that are subject to the Inclusionary Affordable Housing Program and residential
units designated as below market rate (BMR) or income-restricted under City, state, or federal
law are not eligible to register. Units subject to San Francisco’s Rent Stabilization (Rent Control)
Ordinance are able to register, but may charge tourists no more than a proportional amount of
the residential rent.
Planning Commission’s Original Recommendation
The Planning Commission heard the original STR ordinance introduced by Supervisor Chiu
9
on August
7, 2014 and voted four (Antonini, Fong, Hillis, and Johnson) to two (Moore and Sugaya) with
Commissioner Wu absent to recommend approval with modifications to the Board of Supervisors. In
making their recommendation, Commission found that allowing residents to rent their units on a limited
basis was of reasonable, that STRs needed to be limited in order to preserve the City’s housing stock, to
reduce impacts on affordable housing, and to protect the livability of residential neighborhoods.
The Commission’s recommendation sought to create a legal avenue for hosts who want to occasionally
rent their primary residence on a short-term basis, while balancing concerns over housing affordability
and neighborhood character. Consequently, the Commission’s recommendations mainly focused on
improving the enforcement and monitoring of STRs; however the Commission also believed that the
Ordinance needed to be expanded to regulate both hosted and non-hosted rentals and that all of the
City’s non-subsidized dwelling units should be treated the same under the new restrictions.
Of the Commission’s 16 recommendations, six were not incorporated into the final ordnance. Those
include:
1. Modify the Ordinance so that the proposed city-run registry tracks the number of nights a unit
has been rented.
2. Require any STR platform or company doing business in San Francisco to provide information on
the number of nights a property was rented. Information should be reported back to the city on a
quarterly basis at a minimum.
3. Grant citation authority to the Planning Department if it is chosen to be the enforcement agency
for STRs, and provide for increased penalties for repeat violators.
4. Limit hosted rentals by nights rented, similar to the restrictions placed on non-hosted rentals, or
by limiting the number of rooms that can be rented at any one time.
5. Require the property owner’s consent in tenant occupied units and/or a 30-day notification by the
Department to the owner prior to listing a unit on the STR registry.
6. Require the Planning Department to maintain a list of registered hosting platforms.
The final ordinance did include a requirement similar to recommendation five that requires the
Department to send a letter to the property owner notifying them that the permanent resident of the unit
has applied to be on the STR registry; however, a property owner’s consent is not required before listing a
unit on the sort-term rental ordinance.
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Board File 140381, Ordinance Number 218-14, Final Action 10/27/2014
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Budget and Finance Committee Hearing
Since the Board adopted the STR Ordinance, the Department also participated in a public hearing before
the Budget and Finance Sub-Committee on March 4, 2015
10
. This hearing was at the request of
Supervisors Farrell and Christensen and focused on the Planning Department's capabilities to enforce the
STRs Ordinance, and the financial resources necessary for effective enforcement. At the hearing,
Department staff presented an overview of the new law; the process for registration; some of the stats on
how registration is progressing; and then provided our assessment of what’s working and what could
work better.
During the presentation, staff emphasized that the Planning Commission felt that if housing and
neighborhood character could be preserved, it would be reasonable to allow STRs. So while the
Commission felt comfortable with permitting the use in a way that did not reduce our housing, this use is
predicated on this limits being enforced.
Staff also acknowledged that while some potential applicants complained about the burden of registering
in person, appointments save both applicants and planners from a chaotic intake situation. The face-to-
face meetings allow for applicants to ask important questions and learn about the program in greater
detail. Staff believes the face-to-face, scheduled appointments also help to reduce the occurrence of
fraudulent applications being filed.
The members of this Committee are typically Chair Farrell, Tang, and Mar. At the March 4 hearing,
Supervisors Christensen, Campos, and Kim joined in for the hearing. Supervisor Farrell restated his
commitment to ensuring sufficient resources to enforce this law. Supervisor Campos stated that he has
asked the Board’s Budget Analyst to report on the issue and that the City may need to subpoena some
hosting platforms to increase our understanding. Supervisor Christensen wanted to increase motivation
for registry and thought the City should get clear about our goals and develop a timeline for hosts to
register. Supervisor Mar expressed his disappointment that a local, successful corporation was failing to
cooperate. He said he liked the idea of adding a cap to the registry. Supervisor Kim again stated that the
law has put the Planning Department in a difficult position of enforcing a law that is inherently difficult
to enforce. As this was a hearing, no action was taken.
ISSUES AND CONSIDERATIONS
Planning Department’s Short-Term Rental Data
As of April 3, 2015, 455 Short-Term Residential Rental Applications have been submitted to the Planning
Department for review. While staff is currently reviewing these applications, the following is a summary
of our current disposition of these applications:
Certificates Issued: 170 applications out of 455 applications (37%) have been reviewed by staff and found
to be complete and accurate, resulting in the issuance of a registration certificate. This process involves 1)
creating the record in the Project and Permit Tracking System (PPTS); 2) verifying accuracy and
completeness of application materials; 3) checking for open enforcement violations with the Planning
Department and Department of Building Inspection; 4) mailing notices to property owners when
necessary; and, 5) creat
ing/issuing the registration certificate and mailing registration packet to the
applicant.
Ineligible Applications: 27 of the 455 applications (6%) have been reviewed by staff and appear to be
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Board File 150198
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ineligible. Ineligible applicants are those who do not appear to be permanent resident of the unit in
question. This is often determined by information the applicant has provided during their appointment
or information available as a result of previous enforcement action. These applicants have been issued a
Notice of Intent to Deny Based Upon Incomplete or Ineligible Short-
Term Residential Rental Application
(“Notice”). The Notice provides 30 days for the applicant to submit additional materials. Failure to
respond will result in denial of the application.
Incomplete Applications: Staff has found that at least 53 of the 455 (12%) applications include inadequate
or inconsistent information. This includes documents that show ownership of the property with different
mailing addresses for supporting materials. Staff has also received applications for multi-unit buildings
where the owner claims residency in one unit (the unit they are also applying to rent short-term), while
also submitting documentation revealing that they live in another unit in the same building. These
inconsistencies prevent staff from being able to process and
issue certificates. During the intake
appointment, applicants are informed of the missing or inaccurate documents and are given the
opportunity to email or physically drop off the missing documentation (avoiding the need for a separate
appointment). Those applicants that have not submitted missing documentation have been issued a
Notice of Intent to Deny Based Upon Incomplete or Ineligible Short-
Term Residential Rental Application
(“Notice”)
. The Notice provides 30 days for the applicant to submit additional materials. Failure to
respond will result in denial of the application.
“No-Show” and Cancelled Appointments:
Since the program first began accepting appointments on
February 2, 2015; staff has experienced a no-show/cancellation rate of 26%. Over time, staff has observed
that a greater number of applicants fail to show up for their scheduled appointment. Staff believes that
the high no-show/cancellation rate may decrease if applicants are charged a no-show/cancellation fee. The
Department has begun offering after-hours drop-in application sessions (without need for appointment)
once per month and plans to introduce business-hours drop-in sessions (beginning in May) to increase
opportunities for the public to submit applications and optimize staff time for application intake.
Number
Ratio
Applications Submitted
455
--
Certificates Issued
170
170/455
Applications Found to be Ineligible
27
27/455
Submitted Applications Currently Missing
Materials
53 53/455
“No-Show” and Canceled Appointments 132
132/515*
*number of scheduled appointments
Housing Affordability
The Planning Department’s paramount concern continues to be limiting the impact that STRs have on the
availability and affordability of the City’s housing stock. This concern is derived from Objectives Two
and Three of the City’s Housing Element, which seek to “retain existing housing units” and “protect the
affordability of the existing housing stock” respectively. Many hosts (56%) say the tourist use enables
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them to pay their rent or mortgage
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. The concern is that the financial assistance for hosts may be coming
at the expense of residential tenants’ opportunity for permanent housing.
The critical questions for policy makers seeking to protect housing are: when does STR make more efficient use of
unused resources and when does it incentivize the conversion of residential space to tourist use? While this report
reviews a fair amount of new data, these fundamental questions remain unanswered.
This section of the staff report will review available data in relation to how tourist use of housing may
affect housing availability and affordability.
Newly available data, specific to San Francisco since the August 2014 Commission hearing:
• 2014 August- datascrape of Airbnb by an independent journalist
12
• 2014 December- datascrape of Airbnb by an independent journalist
13
• 2015 February- datascrape of Airbnb by an independent journalist
14
• PENDING- Controller’s Report by the Office of Economic Analysis
• PENDING- Board of Supervisors Budget and Legislative Analyst
New comparative reports on STR in other cities:
• 2014 October- NY State Attorney General Study, “Airbnb in the City”
15
• 2015 March- LAANE, “Airbnb, Rising Rent, and the Housing Crisis in Los Angeles”
16
In 2015, the Planning Department benefited from the graduate research of Alex Marqusee at the UC
Berkeley Goldman School of Public Policy. A detailed memorandum summarizing this work to date is
attached as Exhibit B. The attached memorandum collaborates multiple data sources to provide the most
complete and transparent window yet into San Francisco’s STR market. Highlights of the “Marqusee
Memorandum” include:
1. Extent of San Francisco’s STR Market. Using multiple sources, the memo reaffirms previous
estimates that approximately 4000-5000 Airbnb listings currently exist in San Francisco. To understand
how listings may translate into tourist stays and/or the loss of housing, this memo notes that:
• an estimated 130,000 tourists stayed in STRs in 2014, according to the San Francisco Travel
Association;
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Economic Impact Analysis. HR&A Associates, commissioned by Airbnb. 2012.
12
Data collected and published by Tom Slee. Retrieved from
https://www.google.com/fusiontables/DataSource?docid=1WvonuxK6oy6c6gi7iIvLDIaJtcyHXbx8t0KKGh1p#map:id=
3 in February 2015.
13
Data collected by: Murray Cox of http://insideairbnb.com/ (personal communication with staff in March 2015).
14
Data collected by: Guss Dolan (http://darkanddifficult.com/) & Anti-Eviction Mapping Project
(http://www.antievictionmappingproject.net/) (personal communication with staff in March 2015)
15
New York State Attorney General, Eric T. Schneiderman. “Airbnb in the city”. October 2014. Retrieved from
http://www.ag.ny.gov/pdfs/Airbnb%20report.pdf
in November 2014.
16
LAANE, A New Economy for All. “Airbnb, Rising Rent, and the Housing Crisis in Los Angeles”, March 2015.
Retrieved from http://www.laane.org/wp-content/uploads/2015/03/AirBnB-Final.pdf
in April 2015.
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• the majority of hosts rent out their units less than once per month; however, a few hosts rent
more frequently, there are about 500 listings that are booked at least 3.5 times per month; and
• Airbnb estimated that the average stay per booking is 5 nights per trip in 2011. This estimate is
collaborated with a survey by the SF Travel Association Visitor Survey that found short-term
rental stays averaged 5.1 nights.
2. Revenue and Economic Incentives for San Francisco Hosts. The memo estimates revenue of hosts by
counting post-rental reviews and increasing this number by 28% to account for the percentage of
bookings that Airbnb has said do not result in reviews. This estimation technique shows that most units
generate little revenue per month ($495 monthly revenue for 50% of hosts) but some hosts make a sizable
income ($1894 monthly revenue for the top 10% of hosts and $2500 monthly revenue for the top 5% of
hosts). When considering when the economic incentives that the STR market may provide to convert
residential use to tourist use, it’s important to compare the prices of similar units from both the
residential and STR market. While a perfect comparison is not possible, the memo explores current
Craigslist rental rates by neighborhood against STR rates by neighborhood. This data show that the
median number of days where STR use would outcompete residential use is about 257 days
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. This
provides assurance that the highest STR cap proposed (120 day limit) in the pending ordinances would
still protect housing by ensuring that residential use would be more lucrative than STR.
3. Description of STR Listings: Entire Units in the Northern and Eastern Neighborhoods. All three
datascrapes cited in the memo confirm that a majority of hosts (61%) rent their entire unit. Private rooms
account for about a third of the listings (35%). And, shared rooms represent the smallest fraction of San
Francisco listings (4%). The density map below shows that STR units are concentrated where the City’s
housing is concentrated.
Note: Map points for listings are imprecise as the data
available on Airbnb’s website obscures the exact location
by about ¼ mile. This obfuscation likely accounts for dots
in the ocean and parks.
San Francisco Analysis. The data shows that the average, minimum booking per month is slightly less
than once per month. If Airbnb’s 2011 statement that bookings typically are for 5 rental days is still
accurate; then the median tourist use of a listing represents 54 days per year or about 15% of the year.
Allowing for tourist use of a unit for 15% of the year falls squarely within policymaker expectations. The
current law allows tourist use of a full unit for 25% of the year. However, the most active 25% of listings
average 2 bookings per month which results in tourist use for approximately 33% of the year and the top
17
This number overestimates the profitability of Airbnb by not accounting for some fees and operating
costs. The Office of the Controller is expected to explore this topic in more detail in an upcoming report.
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10% of listings are estimated to be in tourist use for the majority of the year—exceeding the limits
proposed by all of the draft ordinances. The good news is that the average listing continues to be
dedicated to tourist use for a fraction of the year. Without a more detailed survey of hosts, it cannot be
determined if the listing is used for residential use for the remainder of the year. Along the same lines,
there is no data to inform policymakers about when a tenant may decide to forego a roommate and
instead periodically lease a portion of their unit as a STR. The data does show that a limited number of
listings that are dedicated to tourist use for a majority of the year and have little capacity to house San
Francisco residents.
Minimum Estimated Bookings for all 5,148 Listed Units in San Francisco
The Average Listings Comply with SF Policy Intent; But
The Most Active Listings Are Dedicated to Tourist, Not Residential Use
Median
(average)
listings
Maximum
use if 90
ST
R days
allowed
Top 25%
most
active
listings
Maximum
use if 120
STR days
allowed
Top 10%
most active
listings
Top 5% of
active
listings
Bookings per month
0.9
1.5
2
2
3.5
4.5
Approx. % of the year
listing
dedicated to
tourist use*
15%
25%
33%
33%
58%
74%
* The length of stay per booking is estimated here at 5 days. This is based upon Airbnb’s 2011 statement that
bookings are typically for 5 rental days and is slightly less than the 2014 SF Travel Association Visitor Survey
stating short-term rental stays averaged 5.1 nights.
Density of STR Listings By Neighborhood That Appear to Be Rented as STR at Least 50% of the Year
This map demonstrates that some of the most frequently booked or commercially-oriented listings are concentrated
in core neighborhoods. The numbers represent the listings per neighborhood which are believed to be rented at least
50% of the year.
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Hearing Date: April 23, 2015 Short-Term Rentals
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Conclusions Beyond San Francisco. In addition to the Marqusee Memorandum, staff reviewed the New
York Attorney General Report on New York City; the LAANE report on Los Angles and a report
commissioned by Airbnb as summarized in the Wall Street Journal
18
.
Together, the conclusions in these three reports seem to mirror the local public dialogue:
1) While the majority of hosts may be offering units in a manner that aligns with public policy goals in
San Francisco; a minority of commercial users dominate the market and
2) Although STRs likely have limited effect on the citywide housing market, the effect is more pronounced
in high-demand neighborhoods.
Highlights from these three reports on STRs include:
• NY Attorney General Report: This report analyzes Airbnb bookings from January 1, 2010 to June
2, 2014. It provides the first exploration of how users in NYC use the hosting platform. The
intent of the report is to inform decision-makers on how to “best embrace emerging technology
while protecting the safety and well-being of our citizens”.
o Effects on Housing Supply. “Thousands of residential units in New York City were
dedicated primarily or exclusively to private STRs. In 2013, over 4,600 unique units were each
booked as private STRs for three months of the year or more. Of these, nearly 2,000 units
were each booked as private STRs on Airbnb for at least 182 days—or half the year. While
generating $72.4 million in revenue for hosts, this rendered the units largely unavailable for
use by long-term residents. Notably, more than half of these units had also been booked
through Airbnb for at least half of the prior year (2012).” (pg. 12)
o Neighborhood Concentration. “The majority of units converted to private STRs are in
popular neighborhoods in Brooklyn and Manhattan. A dozen buildings in those same
neighborhoods had 60% or more of their units used at least half the year as private STRs,
suggesting that the buildings were operating as de facto hotels.” (pg. 12)
o Rate of Growth. “Private STRs in New York City have grown at a staggering pace. The
number of unique units booked for private STRs through Airbnb has exploded, rising from
2,652 units in 2010 to 16,483 in just the first five months of 2014. Private bookings in New
York City saw a nearly twelvefold spike, rising from 20,808 in 2010 to an estimated 243,019 in
2014.” (pg. 6)
o Commercial Users. “While commercial users represented a minority of hosts, they
dominated the private STR market in units, reservations, and revenue. Commercial Users
[represent only 6% of all hosts, but] controlled more than one in five unique units in New
York City booked on Airbnb, accepted more than one in three private reservations, and
received more than one of every three dollars in revenue from private STRs on Airbnb—for a
total of $168 million.” (pg. 10)
18
Kusisto, Laura. Wall Street Journal. “Airbnb Pushes Apartment Rents Up Slightly, Study Says” March 30, 2015.
Retrieved from
http://blogs.wsj.com/developments/2015/03/30/airbnb-pushes-up-apartment-rents-slightly-study-
says/ in April 2015.
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14
New York City Commercial Users Accounted for a Disproportionate Share of Private STRs
Image from NY Attorney General report illustrating
that a minority of hosts garner the a high percentage of
revenue and reservations.
• LAANE Report on Los Angeles. This report completed by a nonprofit that seeks to “build a new
economy based upon: good jobs, thriving communities, and a healthy environment” is the most
critical. It concludes with four principals for regulating short-term rentals 1) protect housing; 2)
require approval for each STR; 3) hosting platforms should share the burden of enforcement; and
4) hosts should only be able to rent STR when they are present during the rental period.
o Characterization of STR in LA. “these units are not, by and large, the “shared” space
implied by terms like host or sharing economy. Instead, nearly 90 percent of AirBnB’s Los
Angeles revenues are generated by lessors with whole units and leasing companies who rent
out two or more whole units.” (pg. 3)
o Loss of Housing. “AirBnB has created a nexus between tourism and housing that hurts
renters. The 7,316 units taken off the rental market by AirBnB is equivalent to seven years’ of
affordable housing construction in Los Angeles.” (pg. 3)
o Impact Varies by Neighborhood. “In Venice, as many as 12.5% of all housing units have
become AirBnB units, all without public approval.” (pg. 3)
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Hearing Date: April 23, 2015 Short-Term Rentals
15
• Wall Street Journal. This article
19
summarizes a report commissioned by Airbnb and written by
Thomas Davidoff of the University of British Columbia.
o Citywide Impacts on Housing May Be Limited. “Airbnb increases the price of a one-
bedroom unit by about $6 a month. In San Francisco, he found that it increases rents by on
average about $19 a month… Even without relying on Airbnb’s estimates, Mr. Davidoff said
that if one assumes that all listings are investors renting out units solely on Airbnb, the
increases are modest. In New York, rents would likely go up around $24 a month and San
Francisco around $76 a month.”
o Neighborhood Impacts May Be More Pronounced. “Airbnb listings aren’t evenly spread
across most cities but tend to be concentrated in prime neighborhoods, meaning that popular
places could face more pressure on rents than others. Mr. Davidoff said it is difficult to
measure how much Airbnb drives up rents in places like Venice Beach, which has about 200
places available for this Friday evening, because some people may just move to a different
area, lessening the rent increase. He said in that case, the criticism of Airbnb is less about
citywide affordability than the right of people to stay in desirable neighborhoods. ‘It’s not an
affordability issue. It’s a luxury neighborhood issue or a bohemian neighborhood issue,’ he
said.”
Since the Planning Commission hearing in August, decision-makers and the public benefit from much
greater availability of data on STRs. Both the San Francisco data and the data from other reports point to
limited impacts from the average host, while a small number of commercially-minded hosts
disproportionately colonize the listing market. For this reason, a key need is to identify the apparently
small number of hosts who provide year-round lodging to tourists at the expense of potential residents.
Further, the current level of STRs likely has a limited effect on citywide housing prices and availability.
