Airbnb all but surrenders San Francisco illegal listings battle
Airbnb has ended its battle against San Francisco’s ruling that hosts must adhere to a 90-day cap per year for renting out their homes. Airbnb has said it will create a mandatory host registration system for San Francisco, providing the city with names, addresses and guest stays for its hosts, capping the number of stays as required by city officials since 2015. The agreement is likely to have repercussions for Airbnb’s lawsuits in other locations across the US, such as Chicago and New York.

Elizabeth Weise, USATODAY

SAN FRANCISCO – After more than two years of tussling, Airbnb has given in to San Francisco’s demands that it make sure its hosts conform to the city’s 90-day cap on the number of nights a whole apartment or home can be rented per year.

The decision by the home-sharing site comes a week after a judge indicated he would likely rule against Airbnb in a lawsuit against San Francisco over the regulations.

The shift comes as cities worldwide struggle with a shortage of rental units, which critics say is exacerbated by units being taken off the rental market because they're more lucrative as short-term rentals. San Francisco-based Airbnb has facilitated thousands of such listings and fought back hard against attempts to regulate it.

This change in stance could be an example of Airbnb adapting to a changing environment, said Susan Wachter, a professor of real estate at The Wharton School in Pennsylvania.

“This is an example of how Airbnb may have to be flexible in order to expand its market share. Its potential is extraordinary but in the end it’s going to have to deal with local regulatory bodies. Regulation is inevitable,” she said.

Host database

Airbnb on Monday said it would craft a mandatory host registration system for the city and will provide San Francisco with a list of names, addresses and guest-stays for its hosts. Once the system is in place, the company agreed to cap listings of whole houses or apartments to 90 days per year, as required under a city regulation passed in 2015.

In an editorial in the San Francisco Chronicle, Airbnb admitted that it has made its share of mistakes along the way, but is making progress and now "is ready and willing to do more to address the specific problems that remain," Chris Lehane wrote Monday.

The company also agreed to deal with an extremely hot-button issue in San Francisco: short-term rental of apartments whose tenants have been evicted under the state’s Ellis Act, which allows landlords who want to get out of the business of renting to evict tenants. Those units then cannot legally be rented for five years.

"We're encouraged that Airbnb appears to be taking steps to meet their requirements under the law. We look forward to them coming into full compliance. San Francisco has a housing crisis on its hands, and we need to protect residents so their homes aren't illegally converted into de facto hotels," said John Coté, communications director for the City Attorney.

Critics have alleged that apartment emptied by landlords were being rented by the day on Airbnb. The company also said it would ensure that no Ellis Act’d apartments were rented to travelers.

Under current San Francisco rules, Airbnb hosts can rent individual rooms in their homes as many days a year as they want, while whole-house or apartment rentals are capped at 90 days.

However, the city’s Board of Supervisors, the local equivalent of the City Council, is considering even stronger regulations on short-term rentals, limiting them to just 60 days a year, down from the current 365.

The move came a week after U.S. District Judge James Donato made it seem likely he’d find for San Francisco in a suit filed by Airbnb that claimed the site wasn’t responsible for its users who didn’t follow local regulations and that it was protected under free speech rules because it was simply the publisher of the listings.

Donato denied a request for a preliminary injunction by Airbnb last week, indicating he found merit in San Francisco’s arguments that it has the right to regulate the service.

Multiple suits

Airbnb had launched multiple suits against municipalities that want to regulate its hosts, including San Francisco, Anaheim and Santa Monica, Calif, Chicago and the state of New York.

The fact that Airbnb has backed down with San Francisco could embolden other cities to increase their efforts to regulate the short-term rental site and also seems to indicate a change of course in the company's response to such suits.

“Airbnb’s mantra seems to have been, ‘We’re the new kid on the block, we represent a new paradigm in occupancy and it’s not us that need to confirm to statues, it’s the municipalities and the states that need to conform to us,’” said Sherwin Belkin, a real estate lawyer with Belkin Burden Wenig & Goldman who represents owners, managers and developers in New York City.

New York state passed a law Oct. 21 which allows hosts to be fined up to $7,500 for listings rooms that are not legal for short-term rentals.

Airbnb and New York City go head to head

That same day, Airbnb filed suit against New York, saying under the Communications Decency Act of 1996, the company can’t be held liable for content such as rental listings created by third-parties. The suit also argued that the New York law is a violation of the First Amendment rights of both Airbnb and its users. Airbnb has filed similar lawsuits in Anaheim and Santa Monica.

The fact that Airbnb appears to now be willing to find a way to work things out in San Francisco represents a shift in strategy, Belkin said.

“It’s a big tonal change.”

Could be positive for Airbnb

In the end, whatever happens in San Francisco and New York tends to diffuse across the country, but as least some regulations could end up being to Airbnb’s advantage, said Hart Posen, a professor in the business school at the University of Wisconsin.

“You need a certain degree of scale to manage that kind of regulations, and that’s a barrier to new companies coming into the field. Once [Airbnb] builds the software to do it, it’s usable in San Francisco and Chicago and everywhere else” he said.