Airbnb Archives — Page 3 of 4 — San Francisco Bay Guardian Archive 1966

Debunking SF Mag’s Ellis Act apologist article, point by point

Erica Hanna

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January 20, 2014

Debunking SF Mag’s Ellis Act apologist article, point by point

Well, everyone’s got an opinion. And when it comes to San Francisco’s housing crisis, that’s doubly true.

San Francisco Magazine’s opinion though, amounts to a cry for help for (they say) the oft-demonized landlords from what they call the ever-overblown Ellis Act eviction crisis.

In his Tweet earlier today, San Francisco Magazine Editor-in-Chief Jon Steinberg said “We’re calling BS on San Francisco’s eviction crisis.” The article, by San Fran Mag Web Editor Scott Lucas, lays out a San Francisco that’s hard to recognize, one where evictions and rental increases aren’t displacing people in droves. At least, not enough to qualify as a “crisis.”

Sorry Jon, we’re calling BS on your article.

We're calling BS on SF's eviction crisis. http://t.co/w4Ooc1qCId

— Jon Steinberg (@jonsteinberg31) January 20, 2014

The Guardian reached out to Ted Gullicksen, executive director of the San Francisco Tenant’s Union and Erin McElroy, the head of the Anti-Eviction Mapping Project, to debunk some of the claims made in SF Magazine’s attempt to de-fang the threat of Ellis Act evictions.

You can read the full article here, but we’ve reproduced lines from the piece and included responses from Gullicksen and McElroy addressing their points one by one.

San Francisco Magazine The narrative was a straightforward one: Because the Bay Area has seen an influx of people—largely young, white, and working in tech—who need housing (and can pay for it), greedy landlords, many of them out-of-town speculators, are throwing longtime San Franciscans into the streets and turning the city over to gentrification. It looked cut-and-dried.

It’s not. In fact, Ellis Act evictions represent only a small proportion of the city’s total evictions—and they’re not even historically high to begin with.

Ted Gullicksen That is incorrect on a couple levels. First off, it’s important to understand that the main way people are evicted these ways are via the Ellis Act followed by a buyout. The reason for that is that San Francisco passed strict condominium conversion prohibitions several years ago. If you do an Ellis, you generally are not going to be able to convert to condos ever.

(You need to) include the Ellis threats… for every single Ellis Act eviction filed with the rent board, they’re where the speculators tried to get the tenants to bite… for every Ellis Act eviction, there are about five buyouts where Ellis Act was used as a club.

I come to that number by the number of people coming to the Tenants Union concerned about buyouts, and comparing those with the rent board’s numbers. Pretty consistently we see 33 percent of what the rent board sees.

Erin McElroy California is the only state where the Ellis Act is utilized, it’s hard to say whether it’s historically high or not. We also see it’s being utilized by landlords repeatedly. It’s being used as a business model, not a way of going out of business which was its intended use in 1986.

SFM In the 12-month period ending on February 28, 2013, the total number of Ellis Act evictions was 116—an almost twofold increase over the previous year, but a nearly 70 percent decrease since 2000, when such evictions hit an all-time high of 384. All told, the Ellis Act was behind less than 7 percent of the 1,716 total evictions in the city between February 2012 and February 2013. “Isn’t it far more likely,” asks Karen Chapple, a professor of city planning at UC Berkeley, “that more units are being lost [from the market] through Airbnb?”

TG That number, the 1,716 number, includes “for fault” evictions. If you just include no-fault evictions, Ellis Act evictions are the highest amounts. No-fault evictions are the ones we’re all talking about here. There are a number of rental units lost from the market and that’s a big problem, but the TIC and condominium conversions far surpass tourist conversions (like AirBNB).

EM First of all, for every Ellis Act being recorded, there is not a recording of the units evicted. While you can say there is a number of evictions, it doesn’t represent the units or people being displaced: it doesn’t record the number of people losing their homes.