However, certain neighborhoods that provide the City’s most affordable housing may also provide a ripe
incentive to illegally convert housing to tourist use. Targeting legislative and enforcement efforts towards
those commercial hosts and vulnerable neighborhoods may provide the greatest protections of the City’s
precious housing resources. The pending reports to be published by the Controller’s Office of Economic
Analysis and the Budget & Legislative Analyst may very well provide such data. Without such data, a
broader legislative approach may be advisable given the current housing affordability crisis.
Neighborhood Character
There have been concerns raised that STRs are impacting neighborhood character and quality of life for
residents. Many of the complaints that the Department receives about STRs have to do with the hours of
activity that tourists keep compared to long-term residents. The Department believes that this may be a
concern in some neighborhoods that have a concentration of units being used as STRs full time, but in
most neighborhoods where occasional use is the norm this is not likely to be as much of a problem.
Hotels, Inns and Bed & Breakfast Uses in Residential Districts
In addition to STR provisions in the Administrative Code, the Planning Code also allows small hotel uses
in Residential Districts with Conditional Use authorization. They are historically known as bed and
breakfast inns or small hotels, and are limited to 5 rooms in all RH Districts except in RH-1 Districts,
19
The Wall Street Journal. “Airbnb Pushes Up Apartment Rents Slightly, Study Says”, Kusisto, Laura.
March 30, 2015.
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where the use is prohibited. Because the existing STR law doesn’t place any restrictions on the number of
days for hosted rentals, the law essentially allows small hotels in RH districts as of right. Prior to the
recent legislative change hotels with less than six rooms required a Conditional Use authorization, which
is accompanied by notice to the neighbors and a discretionary public hearing. There is clearly a
difference between renting out a home while on vacation verses a fulltime bed and breakfast; however, as
the Department’s enforcement team has found, and subsequent studies have affirmed
20
, a number of
owners are using STR sites to circumvent traditional oversight processes and are effectively adding high-
intensity hotel-like uses in a residential neighborhood.
REQUIRED COMMISSION ACTION
The proposed Ordinance is before the Commission so that it may recommend adoption, rejection, or
adoption with modifications to the Board of Supervisors
RECOMMENDATION
The Department recommends that the Commission recommend approval with modifications of the
proposed Ordinances and adopt the attached Draft Resolution to that effect.
The Department recommends approval on the following aspects of the three proposed Ordinances:
1. Remove the distinction between hosted and un-hosted rentals, per the Campos and Mayoral
ordinances.
2. Prohibit units that have been subject to an Ellis Act Eviction within the last 5 years from
registering on the STR registry, per the Kim ordinance.
3. Allow the City to institute civil proceedings against a Hosting Platform, Business Entity, or
Owner at any time, per all three ordinances.
4. Allow private right of action for non-profits as outlined in the Kim ordinance.
5. Add “Permanent Resident or owner residing within 100 feet” to the definition of Interested Party
per the Campos ordinance and the Mayoral ordinance.
6. Prohibit Hosting Platforms from listing any unit that did not maintain good standing on the
City’s STR registry, per the Campos ordinance.
7. Add a provision to the STR law directing the Mayor to set up a STR Office that would be staffed
by the Planning Department, Department of Building Inspection and The Tax Collector’s office,
per the Mayoral ordinance.
8. Make the maximum number of nights a unit can be used as a hosted or un-hosted STR at 120
days. Adjust as needed if future studies can confirm the point where such use would incentive
the illegal conversion of residential units to fulltime tourist use, per the changes proposed in the
Mayoral ordinance.
20
“Window into Airbnb’s hidden impact on S.F.” (June 16, 2014) Retrieved from www.SFChronicle.com on July 1,
2014.
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The Department is proposing the following modifications, which are not proposed in any ordinance.
9. Remove the provision in the Administrative Code that requires an Administrative Hearing if a
violation is found.
10. Remove the provision in the Administrative Code that allows cross-examination of witnesses
during the Administrative Hearing.
The Department does not recommend approval of the following items:
11. Do not Require Hosting Platforms to report quarterly to the Planning Department the number of
nights the Residential Unit was occupied as a Short-Term Residential Rental, per the Campos
ordinance.
12. Do not remove “the Owner of the Residential Unit in which the Tourist or Transient Use is
alleged to occur” from the definition of Interested Party, per the Campos ordinance.
13. Do not allow private rights of action for any Interested Party after 90 days if the Department has
not instituted civil action, as proposed in the Campos ordinance.
14. Do not prohibit units that have been approved under Section 207.3 of 715.1 of the Planning Code
from being used as a STR, per the Campos ordinance.
BASIS FOR RECOMMENDATION
Generally, the Department supports efforts to amend the law now that the City has a better
understanding of STR and now that implementation of the STR program has begun. The Department
continues to believe that STRs should be allowed within a reasonable regulatory structure. Many of the
proposed amendments in these three ordinances would add regulation that enables limited STR while
seeking to protect the public interest by minimizing the potential effects on neighborhoods and the
housing stock. The proposed amendments generally increase the City’s capacity for enforcement either
by adding additional resources, data for checks and balances or more easily verified limits. However,
some proposed changes would undermine the City’s enforcement ability and rights the rights of
landlords.
Recommendation 1: Remove the distinction between hosted and un-hosted rentals, per the Campos
ordinance and Mayoral ordinance.
Both Supervisor Campos’s and the Mayoral ordinances would remove the distinction between hosted
and non-hosted rentals. The current law permits hosted rentals 365 days per year and limits un-hosted
rentals to 90 days per year. Removing this distinction is a great improvement to the current law. Without
this change, enforcement of the law would continue to be compromised as the Department has not
identified an effective method to determine if a rental is truly hosted or not. Further, the distinction
between hosted and un-hosted rentals creates an avenue to operate a fulltime bed and breakfast type use
in their home without public notice or Planning Commission review.
Recommendation 2: Prohibit units that have been subject to an Ellis Act Eviction within the last 5
years from registering on the STR registry, per the Kim ordinance.
Paramount to the Department’s recommendations is protecting the existing housing stock for San
Francisco’s residents and workers. An Ellis Act Eviction, by its very nature, is the property owner’s
statement that they are exiting the rental market. The existing and proposed versions of the law seek to
keep the unit as primarily residential by limiting STR to the occupant of the unit. An owner move-in
eviction is another eviction type that would allow the owner to move in and engage in STR. By allowing
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Hearing Date: April 23, 2015 Short-Term Rentals
18
STR in owner-move in evictions; the owners’ rights to STR are maintained. Removing the capacity for
STR in the circumstance of Ellis Act Eviction removes a potential enforcement problem and removes the
incentive to evict tenants when STRs may be more lucrative.
Recommendation 3: Allow the City to institute civil proceedings against a Hosting Platform,
Business Entity, or Owner at any time, per the Kim ordinance and Campos ordinance.
This provision increases the Department’s enforcement powers and gives the City more power in
prosecuting the most egregious cases by allowing the City to take immediate action against repeat
offenders. It also helps restore balance between the City and other Interested Parties, which under the
various proposal, would be allowed to act before the Department has found that a violation has occurred.
Recommendation 4: Allow private right of action for non-profits as outlined in the Kim ordinance.
This limited provision increases the Department’s enforcement capacity by allowing non-profits that have
in their bylaws a focus on housing the ability to go after some of the city more vulnerable housing,
including units where an Ellis Act Eviction has occurred within the last five years and in buildings with
three or more rent-controlled units. Further these entities’ main focus is on the preservation or
improvement of housing and have an inherent interested in ensuring that the City’s housing stock is
protected.
Recommendation 5: Add “Permanent Resident or owner residing within 100 feet” to the definition of
Interested Party per the Campos ordinance and the Mayoral ordinance.
This modification will add those that are most directly impacted by STRs, those living within the
immediate vicinity of the unit in question, to initiate civil proceedings once the Department has found a
violation. Protecting neighborhood character is one of most important issues that the Department is
concerned about when it comes to allowing STRs in residential districts, and the department finds that
this modification is in line with that concern.
Recommendation 6: Prohibit Hosting Platforms from listing any unit that did not maintain good
standing on the City’s STR registry, per the Campos ordinance.
This amendment would prohibit Hosting Platforms from listing a STR property on their service without a
valid STR registration number. The Department believes that this provision is essential to improving the
City’s enforcement capacities as it would prevent anyone from listing a unit without a registration
number, and it makes the Hosting Platforms an active partner in ensuring that hosts are abiding by the
City’s rules.
Recommendation 7: Add a provision to the STR law directing the Mayor to set up a STR Office that
would be staffed by the Planning Department, Department of Building Inspection and The Tax
Collector’s office, per Mayoral ordinance.
While this proposal is not outlined in detail, the Department understands that this new office will act as a
one stop shop for all STR issues in the city, including enforcement, administration, and outreach. The
office will allow a host to apply for the business license, sign up for the registry and get answer to their
questions in one office. Having three agencies share in the responsibilities for the STR program will add
more resources to enforcement and provide enhanced customer service to the City’s residents.
Executive Summary CASE NO. 2014-001033PCA, 2015-003861PCA, & 2015-004765PCA
Hearing Date: April 23, 2015 Short-Term Rentals
19
Recommendation 8: Make the maximum number of nights a unit can be used as a hosted or un-hosted
STR at 120 days. Adjust as needed if future studies can confirm the point where such use would
incentivize the illegal conversion of residential units to fulltime tourist use, per the changes proposed
in the Mayoral ordinance.
As mention on page 10, two pending reports (one each by the Controller’s Office and Budget Analyst)
may shed more light onto the financial aspects of STRs in the City. As part of that analysis, the
Department understands the Controller may be looking at the number of days at which STRs become
more profitable than renting a unit out full time to a permanent resident. When this item first came to the
Planning Commission, the Department supported the 90-day limit because it was consistent with the
accessory uses limits for dwelling units in the Code, which is currently one-fourth of the floor area (90
days is one-fourth of the year), and still maintained the unit as primarily residential. 120 days is one-
third of the year, which still fits within the definition of an accessory use for other non-residential uses,
and the units would still be primarily residential for the majority of the year. The Marqusee Memo
estimates that the median days of STR needed to outcompete residential use is about 257 days
21
. This
provides assurance that the recommended 120 day cap would still protect housing by ensuring that
residential use would be more lucrative than STR. That said, the Department is hesitant to recommend
further changes to the number of days until we better understand what impact the change will have on
the City’s housing stock. In particular, it is unclear if STR listings that are frequently booked would be put
to residential use if STR were further limited. For example, even in cases where STRs are not as lucrative
as residential uses and where the STR merely provides the host with a marginal funding source, the
question remains: would the space be offered for another tenant if STR were not available? The answer to
this question lies in individual living preferences as to whether it’s easier to live with a roommate or
intermittent tourists.
Recommendation 9: Remove the provision in the Administrative Code that requires an Administrative
Hearing if a violation is found.
This amendment is not proposed in any of the pending ordinances. Existing law requires a mandatory
administrative review hearing once the Department has found there is a violation. The Department is
recommending that this be modified to make the hearing voluntary, so that if the Department finds there
is a violation, it could be abated without a hearing. If the violation is contested, then a hearing could be
requested by person or entity charged with a violation.
Recommendation 10: Remove the provision in the Administrative Code that allows cross-examination
of witnesses during the Administrative Hearing.
This amendment is not proposed in any of the pending ordinances. Existing law allows for cross-
examination of witnesses during the Administrative Hearing. This provision is a holdover from the
administrative hearing processes that was in place prior to the STR program. The Department finds that
cross-examination is unnecessary for a hearing of this type and removing cross-examination would
reduce the potential for needless acrimony.
Recommendation 11: Do not require Hosting Platforms to report quarterly to the Planning
Department the number of nights the Residential Unit was occupied as a Short-Term Residential
Rental, per the Campos ordinance.
21
This number overestimates the profitability of Airbnb by not accounting for some fees and operating
costs. The Office of the Controller is expected to explore this topic in more detail in an upcoming report.
Executive Summary CASE NO. 2014-001033PCA, 2015-003861PCA, & 2015-004765PCA
Hearing Date: April 23, 2015 Short-Term Rentals
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The Department originally recommended this provision be added to the STR ordinance when it was first
heard by the Planning Commission last August. At the time, the Department was concerned that without
this information the ordinance could not be effectively enforced. However, if Recommendation 6 listed
above is added to the City’s STR program the Department believes that the law will be more enforceable.
Further, not all Hosting Platforms are involved with the booking or the financial transaction between the
host and the renter, making the information the City would get from these Hosting Platforms incomplete.
This requirement would also subject those Hosting Platforms that do collect this information to a higher
standard and scrutiny than those that do not, and these reporting requirements may shift hosts to other
platforms that do not collect the information in order to circumvent the law.
Instead the Department believes that the City should pursue improved data collection and technologic
solutions to inform policy-makers and assist with enforcement, and explore collaboration with other city
agencies that may provide better information across hosting platform types. Certainly hosts who
maintain booking information should be encouraged to share this data with the City, especially when a
violation is alleged; however the Department does not believe that it should not be requirement of the
STR program for the reasons stated above.
Recommendation 12: Do not remove “the Owner of the Residential Unit in which the Tourist or
Transient Use is alleged to occur” from the definition of Interested Party, per the Campos ordinance.
This modification would remove the owner of the unit from the definition of Interested Party. Interested
Parties are currently allowed to seek civil action against a tenant (Owner
22
) or Business Entity once the
Planning Department has found in violation. Removing owners of the unit from the definition of
Interested Party would remove the unit owner’s ability to seek civil action under Admin Code Section
41A. While the unit owner has other legal avenues to address violations of a lease agreement, the
Department believes that unit owners have an inherent interest in the unit that they own and therefore
should not be removed from the definition of Interested Party.
Recommendation 13: Do not allow private rights of action for any Interested Party after 90 days if the
Department has not instituted civil action, as proposed in the Campos ordinance.
Supervisor Campos’s ordinance proposes to allow anyone who is defined as an Interested Party to initiate
civil proceedings if the Department has not determined if a violation has happened within 90-days.
While the Department supports the limited expansion of private rights of action in Supervisor Kim and
Breed’s Ordinance; the Department finds that the provision in Supervisor Campos’s ordinance is overly
broad. The Department believes that the City should be responsible for enforcing its own laws, and
allocate resources accordingly. Allowing any Interested Party, which is proposed to include everyone
within 100 feet of the property, to initiate civil proceedings before the Department has determined if a
violation has occurred could open up the entire process for abuses. Further, it would limit the
Department’s ability to bring decisive action against violators.
Recommendation 14: Do not prohibit units that have been approved under Section 207.3 of 715.1 of
the Planning Code from being used as a STR, per the Campos ordinance.
Units approved under 207.3 and 715.1 are not subject to any income restrictions, and for all intents and
purpose they are units like any other in the City. The Department believes that the current regulation,
which only allows the primary resident to register the unit as a STR, is sufficient enough to ensure that
22
For the purposed of the City’s STR regulations, the term "Owner" includes a lessee where the lessee is offering a
Residential Unit for Tourist or Transient use.
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21
these units are not illegally converted to a permanent hotel use. The Department does not see a policy
reason to prohibit the permanent residents of these units from the City’s STR program.
ENVIRONMENTAL REVIEW
The proposed Ordinance is not defined as a project under CEQA Guidelines Sections 15378 and
15060(c)(2) because it does not result in a physical change in the environment.
PUBLIC COMMENT
As of the date of this report, the Planning Department has not received any comments of support or
opposition to the proposed ordinances.
RECOMMENDATION: Recommendation of Approval with Modifications
Attachments:
Exhibit A: Draft Planning Commission Resolution
Exhibit B: Memo from Alex Marqusee, UC Berkeley Goldman School of Public Policy
Exhibit C: Board of Supervisors File No. 141036
Exhibit D: Board of Supervisors File No. 150295
Exhibit E: Board of Supervisors File No. 150363
www.sfplanning.org
Planning Commission Draft Resolution
HEARING DATE APRIL 23, 2015
Project Name: Amendments Relating to Short-Term Rentals
Case Number: 2014-001033PCA, 2015-003861PCA, and 2015-004765PCA
[Board File No. 141036, 150364, 150363]
Initiated by: Supervisor Kim/ Introduced October 7, 2014
Supervisor Campos/Introduced April 14, 2015
Mayor Edwin Lee, Supervisor Farrell/ Introduced April 14, 2015
Staff Contact: Aaron Starr, Manager of Legislative Affairs
aaron.starr@sfgov.org, 415-558-6362
Reviewed by: AnMarie Rodgers, Senior Policy Advisor
Recommendation: Recommend Approval with Modifications
RECOMMENDING THAT THE BOARD OF SUPERVISORS ADOPT WITH MODIFICATIONS THE
THREE PROPOSED ORDINANCES THAT WOULD AMEND CHAPTER 41A OF THE
ADMINISTRATIVE CODE; AND MAKING ENVIRONMENTAL FINDINGS, AND FINDINGS OF
CONSISTENCY WITH THE GENERAL PLAN, AND THE EIGHT PRIORITY POLICIES OF
PLANNING CODE, SECTION 101.1.
WHEREAS, on October 7, 2014, Supervisors Kim and Breed introduced a proposed Ordinance
(hereinafter “Kim ordinance) under Board of Supervisors (hereinafter “Board”) File Number 141036,
which would amend the Administrative Code, Chapter 41A, to prohibit certain residential units that have
been the subject of an Ellis Act eviction from use as short-term residential (hereinafter STR) rentals and
provide for private rights of action to enforce the requirements of this Chapter; and
WHEREAS, on April 14, 2015, Supervisor Campos introduced a proposed Ordinance (hereinafter
“Campos” ordinance) under Board File Number 150364, amending the Administrative Code, Chapter
41A, to revise the Residential Unit Conversion Ordinance to: limit short-term rental of a Residential Unit
to no more than 60 days per calendar year; require Hosting Platforms to verify that a Residential Unit is
on the City Registry prior to listing, 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 useage data to the
Planning Department; prohibit short-term rental of certain “in-law” units; 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; and
provide for criminal penalties against Hosting Platforms in violation of this Chapter 41A; and
Exhibit A
Draft Resolution XXXXXX
April 23, 2015
2
CASE NO. 2014-001033PCA, 2015-003861PCA, & 2015-004765PCA
Short-Term Rentals
WHEREAS, on April 14, Mayor Edwin Lee and Supervisor Farrell introduced a proposed Ordinance
(hereinafter “Mayoral” ordinance) under Board File Number 150364 amending the Administrative Code,
Chapter 41A, to revise the Residential Unit Conversion Ordinance to limit short-term rental of a
Residential Unit to no more than 120 days per calendar year; revise the definition of Interested Parties
who may enforce the provisions of the Administrative Code, 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; and direct the Mayor to 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
WHEREAS, The Planning Commission (hereinafter “Commission”) conducted a duly noticed public
hearing at a regularly scheduled meeting to consider the proposed Ordinances on April 23, 2015; and,
WHEREAS, the three proposed Ordinances have been determined not to be a project under the California
Environmental Quality Act Section 15060(c) and 15378; and
WHEREAS, the Planning Commission has heard and considered the testimony presented to it at the
public hearing and has further considered written materials and oral testimony presented on behalf of
Department staff and other interested parties; and
WHEREAS, all pertinent documents may be found in the files of the Department, as the custodian of
records, at 1650 Mission Street, Suite 400, San Francisco; and
WHEREAS, the Planning Commission has reviewed the proposed Ordinances.
MOVED, that the Planning Commission hereby recommends that the Board of Supervisors approve with
modifications the proposed ordinances.
The Planning Commission recommends approval on the following aspects of the three proposed
Ordinances:
1. Remove the distinction between hosted and un-hosted rentals, per the Campos and Mayoral
ordinances.
2. Prohibit units that have been subject to an Ellis Act Eviction within the last 5 years from
registering on the STR registry, per the Kim ordinance.
3. Allow the City to institute civil proceedings against a Hosting Platform, Business Entity, or
Owner at any time, per all three ordinances.
4. Allow private right of action for non-profits as outlined in the Kim ordinance.
5. Add “Permanent Resident or owner residing within 100 feet” to the definition of Interested Party
per the Campos ordinance and the Mayoral ordinance.
