Paul Morris for Bloomberg

Paul Morris for Bloomberg

San Francisco Voters Reject Ballot Measure to Curb Airbnb

Back Bloomberg Nov 6, 2015 By Alison Vekshin and Eric Newcomer

Airbnb fought off a San Francisco ballot measure that sought to limit the short-stay rental service in its hometown, an effort to contain housing costs that some say has made the city a playground for well-heeled techies.

The measure, meant to preserve scarce housing for residents in a searing market, would have imposed a 75-day-per-year limit on Airbnb rentals and forced hosts to register with the city. It was losing 55 percent to 45 percent with all the precincts reporting, according to city election results.

Airbnb, founded in 2008 and operating in more than 34,000 cities as an alternative to pricier hotels, is waging similar battles across the U.S. In San Francisco, a surge in highly paid technology workers has driven up housing prices and sparked protests over income inequality and evictions. More than a dozen protesters stormed Airbnb’s headquarters Monday, releasing helium balloons with signs reading “homelessness” and “entitlement.”

The stakes were high for Airbnb, last valued at $25.5 billion and widely expected to go public in the coming years. Losing the ballot could have encouraged political activists in other cities to push for similar restrictions.

“In a decisive victory for the middle class, voters stood up for working families’ right to share their homes and opposed an extreme, hotel industry-backed measure,” Airbnb spokesman Christopher Nulty said in a e-mailed statement.

Airbnb spent $8.4 million to defeat the measure and hired Chris Lehane, a former White House crisis manager, to spearhead efforts to block regulations that could impede its business. The hotel industry largely sat out of the fight, leaving Airbnb to accumulate a major spending advantage.

“It’s a validation that they can counter regulation that might be restrictive to their growth,” said Arun Sundararajan, professor at New York University’s business school who studies the sharing economy. “Strategically, it’s a victory. Here’s a piece of regulation that wasn’t in Airbnb’s best interest and people have voted against it.”

The state’s fourth-largest city is at the center of the new economy and home to some of the world’s most well-known companies, including Twitter and Uber Technologies, another sharing-economy company that’s battling for dominance against taxis. In recent years, technology jobs have shifted from Silicon Valley to San Francisco as competition increases for young engineers drawn to the vibrant urban environment.

The city’s median rent increased 13 percent to $4,390 in September from a year earlier. The median home value rose 15 percent to $1.1 million during the same time, according to Zillow, a Seattle-based real-estate website. A median- income renter in the San Francisco metropolitan area can expect to spend 47 percent of his paycheck on rent, the company said.

Supporters of the measure say owners who would otherwise lease their houses year round are making more money by renting them short term, like a hotel room, driving up housing prices.

“There is a legitimate question of whether or not Airbnb is having an impact on rents across the country, not just in San Francisco,” former mayor and now Lieutenant Governor Gavin Newsom said of the proposition he opposed. “The data may bear out that it has, but this is not the solution to it.”

Proposition F, as the measure is known, would have limited short-term rentals to 75 days per year, regardless of whether the property is occupied by the existing resident, and would have banned short-term rentals of suites or apartments attached to homes. Under current law, short-term rentals are restricted to 90 days a year if the resident doesn’t live there during that time, with no limits if he or she does.

The measure divided political leaders. U.S. Senator Dianne Feinstein, a Democrat, wrote an op-ed supporting it. San Francisco Mayor Ed Lee, also a Democrat who wrote the ballot argument against the measure, said the ability to rent out apartments helps people pay their bills.