What we’ve done through the Anti-Eviction Mapping Project is to match those petitions with the number of units. If you go to our website you can see the number of units lost since 1997 in each petition. While the city (of San Francisco) only recorded about 1,300 Ellis Act evictions since then, there have been at least 4,000 units lost. We don’t know how many people are in each unit. There could be between 1 and 6 people in each on average.

SFM Laying the blame on nefarious Rich Uncle Pennybags types isn’t exactly right either. A recent report commissioned by Supervisor David Campos is clear on that point: The increase in Ellis Act evictions, it found, “occurred simultaneously with significant increases in San Francisco housing prices.” In other words, the problem isn’t speculators. It’s the market.

TG The problem is indeed the speculators. Most of these buyouts are done by speculators, of the current Ellis Act evictions right now, most of the buyouts are done by one of twelve speculators.

The Anti-Eviction Mapping Project showed that these real estate speculators form Limited Liability Corporations for each building. The Anti Eviction Mapping Project went through all these LLC’s and identified actual owners and compared them to Ellis Act evictions at the rent board. One person involved is doing six Ellis evictions right now.

EM Speculators are taking advantage of the market. If there weren’t people to buy luxury condos, Ellis Act evictors wouldn’t buy up the units and turn them into condos.

It’s one thing for a landlord to issue an Ellis Act one time because they’re done being a landlord, it’s another to see serial evictors use it over and over again through Limited Liability Corporations. Urban Green has 40 or so LLC’s, they’re using them all to push the Ellis Act. See our serial evictor chart and you’ll see 12 different people that use that serial evictor model. It’s a way for them to make money.

SFM The city simply doesn’t have enough housing to keep up with job growth. And as real estate values rise, the incentive for a property owner to sell grows considerably. No villainy. Just economics.

TG The city is building a ton of housing, as anyone can tell you. The city, though, is building nothing but luxury condos. There’s plenty of housing, but nothing affordable.

EM If displacing long term residents and folks with disabilities and seniors is just economics, it’d be an argument against our economic system. The city offers services for trans folk, queer folk, people with HIV, all reasons people moved to San Francisco and it has a popular place in people’s imagination. Native San Franciscans are also not being valued. If that’s economics, San Francisco has lost its heart and its soul.

SFM Even if incremental changes happen, San Francisco’s affordability problem will likely continue almost unabated. Ellis Act evictions are, in Chapple’s words, not a cause of the housing crisis, but rather “a symptom. Fixing it is like using a Band-Aid for brain cancer.”

TG The Ellis Act is in fact a cause, because it’s taking thousands of units off the rent control market. When we’re losing more and more rent control units, supply dwindles and the rents go up.

EM I would agree the Ellis Act isn’t the cause of the problem. The problem is it’s being utilized with other forms of evictions for landlords to take advantage of a political economy with the relationship between the city and tech. The problem is the relationship with the new tech class and the impunity it maintains through city government.

@Scott_Wiener @FitzTheReporter I agree. Affordability has to be big part of conversation. I suspect only small distance btwn you and I.

— Scott Lucas (@ScottLucas86) January 20, 2014

Year of Evictions

Erica Hanna

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December 31, 2013

30

This New Year’s Eve we take a look back at a hard year for many San Franciscans, what many in the future may call our Year of Evictions. After reading our retrospective, check out our interactive timeline below, where we chronicle flashpoints in the year of evictions and San Francisco’s tech culture war. Did we miss something? If you’d like to submit an event and date for the timeline, email joe@sfbg.com.

San Francisco’s political dynamics shifted significantly in 2013 as concerns about affordable housing, gentrification, and displacement shot to the top of city’s agenda, forcing elected officials to scramble for solutions.

The growing urgency of these issues can be tracked by the evolving statements and positions of Mayor Ed Lee over the course of the year, as well as the increasingly assertive actions of the progressive movement for housing justice, which caught fire and began to garner national headlines on a regular basis by the year’s end.

It’s true that affordable housing and cost-of-living issues were already a major concern a year ago, on the heels of voter approval of Proposition C and the creation of the city’s Affordable Housing Fund in November 2012. That compromise measure was created by Lee and his downtown allies, working with Sup. John Avalos and progressive groups.