6. Prohibit Hosting Platforms from listing any unit that did not maintain good standing on the
City’s STR registry, per the Campos ordinance.
Draft Resolution XXXXXX
April 23, 2015
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CASE NO. 2014-001033PCA, 2015-003861PCA, & 2015-004765PCA
Short-Term Rentals
7. Add a provision to the STR law directing the Mayor to set up a STR Office that would be staffed
by the Planning Department, Department of Building Inspection and The Tax Collector’s office,
per the Mayoral ordinance.
8. Make the maximum number of nights a unit can be used as a hosted or un-hosted STR at 120
days. Adjust as needed if future studies can confirm the point where such use would incentive
the illegal conversion of residential units to fulltime tourist use, per the changes proposed in the
Mayoral ordinance.
The Department is proposing the following modifications, which are not proposed in any ordinance.
9. Remove the provision in the Administrative Code that requires an Administrative Hearing if a
violation is found.
10. Remove the provision in the Administrative Code that allows cross-examination of witnesses
during the Administrative Hearing.
The Department does not recommend approval of the following items:
11. Do not Require Hosting Platforms to report quarterly to the Planning Department the number of
nights the Residential Unit was occupied as a Short-Term Residential Rental, per the Campos
ordinance.
12. Do not remove “the Owner of the Residential Unit in which the Tourist or Transient Use is
alleged to occur” from the definition of Interested Party, per the Campos ordinance.
13. Do not allow private rights of action for any Interested Party after 90 days if the Department has
not instituted civil action, as proposed in the Campos ordinance.
14. Do not prohibit units that have been approved under Section 207.3 of 715.1 of the Planning Code
from being used as a STR, per the Campos ordinance.
FINDINGS
Having reviewed the materials identified in the preamble above, and having heard all testimony and
arguments, this Commission finds, concludes, and determines as follows
:
1. Generally, the Commission supports efforts to amend the law now that the City has a better
understanding of STR and now that implementation of the STR program has begun. The
Commission continues to believe that STRs should be allowed within a reasonable regulatory
structure. Many of the proposed amendments in these three ordinances would add regulation
that enables limited STR while seeking to protect the public interest by minimizing the potential
effects on neighborhoods and the housing stock. The proposed amendments generally increase
the City’s capacity for enforcement either by adding additional resources, data for checks and
balances or more easily verified limits. However, some proposed changes would undermine the
City’s enforcement ability and rights the rights of landlords.
2. The Commission finds that removing the distinction between hosted and un-hosted rentals is a
great improvement to the current law. Without this change, enforcement of the law would
continue to be compromised as the Planning Department has not identified an effective method
to determine if a rental is truly hosted or not. Further, the distinction between hosted and un-
Draft Resolution XXXXXX
April 23, 2015
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CASE NO. 2014-001033PCA, 2015-003861PCA, & 2015-004765PCA
Short-Term Rentals
hosted rentals creates an avenue to operate a fulltime bed and breakfast type use in their home
without public notice or Planning Commission review.
3. Paramount to the Commission’s recommendations is protecting the existing housing stock for
San Francisco’s residents and workers. An Ellis Act Eviction, by its very nature, is the property
owner’s statement that they are exiting the rental market. The existing and proposed versions of
the law seek to keep the unit as primarily residential by limiting STR to the occupant of the unit.
An owner move-in eviction is another eviction type that would allow the owner to move in and
engage in STR. By allowing STR in owner-move in evictions; the owners’ rights to STR are
maintained. Removing the capacity for STR in the circumstance of Ellis Act Eviction removes a
potential enforcement problem and removes the incentive to evict tenants when STRs may be
more lucrative.
4. The Commission finds that the proposed Ordinance increases the Department’s enforcement
powers and gives the City more power in prosecuting the most egregious cases by allowing the
City to take immediate action against repeat offenders.
5. The Commission finds that the proposed ordinances increases the Department’s enforcement
capacity by allowing non-profits that have in their bylaws a focus on housing the ability to go
after some of the city more vulnerable housing, including units where an Ellis Act Eviction has
occurred within the last five years and in buildings with three or more rent-controlled units.
6. The Commission finds that including in the definition of Interested Party “residents and owners
within 100” of the unit in questions allows those most directly impacted by STR to initiate civil
proceedings once the Department has found a violation.
7. The Commission finds that prohibiting Hosting Platforms from listing any unit that did not
maintain good standing on the City STR registry is essential to improving the City’s enforcement
capacities as it would prevent anyone from listing a unit without a registration number, and it
makes the Hosting Platforms an active partner in ensuring that hosts are abiding by the City’s
rules.
8. The Commission finds that it is better to wait on changing the number of days a unit can be
rented out as a STR until the City has a better understanding of what impact the change will have
on the City’s housing stock.
9. The Commission finds that the City should pursue improved data collection and technologic
solutions to inform policy-makers and assist with enforcement, and explore collaboration with
other city agencies that may provide better information across hosting platform types rather than
requiring Hosting Platforms to provide quarterly report to the City on the number of nights units
listed on their serves are rented.
10. The Commission finds that unit owners have an inherent interest in the unit that they own and
therefore should not be removed from the definition of Interested Party.
Draft Resolution XXXXXX
April 23, 2015
5
CASE NO. 2014-001033PCA, 2015-003861PCA, & 2015-004765PCA
Short-Term Rentals
11. The Commission finds that allowing any Interested Party to initiate civil proceedings before the
Planning Department has determined if a violation has occurred could open up the entire process
for abuses. Further, it would limit the Planning Department’s ability to bring decisive action
against violators.
12. The Commission finds that the current regulation, which only allows the primary resident to
register the unit as a STR, is sufficient enough to ensure that Accessory Dwelling Units are not
illegally converted to a permanent hotel use. The Commission does not find a policy reason to
prohibit the permanent residents of these units from participating in the City’s STR program.
13. General Plan Compliance. The proposed amendments to the Planning Code are consistent with
the following Objectives and Policies of the General Plan.
HOUSING ELEMENT
OBJECTIVE 2
RETAIN EXISTING HOUSING UNITS, AND PROMOTE SAFETY AND MAINTENANCE
STANDARDS, WITHOUT JEOPARDIZING AFFORDABILITY.
As amended, the proposed Ordinances would be consistent with Object two of the Housing Element
because they would limit the number of days that a unit could be utilized as a short term rental and how
much that could be charged for a short-term rental, helping to preserve the City’s existing housing stock.
OBJECTIVE 3
PROTECT THE AFFORDABILITY OF THE EXISTING HOUSING STOCK, ESPECIALLY
RENTAL UNITS.
POLICY 3.1
Preserve rental units; especially rent controlled units, to meet the City’s affordable housing needs.
With the proposed amendments, the proposed Ordinances would help preserve rental units by ensure that
they are not converted into full time short-term rentals.
OBJECTIVE 11
SUPPORT AND RESPECT THE DIVERSE AND DISTINCT CHARACTER OF SAN
FRANCISCO’S NEIGHBORHOODS.
POLICY 11.8
Consider a neighborhood’s character when integrating new uses, and minimize disruption
caused by expansion of institutions into residential areas.
While not an entirely new use, short-term rentals are proliferating within the City like never before and
having a new and distinct impact on the City’s residential neighborhoods. With the Commission’s
proposed amendments, the proposed Ordinances would help preserve the distinct residential character of
Draft Resolution XXXXXX
April 23, 2015
6
CASE NO. 2014-001033PCA, 2015-003861PCA, & 2015-004765PCA
Short-Term Rentals
the City’s residential neighborhoods by limiting the number of nights a residential unit can be rented out as
a short-term rental.
COMMERCE AND INDUSTRY ELEMENT
OBJECTIVE 2
MAINTAIN AND ENHANCE A SOUND AND DIVERSE ECONOMIC BASE AND FISCAL
STRUCTURE FOR THE CITY.
POLICY 2.1
Seek to retain existing commercial and industrial activity and to attract new such activity to the
city.
Short-term rentals are commercial activity and these Ordinances seeks to retain that commercial activity in
the City while providing sufficient regulatory controls to ensure that any negative impacts are addressed.
OBJECTIVE 3
PROVIDE EXPANDED EMPLOYMENT OPPORTUNITIES FOR CITY RESIDENTS,
PARTICULARLY THE UNEMPLOYED AND ECONOMICALLY DISADVANTAGED
Policy 3.4
Assist newly emerging economic activities
Short-term rentals and short-term rental hosting platforms are an emerging economic activity; the
proposed Ordinances would maintain the legality of this activity within San Francisco.
14. Planning Code Section 101 Findings. The proposed amendments to the Planning Code are
consistent with the eight Priority Policies set forth in Section 101.1(b) of the Planning Code in
that:
1. That existing neighborhood-serving retail uses be preserved and enhanced and future
opportunities for resident employment in and ownership of such businesses enhanced;
The proposed Ordinances would not have a negative effect on neighborhood-serving retail uses.
2. That existing housing and neighborhood character be conserved and protected in order to
preserve the cultural and economic diversity of our neighborhoods;
The Commission‘s proposed amendments to the proposed Ordinances seek to minimize any impacts
that this proposal would have on existing housing and neighborhood character.
3. That the City’s supply of affordable housing be preserved and enhanced;
The proposed Ordinances would not negatively affect the City’s supply of affordable housing.
4. That commuter traffic not impede MUNI transit service or overburden our streets or
Draft Resolution XXXXXX
April 23, 2015
7
CASE NO. 2014-001033PCA, 2015-003861PCA, & 2015-004765PCA
Short-Term Rentals
neighborhood parking;
The proposed Ordinances would not result in commuter traffic impeding MUNI transit service or
overburdening the streets or neighborhood parking.
5. That a diverse economic base be maintained by protecting our industrial and service sectors
from displacement due to commercial office development, and that future opportunities for
resident employment and ownership in these sectors be enhanced;
The proposed Ordinances would not cause displacement of the industrial or service sectors due to office
development, and future opportunities for resident employment or ownership in these sectors would
not be impaired.
6. That the City achieve the greatest possible preparedness to protect against injury and loss of
life in an earthquake;
The proposed Ordinances would not have an impact on City’s preparedness against injury and loss of
life in an earthquake.
7. That the landmarks and historic buildings be preserved;
The proposed Ordinances would not have an impact on the City’s Landmarks and historic buildings.
8. That our parks and open space and their access to sunlight and vistas be protected from
development;
The proposed Ordinances would not have an impact on the City’s parks and open space access to
sunlight and vistas.
8. Planning Code Section 302 Findings. The Planning Commission finds from the facts presented
that the public necessity, convenience and general welfare require the proposed amendments to
the Planning Code as set forth in Section 302.
NOW THEREFORE BE IT RESOLVED that the Commission hereby recommends that the Board ADOPT
WITH MODIFICATIONS the proposed Ordinances as described in this Resolution.
Draft Resolution XXXXXX
April 23, 2015
8
CASE NO. 2014-001033PCA, 2015-003861PCA, & 2015-004765PCA
Short-Term Rentals
I hereby certify that the foregoing Resolution was adopted by the Commission at its meeting on April 23,
2015.
Jonas P. Ionin
Commission Secretary
AYES:
NOES:
ABSENT:
ADOPTED: April 23, 2015
AirbnbandSanFrancisco:
DescriptiveStatisticsand
AcademicResearch
AlexMarqusee‐MastersCandidateatGSPPU.C.
Berkeley,PlanningDepartmentIntern
TheauthorconductedthisstudyaspartoftheprogramofprofessionaleducationattheGoldmanSchoolof
PublicPolicy,UniversityofCaliforniaatBerkeley.Thismemorandumservesasthefoundationforapapertobe
submittedinpartialfulfillmentofthecourserequirementsfortheMasterofPublicPolicydegree.The
judgmentsan
dconclusionsare
solelythoseoftheauthor,andarenotnecessarilyendorsedbytheGoldman
SchoolofPublicPolicy,bytheUniversityofCaliforniaorbyanyotheragency.
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
1
To: AnMarieRodgers,SeniorPolicyAdvisor,SanFranciscoPlanningDepartment
From: AlexMarqusee,GoldmanSchoolofPublicPolicyMastersStudent,PlanningDepartmentIntern
RE: AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
Date: 4/15/15
Purpose:Thismemorandumseekstoinformthedebatearoundshorttermrentalsbydescribingthe
characteristicsoftheshorttermrental(STR)marketinSanFranciscothroughdescriptivestatisticson
Airbnb,thelargesthostingplatformforshorttermrentals.Thesecondhalfpresentsasummaryofthe
limitedacademicliteratureonSTRmark
ets.Theappendixoffersdetailedinformationonmeth
odsand
completedatatablesforfurtherreview.Thismemorandumbuildsthefoundationforalargeranalysis
oftheimpactofSTRsonthepriceandavailabilityofrentalhousinginSanFranciscotobereleasedin
May2015.
Whataretheavailabledatasources?
ThefollowingstatisticsontheSanFranciscoSTRmark
etdrawfromseveralsourcesbutonlypertainto
unitslistedonAirbnb:
1. AfactsheetprovidedbyAirbnbin2012andincludedintheSFPlanningDepartment’spublic
recordonSTRs(citedas‘Airbnb2012’);
2. AconsultingreportbyRosenConsultingGroupwhohadaccesstoAirbnbdatafor2012butoffer
notransparencyintotheirmethodology.Thewebsite‘Journalist’sResource’describedthis
studyasaninternalAirbnbreport
1
(citedhereasRCG);
3. AneconomicimpactanalysisbyHR&AassociatesforAirbnbthatwasreportedonbutnot
released
2
tothepublic(2012StudycitedasHR&A2012);
4. DatascrapedandmappedinAugust2014byanindependentjournalist
3
(citedas‘8/14Scrape’);
5. AnewsstorybyCarolynSaidintheSanFranciscoChronicalrelyingondatascrappedfromthe
AirbnbwebsiteonMay19,2014,bythedataminingcompanyConnotate
4
(citedasSFC);
6. DatascrapedandinDecember2014byanindependentjournalist
5
andprovidedtoauthor(cited
as‘12/14Scrape’);
7. Datascrapedon02/09/15byanindependentjournalist
6
andprovidedtoauthor(citedas‘2/15
Scrape’).
1
Penn,JoannaandJohnWihbey(2015,January29
th
).Uber,Airbnbandconsequencesofthesharingeconomy:
Researchroundup.Retrievedfromhttp://journalistsresource.org/studies/economics/business/airbnb‐lyft‐uber‐
bike‐share‐sharing‐economy‐research‐roundup
2
AirbnbcontractedHR&AAdvisorstocreatethisreport.TheauthorcontactedHR&Aon3/18/15foracopyofthe
reportandwastoldthatthereportcouldnotbereleasedsinceitisAirbnb’sproprietaryinformation.
3
DatacollectedandpublishedbyTomSlee.Retrievedfrom
https://www.google.com/fusiontables/DataSource?docid=1WvonuxK6oy6c6gi7iIvLDIaJtcyHXbx8t0KKGh1p#map:id
=3inFebruary2015.
4
Said,C.WindowintoAirbnb’shiddenimpactonS.F.SanFranciscoChronical.Retrievedfrom
http://www.sfchronicle.com/business/item/Window‐into‐Airbnb‐s‐hidden‐impact‐on‐S‐F‐30110.php
5
Datacollectedby:MurrayCoxofhttp://insideairbnb.com/(personalcommunicationwithstaffinMarch2015).
6
Datacollectedby:GussDolan(http://darkanddifficult.com/)&Anti‐EvictionMappingProject
(http://www.antievictionmappingproject.net/)(personalcommunicationwithstaffinMarch2015)
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
2
8. Adatasummarybrief,‘SanFrancisco:VisitorIndustryEconomicImpactSummary,2014’bythe
SanFranciscoTravelAssociationprovidedtotheauthor(citedas‘SFTA’).
9. LongtermrentaldatascrapedfromCraigslistandprovidedtotheauthorbytheSanFrancisco
PlanningDepart
ment.Thisdatasetincludesapproximately8,500rentallistingsfromCraigslist
postedduring2014.Thisdatawascleanedtoremoveduplicatesandoutliers.
Howreliableisthisinformation?
Overall,thisdataprovidesareliabledescriptionofthegeneralcharacteristicsandsizeoftheAirbnb
marketinSanFr
anciscobutcannotprovide
exactfiguresduetounverifiedmethodologiesand
imperfectionsinthedatascrapingprocess.TheconsultingreportsbyHR&AandtheRosenConsulting
Groupprovidenomethodologynormeansofverification.Itisimpossibletotellwhetherornottheir
conclusionsarebiasedorinterpretedobjectively.Datacolle
ctedfromwebscrapesmayomitsome
listingsormay
over‐countduplicatedlistingsandsotheresultingstatisticsareinexact.Theselimitations
inthedatareinforcetheneedtocorroborateeachsourceagainsttheothers.
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
3
TableofContents
DescribingtheAirbnbMarketinSanFrancisco............................................................................................4
HowmanytotalAirbnblistingsarethereinSanFrancisco?....................................................................4
WherearetheAirbnbUnitsinSanFrancisco?.........................................................................................4
HowmuchdovisitorsuseAirbnbinSan Francisco?.................................................................................5
HowoftenareAirbnbrentalsbooked?....................................................................................................6
HowmuchdoesanAirbnblistingcostpernight?....................................................................................9
HowmuchdoAirbnbhostsmake?.........................................................................................................10
IsitmoreprofitabletorentanapartmentasanAirbnbunitorasalongtermrental?........................13
Dohostsrentouttheirentirehomeorjustaroom?.............................................................................16
WhydoAirbnbhostsrentouttheirunits?.............................................................................................17
Do
Airbnbhostsusuallyliveintheunitstheyrent?...............................................................................17
Howmanyhostslistmultipleunits?.......................................................................................................17
Howmanyresidentialunitsaretakenoffthemarkettobeusedas‘entireplace’Airbnbrentals?......18
Howmanybedroomsaretakenoffthemarkettobeusedas‘privateroom’Airbnbrentals?.............19
Existin
gAcademicResearchontheSTRMarket.........................................................................................20
HowdoestheSTRmarketwork?............................................................................................................20
IsthereanyimpactfromSTRsonhousingprices,housingavailability/capacityorthequalityoflifein
residentialneighborhoods?....................................................................................................................20
Whydohostsengageintheshorttermrentalmarket?........................................................................20
DoestheSTRmarket“selfregulate”withrespecttothequalityofunitsandensuringfullyinformed
transactions?...........................................................................................................................................21
DoestheAmericanswithDisabilitiesAct(ADA)applytoshorttermrentals?.......................................22
DoestheFairHousingAct(FHA
)applytoshorttermrentals?...............................................................22
Appen
dix:....................................................................................................................................................23
DistributionofAirbnbUnitsbyNeighborhoodandTypeofUnitasofDecember2014........................23
PriceofAirbnbUnitsbyNeighborhoodandTypeofUnitasofDecember2014...................................24
MethodologyforBreakevenAnalysis.....................................................................................................25
ModelandRegressionResultsforPredictingPricesof‘Entir
ePlace’onAirbnbasofDecember201433
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
4
DescribingtheAirbnbMarketinSanFrancisco
HowmanytotalAirbnblistingsarethereinSanFrancisco?
Thedatadonotallowforanexactestimateofthenumberofuniquelis tings.Enforcementstaffatthe
PlanningDepartmentreport,andareviewofthescrapeddatacorroborates,somehostswilllistthe
samebedroomseparatelyasbothanentireunitandasaprivateroom.Inaddition,somehostslistthe
exactsameuni
tmultipletimesunderdifferentdescriptions.Thetotalnumberofrentalslistedonthe
Airbnbwebsitelikelyoverstatesthetruenumber ofactive,uniquelistingsbutitisunclearbywhat
degree.Thereareanestimated 4000to5000uniqueAirbnblistingsinSanFrancisco.
4798listedrentalsasofMay2014.(S
FC)
4058rentalswith atleastonereview
asofAugust2014.(8/14Scrape)
5148listedrentals,4262unitswithatleastonereview,and5057listingsupdatedinthelastsix
monthsasofDecember2014.(12/14Scrape)
5095listedrentals,3889unitswithatleastonereview,and4880
listingsupdatedinthelastsix
monthsasofFebruary2015.(2/15Scrape)
WherearetheAirbnbUnitsinSanFrancisco?
