Time to enforce the law

Airbnb owes the city some money -- will we ever collect?

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EDITORIAL The new tech companies that are making waves in San Francisco — Airbnb in the short-term rental business and Lyft and Uber in the taxi industry — may describe themselves as innovative and disruptive, and they may be appealing to investors.

But there's a more accurate word that describes their relationship to the city:

Cheaters.

The way these companies are luring customers isn't really about high-tech applications or brilliant business models. They've just found a way to get around the rules that everyone else has to obey.

Some city officials are talking about hearings and new legislation, all of which is fine. But in the rest of the business community, when someone flagrantly, openly violates the regulations, the City Attorney's Office cracks down. That's what needs to happen here, and soon.

Airbnb has a slick and appealing promise: You can rent out your house or apartment on the Internet to someone who wants to stay in the city for a few days, but is looking for an alternative to a traditional hotel. The homeowner or tenant gets some extra bucks; the visitor gets to stay in a cool neighborhood at a bargain price. What's not to like?

Well, for one thing, most leases in San Francisco bar unauthorized sublets, so renters who offer their places on Airbnb face problems with their landlords, including possibly eviction. City laws also bar the use of residential property for commercial purposes. And, as we've pointed out repeatedly, Airbnb isn't collecting the transient occupancy tax that every other hotel operator in the city has to pay. The total tab: At least $1.8 million a year.

Lyft and Uber say they're using creative apps to offer an alternative to the screwed-up taxi system. Drivers offer rides to people who can "volunteer" to pay at the end — but if nobody pays, the whole business model fails and the venture capitalists who put up the money lose. So everyone knows that these are pay-for-hire taxis.

Except that San Francisco requires every taxi driver to have a permit, called a medallion — and drivers have to go through training, background checks, and carry extensive insurance. If a driver overcharges or refuses a fare, a customer can complain to the city, and get recourse. The startups don't follow the same rules.

There are reasons the city regulates cabs and charges hotel taxes. Cab drivers are ferrying people, some of them vulnerable; it's only a matter of time before a rogue driver who sneaks into the new unregulated startups winds up in a horrible crash or criminally preying on riders.

Driving a cab without a medallion is illegal. Failing to pay city taxes is, too. City Hall can debate and dither and try to avoid offending the mayor (who, unfortunately, is trying to help Airbnb slide). But this is a clear-cut case of businesses flouting city law. Herrera needs to put an end to it.

 

Comments

by a cheap tactic to try and attack our mayor.

We cannot have a patchwork quilt of thousands of bilateral tax deals, some compulsory, some voluntary and some non-existent.

There has to be a national, or in this case, international, approach on how (or whether) intermediary websites should be burdened with the obligation of collecting taxes for hundreds of municipalities.

We're not even talking about State taxes here, but local taxes, which vary enormously.

The simplest solution is to say that the tax is sue by the person who rents out the rooms, and IN the location where his property is. Property cannot move and so that is best way to levy taxes.

Posted by Guest on Apr. 09, 2013 @ 10:49 am

that AirBnB have any obligation to act as a tax collector.

It's possible that, purely because they happen to be located in Sf, that they might feel a need to co-operate on a voluntary basis.

But what if they were not? It doesn't matter where an onloine website is hosted. What matters is where the product is that is being sold and, in this case, it is rooms in SF homes, many of which are rented.

So, let's start enforcing collection from tenants using AirBnB!

Posted by Guest on Apr. 09, 2013 @ 10:20 am

AirBnB goes one step further than CL and, as well as amrketing the services, also acts as a booking agent. But the model assumes that the vendor has included any taxes in the cost of the room, or will otherwise absorb the tax out of their profits, or will collect the tax separately from the Guest.

Expedia does not itemize out any tax - they just quote the gross amount quoted by the hotel. AirBnB follows the same principle. Neither Expedia nor AirBnB can know the tax on a room in Uzbekistan pr Somalia, nor can they act as a tax collector for those jurisdictions..

