.Upfront: Limited investment

by Joseph Mayton

Editor’s note: This story is under review following reports of challenges to the veracity of Joseph Mayton’s reporting for other publications.

Vacationers seeking out unique two- or three-night stays in short-term rentals in Sausalito and Tiburon will now be forced to look elsewhere, after the cities passed new zoning ordinances this summer that bar residents from renting their house or apartment for limited periods—which could hamper house-sharing companies like Airbnb from extending their footprint across the Bay Area.

Tiburon approved the Town Council measure despite Mayor Frank Doyle and Vice Mayor Erin Tollini criticizing and dissenting the move. The decision will have far-reaching consequences for those currently renting on the two most popular house-sharing sites: Airbnb.com and vrbo.com.

“I hate to see everyone get punished for one or two bad apples,” Doyle told the council in August.

Despite growing concerns that companies like Airbnb are beginning to dominate the “sharing economy” and manifest little more than a new moneymaking scheme, many knowledgeable about the sector are focused on the equality and equity that sharing is having in communities. Nikki Silvestri, executive director of Green for All, argues that the sharing economy is key to changing the social and economic status quo in the United States.

“We have too many communities right now not participating in the sharing economy, whether that be online or offline,” Silvestri says. “People need to be educated on how they can connect with others to form an alliance and begin the process.”

For Sausalito resident Mary, a mother of two who says that her family has rented out their house for weekends and days when they are not present, bringing in extra cash has helped with the kids’ needs.

“I understand the reason for banning short rentals because some companies are abusing the system and buying properties just to rent out and that hurts the market, but the ban will hurt our ability to have that little extra income,” she says.

She adds that while each city has “good intentions” with the ordinances, “it is going to really limit our ability to spend extra money where we had been.”

As economic difficulties persist, particularly among communities of color facing higher levels of economic discrimination, Jose Quinonez of San Francisco’s Mission Asset Fund says that as long as those working in collectives and other sharing economy endeavors maintain a sense of equity, a new model is possible.

“What we are witnessing is a massive movement away from traditional means of functioning in the economy and society, and this has resulted in a push toward sharing,” Quinonez says. For him, the issue is about understanding current restrictions and problems facing people across the country as a result of economic disparity—specifically, the overwhelming access that the upper classes have to capital.

As the CEO of the Fund, Quinonez seeks to create more access and greater economic power for those who need it, by connecting them directly with individuals and groups capable of delivering that assistance.

The bans are part of the latest moves across the Bay Area to limit investment companies and property investors from purchasing buildings and using the units solely for short-term rentals.

For example, in San Francisco—home to the most expensive rental market in the country with the median price for a one-bedroom currently running more than $3,500—a petition signed by more than 15,000 people is calling for greater oversight of the sector, as well as the introduction of new regulations for the market.

Advocates of Airbnb, though, counter that restricting it just hurts middle class owners who use it to rent out spare rooms, and that it’s the bigger players in the rental market outside the home-sharing sites who are causing the high costs.

Currently Airbnb hosts can offer rentals for 90 days a year when not present at the home or as many as 265 days when they are there. The petition, however, proposes a 75-day limit on hosting, quarterly reports from platforms offering services, and civil court options if the planning department does not react to complaints in a timely manner.

The petition comes after Mayor Ed Lee’s announcement of a new Office of Short Term Rental Administration and Enforcement aimed at registering hosts and investigating violations. The city has already passed an ordinance limiting rentals to 120 days annually. It coincided with letters sent to 15 hosts for allegedly making residential units into 73 full-time hotels.

But for families like Mary’s and others in Tiburon and Sausalito, the ordinances are a hindrance to maintaining their current standards of living. Christopher Nulty, a public affairs representative with Airbnb and a spokesman for the company’s San Francisco for Everyone campaign, agrees that the middle class is being hurt by these proposals in San Francisco and in Marin.

“This is a Trojan horse proposal designed to effectively ban home-sharing and make it harder for middle class families to stay in the city they love,” Nulty says. “San Francisco already has common sense reforms that were put in place this year by the mayor and the board of supervisors. The poorly written measure is full of loopholes and language intended to trick voters, including provisions that would outlaw in-law unit rentals, create different rules for different communities and make San Francisco the first city in the country to encourage neighbors to spy on their neighbors.”

Airbnb declined to detail the number of rentals that are on offer in Marin and the number of large investment and property managers who have purchased units for short-term rentals, citing privacy issues. However, in New York, Attorney General Eric Schneiderman subpoenaed Airbnb to release statistics, and it showed that six percent of hosts were responsible for nearly 40 percent of Airbnb’s revenue from 2010 through 2014.

“I think the council made the correct decision,” Tiburon Councilman Jim Fraser says in response to questions about the ordinance’s efficacy and goals. “We’re a residential community …  commercializing a neighborhood town is not something, I think, we should be doing.”

And if residents continue to rent, they will be fined $462 a day for every day rented or even advertised to rent. Sausalito and Tiburon are not the first California cities to ban short-term rentals. Hermosa Beach, Santa Monica and Manhattan Beach have already passed bans, and Laguna Beach in Southern California joined the list in August.

Despite the issues raised by some in Marin, residents like William Chong believe that the moves will be better for the area in the long run. “This is something that I am sure is not going to end in terms of a debate in the near future, and I would bet town councils will again visit these measures, but right now I agree with the moves,” Chong says. He believes that it will give more middle class families the ability to rent spaces.

“At the end of the day, we will have to decide as communities who is most important,” Chong says, “and I believe that the council’s decisions are positive in that they recognize who is needed here more than the big companies abusing a system.”