ThereareAirbnbunitsinallneighborhoodsinSanFranciscobuttheseunitsarenotdistributedevenly.
ThemapsbelowshowthelocationoftheAirbnbunitsinSanFranciscoaswellasaheatmap(kernel
densitydistribution)ofAirbnbunitsinSanFrancisco.ThehigherconcentrationsofAirbnbunitsappear
asbrighterredareas.
Asthemapsaboveshow,Airbnbunitsappeartobe
concentratedinthenorthernandeastern
neighborhoodsofthecity.However,thismapmerel yshowswhereunitsarelocatedanddo es nottake
intoaccountthefactthatthosepartsofthecityhaveahi
gherdensityofallhousinguni
ts.Itis
necessarytocontrolforthedensityofhousingunitsinordertoidentifyifthereareareasofthecitywith
higherconcentrationsofAirbnbunits.Themapbelowcontrolsforneighborhooddensitybydividingthe
numberofAirbnbunitsbythetotalnumberofhousingunits
foreachneighborhood.
I
Ri
C
St
Sth
Ot
P
Mi
M
I
Sth
N
D
Wt
Gld
B
B
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
5
Themaptotheleftshowsthenumberof
Airbnbrentalsbyneighborhoodasa
percentageofthetotalho usingstock.The
darkercolorsindicatehigher
concentrationsofAirbnblistings.Thismap
confirmsthattherearehig
her
concentrationsofAirbnbunitsinthe
northernandeasternneighborhoods.
HowmuchdovisitorsuseAirbnbin
SanFrancisco?
Currently,therearenoavailablesourcesto
preciselycalculatethedemand forAirbnb
orothershorttermrentalsinSanFrancisco.However,acomparisonofstatisticsissuedfromreports
commissionedbyAirbnbandarecentsurveyofvisitorstoSanFranciscoconductedfortheSanFrancisco
TravelAssociationoffersageneralapproximation.
1. ReportscommissionedbyAirbnbindi
catethatdemandforAirbnbtracksth
eseasonaldemand
ofhoteloccupancyrates.TheseAirbnbreportsalsostatethatin2011and2012therewere at
mostapproximately1500bookingspermonth andthosebookingsaverageaboutfivenightsin
length.
DemandforAirbnbre
portedlyvariesbyseasonandtrackshoteloccupancyrates.In
2012,thehig
hestdemandinanyonemonthwas1,576individualbookingsinAugust.
(RCG)
Between2011and2012,guestsstayedanaverageof5.5nightspertrip.(HR&A2012)
Guestsstayedanaverageof5nightspertripin2011.(Airbnb2012)
2. In2014,asurveyof4,682visitorstoSanFran
ciscofoundthat76werestayingin“peer‐to‐peer
lodging”ofsomekindthroughAirbnb,VRBO,Homeawayorarelatedservice.Fromthis
number,thesurveyestimatedthat130,000visitorsstayedinpeer‐to‐peerlodgingin2014.
(SFTA)Thissamesurveyals
oaskedthelengthofstayforvisitors.Theresultsfromthe67
responsestothisquestionreportsthattheaveragelengthofstayisaboutfivenightswhich
confirmstheearlierstudies.Thefulldistributionalsoconfirmsthatthemajorityofpeer‐to‐peer
lodgingsareinfactshorttermrentalsoffewerthanthirt
ydaysinduration:
NightsinSanFranciscobyPlaceofStay(2014SurveyData)
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
6
(Source:SanFranciscoTravelAssociation 2014VisitorProfile:Fi nalReportofFindings.NightsinSan
FranciscoDetailbyPlaceofStay.SurveyandreportbyDestinationAnalytics)
HowoftenareAirbnbrentalsbooked?
Currently,therearenopubliclyavailableandverifiablesourcestopreciselyidentifytheoccupancyrate
ofAirbnbunits.However,statistics fromreportscommissionedbyAirbnbandananalysisofdata
scrapedfromtheAirbnbwebsitecreateageneralpictureofoccupancyrates:
1. TworeportscommissionedbyAirbnbofferstatisticsonusagebu
tthesereports’methodologies
areundisclosedandsocan’
tbeverified.Inaddition,thesestatisticsrepresenteitherthe
medianorthemeanoccupancyra teanddonotprovideanyinformationonthedistribution of
bookingsperunit.
Theaveragelistingwasoccupiedfor53daysduring2012.Thistranslatesintoa14.5%
occupancyrate.
7
(RCG)
Theoccupancyratewas13.4%forthemonthofDecember2011.Overanentireyear,
thistranslatestoapproximately49daysofoccupancy.(Airbnb2012)
2. DatascrapedfromAirbnb’swebsitesprovidesthenumberoftimeseachunithasbeenreviewed
aswellasthelengthoftimeeachunithasbeenlistedonthewebsit
e.Thesedatapointsallowa
calculationoftheminimumnumberoftimeseachunithasbeenbooked.
8
Thefollowingdata
representtheminimu m reviewspermonthsinceguestsarenotre quiredtoleavereviews.A
2014onlinecommentbytheCEOofAirbnbstatedthat“72%ofguestsleaveareviewfor
hosts.”
9
Intruth,itisimpossibletoknowexactlybyhowmuchthismetricunderreportsusage
foreachindividualunit.ThehistogrambelowshowsthedistributionofAirbnbunitsinSan
Franciscobytheminimum reviewspermonthforeachunitsinceitreceiveditsfirstreview.
7
Morespecifically,thisdatapointrepresentsthenumberofnightstheunitwasoccupiedovertheprevious12
monthsatthetimeofanalysisandnotthe2012calendaryear.RCGdonotprovideanexactdateofanalysis.
8
TheReviewsperMonthmetriciscalculatedbydividingthenumberofreviewsbythelengthoftimebetween
whentheunitreceiveditsfirstreviewandthedatetheunit’sinformationwasscrapedfromAirbnb’swebsite.This
numberisthenexpressedintermsofmonths.
9
Chesky,B.(9/7/2012)WhatpercentofAirbnbhostsleavereviewsfortheirguests.Retrievedfrom:
http://www.quora.com/What‐percent‐of‐Airbnb‐hosts‐leave‐reviews‐for‐their‐guests
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
7
Thedistributionsuggests thatthemajorityofhostsrentouttheirunitslessthanonetimeamonthat
minimum.However,thisdistributionskewstotherightmeaningthere aresomehostswhorentout
theirunitsfarmoretimespermonth. Thetablebelo
wshowstheminimumbookingspermonthforthe
hostswiththehighestoccupancyrates:
MinimumBookingsperMonthbyTypeofUnit:AllAirbnbUnits(Dec.2014)
TypeofUnit NumberofUnits Median 75
th
Percentile 90
th
Percentile 95
th
Percentile
Entirehome/apt 3,228 0.8 1.9 3.4 4.3
Privateroom 1,795 0.9 2.3 3.8 4.9
Sharedroom 125 0.9 1.6 2.6 3.1
AllUnits 5,148 0.9 2 3.5 4.5
Thetableaboveshowsthatasmallnumberofhostsrentouttheirunitsveryoften.Thereare
approximatelyfivehundredunitsthatarerentedatleastthreeandahalftimespermonth.
TherearealsoalternatemethodsofestimatingtheactualdistributionofoccupancyratesforAirbnb
unitsinSanFran
cisco.Assumingthattheoccupancyrate
forallbookingswerefortheaveragelengthof
stayof5.1nights(SFTA)results inthefollowingdistributionofestimated
10
occupancyratesforAirbnb
units:
10
EstimatedOccupancyratesarecalculatedbymultiplyingthenumberofreviewspermonthbytheaverage
lengthofstayforavisitorstayinginashorttermhotel(5.1nights).Thisnumberisconvertedtoapercentageby
annualizingtheestimatednumberofnightstheunitisoccupiedeachmonthanddividin
gby365.
0 5 10 15 20 25
Percent of Total Units
0 2 4 6 8 10
Reviews Per Month
San Francisco (Dec. 2014)
Histogram of Minimum Bookings Per Month for Airbnb Units
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
8
EstimatedOccupancyRatesbyTypeofUnit:AllAirbnbUnits(Dec.2014)
TypeofUnit Number
ofUnits
25
th
Percentile
Median 75
th
Percentile
90
th
Percentile
95
th
Percentile
Entire
home/apt 3,228 3% 14% 33% 58% 74%
Privateroom 1,795
3% 15% 40% 65% 84%
Sharedroom 125
0% 15% 28% 45% 53%
Total 5,148
3% 15% 34% 60% 77%
Theseoccupancypercentagesshouldbeviewedasroughapproximationsofthetruedistribution.
However,thetoptenpercentofunitsappeartohaveoccupancyratesclosetotheU.S.nationalaverage
occupancyrateforcommercialhotels(65.1%)
11
andthetopfivepercentofusersareapproachingthe
SanFranciscohoteloccupancyrateof84.1%.
12
Bycomparingallthreeestimatesofoccupancyrates,itispossibletocompare themostandleast
conservativepredictionsoftheactualoccupancyratesofshorttermrentalsinSanFrancisco:
11
hotelnewsnow.com.OccupancyrateoftheUnitedStateshotelindustryfrom2001to2015.InStatista‐The
StatisticsPortal.RetrievedApril13,2015,fromhttp://www.statista.com/statistics/200161/us‐annual‐
accomodation‐and‐lodging‐occupancy‐rate/
12
PKFEconometricForecastofUSLodgingMarkets,March‐May2015EditionforSanFrancisco.
MethodsforEstimatingOccupancyRates
1. Calculatetheminimumnumberofreviewspermonthwiththeobservedtotalnumberof
reviews,theminimumrequiredlengthofstayandthelengthoftimesincetheSTRwasfirst
reviewed.
2. Inflatetheminimumnumberofreviewspermonthby:
a) Multiplyingbytheaveragelengthofstayinsteadofminimumrequiredstay.Th
ree
sourcesfrom2012and2014stateapproximately5nightsastheaveragele
ngthof
stay.
b) Multiplybytheaveragelengthofstayandbyhowmanyusersdidnotleavereviews.
Airbnbstatedin2012thatonly72%ofguestsleavereviews.
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
9
TheabovechartshowshowdifficultitistoaccuratelyestimateoccupancyratesforAirbnbunitswith
theveryhighestoccupancyunits. Itispossibletosaythatthetoptenpercentofmostfreq
uentlyused
AirbnbUnit
sarelikelyoccupiedaquarteroftheyear,butconcludinganythingelsemorepreciselyisn’t
wellsupportedbytheseestimates.Forinstance,therecentsurveypresentedonpage5reportedthat
the67visitorstoSanFranciscostayinginpeer‐to‐peerlodgingstayedforanaverageof5.1nights. In
reality,thisaveragereflectsadistri
butionthatmightbe
differentfordifferenttypesofrentals.For
instance,it’spossiblethattheunitswiththemostreviewshaveshorterstaysthanunitswithfewer
reviews.Inthatscenario,thelessconservativeestimateswouldbeoverstatingtheoccupancyratefor
unitswithmanyreviewsandunderstatin
gtheoccupancyrateforunitswithfewreviews.
HowmuchdoesanAirbnblistingcostpernight?
ThecostofanAirbnbrentaldependsonthetypeoflisting.Onaverage,entireapartmentsandhomes
rentforapproximately$250pernight,privateroomsrentforapproximately$120pernight,andshared
roomsrentforapproximately$85pernight.(SFC,8/14Scrape,12/14Scrapeand2/15Scrape)In
comparison,theaveragehot
elroomcurrentlyrentsfor$200
pernight.
13
13
SanFranciscoHotelRoomRatesReachAll‐TimeHigh,Average$200ANight.(2014,June30
th
).Retrievedfrom
http://sanfrancisco.cbslocal.com/2014/06/30/san‐francisco‐hotel‐room‐rates‐reach‐all‐time‐high‐average‐200‐a‐
night‐travel‐tourism‐vacation/
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
10
Pricesdependonthesizeandqualityoftheunitaswellasthelocation.Airbnbrentalslocatedinhouses
alsoappeartochargeaslightpremiumofapproximately$20pernightcomparedtosimilarunitslocated
inapartmentbuildings.
Theseaveragesmaskawide
rangeofpricesforAirbnbrentals.Thestandarddeviationsforthepriceper
nightofeachtypeofshorttermrentalareaslargeasthemean.Afullaccountingofthedistributioncan
befoundintheAppendix.Theappendixalsoincludestheresultsofaregressionmodelforshortter
m
rentalsof‘EntirePlace’unitsthatidentifiestheaveragedifferenceinpricesbasedonthenumberof
bedrooms,bathroomsandthelocation.Asanexample,thebarchartbelowillustratesthedifferencesin
priceforthemostexpensive,leastexpensiveandmedianexpensiv
eneighborhoods:
HowmuchdoAirbnbhostsmake?
Currently,therearenopubliclyavailableandverifiablesourcestopreciselyidentifyhowmuchreve nue
orincomehostsmakeeachyear.However,reportscommissionedbyAirbnbandananalysisofdata
scrapedfromAirbnb’swebsiteincludeenoughinformationtoestimate hosts’averageannualincomes
andrevenues.
Theonlyexactdataonaveragein
comescomefromrepor
tscommissionedbyAirbnbthatdonot
disclosetheirdatasourcesormethodology.Thesereportsarealsoatleastthreeyearsoldandmight
notreflectcurrentmarketconditions.Additionally,it’simpossibletodrawanyconclusionsfromthe
averageannualrevenuesincewedonotknowtheshapeoftheunderlyingdistribution.
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
11
AverageannualincomefromAirbnbin2012was$6,772
14
orabout$560permonth.(RCG)
PerAirbnbin2012,hostsofentireapartmentsearnedonaverage$9,300annuallyandhostsof
sharedorprivateroomsonaverageearned$6,900annually.(HR&A2012)
Theaveragehostearned$5,490inrevenuein2011.(Airbnb2012)
Theestimatedminimummonthlyrevenueforeachunitcan becalculatedfrominformationscraped
fromAirbnb’swebsiteincluding:thenum
berofreviews,thenightlyprice,theminimumrequiredstay
andhowlongtheunithasbeenlisted.However,theresultingmetrics un derstatethetruegrossrevenue
andareinexactapproximations.Themetricunderstatesthetruerevenuesincenotallguestsleave
reviews.Inaddition,assumingtha
tallguestsstayedfortheminimumnumberofnightsonlyprovides
theminimumrevenue.Finally,someguestsmighthavechangedtheirpricesandminimumstay
requirementsoverthelifet imeoftherental.Thismakestheresultingstatisticslessaccurate.Overall,
thesenum
bersshouldbeinterpretedasonlygeneral
approximationsofthemagnitudeoftherevenue
thatlistingsgenerate.Inaddition,thisstatisticcreatesmisleadingresultswhenappliedtosomeunits
andsothedatasetisrestrictedforthispartoftheanalysis.
15
Thehistogrambelowshowsthedistributionofestimatedminimummonthlyrevenueforthesubsetof
AirbnbunitsinSanFranciscothatwereactiveforatleastsixmonthsbyDecemberof2014anddidnot
haveaminimumrequiredstayoffiveormoredays:
14
ThisdatapointactuallyrepresentstheaveragerevenuerealizedbyAirbnbhostsoverthelast12monthsandnot
overthe2012calendaryear.Itisunclearwhetherthisrepresentsgrossrevenueorrevenuenetoffees,taxesand
Airbnbchargeslistedonthewebsite.
15
Thefollowingstatisticsaremisleadingwhencalculatedforcertainunitsandsothedataisrestrictedtoavoid
biasingtheseresults.First,thesestatisticsexcludeunitsthathavebeenofferedforfewerthansixmonthsto
removerevenuenumbersthatmightonlyreflecttheoccupancyratesduringSanFrancisco’shightouristseason
durin
gthesummer.
15
Inaddition,itisclearthatsomeunitshavechangedtheirminimumnightsrequiredfora
reservationsincetheunit’sreviewspermonthmultipliedbytheminimumnightsforreservationexceedthe
numberofdaysinamonth.So,thesestatisticsexcludeunitswithaminimumrequiredstayofmorethanfiveda
ys
toveryconservativelyavoidthepotentialforincludingthe
seinaccurateestimations.Thesetworestrictions
reducethetotalunitsforthisanalysisfrom5148unitsto2752units.
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
12
Theabovehistogramshowsthatmostunitshavegeneratedlittlerevenuepermonthbutthatthereare
anumberofhostswhomakeatleastafewthousanddollarspermonth.Thetruerevenuenumbersmay
bedramatically
higherifweinflatethenumberofbookingsbyhowmuchAirbnbclaimsreviewsare
underreported.
0 5 10 15
Percent of Selected Units
0 1000 2000 3000
Estimated Minimum Monthly Revenue
Selection of Airbnb Units (Dec. 2014)
Histogram of Estimated Minimum Monthly Revenue
MethodsforEstimatingHosts’Revenue
1. Calculatethemostconservativeestimatedmonthlyrevenue(numberofreviewspermonth
timesminimumrequiredstaytimespricepernight)
2. Calculateprogressivelylessconservativeestimatesofmonthlyrevenueby:
a) Multiplyby theminimumlengthofstayandinflatebyhowmanyusersdidnotleave
reviews.Airbnbstatedin2012thatonly72%ofgu
estsleavereviews
b) Mult
iplyingbytheaveragelengthofstayinsteadoftheminimumrequiredstaybut
usetheoriginalnumberofreviewspermonth.Sourcesfrom2012and2014state
approximately5nightsastheaveragelengthofstay.
c) Adjustforboththeaveragelengthofstayinsteadofthemini
mumandforthe
underreporti
ngofreviews.
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
13
Thefollowingtablepresentsthedistrib utionofmonthlyrevenuesfromthefourdifferentestimation
techniquesandareinorderfrommosttoleastconservative.Pleasenotethattheseareestimates
meanttogiveanapproximationofhowmuchrevenuelistingsgene
rateeachmonthonaverage:
EstimatesforHosts’MonthlyRevenue:SelectAirbnbUnits(Dec.2014)
AdjustmenttoEstimate: 25
th
Percentile
50
th
Percentile
75
th
Percentile
90
th
Percentile
95
th
Percentile
Nothing(Most
ConservativeEstimate)
$150 $356 $780 $1,364 $1,800
Numberofbookings
inflatedformissing
reviews
$208 $495 $1,083 $1,894 $2,500
Averagestayof5nights
insteadofminimum
requirement
$398 $956 $1,964 $3,189 $4,137
Bothincreasedlengthof
stayandinflatedfor
missingreviews(Least
ConservativeEstimate)
$553 $1,328 $2,727 $4,429 $5,746
IsitmoreprofitabletorentanapartmentasanAirbnbunitorasalongtermrental?
Currentdatalimitationsmakeitimpossibletoperfectlydeterminewhetheritismoreprofitabletorent
apartmentsinSanFranciscoasalongtermorshorttermrental.However,wecanapproximatethe
distributionofhowmanydaysashorttermrentalneedstoberenteduntilitsmoreprofitablethana
longtermrental(the‘BreakEvenRate’)bycomparingactual,advertisedlongtermrentalpri
cestoshort
termrentscalculatedtomatchtheunit’sattributes(location,bedroomsandbathrooms).Afull
explanationofthemethods,theregressionforfittedshorttermrents,the‘BreakEvenRate’modeland
theresultsofasimulationanalysisconfirmingthesestatisticsisavailableinth
eAppendix.
MethodsforCalculating“BreakEvenOccupancyRate”
1. Compareshorttermrentsandlongtermrentsfor8500apartmentslistedonCraigslistin
2014.Aregressionanalysiscreatedapredictedshorttermnightlyrateforeachlistingbased
onitslocation,numberofbedrooms andnumberofbathrooms.
2. Assumethatoperatingashorttermrentalscosts32%oftotalr
evenue.Airbnbchargesat
leasta3%fee,
hoteltaxis14%andoneprominentmanagementcompany(Pillow.com)
charges15%tomanageallaspectsofrunningashorttermrental.Thisunderestimatesthe
truecostofrunningashorttermrental.