But early in 2013, it became clear that the measure wasn’t enough to prevent rapid, escalating displacement of low and middle-income San Franciscans, and that the overheating real-estate market — driven by an influx of new employees at technology companies that Lee had courted and supported with big tax breaks — was rapidly changing the face of the city. Meanwhile, Lee’s administration also faced a Housing Authority imbroglio as a former director parted ways amid allegations of corruption, while the agency’s deep financial troubles left dilapidated public housing units in disrepair.

Lee and his allies at first tried to stay the course, giving only lip service to the affordability problem early on.

“Though some may wish otherwise, we cannot defy the law of supply of demand within our City limits,” Lee said during his state of the city address on January 28. The tone of his speech was triumphant as Lee emphasized the growth of the tech sector.

“We have given renewed confidence to leading high technology companies like Salesforce, Yelp, Zynga, Twitter, Square, Autodesk, Riverbed, Airbnb and so many more to stay and grow in our City,” Lee said during the speech. “We’re even attracting growing companies … to pull up stakes and move to the new gravitational center of Silicon Valley — San Francisco.”

But by the time November rolled around, even the New York Times was noting that “As the center of the technology industry has moved north from Silicon Valley to San Francisco …income disparities have widened sharply, housing prices have soared.” (“Backlash by the Bay,” NYT, 11/24/13).

It took almost an entire year, but the mayor’s ardent embrace of tech is starting to give way to the realization that a growing movement for equitable housing was steadily gaining ground and that it was something the city’s politicians would ignore at their peril.

Freedom is slavery, privacy is theft

Sasha Cuttler

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November 26, 2013

2

LIT Reading a book is a simple, solitary pleasure. As I sat with the thick, hardback edition of The Circle by Dave Eggers in recent weeks, I could feel its weight on my lap and watch my bookmark slowly proceed through its pages. It was a precious, visceral experience to read it, something I savored like a juicy secret.

Those sensations and my desire to keep them to myself for awhile are anathema to the hyper-connected, technology-obsessed world that Eggers creates in this dystopian novel — a world that is far closer to the one we live in and are building right here in the Bay Area than many techophiles would like to admit.

In fact, I deliberately waited until just after I finished reading The Circle (Knopf/McSweeney’s, 504 pp., $27.95) to read any of its reviews, and one of the first ones to come up on my Google search was a scathing critique in Wired magazine headlined “What the Internet Looks Like if You Don’t Understand It.”

Without a sense of irony, the review parrots the perspective of the book’s protagonist — 24-year-old Mae Holland, who gets a coveted job at The Circle, a near-future Silicon Valley company that’s an amalgam of Google, Facebook, Twitter, and your bank — who dismisses concerns about privacy, corporate power, and the reductive, data-driven trivialization of culture by saying that critics just don’t understand the Internet.

You see, The Circle — like many of today’s real life tech companies and a large portion of the shiny, happy true believers who work at them — is saving the world from all the messiness and ignorance that preceded its rise. And if you don’t get that, or you don’t accept trading your personal information for the collective good, then you’re just crazy and resistant to the inevitable march of progress.

“Who but a fringe character would try to impede the unimpeachable improvement of the world?” Mae asks herself when The Circle’s biggest critics mysteriously turn out to have incriminating information on their computers.

Later, Mae and The Circle’s “Wise Men,” who prod her progression toward becoming the fresh young face of the company, reduce that faith in the digital collective to the Orwellian slogan: “Secrets are lies. Sharing is caring. Privacy is theft.”

And in the end, the naif-turned-guileless-villain could only see the goodness and virtue of living “in a world where everyone could know each other truly and wholly, without secrets, without shame and without the need for permission to see or to know, without the selfish hoarding of life — any corner of it, any moment of it. All of that would be, so soon, replaced by a new and glorious openness, a world of perpetual light.”

