Normally when you hear about the city going after a landlord, it’s for building code violations, or complaints resulting from tenants (remember this palace on 26th Avenue?).
But this week we heard about a landlord who is in legal trouble with the city because they violated the short-term rental law, aka the “Airbnb law”.
Resident Sue Vaughan stopped in at an open house at 1918-1920 Clement Street last fall. The three unit, mixed-use building has a retail space on the ground floor (formerly Clement Street Pharmacy) plus two apartments. The top floor is 3 bedroom / 1.5 bath; the lower flat is a 2 bedroom / 2 bath.
While touring the flats, she noticed clues that they were being rented out as AirBnb units, like laminated welcome signs that said “Dear AirBnB customer” and lock boxes on both properties.
The realtor said the same owner had another property on the market at 4826-4828 Geary, so Vaughan went over there to check it out. Like its sister, it is a mixed-use building with a Korean restaurant on the ground floor, and 9 rooms of residential rentals on the top 2 floors.
At the Geary property, Vaughan saw similar Airbnb clues. Her suspicions were confirmed when the realtor told her that the owner was taking in $10,000 a month from renting the rooms on Airbnb.
According to the short-term rental law in San Francisco, a permanent resident (owner or tenant) can rent all or a portion of their residential unit as a short-term rental. If the permanent resident is present on the property, they can rent the unit(s) for an unlimited number of nights per year. But if they are not living in the residence, they can only rent it out for a maximum of 90 nights per year.
Homeowners are also required to place their residential unit on the Office of Short-Term Rental’s Short-Term Residential Rental Registry. The registry also states that a homeowner may only register one residential unit.
Based on what Vaughan saw at the properties, she reported the two properties to the San Francisco Office of Short-Term Rental for investigation.The owner of the two mixed-use properties is Alice Tse, and this is not her first entanglement with property violations in the Bay Area.
In April 2015, The City of Oakland filed suit against the owners of Empyrean Towers, which includes Alice Tse, accusing management of illegal evictions, failing to make repairs and for creating a public nuisance. Inspectors documented dozens of problems including broken windows, faulty plumbing, and an elevator that was frequently out of service.
When the suit was filed, Tse agreed to a deal that would provide $500,000 for a long list of overdue repairs, but shortly after declared bankruptcy. Control of the property was handed over to a Chapter 11 trustee. [KTVU]
Tse’s two San Francisco properties were quickly identified in Airbnb’s listings, with headlines like “Beautiful Room with 2 Twin Beds” and “Beautiful Room Near Golden Gate”. The Airbnb user listing the rentals appeared to be a man named “Luis”, not Tse herself.
In total, Tse was renting out six to eight rooms in each of the properties, for prices ranging from $61 to $155 a night.
After Vaughan filed her complaint with the city of San Francisco, Tse was served with notices of her violations of the short-term rental law (2016-012772ENF, 2016-012769ENF), and fined $42,000.
“It’s terrifying,” Vaughan told KTVU. “If you can convert any home into an AirBnB hotel, I think it risks destroying the city.”
In San Francisco where the demand for housing far exceeds the supply, and rental and home prices continue to rise, illegal short-term rentals like these make it even harder for people to afford to live in San Francisco.
Tse has removed both Airbnb listings, vacated the buildings, and so far has paid $28,000 of the $42,000 in fines. Tse also took both properties off the market.
KTVU contacted Airbnb about Tse’s illegal listings, and their response was “Bad actors like this have no place on our platform.”
Airbnb has implemented a One Host, One Home program to educate Airbnb users about only posting one address per city law (“Hosts can have multiple listings at that address, but can’t have listings at different addresses.”)
Their help page says “Your listings and your account may be suspended or deactivated if we determine that you’re attempting to manage listings at multiple addresses in San Francisco.”
But critics argue that it is not working, and that AirBnb should be more proactive about identifying multiple resident hosts, and taking corrective action against abusive usesrs like Tse.