3. Calculatetheoccupancyraterequiredforeachshorttermrentaltogeneratethesame
incomeasth
eapartmentlistedonCraigslist.Express
edas‘DaysOccupieduntilSTRisMore
Profitable’whichmultipliestheoccupancyrateby365toconvertintonumberofdaysoutof
theyear.
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
14
Theresultinganalysissuggeststhattherearemanypropertiesthatarevulnerabletoconversiontoa
shorttermhotelbecausetheywouldbemoreprofitableasafulltimeshorttermrentalthanasalong
termrental.
16
Thisisespeciallytrueconsideringthattraditionalhotelscurrentlyboastanoccupancy
rateofapproximately85%
17
inSanFrancisco.
ApplyingtheestimatedshorttermrentstoasampleofapartmentslistedonCraigslistcreatesthe
followingdistributionof‘BreakEven’occupancyratesexpressedasthenumberofdaysinayearashort
termrentalwouldhavetoberentedtobemoreprofitablethanthecomparablelongtermrental.Inthe
graphbelow,any‘BreakEven’pointsbel
ow365(tancolumns)indicatethatitispossibleforthat
percentageofapartmentslistedonCraigslisttoberentedmoreprofitablyasashorttermrentalthanas
alongtermrental.Anybarsabove365days(greycol
umns)indicatethatitisim
possibleforthat
percentageofCraigslistapartmentstobemoreprofitablyrunasashorttermrental.Thisanalysis
overestimatestheprofitabilityofAirbnbasitdoesnotincludeasmallproportionoffeesandoperating
costs.
16
Thiscalculationisonlyasgoodastheestimatedshorttermrent.Theanalysisincludedsimulationsofaselection
ofneighborhoodstoconfirmthatthesefindingsarenotduestopoorestimates.Thismethodrantwothousand
versionsofthissameanalysisbyalteringtheestimatedshorttermrentseachtimebyara
ndomamountofthe
marginoferror.
TheresultingdistributionsconfirmthesefindingsandcanbefoundintheAppendix.
17
March‐May2015EconometricForecastsofUSLodgingMarkets,SanFrancisco/SanMateoshowsanaverageof
84.1occupancyratefor2014.However,overthepastfouryears,theoccupancyratespikesto90%duringthe
thirdquartereachyeartoover90%andthenfallsbacktoatorbelowaverageo
ccupancy.Theaverage
dailyroom
rate(ADR)similarlyspikesduringthethirdquartertoabout$20overtheaverageannualADRwhichwasabout
$207in2014.
0 2 4 6 8
Percent of Sampled Craigslist Units
100 200 300 400 500365
Days of Occupancy when STR More Profitable than LTR
San Francisco Rental Listings (Craigslist 2014)
Histogram of Break Even Point: Days STR Rented per Year
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
15
Thehistogramaboveillustratesthatformostofthesesampledapartments,thereisanincentivetorent
theunitasashorttermrentalratherthanasalongtermrental.Itisunclearhowmanylandlordsare
currentlyconvertinglongtermunitsin
toshorttermrentals.Thatquestionisaddressedinalater
sectionentitled“Howman yresidentialunitsaretakenoffthemarkettobeusedasAirbnbrentals”.The
medianvaluesuggeststhat,onaverage,thereisanincentiveforlandlordstoconvertlongtermunitsto
shorttermrentalsiftheunitcouldbe
rentedformorethan257daysoutoftheyear.Thedistribution
alsoshowsthatnearlyalloftherentalunitssampledwouldhavetoberentedformorethan100daysa
yeartobemoreprofitableasashorttermrental.Th
efollowingboxplot(alsoknownasaboxand
whiskersplot)showsthatthemajorityofsampledCraigslistunitswoul
dneedatleastbetweentwoand
threehundreddaysofshorttermreservationsperyeartojustifyconvertingthepropertyfromalong
termrental(thetwoshadedboxesrepresentthemiddlefiftyper
centofobservationsandthedark
verticallineisat365days):
Inaddition,thepotentialprofitabilityofshorttermrentalhotelsisunevenlydistributedacrossthecity.
Themapbelowshowsthemedianofthenumberofdaysperyearthatapartments wouldhavetobe
rentedasash
orttermrentaltobe
moreprofitablethanaslongtermrentals.Again,thismetric
underestimatestheprofitabilityofAirbnbrentalsandsothetruemediansaremostlikelyhigher.
100 150 200 250 300 350 400
Days of Occupancy for Profitable STR Conversion
excludes outside values
Box and Whiskers Graph of Break Even Occupancy
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
16
Themapaboveshowsthatthepoten ti alforrentalunitstobeconvertedintofulltimeshorttermrentals
isdifferentindifferentneighborhoods.Neighborhoodsthatareestimatedtobelessvulnerableto
conversionshaveahighernumberofdaysneededforaprofitableconversiontoashortter
mrentaland
aredarkerincolor.
Dohostsrentouttheirentirehomeorjustaroom?
Themajorityofhosts(approximately61%)rentouttheirentireunit.Mostoftheremain inglistingsare
foraprivateroom(approximately35%)andasmallpercentageoflistingsareforasharedroom
(approximately4%).
Entireunitscomprised62.2%ofAirbnblistingsinMayof2014,61.5%inAugustof2014,62.7%
inDecember2014and59.0%inFebruary2015.(SFC,8/14Scrape,12/14
Scrape,and2/15
Scrape)
Privateroomscomprised34.4%ofAirbnblisti ngsinMayof2014,34.9%inAugustof2014,
24.8%inDecember2014and36.7%inFebruary2015.(SFC,8/14Scrape,12/1 4Scrape,and
2/15Scrape)
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
17
Sharedroomscomprised3.4%ofAirbnblistingsinMayof2014,3.5%inAugustof2014,2.4%in
December2014
18
and4.3%inFebruary2015.(SFC,8/14Scrape,12/14Scrape,and2/15Scrape)
WhydoAirbnbhostsrentouttheirunits?
Currently,therearenopublicandverifiablesourcestoknow.Theonlyexactdataonthissubjectcome
fromreportscommissionedbyAirbnbthatdonotdisclosetheirdatasourcesormethodology.
AsurveyofusersbyAirbnbpresentedbytheRosenConsultingGroupin2013foundthat“the
moneygeneratedbyshort‐termrentalswasviewedbyhostsasextraspendin
gmoney(48%)or
supplementaryincomeforlivingexpenses (42%).” (RCGPage5)
Anonlinesurveyof344hostsfoundthat56%ofthemuseAirbnbtopayforpartoftheirrentor
mortgage.(HR&A2012)
DoAirbnbhostsusuallyliveintheunitstheyrent?
Therearenodataatthistimetoanswerthisquestionwithanycertaintyandallstatisticsonthesubject
shouldbeinterpretedwithgreatcare.AsurveycommissionedbyAirbnbstatedthat90%ofhostslivein
thehometheyofferasaSTRbutoffersnomeansofverifyingitsmethodology.(RCG)
Inaddition,ananalysisofdatascrapedfromAirbnb’swebsiteshowsthatth
evastmajority
(approximately85%)ofhostsonlylistoneunit.However,itisincorrecttothereforesaythat85%of
hostsliveintheunittheylistsinceanunknownproportionofthoselistingsareforsecondho
mes.(8/14
Scrapeand2/1
5Scrape)
Howmanyhostslistmultipleunits?
Therearenodataatthistimetoanswerthisquestionwithanycertainty.Approximately550Airbnb
hosts(approximately14%ofallhosts)listmultipleunits.However,thisdoesnotexplainhowmany
hostslistmultipleunitsasstaffbelieveitislikelythat someofthosehostsareactuallybookingagents.
Therewere513hosts(13.6%)withmult
iplelistingsinMay2014,535hosts(13.8%)in
August2014,604(14.5%)and550hosts(13.4%)inFebruary2015.(SFC,8/14Scrape,
12/14Scrapeand2/15Scrape)
Therearealsoafewhostswithalargenumberoflistings.Thetoptenhostsofferedapproximately190
listings.Staffdonotbelieveitisappropriatetoiden
tifyadownwardtrendovertimeinthenumberof
listingsbythemostactivehostsduetotheinaccuraciesofdatascraping.
Thetoptenoffered248AirbnblistingsinMay,2014,185inAugust,2014,133in
December,2014and141inFebruary,2015.(SFC,8/14
Scrape,12/14Scrapeand2/15
Scrape)
18
Themethodusedtoremoveduplicateddatamostlikelydisproportionatelyremovedsharedroomsthatwerein
factuniquelistings.
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
18
Howmanyresidentialunitsaretakenoffthemarkettobeusedas‘entireplace’Airbnb
rentals?
Therearenodataatthistimetoanswerthisquestionwithanycertainty.Therearetwodifferent
reasonswhyitisimpossibletogetananswerwithanycertainty:
1. Lackofprecisedata:datascrapingoffersalargeamountofusefulinformationtounderstand
theAirbnbmarketbutdoesnotofferda
taontheexactnumberofbookingsorthele
ngthof
thosebookings.Itispossibletogetageneralsenseofthedistributionofcommercialusers
throughestimatedoccupancyratesbuttheseestimatesrelyonassumptionsaboutthenumber
ofgueststhatleavereviewsandthelengthofeachstay.Theseassumptionsmeanthatthe
resultingstatisticsaremerely
suggestiveofthetruedistribu tionofunitsalreadyconvertedto
fulltimeAirbnbrentals.
2. Additionally,somepercentageofapartmentsbeingusedasAirbnbrentalsmightnothavebeen
usedaslongtermrentals.EvenbeforethecreationofAirbnb,someper
centageofrentalunits
wereheldoffthemarketeachyear.
19
Withthesecaveatsinmind,itispossibletoidentifythenumberofcommercialusersbyfilteringthe
estimatedoccupancyratesforonlythoseunitswithagreaterthan50%occupancyrate:
EstimatedNumberofCommercialAirbnbUnits:AllAirbnbUnits(Dec.2014)
TypeofUnit OccupancyRateAbove50%
(Averageof5.1DaysperStay)
ConservativeCalculated
OccupancyRate(DaysofStay
isMinimumRequired)
Entirehome/apt 413 23
Privateroom 303 10
Sharedroom 9 0
Total 725 33
However,someoftheseunitsmayonlyreflectahighoccupancyratebecausetheyhavebeenlistedfor
averyshortamountoftimeandhadafewbookingsearlyon.ThenexttableonlylooksatAirbnb
rentalsthathavebeenlistedforatleastsixmonths:
EstimatedNumberofCommercialAirbnbUnits:AirbnbUnitsListedforMinimumSixMon
ths(Dec.2014)
TypeofUnit OccupancyRateAbove50%
(Averageof5.1DaysperStay)
ConservativelyEstimated
OccupancyRateAbove50%
(DaysofStayisMinimum
Required)
Entirehome/apt 282 18
Privateroom 211 8
Sharedroom 4 0
Total 497 33
19
PleasealsoseeSPUR’sexcellentreportonnon‐permanentresidentsforanmorecompletereviewofthe
complexitiesaroundestimatingrentalvacancies.Retrievedat:
http://www.spur.org/sites/default/files/publications_pdfs/SPUR_Non‐Primary_Residences.pdf
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
19
TheabovetableconfirmsthepossibilitythatthereareAirbnbhostswhorentouttheirunitvery
frequently.Thisdistributionofthesepotentiallycom mercialAirbnbuni tsisnotevenacrossthecity:
Themapaboveshowsthenumberofpotentiallycom m
ercialAirbnblistingsineachneighborhood.
PotentiallycommercialAirbnbusersare defin edaslistingswithanestimatedoccupan cyrateofgreater
than50%whichhavealsobeenlistedformorethansixmonths.Thisdistributionappearstomatchthe
overalldistributionofAirbnbunitsinSa
nFrancisco.
Howmanybedroomsaretakenoffthemarkettobeusedas‘privateroom’Airbnb
rentals?
Thismemorandumdoesnotattempttoanswerthisquestionwhichwillbeexaminedinthefullreport.
Thisthreattohousingcomesfromthe‘overconsumptionofhousing’madepossiblebyshorttermrental
income.Essentially,atenantwillrentahigherqualityhouseorapartment(moreexpensive
neighborhood,morebedrooms,moreamenities,etc.)thantheywouldotherwisechooseorbeableto
affordonlybecausetheycanrelyontheaddi
tionalincomegeneratedthroughrentingpartoftheir
spaceasashorttermrentals.Itispossiblethatthiswouldremovecapacityfromtherentalmarketby
removingbedroomsotherwiseavailabletoroomma
tes.Anecdotally,
individualtenantshavereported
rentingouttwobedroomapartmentsandchoosingastreamofshorttermvisitorsoveralongterm
roommate.However,therearenodatatoquantifytheextenttowhichthisishappeninginSan
Francisco.Thereisalsonoanalysisatthistimetoquantifythepotentialthreattothehousing stockof
the‘overcons
umptionofhousing’byrenters.
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
20
ExistingAcademicResearchontheSTRMarket
HowdoestheSTRmarketwork?
TheSTRmarketcomprisesconsumers (“guests”)rentingentireapartments,privaterooms,oraccessto
asharedroomfrompropertyownersorleaseholders(“hosts”).Onlinehostingplatformssuchas
Airbnbfacilitatetheconnectionsbetweenhostsandguestsandearnafeefrombothpartiesforeach
booking(i.e.thefeeperbo
okingmodel).Othe
rshostingplatformssuchasHomeawayandVRBOalso
facilitatetheconnectionbetweenguestandhostforafeebutinadditionofferhostsasubscription
servicetoonlyadvertisetheirrentals(i.e.thefeeperlistingmodel).Stillotherhostingplatformssuchas
Craigslistdonotgeneraterevenuefromeitherhostsorguests.Hostsandguestsareencouragedby
hostingplatfo
rmstoprovidereviewsofeachother.Mostmunicipalitiesdefineshorttermrentalsas
lastingfewerthanthirtydaysandprohibitanyleasesthatarelessthan30days,asthisistypically
categorizedasatransientortouristuse
.STRsmay
provideaclosesubstitutetohotelroomsormay
provideanewtypeoflodgingproductbyprovidingadditionalamenitiessuchasfullkitchens,easy
accesstodifferentneighborhoods,andamorelocalandauthenticexperienceofanarea.
IsthereanyimpactfromSTRsonhousingprices,housingavailability/capacityorthe
qualityoflifeinresidentialneighborhoods?
Thereisnoconclusiveevidencetoanswerthisquestionatthistime.
Oneofthemostcontentiousquestionsremainstheleaststudiedbyacademics.Teasingouttheimpacts
ofaphenomenononrentsistrickywhenaclearchangeoccurs(i.e.ifadensitybonuspolicystarts
tomorrowandisalwaysappliedoranaturaldisasterdisplacesmanyresidents)butnearlyi
mpossible
whenanactivityslowlyentersamark
etovertimeandisspreadacrossallcomparablegeographies.
Airbnbhired theRosenConsultingGro uptoanswerthatquestionamongothers.Intheir
response,theyclaimedthatmacroeconomicfactors(strongjobmarket,constrainedhousing
supply,andachangingpref
erenceforlivinginurbanareas)swampoutanyimpactonprices
fromthecomparativelysmallnumberofshorttermrentals.Theyalsoarguedthatturningunits
intohotelsthroughSTRsdoesn’tpenciloutalthoughdidnotprovideanymethodologytoverify
thisresult.
AirbnbcommissionedastudybyThoma
sDavidofffromtheUniversityofBritishColumbiathat
foundthatinSanFrancisco
,Airbnb“increasesrentsbyonaverageabout$19amonth.”
20
The
methodologybehindthisestimatehasnotbeenreleasedandsoitisimpossibletoevaluatethis
claim.
Whydohostsengageintheshorttermrentalmarket?
Hostsrentunitsprimarilyformoneybutsomehostsmayalsobemotivatedtocontinuebecausethey
enjoytheprocessorwanttoavoidhavingaperman entroommate.Theremayalsobeasubsetofusers
20
Kusisto,L(3/30/15).AirbnbPushesUpApartmentRentsSlightly,StudySays.TheWallStreetJournal.Retrieved
fromhttp://blogs.wsj.com/developments/2015/03/30/airbnb‐pushes‐up‐apartment‐rents‐slightly‐study‐says/
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
21
whobelievethatitachievessustainabilitygoals.Thereisverylittleindependentempiricalworkto
supportthis.
Afewempiricalstudieshavefoundthatpeopleengagein‘collaborativeconsumption’for
economicbenefits,personalsatisfaction,andbeca
usetheybelieveitcon
tributestoecological
sustainabilitybybetterutilizing idleresources.
21,22
DoestheSTRmarket“selfregulate”withrespecttothequalityofunitsandensuringfully
informedtransactions?
Theevidenceisunclearbutsuggeststhatonlinemarketplacesdonotfullyself‐regulate.Itispossible
thatthereputationsystempushesouttheworstunitseventually.However,Airbnbratingsprovidelittle
differentiationbetweenunitsandhavealmostnorelationshipwithratingsofidenticalunitsonother
websites.Onlineratingsystemsarepositivelybiasedbecauseeveryonewantsagoodreviewfrom
everyoneelse.Also,onestudypointstoracialdiscri
minationbyusersonAirbnb.
Manyproponentsofthesharingorcollaborativeeco nomy maintainthatuserreviewsensureahigh
qualityofproducts.Thisalongwithcontrolsbythehostingplatform‘selfregulates’themark
etand
lessenstheneedforgovernmenti
nterventioninthenameofconsumerprotection.
Onlinemarketplacesthatrelyonprofilesanddigitalreputationsmayfacilitateracial
discrimination.AstudyofAirbnbinNewYorkCityfoundthatnon‐blackhostscharge 12%more
forrentalscontrollingforallinformationvisibleonthewebsite.
23
Airbnb’sratingsystemfailstodifferentiatelistingsthroughtheirreputationbasedsystemsince
nearly95%ofratingsare4.5or5stars(Airbnb’sratingsystemhasamaximumof5stars).A
recentwebscrapeofAirbnbinSanFranciscoconfirmedthat91.6%oflistingshave4or5stars.
(2/15Scrape)Moreover,itisun
clearwhattheseratingsreallymean.Thereisonlyaveryweak
correlationbetweentheratingsofpropertieslistedonbothAirbnbandTripAdvisor.
24
Ingeneral,usersofreputationbasedmarketplacesseekoutreciprocalpositivereviews.Inthis
way,thesereputationsareprobablyupwardlybiased.
25,26
21
Tussyadiah,I.(2015).Anexploratoryondriversanddeterrentsofcollaborativeconsumptionintravel.In
Tussyadiah,I.&Inversini,A.(Eds.),Information&CommunicationTechnologiesinTourism2015.Switzerland:
SpringerInternationalPublishing.Retrievedfromhttp://www.tussyadiah.com/ENTER2015‐Tussyadiah.pdf
22
Hamari,JuhoandSjöklint,MimmiandUkkonen,Antti,TheSharingEconomy:WhyPeopleParticipatein
CollaborativeConsumption(2015).AvailableatSSRN:http://ssrn.com/abstract=2271971or
http://dx.doi.org/10.2139/ssrn.2271971
23
Edelman,BenjaminG.andLuca,Michael,DigitalDiscrimination:TheCaseofAirbnb.com(January10,2014).
HarvardBusinessSchoolNOMUnitWorkingPaperNo.14‐054.AvailableatSSRN:
http://ssrn.com/abstract=2377353orhttp://hbswk.hbs.edu/item/7429.html
24
Zervas,GeorgiosandProserpio,DavideandByers,John,AFirstLookatOnlineReputationonAirbnb,Where
EveryStayisAboveAverage(January28,2015).AvailableatSSRN:http://ssrn.com/abstract=2554500
25
Overgoor,J.,Wulczyn,E.&Potts,C.(2012).TrustPropagationwithMixed‐EffectsModels.InJ.G.Breslin,N.B.
Ellison,J.G.Shanahan&Z.Tufekci(eds.),ICWSM,:TheAAAIPress. Retrievedfrom
http://web.stanford.edu/~cgpotts/papers/OvergoorWulczynPotts.pdf
26Bolton,GaryE.andGreiner,BenandOckenfels,Axel,EngineeringTrust‐ReciprocityintheProductionof
ReputationInformation(March8,2009).UNSWAustralianSchoolofBusinessResearchPaperNo.2009ECON02.