POWER OF FICTION

I understand how some critics can fault Eggers for being a little over-the-top in presenting The Circle’s technologies and ambitions, or with its characters being sometimes two dimensional messengers of the author’s takeaways, or with plot points that seem a little implausible (for example, it’s hard to imagine most politicians “going transparency” and wearing live cameras around the necks all day, every day).

But that’s really part of the fun with this book, and those supposed flaws actually prove to be skillful devices that develop the novel into an allegory of modern times in much the same way that George Orwell did in 1984, a comparison that Eggers was clearly aiming for.

Instead of the grim, top-down, thought-policing security state conjured up by Orwell as he observed the rise of totalitarianism in Europe, the dystopian world that Eggers creates is a cheerful if vapid, bottom-up, all-knowing security apparatus that supplants government itself.

Much like in 1984, it is average citizens who become the key agents of the security state, persuaded by propaganda and skewed visions of the greater good to spy on their neighbors. Or in the case of The Circle — and its cheap, small, wireless, and ubiquitous SeeChange cameras, or the TruYouth tracking chips implanted in children for their protection — the actions of people in every corner of the world.

Yet the real power and insights in this compelling work of fiction isn’t with its portrayal of the grand endgame, as creepy as that all might be (and I won’t even get into a couple of the chilling plot twists and scenes that come toward the end of the book). What intrigued me most was its reflection of the attitudes and motivations that are so prevalent in the tech world today, as we see all around us, and the perils in following through these incubating ideas to their logical ends.

Mayor Ed Lee and his main financial benefactor, venture capitalist Ron Conway, the libertarian-leaning investor in a huge cross-section of local high-tech companies (see “The Plutocrat,” 11/27/12), regularly present technology as the panacea for all that ails this complex, multi-faceted city.

“Dispution” is the main stated goal of this industry, whether it be Airbnb’s defiance of local housing, zoning, and tax laws to allow people to monetize their apartments; Lyft and Uber creating unregulated taxi services that threaten San Francisco’s long-developed taxi system; or the San Francisco Citizens Initiative for Technology & Innovation (sf.citi) pushing tech-based public-private partnerships “to find new solutions to historic problems facing San Francisco.”

In fact, a campaign video that sf.citi created during the mayor’s race two years ago was eerily similar to the thoughts Mae had one day while away from the safe and sanitized cocoon of the Circle campus: “Walking through San Francisco, or Oakland, or San Jose, or any city, really, seemed more and more like a Third World experience, with unnecessary filth, and unnecessary strife and unnecessary errors and inefficiencies — on any city block, a thousand problems correctible through simple enough algorithms and the application of available technology and willing members of the digital community.”

CLOSING THE CIRCLE

Eggers writes from a place of love for San Francisco, the city we watched him adopt through his breakout novel, A Heartbreaking Work of Staggering Genius (2001). He then founded the McSweeney’s publishing house and the 826 Valencia writing lab, mentoring new generations of young writers and encouraging our love affair with the printed word.

I got to know Eggers at events and coffee shops in our Mission District neighborhood, and he was generous with his time and advice as I was writing my own book, The Tribes of Burning Man (2010). Eggers spanned the first dot-com boom and the current one, his award-winning books are critically acclaimed for their penetrating insights into what makes people tick, and so his observations about the quirks and pitfalls of techie culture here in the Bay Area can’t be easily dismissed.

The tech industry does a lot of good and important work, but there are inherent dangers in the marriage of powerful technologies to the power-hungry capitalists who finance their ventures. And the mediating factor is the multitudes who use the technologies and what their expectations are. It is a triad reflected in a parable-like story toward the end of the book when a shark, an octopus, and a school of sea horses are put into the same tank (spoiler alert: the shark wins).

The mysterious Kalden, a Mark Zuckerberg-like character who helped create The Circle, explains toward the end that he and others were motivated by a desire to apply technological fixes to any problems they saw, often just to see what could be done, without really thinking through the wider and longer term implications of what they were doing.

“I was trying to make the web more civil. I was trying to make it more elegant. I got rid of anonymity. I combined a thousand disparate elements into one unified system. But I didn’t picture a world where Circle membership was mandatory, where all government and all life was channeled through one network,” Kalden tells Mae.