Posted by Guest on Apr. 09, 2013 @ 5:48 am

The first thing any business does it figure out the regulations and taxes that apply to its proposed activities. Since Airbnb is targeting various cities to make profits in the short-term rental business, they are going to be subject to whatever regulations and taxes apply. No court is going to let the executives or business itself avoid prosecution when the business is purposely directing its marketing and offering services to a particular city, state or country.

anon seems to think Airbnb executives are so stupid that they would avoid paying taxes where a long jail term or substantial penalties and fines are possible for willful tax evasion. Most SFBG readers may not believe it, but executives generally do not like flying all over the globe only to be arrested when they land for evading the country's tax laws.

Posted by Guest on Apr. 09, 2013 @ 7:47 am

guarantee you that they do not feel any need to concern themselves with the tax rules of any jurisdiction where they do not have a physical presence.

Imagine this instead. I sell a SF room to a Japanese visitor by advertizing the room on a Japanese website. The US has no jurisdiction over that, only over me. So they pursue me for the tax and not the Japanese website.

This is really basic internet 101, and you're showing your age by wrongly thinking the old ruels apply here.

You just don't get it. If SF can force AirBnB to collect this tax, it is only because the room is in SF AND AirBnB just happen to be in SF.

And if they then leave, SF can whistle for their taxes. They'll have to chase down the tenants who are subletting this way, who you strangely seem to ignore are the real culprits here.

Posted by anon on Apr. 09, 2013 @ 8:02 am

if it was AirBnB's responsibility??

and just for the record, on AirBnB's website it says:

•you have all necessary permissions to offer your accommodations, including ensuring that your hosting activity (i) will not breach any agreements you have entered into with any third parties (such as any agreements or rules with a landlord or HOA) and (ii) will (a) be in compliance with all applicable laws, Tax requirements, and rules and regulations that may apply to your Accommodations, including, but not limited to, zoning laws and laws governing rentals of residential and other properties and (b) will not conflict with the rights of third parties

So how is it AirBnB's fault if some schmuck rents out their apartment in violation of the lease (a.k.a: contract) they entered into themselves?

Steven really has a hardon for these guys...

Posted by GuestD on Apr. 03, 2013 @ 1:06 pm

the host assumes all legal risks and liabilities for taxes.

And given that Steven routinely excuses breaking the law for Occupiers, protestors, tree-huggers and assorted other ne'er-do-well's, who could possibly blame Steven for breaking his lease with his landlord, evading SF taxes and ignoring SF's rental laws in trying to make a quick buck out of the instatiable need for housing in SfF?

Steven is simply showing the age-old American entreneurial and capitalist spirit, and for that we surely must commend him.

Posted by Anon on Apr. 03, 2013 @ 1:39 pm

What planet are you on, or should I say what are you smoking "Except that San Francisco requires every taxi driver to have a permit, called a medallion — and drivers have to go through training, background checks, and carry extensive insurance."

First of all not all taxi drivers have a medallion, they have A cards that permit them to drive, there are only about 1500 medallions and the rest of the drivers are slaves to the industry that only hold A cards.

Second of all, extensive insurance, cab drivers for the most part are not covered by insurance from the cab companies. In fact I was in an accident as cab driver and found out the cab companies are not required to carry uninsured motorist coverage nor are they required to have air bags in the cars. Ask the SFMTA, that's what they told my lawyers!

Third of all, how many taxi drivers pay taxes? The real reason why cab drivers did not want the 5 percent is that it would leave a paper trail if they had to accept credit cards and then would have to start paying taxes. Shame on you all!

These companies Sidecar, Lyft, and Uber are fulfilling a need that taxi companies and drivers can not fill.

Posted by Dean Clark on Apr. 03, 2013 @ 8:55 pm

Mr. Clark, didn't I read that you are a Sidecar driver somewhere? So if you get in an accident with Sidecar, are you better off than if you were driving a taxi?

