Into thin air - Page 8

"Shareable housing" is causing apartments to vanish from SF's rental market — yet popular, profitable sites like Airbnb violate local laws

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"Don't blame Airbnb, blame the SF Tax Collector for a shoddy website, incompetent workers, and their inability or lack of desire to chase individual lessors. It is not the responsibility of Airbnb to collect taxes; it is the responsibility of the lessor to collect the taxes, just like a hotel," Fajardo wrote.

It's certainly true that TOT rates aren't simple — the 14 percent base rate gets another 1.5-2 percent tacked on it, depending on where the host is located, to fund the Tourism Improvement District proposed by hotels and approved by the city. (That fee just went up again July 1 to fund an expansion of the Moscone Convention Center.) The TOT also isn't simple for Airbnb hosts to collect and pay.

We forwarded Fajardo's criticisms and concerns to Greg Kato, the policy and legislative director for the Tax Collector's Office. He acknowledged that the system is complicated — particularly for Airbnb hosts who aren't legally allowed to operate as a hotel — but he said they try to simplify it as much as possible.

To pay taxes, a business first needs to register with the city by paying a $26 fee and filling out an application, which includes a line indicating whether transient occupancy is part of the business. "There are few, if any, barriers to initially register as a business," Kato said.

The problems come when that business applies to the city for its "certificate of authority" to collect the taxes, and applicants are asked whether they have the relevant licenses and proper zoning to conduct that kind of business. And most Airbnb hosts don't have that because they are actually violating a variety of city codes.

"In a residentially zoned area, this type of use is at least a conditional use [which requires a permit obtained after giving neighbors notice and going through a public hearing] if not a banned use," Kato told us. "Those land use issues are what Sup. Chiu is trying to address with his legislation."

Although Kato said such legislation is beyond the scope of his office, those issues can interfere with a host's ability to receive a certificate of authority to collect the taxes.

"There are a lot of other parties interested in this issue that might have other issues that would break that authority," Kato said, citing landlords, homeowners associations, and neighbors as parties that might object to someone essentially turning his or her apartment into a hotel room, which was banned decades ago by the Apartment Conversion Ordinance.

It's pretty easy to see on the Airbnb website that it isn't charging the TOT or making it easy for its hosts to do so (see "Airbnb isn't sharing," 3/19/13). Using Airbnb's own stated figure that its San Francisco hosts collect about $12.7 million in rents each year, that would amount to nearly $2 million annually that the city should be collecting on these transactions.

When Airbnb's 31-year-old founder and CEO Brian Chesky spoke at a hospitality conference organized by USF in April, he didn't acknowledge any complexities or downsides to his business model, instead casting his company as saving the world.

"It's like the United Nations at every kitchen table. It's very powerful," Chesky said of the social benefits of his company. "I think we're in the midst of a revolution." He wasn't talking about revolution in the sense of challenging the authority or legitimacy of San Francisco, its laws, or its elected leaders, although that seems to be implicitly what he's doing. And he certainly didn't seem to be taking into account his evicted hosts, their upset neighbors and landlords, or the city's disappearing apartments and rising rents when he said, "For us to win, no one has to lose."