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:
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.