AvailableatSSRN:http://ssrn.com/abstract=1355583orhttp://dx.doi.org/10.2139/ssrn.1355583
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
22
Airbnbhasacknowledge dpotentialproblemsofbiasandhasinstitutednewstructuresto
encouragemorehonestreporting.
27
DoestheAmericanswithDisabilitiesAct(ADA)applytoshorttermrentals?
Itdependsonthecircumstancesandwillbedeterminedbyfuturelawsuits.Owner‐occupiedresidences
areexemptfromADArequirementsbutunitsrentedoutfulltimeforSTRsmayhavetobeADA
compliant.
TitleIII‐1.300oftheADAexemptsresidential dwellingunits.However,timesharesandvacationhomes
whicharecommercialinnatu
rearesometimescoveredbytheact.TheDepartmentofJusticerules
stressthat“theextenttowhichtheoperationsresemblethoseofahotel,motelorinn”dictatewhether
ornotavacationhomeortime‐shareshouldbeADAcompliant.
28
Itispossiblethathostswhorenttheir
entireunitsfrequen tlymayhaveobligationsundertheADA.Airbnbadvisesitshoststhatmostarenot
‘aplaceofpublicaccommodation’andsoareexemptfromtheADA.However, itwarnsthattheADA
mayapplytohostswhooffermorethanfiverooms.
29
SomelegalanalystsbelievethatalthoughitisunclearwhetherhostsarecoveredbytheADA,itisonlya
matteroftimebeforeADAlawsuitsbegin.
30
Otheranalystsclaimtheshorttermrentalswillmostlikely
becoveredbytheADAandsimilarstatelawsbecauseoftheirsimilaritytotimeshareswhichtheDOJhas
recentlyfoundtobe"placesoflodging.”
31
DoestheFairHousingAct(FHA)applytoshorttermrentals?
Yes,itisillegaltodiscriminateagainstapotentialrenterbasedonrace,religion,nationalorigin,gender,
familialstatusordisability.BothfederalandCaliforniastatelaws(i.e.theUnruhAct)apply .
32,33,34
27
McGarry,C.(2014,July11).Airbnbrevampsreviewstoencouragemorehonesty.TechHive.Retrievedfrom
http://www.techhive.com/article/2452750/airbnb‐revamps‐reviews‐to‐encourage‐more‐honesty.html
28
AmericanswithDisabilitiesActADATitleIIITechnicalAssistanceManualCoveringPublicAccommodationsand
CommercialFacilities.Retrievedfromhttp://www.ada.gov/taman3.html
29
Airbnb.ADAandFHACompliance.Retrievedfromhttps://www.airbnb.com/support/article/898?cdn_spdy=1
30
Wilson,M.(2014,August14).CouldHousing‐SharingOpentheDoorforADALitigation?[Weblogpost].
Retrievedfromhttp://blogs.findlaw.com/strategist/2014/08/could‐house‐sharing‐open‐the‐door‐for‐ada‐
litigation.html
31
Gladstone,M.B.(2014,October15).WhattheFinalNewAirbnbLegislationMeansforYou,YourTenantsand
YourLiabilities.Retrievedfromhttp://www.hansonbridgett.com/Publications/articles/2014‐10‐landuse‐term‐
rentals.aspx
32
Eichner,M.(2013,November28).Aretemporaryrentalscoveredbyfairhousinglaws?.LosAngelesTimes.
Retrievedfromhttp://articles.latimes.com/2013/nov/28/business/la‐fi‐rentwatch‐20131201
33
Fishman,S.HowtoScreenRentersonAirbnb,VRBO,andOtherShort‐TermHostingSites.Retrievedfrom
http://www.nolo.com/legal‐encyclopedia/how‐screen‐renters‐airbnb‐vrbo‐other‐short‐term‐hosting‐sites.html
34
UnruhCivilRightsAct.Retrievedfromhttp://www.dfeh.ca.gov/Publications_Unruh.htm
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
23
Appendix:
DistributionofAirbnbUnitsbyNeighborhoodandTypeofUnitasofDecember2014
ThistableprovidesinformationonthenumberoflistingsonAirbnbineachneighborhoodinSan
Franciscoandtheavailabilityofdifferenttypesofunits.
SanFrancisco
Planning
Department
Neighborhoods
Entirehome/apt Privateroom Sharedroom Total
No. % No. % No. % No. %
Bayview 21 35.60% 37 62.70% 1 1.70% 59 100.00%
BernalHeights 187 64.00% 102 34.90% 3 1.00% 292 100.00%
Castro/Upper
Market
230 63.50% 130 35.90% 2 0.60% 362 100.00%
Chinatown 23 59.00% 12 30.80% 4 10.30% 39 100.00%
CrockerAmazon 5 29.40% 12 70.60% 0 0.00% 17 100.00%
DiamondHeights 6 60.00% 4 40.00% 0 0.00% 10 100.00%
Downtown/Civic
Center
101 67.30% 40 26.70% 9 6.00% 150 100.00%
Excelsior 21 35.60% 34 57.60% 4 6.80% 59 100.00%
FinancialDistrict 35 67.30% 9 17.30% 8 15.40% 52 100.00%
GlenPark 43 75.40% 14 24.60% 0 0.00% 57 100.00%
GoldenGatePark 16 66.70% 8 33.30% 0 0.00% 24 100.00%
HaightAshbury 176 62.00% 107 37.70% 1 0.40% 284 100.00%
InnerRichmond 89 56.00% 69 43.40% 1 0.60% 159 100.00%
InnerSunset 76 69.10% 31 28.20% 3 2.70% 110 100.00%
Lakeshore 8 27.60% 15 51.70% 6 20.70% 29 100.00%
Marina 193 83.20% 37 15.90% 2 0.90% 232 100.00%
Mission 437 57.80% 309 40.90% 10 1.30% 756 100.00%
NobHill 153 70.20% 60 27.50% 5 2.30% 218 100.00%
NoeValley 136 67.70% 64 31.80% 1 0.50% 201 100.00%
NorthBeach 88 69.80% 33 26.20% 5 4.00% 126 100.00%
OceanView 19 45.20% 23 54.80% 0 0.00% 42 100.00%
OuterMission 40 53.30% 33 44.00% 2 2.70% 75 100.00%
OuterRichmond 72 67.30% 33 30.80% 2 1.90% 107 100.00%
OuterSunset 62 56.90% 42 38.50% 5 4.60% 109 100.00%
PacificHeights 106 72.10% 40 27.20% 1 0.70% 147 100.00%
Parkside 23 50.00% 20 43.50% 3 6.50% 46 100.00%
PotreroHill 127 62.30% 71 34.80% 6 2.90% 204 100.00%
Presidio 3 50.00% 3 50.00% 0 0.00% 6 100.00%
PresidioHeights 26 66.70% 13 33.30% 0 0.00% 39 100.00%
RussianHill 118 72.00% 43 26.20% 3 1.80% 164 100.00%
Seacliff 7 87.50% 1 12.50% 0 0.00% 8 100.00%
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
24
SouthofMarket 214 61.80% 107 30.90% 25 7.20% 346 100.00%
Treasure
Island/YBI
3 42.90% 4 57.10% 0 0.00% 7 100.00%
TwinPeaks 36 67.90% 16 30.20% 1 1.90% 53 100.00%
VisitacionValley 6 40.00% 8 53.30% 1 6.70% 15 100.00%
WestofTwin
Peaks
30 55.60% 24 44.40% 0 0.00% 54 100.00%
WesternAddition 276 58.60% 184 39.10% 11 2.30% 471 100.00%
Total 3212 62.60% 1792 34.90% 125 2.40% 5129 100.00%
PriceofAirbnbUnitsbyNeighborhoodandTypeofUnitasofDecember2014
ThistableprovidesinformationonthemeanpriceofAirbnbunitsindifferentneighborhoods separated
bythetypesofunits.
EntireHome PrivateRoom SharedRoom
Neighborhood Mean
Price
Stand.
Dev.
Count Mean
Price
Stand.
Dev.
Count Mean
Price
Stand.
Dev.
Count
Bayview 170.4 99.9 21 90 22.1 37 70 0 1
BernalHeights 201.3 101.7 187 112 97.7 102 44.3 19.1 3
Castro/Upper
Market
248.9 140.9 230 121.6 37.5 130 67.5 17.7 2
Chinatown 178.7 40.5 23 126.7 29.5 12 55.5 18.3 4
Crocker
Amazon
120.2 24.4 5 79.8 70.5 12 N/A N/A 0
Diamond
Heights
228.2 153.3 6 114.3 81.8 4 N/A N/A 0
Downtown/Civi
cCenter
172.7 61.8 101 124.8 38.5 40 72.6 25.7 9
Excelsior 170.1 52.9 21 65.3 25.5 34 35.8 26.2 4
Financial
District
220.7 100.6 35 128.9 43.4 9 45.5 23.6 8
GlenPark 225.9 102 43 101.4 24.3 14 N/A N/A 0
GoldenGate
Park
159.9 41.9 16 96.8 25.9 8 N/A N/A 0
HaightAshbury 261.4 160.9 176 113 41.5 107 45 0 1
InnerRichmond 213.7 117.2 89 100.8 27 69 80 0 1
InnerSunset 192.6 91.8 76 96.4 22.5 31 76.7 2.9 3
Lakeshore 161 49 8 122.3 144.6 15 83.3 10.3 6
Marina 265.1 188.7 193 131.3 47.2 37 67 11.3 2
Mission 230.2 149.1 437 110.4 34.7 309 98.9 84.6 10
NobHill 251.6 164.3 153 118 38.5 60 118.6 55.5 5
NoeValley 242.7 172.2 136 116.1 33.8 64 90 0 1
NorthBeach 272.1 189.4 88 120 51.1 33 41.6 13.1 5
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
25
OceanView 185.4 116.6 19 91.7 33.8 23 N/A N/A 0
OuterMission 193.1 83.7 40 93.9 32.3 33 65 14.1 2
Outer
Richmond
179.6 79.8 72 108.7 32.6 33 81.5 19.1 2
OuterSunset 191.3 101.1 62 97.3 25.2 42 72.8 48.3 5
PacificHeights 344.9 382.7 106 131.5 68.1 40 250 0 1
Parkside 196.4 101 23 95.3 31.1 20 89.7 36.6 3
PotreroHill 245.2 224.2 127 119.5 36 71 131.5 157.2 6
Presidio 161 69.2 3 158.3 45.4 3 N/A N/A 0
PresidioHeights 276.8 195.6 26 121.8 36.7 13 N/A N/A 0
RussianHill 278.4 186 118 146.7 56.5 43 73.3 45.1 3
Seacliff 184.6 78.7 7 80 0 1 N/A N/A 0
Southof
Market
267.9 175.2 214 134.5 82.5 107 90.6 99.2 25
Treasure
Island/YBI
214.3 66.6 3 84.8 7.1 4 N/A N/A 0
TwinPeaks 241.5 181.1 36 108.6 21.1 16 85 0 1
Visitacion
Valley
129.2 64.7 6 103.5 63.8 8 83 0 1
WestofTwin
Peaks
254.7 130.1 30 110.2 55 24 N/A N/A 0
Western
Addition
219.4 103 276 114.4 31.8 184 101.9 101 11
Total 236.4 163.8 3212 113.5 50.1 1792 82.6 73.4 125
MethodologyforBreakevenAnalysis
Thissectionexplainsthemethodologyfordeterminingthebreakevenoccupancyratebetweenshort
termrentalsandlongtermrentalsinSanFrancisco.Thisanalysisseekstoanswerthequestion:how
manydaysoftheyearwouldashorttermrentalneedtoberentedtobeasprofitableasalongterm
rental?ThisanalysisusesthedatasetofAirbnbunitsscrapedinDecember20
14asitappearstobethe
mostcompleteandaccuratedataavailable.
Thefollowingvariablesareincludedinthiscalculation:
P
LT
=Annualizedrentofanapartmentrentedasalongtermrental.Thisistheactualmonthlyprice
listedoncraigslistforanapartmentinSanFranciscomultipliedby12.Craigslistunitswithapriceper
bedroombelow$700areremovedsincetheyallappeartobeadvertisingforroommatesinsteadoffor
entireunits.
P
ST
=Estimatedannualizedpriceofanapartmentrentedat100%occupancyasashorttermrentalon
Airbnb.Thisisavaluefittedtothespecificsofoneofthecraigslistapartments.Anumberof
regressionswereruntotestdifferentfunctional formsusingthenumberofbedrooms,numberof
bathroomsan
dadummyvariableforeachofthe38
planningdepartmentdefinedneighborhoods.
TheseregressionswereonlyrunonthesubsetoftheAirbnbunitsthatarelistedasentireunits(as
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
26
opposedtojustprivateroomsorsharedrooms).Forcraigslistunitsthatdidnotlistinformationabouta
bathroom,thefunctionalformspecificationis:
α β β
Whereαistheintercept,Bedroomsisthenumberofbedroomsthatashorttermrentalhas,Bedrooms
squaredisthesquarednumberofbedroomsinashorttermrental,
representsaset
ofdummyvariablesforallbutoneoftheneighborho odsdefinedbytheplanningdepartmentandis
theerrorterm.Forcraigslistunitswhoselistingsincludedinformationaboutthenumberofbathrooms,
thefunctionalformis:
α β β
β
Thecoefficientsfromtheseregressionsareusedtoestimatewhateachcraigslistapartmentwouldbe
abletochargeasashorttermrental.ThisgivesanestimatednightlyshorttermrentalratewhichIthen
multiplyby365tocreateanestimatedannualizedshorttermrevenue.
C
ST
=annualcosttorunningashorttermrentaloverandabovenormalmaintenancecosts.Thisincludes
fees,cleaningandmaintenancecostsandhoteltaxes.Thehighestprofileproviderofshorttermrental
managementandcleaningservicescharges15%ofgrossrevenue.
35
Thisserviceprovidescleaning
services,pre‐reservationhomepreparation,managingguestinteractions,priceoptimization,screening
potentialguests,andemergencysupport.Inaddition,Airbnbchargesa3%feetothelandlordforthe
bookingandtheCityandCountyofSanFranciscochargethehoteloccupancytaxof14%.Thisleadstoa
totalshorttermoperatingcostof32%.However,noneofthesecostsareincludedintheno
rmal
maintenanceofanapartmentalandlordmustpayeachyearwhichincludemoremajorrepairs,building
management,depreciation,andproper tytaxesamongothers.Thisisoperationalizedasapercentageof
totalrevenue.
M=An
nuallongtermmaintenancecostsforbeingalandlord.Th
e2013SurveyofOperatingIncome&
ExpensesInRentalApartmentCommunitiesfoundthattheaverageannualoperatingexpenditurefor
multifamilyunitsintheSanFrancisco‐Oakland‐FreemontMSAis$7.68persquarefoot.
36
Thisfigure
appliestobothlongtermandshorttermrentalsandsodropsoutfromthemodel.Itispossiblethatit
doesnotapplyevenlytobothlongtermandshorttermrentalsbutthisanalysisassumesthattheyare
thesame.
Model
Theresearchquestionisconcernedabouttheexpectedincomeal
andlordstandstogainorloseby
choosingtowithholdherunitfromthelongtermmarketandins
teadrentitoutasashorttermrental.
Theoutcomeofinterestisthebreakevenoccupancyratethatleadstoequivalentshorttermrental
incomeandlongtermrentalincomeforthenextyear:
35
Retrivedfromhttps://www.pillowhomes.com/
36
Lee,C.2013SurveyofOperatingIncome&ExpensesInRentalApartmentCommunities.NationalApartment
Association.Retrievedfromhttp://www.naahq.org/sites/default/files/naa‐documents/income‐expenses‐
survey/2013‐Income‐Expenses‐Summary.pdf
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
27
1
Simplifyingandrearrangingtermsleadstoourmodel:
1
Theresultingvaluesareusedtoevaluatetheoccupancyratesbas edonthefittedmodel.However,in
thisequation,
and
areknownvaluesbut
isaconstructedvariablesubjecttouncertainty.
TheregressionresultsthatledtothisconstructedvariablecanbefoundinthenextAppendixsection.
Theregressionmodelexplainsapproximatelyhalfofthevariationinshorttermrentalprices.This
uncertaintyisincludedinthemodelthroughasimulationoftheaverageonean
dtwobedroomunit
listedonCraigslistforfiveneighborhoods.So,insteadofusingsinglevalues,thesimulationanalysis
incorporatesthefollowingdistributions:
=normallydistributedwithameanequaltotheaveragerentandwithastandarddeviationfrom
thedatausedtocalculatethemean.Thisiscalculatedbyneighborhoodseparatelyforoneandtwo
bedroomunits.
=thefittedvalueequaltocharacteristicsoftheapartmentunderconsiderationinthesimulation.
Thisisalsoassumedtobenormallydistributedwithastandarddeviationequaltothestandarderrorof
theregression.
Withthesamemodel,twothousandtrialswererunusingthosedistributionstoestimatethebreakeven
occupan
cyrateforea
chtypicaloneandtwobedroomunitinfivedifferentneighborhoodsofinterest.
Theresultsconfirmthegeneraldistributionofbreakevenoccupancyrates.Thesimulationadditionally
providesameasureofconfidenceforpredictingwhetherunitsaremoreprofitableasashorttermunit
ratherthanalongter
munit.Thisresul
tedinthefollowingsimulations
Typical1BedroomApartmentinChinatown:
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
28
Typical2BedroomApartmentinChinatown:
Typical1BedroomApartmentinMission:
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
29
Typical2BedroomApartmentintheMission:
Typical1BedroomApartmentinPacificHeights:
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
30
Typical2BedroomApartmentinPacificHeights:
Typical1BedroomApartmentinBernalHeights:
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
31
Typical2BedroomApartmentinBernalHeights:
Typical1BedroomApartmentintheOuterSunset:
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
32
Typical2BedroomApartmentintheOuterSunset:
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
33
ModelandRegressionResultsforPredictingPricesof‘EntirePlace’onAirbnbasof
December2014
Shorttermrentsarepredictedforrentalunitslistedoncraigslistbyregressingtheavailableattributesof
Airbnbrentalsontheirnightlyprice.Thefullmodel is:
α β β
β
Whereαistheintercept,Bedroomsisthenumberofbedroomsthatashorttermrentalhas,Bedrooms
squaredisthesquarednumberofbedroomsinashorttermrental,
representsaset
ofdummyvariablesforallbutoneoftheneighborho odsdefinedbytheplanningdepartmentandis
theerrorterm.ForunitsonCraigslistwhoselistingsincludedinformationabo utthenumberof
bathrooms,thefunctionalformis:
α β β
β
Theseregressionsgavethefollowingpredictivevalues:
(1) (2)
VARIABLES price price
Bedrooms 30.54*** 51.08***
(8.938) (13.86)
Bedrooms Squared 8.457*** 11.41***
(2.681) (3.820)
Bathrooms 90.19***
(8.645)
Bayview -39.76** -47.68**
(19.84) (19.88)
Bernal Heights -46.76*** -49.46***
(7.125) (7.140)
Castro/Upper Market 13.77* 14.96*
(7.191) (7.884)
Chinatown 24.94** 27.89**
(10.37) (11.73)
Crocker Amazon -95.99*** -98.32***
(32.17) (31.40)
Diamond Heights -46.71 -15.39
(37.12) (29.41)
Downtown/ Civic Center 4.957 11.55
(7.051) (7.641)
Excelsior -80.63*** -92.95***
(15.45) (13.87)
Financial District 44.06*** 48.17***
(12.86) (14.87)
Glen Park -37.22** -35.09***
(14.56) (13.35)
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
34
Golden Gate Park -22.80* -35.67**
(12.82) (16.33)
Haight Ashbury -0.866 -9.038
(8.191) (8.866)
Inner Richmond -32.92*** -35.90***
(8.936) (9.027)
Inner Sunset -44.50*** -44.87***
(8.614) (8.066)
Lakeshore -33.27 -35.59
(27.88) (24.64)
Marina 58.52*** 57.99***
(10.96) (11.87)
Mission -6.772 -11.09
(6.961) (7.323)
Nob Hill 49.38*** 47.77***
(9.519) (10.46)
Noe Valley 9.124 9.359
(10.41) (10.82)
North Beach 58.47*** 58.28***
(14.57) (16.14)
Ocean View -65.71*** -66.81***
(19.26) (18.88)
Outer Mission -76.76*** -79.44***
(13.91) (13.25)
Outer Richmond -54.92*** -59.24***
(11.18) (10.26)
Outer Sunset -56.46*** -65.12***
(13.24) (12.96)
Pacific Heights 85.06*** 98.63***
(24.24) (26.25)
Parkside -46.29** -51.60**
(20.12) (21.25)
Potrero Hill 11.16 19.06
(20.32) (20.39)
Presidio 4.979 6.567
(25.75) (22.68)
Presidio Heights 38.65 41.98
(26.10) (30.68)
Russian Hill 62.68*** 56.06***
(13.26) (13.62)
Seacliff -63.78*** -80.13***
(21.40) (30.27)
South of Market 55.13*** 67.26***
(11.24) (11.71)
Treasure Island/YBI -27.66 -25.42
(90.16) (83.26)
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
AlexMarqusee–04/15/15–AirbnbandSanFrancisco:DescriptiveStatisticsandAcademicResearch
35
Twin Peaks 19.80 20.90
(23.40) (26.71)
Visitacion Valley -100.7*** -92.56***
(29.63) (22.87)
West of Twin Peaks -80.74*** -61.91***
(20.48) (19.87)
Western Addition - -
Constant 39.83*** 112.8***
(12.89) (10.57)
Observations 3,212 3,212
R-squared 0.488 0.434
Robust standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Exhibit B: Marqusee Memo
Hearing Date: April 23, 2015
CASE NO. 2014-001033PCA
Short-Term Rentals
Exhibit C
FILE NO. 150364 ORDINANCE NO.