We all want to be seen and counted, to be connected to something greater than ourselves, and to be protected from lurking evils in our world. The Circle reminds us to careful what we wish for, and it also offers an intriguing prescription for what ails us.

At the end of the novel, Kalden tries to enlist Mae’s help is promoting “The Rights of Humans in a Digital Age,” which range from “We must all have the right to anonymity” and “Not every human activity can be measured” down to the final line, written in red ink: “We must all have the right to disappear.” *

Join the movement

Sasha Cuttler

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October 29, 2013

201

EDITORIAL San Francisco is headed for a showdown. Those who see the city as primarily a place to make money and who want to leave its fate to the mercy of market forces are being confronted by a growing and increasingly well-organized movement demanding aggressive action on the related issues of evictions and gentrification.

The former group, led by Mayor Ed Lee and a handful of his wealthy benefactors and supportive media voices, has so far been content to just plow forward with what they euphemistically call their “jobs agenda” while throwing some token bones to average income San Franciscans.

But there are signs that the pendulum is swinging against the economic elites, who could pay a heavy political price for being so heedless of populist concerns, just as they did at the height of the last dot-com boom in 2000, when progressives won a majority on the Board of Supervisors and held it for almost a decade.

Even pro-growth cheerleaders like SPUR are now decrying the “hyper gentrification” of San Francisco. The San Francisco Chronicle ran a front page article Oct. 27 questioning whether the city was receiving enough benefits for the $56 million tax break it gave to Twitter a couple years ago — tax breaks the newspaper wholeheartedly supported at the time. The San Francisco Business Times has finally joined the Bay Guardian in calling for Airbnb to stop stiffing the city and pay its transient occupancy taxes, in an Oct. 11 editorial calling the company’s intransigence “difficult to defend.”

Those chinks in the armor of establishment San Francisco are a recognition of how bad things have gotten and how tone-deaf the tech industry and its political supporters have been in responding to it. And that recognition was forced by the rising tide of populist outrage at what’s happening to the city of St. Francis.

As we report in this issue (see “Tenant proposals and Guardian forum address eviction crisis”), tenant advocates have proposed an ambitious but reasonable legislative package to address evictions, and we enthusiastically support it.

San Francisco is facing a moment of crisis, as this eviction epidemic compounds the last one to alter the future of this city in unacceptable ways, and our politicians will need to decide which side of history they want to be on. That moment of truth is coming faster than they may appreciate.

Mayor Lee needs to decide whether he’s still the same person who started his career defending tenants in the International Hotel. Sheriff Ross Mirkarimi may soon be faced with the difficult choice of whether to refuse to carry out a legal but unjust eviction, as his predecessor Richard Hongisto did with the I Hotel.

San Francisco is at its best when it acts boldly in defense of progressive values, as it has done on immigration, medical marijuana, and marriage equality. So now is the time to aggressively defend this city’s tenants and low-income residents from real estate speculators, greedy landlords, and predatory corporate interests.

Airbnb says its hosts should pay taxes

Michael Redmond

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October 8, 2013

7

Under pressure in San Francisco and New York City for violating local tenant and land use laws and refusing to pay local taxes, Airbnb has finally acknowledged that transient occupancy taxes apply to the room rentals it facilitates. But the company still hasn’t taken any steps to collect the tax or admitted that it shares this tax debt with its hosts.

“Our hosts are not hotels, but we believe that it makes sense for our community to pay occupancy tax, with limited exemptions for those who earn under certain thresholds,” CEO Brian Chesky wrote on the Airbnb blog on Oct. 3, addressing the post to New York City and not San Francisco, where it is headquartered and where we have shown the company is shirking an annual tax debt of nearly $2 million.