All indications being to the contrary, please enlighten us if there is something more you know...

Posted by Ghost on Apr. 05, 2013 @ 6:10 am

What planet are you on, or should I say what are you smoking "Except that San Francisco requires every taxi driver to have a permit, called a medallion — and drivers have to go through training, background checks, and carry extensive insurance."

First of all not all taxi drivers have a medallion, they have A cards that permit them to drive, there are only about 1500 medallions and the rest of the drivers are slaves to the industry that only hold A cards.

Second of all, extensive insurance, cab drivers for the most part are not covered by insurance from the cab companies. In fact I was in an accident as cab driver and found out the cab companies are not required to carry uninsured motorist coverage nor are they required to have air bags in the cars. Ask the SFMTA, that's what they told my lawyers!

Third of all, how many taxi drivers pay taxes? The real reason why cab drivers did not want the 5 percent is that it would leave a paper trail if they had to accept credit cards and then would have to start paying taxes. Shame on you all!

These companies Sidecar, Lyft, and Uber are fulfilling a need that taxi companies and drivers can not fill.

Posted by Dean Clark on Apr. 03, 2013 @ 8:57 pm

I understand the problems with traditional cabs, and thus the opportunity for pirate operators to come in and exploit the opening. It's because they're filling a need out there. There are no angels. This is a war between a corrupt city agency and the cab companies that have the inside track with that agency on the one hand, and fly-by-night pirate operators trying to make a buck who think it's fun to break rules, on the other hand. In fact, the latter really only get away with it, only because other parts of the city family favor their interests (namely tech).

If you were to come in and start an unlicensed fire department, or ambulance company, you'd be shut down in no time flat. But because they've got big tech money on their side, the city lets them slide with a wink and a nod.

Still, I'd probably choose a real cab over some fly-by-night operator. The regulations may not be as comprehensive (or as fair) as they should be, but I don't think getting into some unlicensed stranger's car is really the answer.

Posted by Greg on Apr. 03, 2013 @ 9:28 pm

They are not paid on a donation basis YOU FUCKING IDIOTS.

If we needed any further evidence of how totally out of touch the SFBG is we have their statement that uber and Lyft are the same thing. They're TOTALLY DIFFERENT. Uber drivers, for one, all have commercial licenses.

Posted by Lucretia Snapples on Apr. 03, 2013 @ 10:19 pm

Personally I'm not well-versed in all the intricacies of the taxi licensing. All I know is that slapping a pink mustache on a car and calling yourself a cab doesn't inspire much confidence. Until they get it together and sort things out and impose some reasonable regulations, I feel safer and more comfortable taking traditional cabs.

Posted by Greg on Apr. 03, 2013 @ 11:16 pm

Just to clear -- Uber & Lyft have very different business models and should absolutely not be grouped together. Uber works with licensed and permitted town cars and professional town car drivers who are required to participate in training and have background checks. Uber has a clear rate structure based on mileage and time, very similar to the taxi industry's. It is absolutely not a "donation"-based business model, which I agree is disingenuous at best. In addition, Uber also contracts with taxi drivers. Lyft & Sidecar are in a completely different category, with no professional drivers or licenses.

Posted by Guest on Apr. 04, 2013 @ 8:37 am

"Uber & Lyft have very different business models and should absolutely not be grouped together"

No longer true, Uberx now has drivers who are unlicensed, just like Sidecar and Lyft.

Posted by Ghost on Apr. 05, 2013 @ 6:12 am

lacking a driver's license, presumably.

I frequently drive people around (my vehicle having more than one seat and all) and occasionally take money from people for that service. I certainly do not deem myself as needing any kind of permit to do that.

Posted by Guest on Apr. 05, 2013 @ 7:11 am

Well!