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[Administrative Code - Short-Term Residential Rentals]
Ordinance amending the Administrative Code to revise the Residential Unit Conversion
Ordinance to: limit short-term rental of a Residential Unit to no more than 60 days per
calendar year; require Hosting Platforms to verify that a Residential Unit is on the City
Registry prior to listing, 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
useage data to the Planning Department; prohibit short-term rental of certain “in-law”
units; 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.
NOTE: Unchanged Code text and uncodified text are in plain Arial font.
Additions to Codes are in single-underline italics Times New Roman font.
Deletions to Codes are in strikethrough italics Times New Roman font.
Board amendment additions are in double-underlined Arial font.
Board amendment deletions are in strikethrough Arial font.
Asterisks (* * * *) indicate the omission of unchanged Code
subsections or parts of tables.
Be it ordained by the People of the City and County of San Francisco:
Section 1. Environmental Findings. The Planning Department has determined that the
actions contemplated in this ordinance comply with the California Environmental Quality Act
Exhibit D
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(California Public Resources Code Sections 21000 et seq.). Said determination is on file with
the Clerk of the Board of Supervisors in File No. _____________ and is incorporated herein
by reference. The Board affirms this determination.
Section 2. The Administrative Code is hereby amended by revising Sections 41A.4,
41A.5 and 41A. 6, to read as follows:
SEC. 41A.4. DEFINITIONS.
Whenever used in this Chapter 41A, the following words and phrases shall have the
definitions provided in this Section:
* * * *
Complaint. A complaint submitted to the Department, or to the Department and the City
Attorney on the same day, alleging a violation of this Chapter 41A and that includes the
Residential Unit's address, including unit number, date(s) and nature of alleged violation(s),
and any available contact information for the Owner and/or resident of the Residential Unit at
issue.
* * * *
Director. The Director of the Planning Department, or his or her designee.
* * * *
Interested Party. A Permanent Resident of the building in which the Tourist or
Transient Use is alleged to occur, any homeowner association associated with the Residential
Unit in which the Tourist or Transient Use is alleged to occur, the Owner of the Residential
Unit in which the Tourist or Transient Use is alleged to occur, a Permanent Resident of a property
within 100 feet of the property containing the Residential Unit in which the Tourist or Transient Use is
alleged to occur, the City and County of San Francisco, or any non-profit organization exempt
from taxation pursuant to Title 26, Section 501 of the United States Code, which has the
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preservation or improvement of housing as a stated purpose in its articles of incorporation or
bylaws.
* * * *
Short-Term Residential Rental. A Tourist or Transient Use where all of the following
conditions are met:
(a) the Residential Unit is offered for Tourist or Transient Use by the Permanent
Resident of the Residential Unit;
(b) the Permanent Resident is a natural person;
(c) the Permanent Resident has registered the Residential Unit and maintains good
standing on the Department's Short-Term Residential Rental Registry; and
(d) the Residential Unit: is not subject to the Inclusionary Affordable Housing Program
set forth in Planning Code Section 415et seq.; is not a residential hotel unit subject to the
provisions of Chapter 41, unless such unit has been issued a Permit to Convert under Section
41.12; is not otherwise a designated as a below market rate or income-restricted Residential
Unit under City, state, or federal law; is not a dwelling unit authorized under Planning Code Section
207.3 or 715.1 (commonly referred to as “in-law units”); and no other requirement of federal or
state law, this Municipal Code, or any other applicable law or regulation prohibits the
permanent resident from subleasing, renting, or otherwise allowing Short-Term Residential
Rental of the Residential Unit.
Short-Term Residential Rental Registry or Registry. A database of information
maintained by the Department that includes a unique registration number for each Short-Term
Residential Rental and information regarding Permanent Residents who are permitted to offer
Residential Units for Short-Term Residential Rental. Only one Permanent Resident per
Residential Unit may be included on the Registry at any given time. The Registry shall be
available for public review to the extent required by law, except that, to the extent permitted by
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law, the Department shall redact any Permanent Resident names and street and unit numbers
from the records available for public review.
* * * *
SEC. 41A.5. UNLAWFUL CONVERSION; REMEDIES.
(a) Unlawful Actions. Except as set forth in subsection 41A.5(g), it shall be unlawful
for
(1) any Owner to offer a Residential Unit for rent for Tourist or Transient Use;
(2) any Owner to offer a Residential Unit for rent to a Business Entity that will
allow the use of a Residential Unit for Tourist or Transient Use; or
(3) any Business Entity to allow the use of a Residential Unit for Tourist or
Transient Use.
(b) Records Required. The Owner and Business Entity, if any, shall retain and make
available to the Department records to demonstrate compliance with this Chapter 41A upon
written request as provided herein. Any Permanent Resident offering his or her Primary Residence
as a Short-Term Residential Rental shall retain and make available to the Department records to
demonstrate compliance with this Chapter 41A, including but not limited to records demonstrating
Primary Residency, the number of days per calendar year he or she has occupied the Residential Unit,
and the number of days per calendar year, with dates and duration of each stay, the Residential Unit
has been rented for Short-Term Residential Rental Use.
(c) Determination of Violation. Upon the filing of a written Complaint that an Owner
or Business Entity has engaged in an alleged unlawful Conversion or that a Hosting Platform
is not complying with the requirements of subsections (g)(4)(A), (C), or (D), the Director shall
take reasonable steps necessary to determine the validity of the Complaint. The Director may
independently determine whether an Owner or Business Entity may be renting a Residential
Unit for Tourist or Transient Use in violation of this Chapter 41A or whether a Hosting Platform
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has failed to comply with the requirements of subsections (g)(4)(A), (C), or (D). To determine if
there is a violation of this Chapter 41A, the Director may initiate an investigation of the subject
property or Hosting Platform's allegedly unlawful activities. This investigation may include, but
is not limited to, an inspection of the subject property and/or a request for any pertinent
information from the Owner, Business Entity, or Hosting Platform, such as leases, business
records, or other documents. The Director shall have discretion to determine whether there is
a potential violation of this Chapter 41A and whether to conduct an administrative review
hearing as set forth below. Notwithstanding any other provision of this Chapter 41A, any
alleged violation related to failure to comply with the requirements of the Business and Tax
Regulations Code shall be enforced by the Treasurer/Tax Collector under the provisions of
that Code.
(d) Civil Action.
(1) The City may institute civil proceedings for injunctive and monetary relief, including
civil penalties, against an Owner, Business Entity, or Hosting Platform for violations of this Chapter
41A under any circumstances, without regard to whether a Complaint has been filed or the Director
has made a determination of a violation through an administrative review hearing as set forth in this
Chapter 41A.
(2) Private Rights of Action.
(A) Following the filing of a Complaint and the determination of a violation
by the Director through an administrative review hearing as set forth in this Chapter 41A, the City
may institute civil proceedings for injunctive and monetary relief against a Hosting Platform for
violation of subsection (g)(4)(A) or the City or any other Interested Party may institute civil
proceedings for injunctive and monetary relief against an Owner, or Business Entity, or Hosting
Platform.
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(B) An Interested Party may institute a civil action for injunctive and monetary
relief against an Owner, Business Entity, or Hosting Platform if:
(i) The Interested Party has filed a Complaint with the Department;
(ii) 60 days have passed since the filing of the Complaint;
(iii) The Director has not made a written determination pursuant to
subsection 41A.6(a) that there is no violation of this Chapter 41A or basis for an investigation for an
unlawful activity;
(iv) After such 60-day period has passed, the Interested Party has
provided 30 days’ written notice to the Department and the City Attorney’s Office of its intent to initiate
civil proceedings; and
(v) The City has not initiated civil proceedings by the end of that 30-day
notice period.
(3) In addition, Civil Penalties. If the City or an Interested Party is the prevailing party
in any civil action under this subsection (d), an Owner or Business Entity in violation of this
Chapter 41A or a Hosting Platform in violation of subsection (g)(4)(A), (C), or (D) may be liable
for civil penalties of not less than $250 or more than $1,000 per day for the period of the
unlawful activity.
(4) Costs and Attorneys’ Fees. If the City or any other the Interested Party is the
prevailing party, the City or the Interested Party shall be entitled to the costs of enforcing this
Chapter 41A, including reasonable attorneys' fees pursuant to an order of the Court.
(5) Any monetary award obtained by the City and County of San Francisco in such
a civil action shall be deposited in the Department to be used for enforcement of Chapter 41A.
The Department, through the use of these funds, shall reimburse City departments and
agencies, including the City Attorney's Office, for all costs and fees incurred in the
enforcement of this Chapter 41A.
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(e) Criminal Penalties. Any Owner or Business Entity who rents a Residential Unit for
Tourist or Transient Use in violation of this Chapter 41A or a Hosting Platform who provides a
listing for a Residential Unit for Tourist or Transient Use in violation of subsections (g)(4)(A), (C), or
(D) without correcting or remedying the violation as provided for in subsection 41A.6(b)(7)
shall be guilty of a misdemeanor. Any person convicted of a misdemeanor hereunder shall be
punishable by a fine of not more than $1,000 or by imprisonment in the County Jail for a
period of not more than six months, or by both. Each Residential Unit rented for Tourist or
Transient Use shall constitute a separate offense.
* * * *
(g) Exception for Short-Term Residential Rental.
(1) Notwithstanding the restrictions set forth in this Section 41A.5, a Permanent
Resident may offer his or her Primary Residence as a Short-Term Residential Rental if:
(A) The Permanent Resident occupies the Residential Unit for no less than 275
days out of the calendar year in which the Residential Unit is rented as a Short-Term Residential
Rental or, if the Permanent Resident has not rented or owned the Residential Unit for the full preceding
calendar year, for no less than 75% of the days he or she has owned or rented the Residential Unit The
Residential Unit is rented for Tourist or Transient Use for no more than 60 days during any calendar
year;
(B) The Permanent Resident maintains records for two years
demonstrating compliance with this Chapter 41A, including but not limited to information
demonstrating Primary Residency, the number of days per calendar year he or she has occupied the
Residential Unit, the number of days per calendar year the Residential Unit has been rented as
a Short-Term Residential Rental, and compliance with the insurance requirement in
Subsection (D). These records shall be made available to the Department upon request;
* * * *
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(3) Short-Term Residential Rental Registry Applications, Fee, and
Reporting Requirement.
(A) Application. Registration shall be for a two-year term, which may be
renewed by the Permanent Resident by filing a completed renewal application. Initial and
renewal applications shall be in a form prescribed by the Department. The Department shall
determine, in its sole discretion, the completeness of an application. Upon receipt of a
complete initial application, the Department shall send mailed notice to the owner of record of
the Residential Unit, informing the owner that an application to the Registry for the unit has
been received. If the Residential Unit is in a RH-1(D) zoning district, the Department shall also
send mailed notice to any directly associated homeowner association that has previously
requested such notice.
Both the initial application and any renewal application shall contain information
sufficient to show that the Residential Unit is the Primary Residence of the applicant, that the
applicant is the unit's Permanent Resident, and that the applicant has the required insurance
coverage and business registration certificate. In addition to the information set forth here, the
Department may require any other additional information necessary to show the Permanent
Resident's compliance with this Chapter 41A. Primary Residency shall be established by
showing the Residential Unit is listed as the applicant's residence on at least two of the
following: motor vehicle registration; driver's license; voter registration; tax documents
showing the Residential Unit as the Permanent Resident's Primary Residence for home
owner's tax exemption purposes; or utility bill. A renewal application shall contain sufficient
information to show that the applicant is the Permanent Resident and has occupied the unit for at
least 275 days of each of the two preceding calendar years. Upon the Department's determination
that an application is complete, the unit shall be entered into the Short-Term Residential
Rental Registry and assigned an individual registration number.
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(B) Fee. The fee for the initial application and for each renewal shall be
$50, payable to the Director. The application fee shall be due at the time of application.
Beginning with fiscal year 2014-2015, fees set forth in this Section may be adjusted each
year, without further action by the Board of Supervisors, as set forth in this Section. Within six
months of the operative date of this ordinance February 1, 2015 and after holding a duly noticed
informational hearing at the Planning Commission, the Director shall report to the Controller
the revenues generated by the fees for the prior fiscal year and the prior fiscal year's costs of
establishing and maintaining the registry and enforcing the requirements of this Chapter 41A,
as well as any other information that the Controller determines appropriate to the performance
of the duties set forth in this Chapter. After the hearing by the Planning Commission, but not
later than August 1, 2015, the Controller shall determine whether the current fees have
produced or are projected to produce revenues sufficient to support the costs of establishing
and maintaining the registry, enforcing the requirements of this Chapter 41A and any other
services set forth in this Chapter and that the fees will not produce revenue that is significantly
more than the costs of providing such services. The Controller shall, if necessary, adjust the
fees upward or downward for the upcoming fiscal year as appropriate to ensure that the
program recovers the costs of operation without producing revenue that is significantly more
than such costs. The adjusted rates shall become operative on July 1.
(C) Reporting Requirement. To maintain good standing on the
Registry, the Permanent Resident shall submit a report to the Department on January 1 of
each year regarding the number of days the Residential Unit or any portion thereof has been
rented as a Short-Term Residential Rental since either initial registration or the last report,
whichever is more recent, and any additional information the Department may require to
demonstrate compliance with this Chapter 41A.
(4) Requirements for Hosting Platforms.
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(A) Notice to Users of Hosting Platform. All Hosting Platforms shall
provide the following information in a notice to any user listing a Residential Unit located
within the City and County of San Francisco through the Hosting Platform's service. The
notice shall be provided prior to the user listing the Residential Unit and shall include the
following information: that Administrative Code Chapters 37 and 41A regulate Short-Term
Rental of Residential Units; the requirements for Permanent Residency and registration of the
unit with the Department; and the transient occupancy tax obligations to the City.
(B) A Hosting Platform shall comply with the requirements of the
Business and Tax Regulations Code by, among any other applicable requirements, collecting
and remitting all required Transient Occupancy Taxes, and this provision shall not relieve a
Hosting Platform of liability related to an occupant's, resident's, Business Entity's, or Owner's
failure to comply with the requirements of the Business and Tax Regulations Code. A Hosting
Platform shall maintain a record demonstrating that the taxes have been remitted to the Tax
Collector and shall make this record available to the Tax Collector upon request.
(C) Prior to listing a Residential Unit within the City to be rented for Tourist or
Transient Use, a Hosting Platform shall verify with the Planning Department that the Residential Unit
is listed on the Registry. A Hosting Platform shall not provide any such listing unless the listing
includes a registration number and the Hosting Platform has verified that the Residential Unit is listed
on the Registry. Additionally, if a Hosting Platform has information that a Residential Unit has been
rented for Tourist or Transient Use for more than 60 days within a calendar year, the Hosting Platform
shall immediately remove such listing from its platform.
(D) Reporting Requirement. A Hosting Platform that collects data indicating
whether a Residential Unit has been rented for a given day, shall submit a quarterly report to the
Department indicating the number of nights a Residential Unit in the City was rented for Tourist or
Transient Use. This report shall include the street address, including unit number, of the Residential
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Unit and the number of days, with dates and duration of stay, the Residential Unit was rented for
Tourist or Transient Use.
Any violation of a Hosting Platform's responsibilities under subsections (g)(54)(A), (C) or
(D) shall subject the Hosting Platform to the administrative penalties and enforcement
provisions of this Chapter 41A, including but not limited to payment of civil penalties of up to
$1,000 per day for the period of the failure to comply, with the exception that a violation
related to failure to comply with the requirements of the Business and Tax Regulations Code
shall be enforced by the Treasurer/Tax Collector under that Code.
(5) The exception set forth in this subsection (g) provides an exception only to
the requirements of this Chapter 41A. It does not confer a right to lease, sublease, or
otherwise offer a residential unit for Short-Term Residential Use where such use is not
otherwise allowed by law, a homeowners association agreement or requirements, any
applicable covenant, condition, and restriction, a rental agreement, or any other restriction,
requirement, or enforceable agreement. All Owners and residents are required to comply with
the requirements of Administrative Code Chapter 37, the Residential Rent Stabilization and
Arbitration Ordinance, including but not limited to the requirements of Section 37.3(c).
Additionally, this Chapter 41A shall not be construed as precluding an otherwise lawful application to
conduct a Tourist or Transient Use where such use is permitted or conditionally permitted under the
Planning Code.
* * * *
SEC. 41A.6. PROCEDURES FOR DETERMINING ADMINISTRATIVE PENALTIES.
(a) Notice of Complaint.
(1) Within 30 days of the filing of a Complaint and upon the Director’s
independent finding that there may be a violation of this Chapter 41A, the Director shall notify
the Owner by certified mail that the Owner’s Residential Unit is the subject of an investigation
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for an unlawful use and provide the date, time, and place of an administrative review hearing
in which the Owner can respond to the Complaint. If the Director finds there is no violation of
this Chapter or basis for an investigation for an unlawful activity, the Director shall so inform
the complainant within 30 days of the filing of the Complaint.
(2) If the Complaint concerns the failure of a Hosting Platform to comply with the
requirements of subsections 41A.5 (g)(4)(A), (C), or (D), within 30 days of the filing of the
Complaint and upon the Director's independent finding that there may be a violation of this
Chapter, the Director shall notify the Hosting Platform by certified mail that the Hosting
Platform is the subject of an investigation for failure to comply with the requirements of that
subsection and provide the date, time, and place of an administrative review hearing in which
the Hosting Platform can respond to the Complaint.
* * * *
(c) Imposition of Penalties for Violations and Enforcement Costs.
(1) Administrative Penalties. If the Hearing Officer determines that a violation
has occurred, an administrative penalty shall be assessed as follows:
(A) For the initial violation, not more than four times the standard hourly
administrative rate of $121.00 for each unlawfully converted unit, or for each identified failure
of a Hosting Platform to comply with the requirements of subsections 41A.5(g)(4)(A), (C), or
(D), per day from the notice of Complaint until such time as the unlawful activity terminates;
(B) fFor the second violation by the same Owner(s), Business Entity, or
Hosting Platform, not more than eight times the standard hourly administrative rate of $121.00
for each unlawfully converted unit, or for each identified failure of a Hosting Platform to comply
with the requirements of subsections 41A.5 (g)(4)(A), (C), or (D), per day from the day the
unlawful activity commenced until such time as the unlawful activity terminates; and
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(C) fFor the third and any subsequent violation by the same Owner(s),
Business Entity, or Hosting Platform, not more than twelve times the standard hourly
administrative rate of $121.00 for each unlawfully converted unit or for each identified failure
of a Hosting Platform to comply with the requirements of subsections 41A.5 (g)(4)(A), (C), or
(D) per day from the day the unlawful activity commenced until such time as the unlawful
activity terminates.
