Prop F fails, but news not all rosy for Airbnb on home turf
On a night of statewide and city races across the country, the highest-profile vote may have occurred in San Francisco. There, voters decided by a 55 to 45 percent margin to forego strict control on spacesharing arrangements facilitated by firms like Airbnb and VRBO.
Had Proposition F been enacted, San Francisco would have required hosts to file reports of their rental activities with the city on a quarterly basis and capped the total number of days a property could be rented per-year at 75.
The failure of Prop F is worthy of celebration, not only because of the onerous regulations avoided, but also because of the stubbornness with which it would have entrenched them in law. In San Francisco, what is enacted by popular vote can – practically without exception – only be undone by popular vote. For a new and swiftly developing market, enshrining such an intractable regulatory regime could have been disastrous, even for those who do have legitimate concerns about the rise of spacesharing.
The measure split San Francisco’s political class sharply. Former mayor and current U.S. Sen. Dianne Feinstein, D-Calif., supported the measure, while it was opposed both by current Mayor Ed Lee and by his immediate predecessor, Lt. Gov. Gavin Newsom.
But the night was not a complete success for supporters of liberalization. In a hotly contested race for a seat on the San Francisco Board of Supervisors, Prop F supporter Aaron Peskin prevailed over his opponent, Julie Christensen, who was in opposition. A hostile Board of Supervisors may turn into an ongoing sore for the room-sharing industry in San Francisco.
In fact, Airbnb already faces a fairly hostile political environment on its home turf. Earlier this year, the city passed rules limiting property owners to 90 days of short-term rentals per-year when they aren’t physically present at the property. The city would fine violators $1,000 a day. But it also bears noting that, according to vacation rental tracking site Beyond Pricing, San Francisco accounts for just 0.3 percent of the company’s total inventory of properties.
Some have gone so far as to characterize the defeat of Prop F as a pyrrhic victory in the national context, because, by spending $8.4 million to combat the measure, Airbnb signaled that it is prepared to spend big to defeat hostile regulation.
But while opponents of spacesharing will no doubt seek to marshal efforts in other cities, the defeat of Prop F gives the industry time to seek legislation at the state-level to pre-empt the worst excesses of municipal regulation. With the stakes for the spacesharing industry so high, the returns on large investments in advocacy across the country stand to be enormous.
The most encouraging take-away from San Francisco’s rejection of Prop F is that public policy arguments that favor free markets and liberalization can succeed, even in the most putatively regulation-friendly jurisdictions.