Contacted by the Guardian, a company spokesperson extended the pledge to San Francisco, writing, “Yesterday, our CEO Brian Chesky announced that we believe it makes sense for our community of hosts to pay occupancy tax to the cities in which they live, with exceptions under certain thresholds, and we are eager to discuss how this might be made possible. We have been in substantive discussions with Board President David Chiu on these issues for some time, and we’d like to thank him for the open dialogue that helped lead to today’s announcement. We look forward to continuing our work with him and others in San Francisco to set forth clear, fair laws that allow regular people to rent out their own homes, while giving back to the city that makes it possible.”

As the Guardian has repeatedly reported, most recently in our Aug. 6 cover story “Into Thin Air,” the San Francisco Treasurer/Tax Collectors Office has ruled that the city’s TOT of about 15 percent applies to Airbnb guests, and that Airbnb shares that joint tax liability with its hosts.

The ability of individual hosts to receive business licenses for renting out rooms and to collect and remit the TOT is complicated by the fact that such rentals violate land use, tenant, and other city laws — and Chiu has been developing legislation that would legalize and regulate the stays.

Airbnb could easily collect the TOT on each San Francisco transaction, as some of its online competitors have already been doing, but it has so far refused to do so. And when the Guardian asked Airbnb whether it now plans to include the tax in its transactions, the company ignored the question.

In fact, Airbnb’s public statements and private communications indicate its intention to pass the buck to its hosts rather that paying the tax liability itself, and several hosts who commented on Chesky’s blog post expressed hopes they would get more support from the company.

Nonetheless, Chiu took the Airbnb’s statement yesterday as a positive sign, telling us, “I am pleased to hear that Airbnb has acknowledged the need for their users to pay the occupancy tax. This policy was developed as a result of discussions that I’ve led in the past year to regulate and tax shareable housing activity in San Francisco. While we continue to negotiate with shareable housing companies, housing advocates, and the Mayor’s Office to find sensible solutions, I am confident that we will be able to move forward on a regulatory framework that provides flexibility to residents, protects our affordable housing stock, and collects the fair share of taxes for the City. I look forward to introducing legislation in the coming months.”

Airbnb makes small admission on tax issue, saying its hosts should pay

Sasha Cuttler

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October 4, 2013

105

Airbnb makes small admission on tax issue, saying its hosts should pay

Under pressure in San Francisco and New York City for violating local tenant and land use laws and refusing to pay local taxes, Airbnb has finally acknowledged that transient occupany taxes apply to the room rentals it facilitates. But the company still hasn’t taken any public steps to collect the tax, nor has it admitted that it shares this tax debt with its hosts.

“Our hosts are not hotels, but we believe that it makes sense for our community to pay occupancy tax, with limited exemptions for those who earn under certain thresholds,” CEO Brian Chesky wrote on the Airbnb blog yesterday, addressing the post to New York City and not San Francisco, where it is headquartered and where we have shown the company is shirking an annual tax debt of nearly $2 million.

Contacted by the Guardian, a company spokesperson extended the pledge to San Francisco, writing, “Yesterday, our CEO Brian Chesky announced that we believe it makes sense for our community of hosts to pay occupancy tax to the cities in which they live, with exceptions under certain thresholds, and we are eager to discuss how this might be made possible. We have been in substantive discussions with Board President David Chiu on these issues for some time, and we’d like to thank him for the open dialogue that helped lead to today’s announcement. We look forward to continuing our work with him and others in San Francisco to set forth clear, fair laws that allow regular people to rent out their own homes, while giving back to the city that makes it possible.”

As the Guardian has repeatedly reported, most recently in our Aug. 6 cover story “Into Thin Air,” the San Francisco Treasurer/Tax Collectors Office has ruled that the city’s TOT of about 15 percent applies to Airbnb guests, and that Airbnb shares that joint tax liability with its hosts.

The ability of individual hosts to receive business licenses for renting out rooms and to collect and remit the TOT is complicated by the fact that such rentals violate land use, tenant, and other city laws — and Chiu has been developing legislation that would legalize and regulate the stays.

Airbnb could easily collect the TOT on each San Francisco transaction, as some of its online competitors have already been doing, but it has so far refused to do so. And when the Guardian asked Airbnb whether it now plans to do so, the company ignored the question.