Coming from the same unwittingly pompous jackass who -- it may be surmised -- makes grand pronouncments about having said one thing or another in the past all the while going under an unrecognizable and non-descript screen name, that certainly merits careful filing... in the circular file.

(Typically comments which begin "you mean" or "you are saying," etc., promise to be troll crap of the lowest order further in.)

Posted by lillipublicans on Apr. 05, 2013 @ 7:43 am

I am aware of no need for a permit in the situation described.

Posted by Guest on Apr. 05, 2013 @ 8:13 am

Uber & Lyft have very different business models and should not be grouped together. Uber works with professional and fully licensed town cars. The drivers are also professional town car drivers who Uber requires to go through additional training and have background checks. Uber is not a "donation-based" business model. They have a clear rate structure that is based on mileage and time, very similar to the taxi industry's. In fact, Uber contracts with taxi drivers as well.

Lyft & Sidecar operate completely differently and I agree that the "donation suggestion" business model is laughable and the drivers aren't vetted or carry proper insurance or licenses. I wouldn't climb into a pink mustache car either!

It's important to get the facts straight, SFBG. Simple research. Otherwise your points are undermined.

Posted by Guest on Apr. 04, 2013 @ 8:53 am

right and everyone else is wrong?

Certainly not SFBG who can argue simultaneously BOTH that AirBnB must comply 100% with the law AND that protestors, Occupiers and those who "fight the system" should be given a pass by our fascist, overbearing, racist police force.

Whether SFBG advocates zero tolerance enforcement of the law really depends on who is breaking the law and why.

Or in the case of DV, WHO is breaking the law.

Posted by Guest on Apr. 04, 2013 @ 11:31 am

THIS IS FOR THE FIND FOLKS SPEAKING ON BEHALF OF THE TAXIS, THE CONSUMER AND THE ALTERNATIVES:

I drive for a seafood company in the bay area. My route is the financial district, fisherman's wharf, chinatown. I drive a long white Ford Econoline 250 for 6 to 8 hours a day, I make my stops and I deliver crates of lobster to the restaurants and retailers. I have to park my van just like you park your taxi. I drive the same streets as you do. I know where i can stop and where i can not, although double parking is illegal, we are all guilty of it at times; most of us use discretion and some rotten apples "just dont give a f--k" who or how many cars are behind them.

It seems the all the above these comments come from three view points: the consumer, the taxi driver and "the alternative" driver. Most of you make valid points, some of you just need to see it from a different perspective to realize, YES, YOU SOUND LIKE A SELF ENTITLED JACKASS. It is not my intent to upset you, I'm just informing that yours points you make are invalid.

One of the arguments that keeps coming up from the taxi side is these new drivers aren't "a professional driver." So what is a professional driver. We know what good drivers are and what bad drivers are. Hypothetically If i quit my truck driving job tomorrow and became a Lyft driver, do i just automatically drop ranks, will i become this "untrained driver" you speak of. My driving record will show a clean history. At 32 years old, i have been driving for 14 years now. At which point of those 14 years will i be respected as a "trained driver?" The point i want to bring up is who are you and what gave you the authority to decide someone is and is not a trained driver. When it comes to picking up and dropping off passengers, it should not take more than a day to learn how to do that.

Maybe vast knowledge of streets and roads is a prerequisite to being a trained driver. I am born and raised in SF, i grew up in the richmond district. Growing up as an asian kid, there was no reason for me to go to potrero hill, till this delivery job. it made me uncomfortable at first, i relied on my GPS but after a few weeks, i have it down. Therefore will a few months of driving turn a new Lyft driver into the "trained driver" that you are?

*Hi-Five to the author of "Oh Come On - 3 points about airbnb"

Taxi Drivers - i still dont understand why you pay $5 at the start of each shift before you leave the lot. the word extortion comes to mind. And why would you pay $300,000 for a medallion, or the "right to be a taxi". And then you hate your job and everyone else you have to interact with. You get mad at lyft and sidecar because you say what they do is illegal and they are untrained. Then you say they steal money from you, the same money that was never really yours to begin with. So you drive around town with this vendetta, flipping the bird, yelling and cussing and anger towards anyone with a pink mustache on their car. why do you do this to yourself?