(2) Prohibition on Registration and Listing Unit(s) on Any Housing
Platform. In the event of multiple violations, the Department shall remove the Residential
Unit(s) from the Registry for one year and include the Residential Unit(s) on a list maintained
by the Department of Residential Units that may not be listed on any Hosting Platform until
compliance. Any Owner or Business Entity who continues to list a Residential Unit in violation
of this section shall be liable for additional administrative penalties and civil penalties of up to
$1,000 per day of unlawful inclusion. Any Hosting Platform that continues to list a Residential Unit
in violation of this subsection and subsection 41A.5(g)(4)(C) shall be liable for additional
administrative and civil penalties of up to $1,000 per day of unlawful inclusion.
* * * *
Section 3. Effective Date. This ordinance shall become effective 30 days after
enactment. Enactment occurs when the Mayor signs the ordinance, the Mayor returns the
ordinance unsigned or does not sign the ordinance within ten days of receiving it, or the Board
of Supervisors overrides the Mayor’s veto of the ordinance.
Section 4. Scope of Ordinance. In enacting this ordinance, the Board of Supervisors
intends to amend only those words, phrases, paragraphs, subsections, sections, articles,
numbers, punctuation marks, charts, diagrams, or any other constituent parts of the Municipal
Supervisor Campos
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Code that are explicitly shown in this ordinance as additions, deletions, Board amendment
additions, and Board amendment deletions in accordance with the “Note” that appears under
the official title of the ordinance.
APPROVED AS TO FORM:
DENNIS J. HERRERA, City Attorney
By:
MARLENA G. BYRNE
Deputy City Attorney
n:\legana\as2015\1500663\01007046.docx
FILE NO. ORDINANCE NO.
Supervisor Farrell
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[Administrative Code – Short-Term Residential Rentals]
Ordinance amending the Administrative Code to revise the Residential Unit Conversion
Ordinance to limit short-term rental of a Residential Unit to no more than 120 days per
calendar year, 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, and direct the Mayor to 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.
NOTE: Unchanged Code text and uncodified text are in plain Arial font.
Additions to Codes are in single-underline italics Times New Roman font.
Deletions to Codes are in strikethrough italics Times New Roman font.
Board amendment additions are in double-underlined Arial font.
Board amendment deletions are in strikethrough Arial font.
Asterisks (* * * *) indicate the omission of unchanged Code
subsections or parts of tables.
Be it ordained by the People of the City and County of San Francisco:
Section 1. Environmental Findings. The Planning Department has determined that the
actions contemplated in this ordinance comply with the California Environmental Quality Act
(California Public Resources Code Sections 21000 et seq.). Said determination is on file with
the Clerk of the Board of Supervisors in File No. _____________ and is incorporated herein
by reference. The Board affirms this determination.
Exhibit E
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Section 2. The Administrative Code is hereby amended by revising Sections 41A.4,
41A.5, 41A. 6, and 41A.7 and adding Section 41A.8, to read as follows:
SEC. 41A.4. DEFINITIONS.
Whenever used in this Chapter 41A, the following words and phrases shall have the
definitions provided in this Section:
* * * *
Director. The Director of the Planning Department, or his or her designee.
* * * *
Interested Party. A Permanent Resident of the building in which the Tourist or
Transient Use is alleged to occur, any homeowner association associated with the Residential
Unit in which the Tourist or Transient Use is alleged to occur, the Owner of the Residential
Unit in which the Tourist or Transient Use is alleged to occur, a Permanent Resident or Owner of
a property within 100 feet of the property containing the Residential Unit in which the Tourist or
Transient Use is alleged to occur, the City and County of San Francisco, or any non-profit
organization exempt from taxation pursuant to Title 26, Section 501 of the United States
Code, which has the preservation or improvement of housing as a stated purpose in its
articles of incorporation or bylaws.
* * * *
Short-Term Residential Rental Registry or Registry. A database of information
maintained by the Department that includes information regarding Permanent Residents who
are permitted to offer Residential Units for Short-Term Residential Rental. Only one
Permanent Resident per Residential Unit may be included on the Registry at any given time.
The Registry shall be available for public review to the extent required by law, except that, to
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the extent permitted by law, the Department shall redact any Permanent Resident names and
street and unit numbers from the records available for public review.
* * * *
SEC. 41A.5. UNLAWFUL CONVERSION; REMEDIES.
(a) Unlawful Actions. Except as set forth in subsection 41A.5(g), it shall be unlawful
for
(1) any Owner to offer a Residential Unit for rent for Tourist or Transient Use;
(2) any Owner to offer a Residential Unit for rent to a Business Entity that will
allow the use of a Residential Unit for Tourist or Transient Use; or
(3) any Business Entity to allow the use of a Residential Unit for Tourist or
Transient Use.
(b) Records Required. The Owner and Business Entity, if any, shall retain and make
available to the Department records to demonstrate compliance with this Chapter 41A upon
written request as provided herein. Any Permanent Resident offering his or her Primary Residence
as a Short-Term Residential Rental shall retain and make available to the Department records to
demonstrate compliance with this Chapter 41A, including but not limited to records demonstrating
Primary Residency, the number of days per calendar year he or she has occupied the Residential Unit,
and the number of days per calendar year, with dates and duration of each stay, the Residential Unit
has been rented for Short-Term Residential Rental Use.
(c) Determination of Violation. Upon the filing of a written Complaint that an Owner
or Business Entity has engaged in an alleged unlawful Conversion or that a Hosting Platform
is not complying with the requirements of subsection (g)(4)(A), the Director shall take
reasonable steps necessary to determine the validity of the Complaint. The Director may
independently determine whether an Owner or Business Entity may be renting a Residential
Unit for Tourist or Transient Use in violation of this Chapter 41A or whether a Hosting Platform
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has failed to comply with the requirements of subsection (g)(4)(A). To determine if there is a
violation of this Chapter 41A, the Director may initiate an investigation of the subject property
or Hosting Platform's allegedly unlawful activities. This investigation may include, but is not
limited to, an inspection of the subject property and/or a request for any pertinent information
from the Owner, Business Entity, or Hosting Platform, such as leases, business records, or
other documents. The Director shall have discretion to determine whether there is a potential
violation of this Chapter 41A and whether to conduct an administrative review hearing as set
forth below. Notwithstanding any other provision of this Chapter 41A, any alleged violation
related to failure to comply with the requirements of the Business and Tax Regulations Code
shall be enforced by the Treasurer/Tax Collector under the provisions of that Code.
(d) Civil Action.
(1) The City may institute civil proceedings for injunctive and monetary relief, including
civil penalties, against an Owner, Business Entity, or Hosting Platform for violations of this Chapter
41A under any circumstances, without regard to whether a Complaint has been filed or the Director
has made a determination of a violation through an administrative review hearing as set forth in this
Chapter 41A.
(2) Private Rights of Action.
(A) Following the filing of a Complaint and the determination of a violation
by the Director through an administrative review hearing as set forth in this Chapter 41A, the City
may institute civil proceedings for injunctive and monetary relief against a Hosting Platform for
violation of subsection (g)(4)(A) or the City or any other Interested Party may institute civil
proceedings for injunctive and monetary relief against an Owner or Business Entity.
(B) An Interested Party who is a Permanent Resident of the building in which
the Tourist or Transient Use is alleged to occur, is a Permanent Resident of a property within 100 feet
of the property containing the Residential Unit in which the Tourist or Transient Use is alleged to
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occur,, or is a homeowner association associated with the Residential Unit in which the Tourist or
Transient Use is alleged to occur may institute a civil action for injunctive and monetary relief against
an Owner or Business Entity if:
(i) The Interested Party has filed a Complaint with the Department;
(ii) The Director has not made a written determination pursuant to subsection
41A.6(a) that there is no violation of this Chapter 41A or basis for an investigation for an unlawful
activity;
(iii) An administrative hearing officer has not issued a final determination
pursuant to subsection 41A.6(b) regarding the Complaint within 105 days of the filing of the Complaint
with the Department;
(iv) After such 105-day period has passed, the Interested Party has provided 30
days’ written notice to the Department and the City Attorney’s Office of its intent to initiate civil
proceedings; and
(v) The City has not initiated civil proceedings by the end of that 30-day notice
period.
Under this subsection 41A.5(d)(2)(B), the prevailing party shall be entitled to the costs of suit,
including reasonable attorneys’ fees, pursuant to an order of the Court.
(3) In addition, Civil Penalties. If the City is the prevailing party in any civil action
under this subsection (d): an Owner or Business Entity in violation of this Chapter 41A or a
Hosting Platform in violation of subsection (g)(4)(A) may be liable for civil penalties of not
more than $1,000 per day for the period of the unlawful activity. Interested Parties other than the
City may not seek or obtain civil penalties.
(4) Attorneys’ Fees and Costs. If the City or any other the Interested Party is the
prevailing party, the City or the Interested Party shall be entitled to the costs of enforcing this
Chapter 41A, including reasonable attorneys' fees, pursuant to an order of the Court.
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(5) Any monetary award obtained by the City and County of San Francisco in
such a civil action shall be deposited in the Department to be used for enforcement of Chapter
41A. The Department, through the use of these funds, shall reimburse City departments and
agencies, including the City Attorney's Office, for all costs and fees incurred in the
enforcement of this Chapter 41A.
* * * *
(g) Exception for Short-Term Residential Rental.
(1) Notwithstanding the restrictions set forth in this Section 41A.5, a Permanent
Resident may offer his or her Primary Residence as a Short-Term Residential Rental if:
(A) The Permanent Resident occupies the Residential Unit for no less than 275
days out of the calendar year in which the Residential Unit is rented as a Short-Term Residential
Rental or, if the Permanent Resident has not rented or owned the Residential Unit for the full preceding
calendar year, for no less than 75% of the days he or she has owned or rented the Residential Unit The
Residential Unit is rented for Tourist or Transient Use for no more than 120 days during any calendar
year;
(B) The Permanent Resident maintains records for two years
demonstrating compliance with this Chapter 41A, including but not limited to information
demonstrating Primary Residency, the number of days per calendar year he or she has occupied the
Residential Unit, the number of days per calendar year the Residential Unit has been rented as
a Short-Term Residential Rental, and compliance with the insurance requirement in
Subsection (D). These records shall be made available to the Department upon request;
* * * *
(4) Requirements for Hosting Platforms.
(A) Notice to Users of Hosting Platform. All Hosting Platforms shall
provide the following information in a notice to any user listing a Residential Unit located
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within the City and County of San Francisco through the Hosting Platform's service. The
notice shall be provided prior to the user listing the Residential Unit and shall include the
following information: that Administrative Code Chapters 37 and 41A regulate Short-Term
Rental of Residential Units; the requirements for Permanent Residency and registration of the
unit with the Department; and the transient occupancy tax obligations to the City.
(B) A Hosting Platform shall comply with the requirements of the
Business and Tax Regulations Code by, among any other applicable requirements, collecting
and remitting all required Transient Occupancy Taxes, and this provision shall not relieve a
Hosting Platform of liability related to an occupant's, resident's, Business Entity's, or Owner's
failure to comply with the requirements of the Business and Tax Regulations Code. A Hosting
Platform shall maintain a record demonstrating that the taxes have been remitted to the Tax
Collector and shall make this record available to the Tax Collector upon request.
(C) Any violation of a Hosting Platform's responsibilities under
subsection (g)(54)(A) shall subject the Hosting Platform to the administrative penalties and
enforcement provisions of this Chapter 41A, including but not limited to payment of civil
penalties of up to $1,000 per day for the period of the failure to comply, with the exception that
a violation related to failure to comply with the requirements of the Business and Tax
Regulations Code shall be enforced by the Treasurer/Tax Collector under that Code.
* * * *
SEC. 41A.6. PROCEDURES FOR DETERMINING ADMINISTRATIVE PENALTIES.
(a) Notice of Complaint.
(1) Within 30 days of the filing of a Complaint and upon the Director’s
independent finding that there may be a violation of this Chapter 41A, the Director shall notify
the Owner by certified mail that the Owner’s Residential Unit is the subject of an investigation
for an unlawful use and provide the date, time, and place of an administrative review hearing
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in which the Owner can respond to the Complaint. If the Director finds there is no violation of this
Chapter or basis for an investigation for an unlawful activity, the Director shall so inform the
complainant within 30 days of the filing of the Complaint.
(2) If the Complaint concerns the failure of a Hosting Platform to comply with the
requirements of subsection 41A.5 (g)(4)(A), within 30 days of the filing of the Complaint and
upon the Director's independent finding that there may be a violation of this Chapter, the
Director shall notify the Hosting Platform by certified mail that the Hosting Platform is the
subject of an investigation for failure to comply with the requirements of that subsection and
provide the date, time, and place of an administrative review hearing in which the Hosting
Platform can respond to the Complaint.
(3) Once a Complaint has been filed, the Department shall include information
regarding the Complaint, including whether the Complaint is pending or resolved and, if resolved, any
final determination, on the Department’s website.
(4) If the Director finds there is no violation of this Chapter or basis for an
investigation for an unlawful activity, the Director shall so inform the complainant within 30 days of
the filing of the Complaint.
(b) Administrative Review Hearings. In the event the Director determines that an
administrative review hearing shall be conducted, the Director's appointed hearing officer will
hold an administrative review hearing within 45 days of the Director's finding that there may
be a violation of this Chapter 41A to review all information provided by the Interested Party,
members of the public, City staff, and the Owner or Hosting Platform for the investigation and
the hearing officer shall thereafter make a determination whether the Owner or Hosting
Platform has violated this Chapter.
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(1) For hearings regarding alleged unlawful conversions, notice of the hearing
shall be conspicuously posted on the building that is the subject of the hearing. The Director
shall appoint a hearing officer to conduct the hearing.
(2) Pre-hearing Submission. No less than ten days prior to the administrative
review hearing, parties to the hearing shall submit written information to the Director including,
but not limited to, the issues to be determined by the hearing officer and the evidence to be
offered at the hearing. Such information shall be forwarded to the hearing officer prior to the
hearing along with any information compiled by the Director.
(3) Hearing Procedure. If more than one hearing is requested for Residential
Units located in the same building at or about the same time, the Director shall consolidate all
of the hearings into one hearing. The hearing shall be recorded. Any party to the hearing may
at his or her own expense cause the hearing to be recorded by a certified court reporter.
Parties may be represented by counsel and shall have the right to cross-examine witnesses.
All testimony shall be given under oath. Written decisions and findings shall be rendered by
the hearing officer within 30 days of the hearing. Copies of the findings and decision shall be
served upon the parties by certified mail. A notice that a copy of the findings and decision is
available for inspection between the hours of 9:00 a.m. and 5:00 p.m. Monday through Friday
shall be posted by the Owner or the Director in the building in the same location in which the
notice of the administrative review hearing was posted.
(4) Failure to Appear. In the event the Owner, authorized Hosting Platform
representative, or an interested party fails to appear at the hearing, the hearing officer may
nevertheless make a determination based on the evidence in the record and files at the time
of the hearing, and issue a written decision and findings.
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(5) Finality of the Hearing Officer's Decision and Judicial Review. The
decision of the hearing officer shall be final. Within 20 days after service of the hearing
officer's decision, any party may seek judicial review of the hearing officer's decision.
(6) Hearing Officer Decision and Collection of Penalties. Upon the Hearing
Officer's decision, the Director may proceed to collect the penalties and costs pursuant to the
lien procedures set forth in Subsection 41A.6(d), consistent with the Hearing Officer's
decision.
(7) Remedy of Violation. If the Hearing Officer determines that a violation has
occurred, the Hearing Officer’s Decision shall:
(A) Specify a reasonable period of time during which the Owner,
Business Entity, or Hosting Platform must correct or otherwise remedy the violation;
(B) Detail the amount of any administrative penalties the Owner or
Hosting Platform shall be required to pay as set forth in Subsection 41A.6(c); and,
(C) For violations by Owners, state that if the violation is not corrected or
otherwise remedied within this period, the Department shall remove or prohibit the registration
of the Residential Unit from the Short-Term Residential Registry for one year even if the
Residential Unit otherwise meets the requirements for Short-Term Residential Rental.
(8) If the Hearing Officer determines that no violation has occurred, the
determination is final.
(c) Imposition of Penalties for Violations and Enforcement Costs.
(1) Administrative Penalties. If the Hearing Officer determines that a violation
has occurred, an administrative penalty shall be assessed as follows:
(A) For the initial violation, not more than four times the standard hourly
administrative rate of $121.00 for each unlawfully converted unit, or for each identified failure
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of a Hosting Platform to comply with the requirements of subsection 41A.5(g)(4)(A), per day
from the notice of Complaint until such time as the unlawful activity terminates;
(B) fFor the second violation by the same Owner(s), Business Entity, or
Hosting Platform, not more than eight times the standard hourly administrative rate of $121.00
for each unlawfully converted unit, or for each identified failure of a Hosting Platform to comply
with the requirements of subsection 41A.5 (g)(4)(A), per day from the day the unlawful activity
commenced until such time as the unlawful activity terminates; and
(C) fFor the third and any subsequent violation by the same Owner(s),
Business Entity, or Hosting Platform, not more than twelve times the standard hourly
administrative rate of $121.00 for each unlawfully converted unit or for each identified failure
of a Hosting Platform to comply with the requirements of subsection 41A.5 (g)(4)(A) per day
from the day the unlawful activity commenced until such time as the unlawful activity
terminates.
(2) Prohibition on Registration and Listing Unit(s) on Any Housing
Platform. In the event of multiple violations, the Department shall remove the Residential
Unit(s) from the Registry for one year and include the Residential Unit(s) on a list maintained
by the Department of Residential Units that may not be listed on any Hosting Platform until
compliance. Any Owner or Business Entity who continues to list a Residential Unit in violation
of this section shall be liable for additional administrative penalties and civil penalties of up to
$1,000 per day of unlawful inclusion.
* * * *
SEC. 41A.7. OFFICE OF SHORT-TERM RESIDENTIAL RENTAL ADMINISTRATION
AND ENFORCEMENT.
The Mayor shall establish an Office of Short-Term Residential Rental Administration and
Enforcement, which shall provide a single location to receive and process applications for the Registry
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and which shall be staffed by the Department, the Department of Building Inspection, and the Tax
Collector’s Office as needed to process applications for the Registry and enforce the requirements of
this Chapter 41A in a timely and efficient manner. It is the intent of this Board in directing the
establishment of this office to streamline both the process of administering the Registry and enforcing
the requirements of this Chapter 41A to protect residential housing from unlawful conversion to Tourist
or Transient Use.
SEC. 41A.8 CONSTRUCTION.
(a) Nothing in this Chapter may be construed to supersede any other lawfully enacted
ordinance of the City and County of San Francisco.
(b) Clauses of this Chapter are declared to be severable and if any provision or clause
of this chapter or the application thereof is held to be unconstitutional or to be otherwise
invalid by any court of competent jurisdiction, such invalidity shall not affect other provisions of
this Chapter.
Section 3. Effective Date. This ordinance shall become effective 30 days after
enactment. Enactment occurs when the Mayor signs the ordinance, the Mayor returns the
ordinance unsigned or does not sign the ordinance within ten days of receiving it, or the Board
of Supervisors overrides the Mayor’s veto of the ordinance.
Section 4. Scope of Ordinance. In enacting this ordinance, the Board of Supervisors
intends to amend only those words, phrases, paragraphs, subsections, sections, articles,
numbers, punctuation marks, charts, diagrams, or any other constituent parts of the Municipal
Code that are explicitly shown in this ordinance as additions, deletions, Board amendment
additions, and Board amendment deletions in accordance with the “Note” that appears under
the official title of the ordinance.
Supervisor Farrell
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APPROVED AS TO FORM:
DENNIS J. HERRERA, City Attorney
By:
MARLENA BYRNE
Deputy City Attorney
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