In fact, Airbnb’s public statements and private communications indicate its intention to pass the buck to its hosts rather than collect and pay the taxes itself, and several hosts who commented on Chesky’s blog post expressed hopes they would get more support from the company on the myriad issues that complicate its simplistic business model.

Nonetheless, Chiu took the Airbnb’s statement yesterday as a positive sign, telling us, “I am pleased to hear that Airbnb has acknowledged the need for their users to pay the occupancy tax. This policy was developed as a result of discussions that I’ve led in the past year to regulate and tax shareable housing activity in San Francisco. While we continue to negotiate with shareable housing companies, housing advocates, and the Mayor’s Office to find sensible solutions, I am confident that we will be able to move forward on a regulatory framework that provides flexibility to residents, protects our affordable housing stock and collects the fair share of taxes for the City. I look forward to introducing legislation in the coming months.”

Endorsements 2013

Michael Redmond

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October 1, 2013

125

We’re heading into a lackluster election on Nov. 5. The four incumbents on the ballot have no serious challengers and voter turnout could hit an all-time low. That’s all the more reason to read up on the issues, show up at the polls, and exert an outsized influence on important questions concerning development standards and the fate of the city’s waterfront, the cost of prescription drugs, and the long-term fiscal health of the city.

PROP. A — RETIREE HEALTH CARE TRUST FUND

YES

Note: This article has been corrected from an earlier version, which incorrectly stated that Prop A increases employee contributions to health benefits.

Throughout the United States, the long-term employee pension and health care obligations of government agencies have been used as wedge issues for anti-government activists to attack public employee unions, even in San Francisco. The fiscal concerns are real, but they’re often exaggerated or manipulated for political reasons.

That’s one reason why the consensus-based approach to the issue that San Francisco has undertaken in recent years has been so important, and why we endorse Prop. A, which safeguards the city’s Retiree Health Care Trust Fund and helps solve this vexing problem.

Following up on the consensus pension reform measure Prop. B, which increased how much new city employees paid for lifetime health benefits, this year’s Prop. A puts the fund into a lock-box to ensure it is there to fund the city’s long-term retiree health care obligations, which are projected at $4.4 billion over the next 30 years.

“The core of it says you can’t touch the assets until it’s fully funded,” Sup. Mark Farrell, who has taken a lead role on addressing the issue, told us. “The notion of playing political football with employee health care will be gone.”

The measure has the support of the entire Board of Supervisors and the San Francisco Labor Council. Progressive Sup. David Campos strongly supports the measure and he told us, “I think it makes sense and is something that goes beyond political divides.”

There are provisions that would allow the city to tap the fund in emergencies, but only after it is fully funded or if the mayor, controller, the Trust Board, and two-thirds of the Board of Supervisors signs off, a very high bar. So vote yes and let’s put this distracting issue behind us.

PROP. B — 8 WASHINGTON SPECIAL USE DISTRICT

NO, NO, NO!

Well-meaning people can arrive at different conclusions on the 8 Washington project, the waterfront luxury condo development that was approved by the Board of Supervisors last year and challenged with a referendum that became Prop. C. But Prop. B is simply the developer writing his own rules and exempting them from normal city review.

We oppose the 8 Washington project, as we explain in our next endorsement, but we can understand how even some progressive-minded people might think the developers’ $11 million affordable housing and $4.8 million transit impact payments to the city are worth letting this project slide through.

But Prop. B is a different story, and it’s something that those who believe in honesty, accountability, and good planning should oppose on principle, even if they support the underlying project. Contrary to the well-funded deceptions its backers are circulating, claiming this measure is about parks, Prop. B is nothing more than a developer and his attorneys preventing meaningful review and enforcement by the city of their vague and deceptive promises.

It’s hard to know where to begin to refute the wall of mendacity its backers have erected to fool voters into supporting this measure, but we can start with their claim that it will “open the way for new public parks, increased access to the Embarcadero Waterfront, hundreds of construction jobs, new sustainable residential housing and funding for new affordable housing.”