The other afternoon, i was by bloomingdales, hailed a cab to a shop to pick up my car. The taxi smelled like cigarettes, he made a u-turn in the middle of mission street so he could get onto 3rd. Once we got onto 3rd between mission and market, where theres always traffic he started ranting and bitching about how lyft doesnt have insurance, the drivers are untrained and so on ... and all i could think is, "why are you telling me this. I dont care." Let me just say this: If you love driving a taxi, you love pointing out cool/interesting facts and places of SF, you love talking to people, introducing people to good food and you have a great spirit and attitude and your good at it, DO IT. But if your a jerk, you dont like making small talk and you could really give a flying f--k how someone else's day is and you "just do it for the money" ..... DRIVING A TAXI IS NOT FOR YOU. TRY SOMETHING ELSE.

Consumers - which ever side you choose, its correct. YOU are the consumer, YOU should be able to choose. If you dont like being in a pink mustache car, thats fine. Stick with taxis, it probably would have been an weird, awkward, and quiet ride anyways, thats not what Lyft is about, it would've been a bad experience for you and the driver. But if you HATE being asked where you want to go before you get in, HATE having to have cash for rides, HATE waiting on corners with your hand up, but you LOVE meeting cool people and great conversations, LOVE fist bumping, and LOVE having reliable rides .... theres LYFT.

If you like riding around in pseudo limos with drivers in suits and you have $$$ to splurge, UBER is for you, they will love your business, i mean money.

The Alternatives (Lyft, SideCar, InstaCab)- Hey do what you do !!! The consumer seems to be happy. Keep it up. Even if .... what the cab driver told me about your insurance is true, it sure says a lot about trust, the fact that the consumer still chooses Lyft to work, that says a lot. The that drivers haven't had as much experience as some veteran drivers, its cool. everyone starts somewhere, you'll get the experience with time.

Posted by Guest on Apr. 07, 2013 @ 3:04 pm

But they want their interpretation of the law enforced now!

Posted by Lucretia Snapples on Apr. 08, 2013 @ 7:44 pm

Of course, commerce is the highest form of human activity and is the most privileged form of speech.

Posted by marcos on Apr. 08, 2013 @ 8:51 pm

But peer-to-peer transactions via internet brokerages like AirBnB or CraigsList are nothing like bricks-and-morter businesses, and so the same tax system cannot reasonably apply.

In fact, we really haven't figured out, as a nation, how tot ax internet commerce, which is why it's random whether you pay sales tax on online purchases.

I stopped using Amazon when they started adding on CA sales tax a few months ago. There are plenty of other sites who do not charge it.

Posted by Guest on Apr. 09, 2013 @ 5:46 am

it turns out there is no basis for a third-party website to act as a free tax collector?

And will the SFBG be pushing just as hard to ensure that those taxes are paid, those tenants brought to justice, and eviction proceedings enforced where that is contrary to their leases?

Or is this all really just a cheap shot against our duly-elected and popular mayor? And you don't really give a crap about dubious taxing of peer-to-peer transactions that occur in no particular location?

Posted by Guest on Apr. 09, 2013 @ 12:36 pm

it seems like Steven is just bitter because he used Airbnb and he had to pay the taxes himself, and apparently other airbnb-ers haven't paid up. Further, he seems pissed b/c he rented his unit out despite the fact that his lease forbids subleasing. But who's fault is that?

warnings on Airbnb's website about these issues be damned!

