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Federal Court Upholds SF Ordinance Regulating Airbnb, Short-term Rental Platforms

November 8, 2016

From Dale Carlson – for Immediate Release

ShareBetter SF Cheers Decision, Praises SF City Attorney Dennis Herrera

SAN FRANCISCO, November 8, 2016  – ShareBetter SF today welcomed the ruling of Federal District Court Judge James Donato, declining to issue a preliminary injunction against a San Francisco ordinance that prohibits Airbnb, HomeAway and other short-term rental platforms from charging fees when they rent illegal, unregistered residential units to tourists, because the two companies are unlikely to succeed on the merits of their arguments.

The ordinance, sponsored by Supervisors David Campos and Aaron Peskin, and approved unanimously this past June by the San Francisco Board of Supervisors, was adopted to address the continued loss of housing units to Airbnb rentals. Legislation approved by the Board in 2015 limited short-term rentals to primary residences that were registered with the City’s Office of Short-Term Rentals. To date, there are fewer than 1,690 registrants in San Francisco, yet Airbnb alone has more than 7,700 people renting residences to tourists in the City.

Airbnb is the largest company offering short-term rentals. It filed the legal challenge (along with HomeAway (NASDAQ: EXPE)) alleging that the City’s ordinance violated the Communications Decency Act and the First Amendment.

Jennifer Fieber of the San Francisco Tenants Union attended the October 6th hearing for the Airbnb lawsuit against San Francisco. “Airbnb argued that it has the absolute right to profit from facilitating illegal transactions. But Judge Donato made it abundantly clear: The Internet isn’t a lawless no man’s land. Just because you have a website doesn’t mean you’re free to ignore laws and skirt regulations that other, legitimate businesses must follow.”

Doug Engmann, a co-founder of ShareBetter SF and the former Chairman of the Pacific Stock Exchange, called today’s ruling “a game changer.” “If other American cities follow San Francisco’s lead, barring Airbnb’s ability to charge booking fees for renting illegal units, it could have a material impact on the company’s revenue and $30 billion valuation. Appealing Judge Donato’s decision could take years, further eroding its valuation. Airbnb just hit a jarring speed bump on the road to its IPO.”

Engmann lavished praise on City Attorney Dennis Herrera and his staff. “The San Francisco Airbnb ordinance adopted a novel approach to curbing illegal short-term rentals. The City Attorney helped craft the law and he defended it vigorously. We have every confidence that Herrera and his deputies can parry any additional legal challenge Airbnb and its ilk may mount.”

About ShareBetter SF. ShareBetter SF is a broad coalition of tenant organizers and landlords, affordable housing advocates and neighborhood associations, labor unions and business interests, advocates for seniors and the disabled, and proponents of sound planning, land use and housing policies.

Dale A. Carlson
Managing Director, Carlson Advisors
Strategic Communications | Public Affairs
415/310-8616

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