With so many major fuck ups going on in this City, I'm surprised SFBG is using up so much oxygen on this issue. Personally, I'm a lot more concerned about Alvarez and the potential for that loser to get a sweet pension for years to come after running the Housing Authority into the freaking ground. I know the SFBG has had a posting or two about this issue over the past few months, but you'd think a guy who screwed over the people in the SFBG protected class would lead to torches and pitchforks, but no, instead there is just bitching and moaning about less than $2M in taxes. So silly. So misguided.

Posted by Guest on Apr. 09, 2013 @ 1:12 pm

There is no evidence for that presumption. SFNBG sometimes advocates full enforcement of (what they perceive to be) the law, like with AirBnB.

But then they want to give a pass to those who Occupy public space or trees.

Hypocrisy, they name is Steven.

Posted by Guest on Apr. 09, 2013 @ 1:27 pm

As far as "ridesharing" apps are concerned, this editorial said what needs to be said.

First, ridesharing apps have a fake business model. If riders don't pay, the business model will fail and the venture capitalists who put up money will lose. But before that happens, if riders don't pay they will receive bad reviews from drivers and they won't get picked up. So, ridesharing apps are really pay-for-hire taxis.

The thing about the taxi business is this: THE TAXI BUSINESS IS DANGEROUS. Drivers get robbed and passengers get assaulted. This happens regularly. The taxi business is so highly regulated simply because it is so dangerous.

Because the taxi business is dangerous, it doesn't make sense to compare it to other app or e-businesses like airbnb or travelocity. Sure it makes sense in a geeky myopic way, if you only focus on the tech and nothing else. But the two businesses don't compare in a real word way: the taxi business is much more dangerous than the travel business, for example.

This is why ridesharing is so dangerous. It's playing around, asking for donations (wink, wink) in a very serious arena where people get hurt and killed regularly. Ridesharing falls somewhere between pay-for-hire taxis with amateur under-insured drivers and 21st century hitchhiking.

Posted by Dave Sutton on Apr. 09, 2013 @ 1:06 pm

is every bit as dangerous as letting someone sharing your car. Maybe more so, as they can kill you, rape you, rob you etc.

Likewise, all roommate situations are potentially like that, not to mention landlords who rent out their own buildings.

But we do not want a nanny state and do not want the government regulating everything to the nth degree. I'd rather take the chance of a bad customer than the near certainty of an incompetent government. Same arguments as used against gun control.

If A wants to pay B to share B's car. home or anything else, the best thing the government can do is butt out and let natural selection do it's job. I don't have problems with carshare or AirBnB because I have good judgment and instincts.

Posted by Guest on Apr. 09, 2013 @ 1:21 pm

post

Posted by Guest on Apr. 09, 2013 @ 1:15 pm

First I am taxi driver who likes the idea of Lyft and Uber, will give us drivers a run for our money. I keep my car clean, dress well, I don't cheat the fare payer, I stay up on places to eat and where everything is.

I have a permit to driver, did have a background check etc.

I have lived overseas where I can tell you that having a short term rental is a whole industry. Holiday Flats, cottages, rooms and other alternative places to stay. Rules should be.

Limits need to be applied. If you do now and then, no problem, if you are filling up your home with paying guests then you need a permit and comply with rules. Fire, Health, Taxes, parking and government regulations.

If you are running a private car service or Lyft, insurance, carrier rules need to be apply.

The rules should apply if you are baking cookies, health, county regulations and a home permit license.

Posted by Garrett on Apr. 10, 2013 @ 10:50 am

Everyone gets inconvenienced just to avoid the often tiny risk of some problem.

Registration, licensing and regulation is often little mroe than an excuse for the city to extort fees and charges from honest, hard-working and ethical entrepreneurs.

As with gun control, the cowboys ignore the rules anyway, while those who follow them would have done that anyway, even if there were no rules.

Posted by Guest on Apr. 10, 2013 @ 10:59 am

In the rest of Europe, Uber isn't so important like there. There are only the traditional taxi service provider.

Posted by Guest on Apr. 10, 2013 @ 4:14 pm

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