There’s nothing the public will get from Prop. B that it won’t get from Prop. C or the already approved 8 Washington project. Nothing. Same parks, same jobs, same housing, same funding formulas. But the developer would get an unprecedented free pass, with the measure barring discretionary review by the Planning Department — which involves planners using their professional judgment to decide if the developer is really delivering what he’s promising — forcing them to rubber-stamp the myriad details still being developed rather than acting as advocates for the general public.

“This measure would also create a new ‘administrative clearance’ process that would limit the Planning Director’s time and discretion to review a proposed plan for the Site,” is how the official ballot summary describes that provision to voters.

Proponents of the measure also claim “it empowers voters with the decision on how to best utilize our waterfront,” which is another deception. Will you be able to tweak details of the project to make it better, as the Board of Supervisors was able to do, making a long list of changes to the deal’s terms? No. You’re simply being given the opportunity to approve a 34-page initiative, written by crafty attorneys for a developer who stands to make millions of dollars in profits, the fine details of which most people will never read nor fully understand.

Ballot box budgeting is bad, but ballot box regulation of complex development deals is even worse. And if it works here, we can all expect to see more ballot measures by developers who want to write their own “special use district” rules to tie the hands of planning professionals.

When we ask proponents of this measure why they needed Prop. B, they claimed that Prop. C limited them to just talking about the project’s building height increases, a ridiculous claim for a well-funded campaign now filling mailers and broadcast ads with all kinds of misleading propaganda.

With more than $1 million and counting being funneled into this measure by the developer and his allies, this measure amounts to an outrageous, shameless lie being told to voters, which Mayors Ed Lee and Gavin Newsom have shamefully chosen to align themselves with over the city they were elected to serve.

As we said, people can differ on how they see certain development deals. But we should all agree that it’s recipe for disaster when developers can write every last detail of their own deals and limit the ability of professional planners to act in the public interest. Don’t just vote no, vote hell no, or NO, No, no!

PROPOSITION C — 8 WASHINGTON REFERENDUM

NO

San Francisco’s northeastern waterfront is a special place, particularly since the old Embarcadero Freeway was removed, opening up views and public access to the Ferry Building and other recently renovated buildings, piers, and walkways along the Embarcadero.

The postcard-perfect stretch is a major draw for visiting tourists, and the waterfront is protected by state law as a public trust and overseen by multiple government agencies, all of whom have prevented development of residential or hotel high-rises along the Embarcadero.

Then along came developer Simon Snellgrove, who took advantage of the Port of San Francisco’s desperate financial situation, offered to buy its Seawall Lot 351 and adjacent property from the Bay Club at 8 Washington St., and won approval to build 134 luxury condos up to 12 stories high, exceeding the city’s height limit at the site by 62 percent.

So opponents challenged the project with a referendum, a rarely used but important tool for standing up to deep-pocketed developers who can exert an outsized influence on politicians. San Franciscans now have the chance to demand a project more in scale with its surroundings.

The waterfront is supposed to be for everyone, not just those who can afford the most expensive condominiums in the city, costing an average of $5 million each. The high-end project also violates city standards by creating a parking space for every unit and an additional 200 spots for the Port, on a property with the best public transit access and options in the city.

This would set a terrible precedent, encouraging other developers of properties on or near the waterfront to also seek taller high-rises and parking for more cars, changes that defy decades of good planning work done for the sensitive, high-stakes waterfront.

The developers would have you believe this is a battle between rival groups of rich people (noting that many opponents come from the million-dollar condos adjacent to the site), or that it’s a choice between parks and the surface parking lot and ugly green fence that now surrounds the Bay Club (the owner of which, who will profit from this project, has resisted petitions to open up the site).

But there’s a reason why the 8 Washington project has stirred more emotion and widespread opposition that any development project in recent years, which former City Attorney Louise Renne summed up when she told us, “I personally feel rich people shouldn’t monopolize the waterfront.”

A poll commissioned by project opponents recently found that 63 percent of respondents think the city is building too much luxury housing, which it certainly is. But it’s even more outrageous when that luxury housing uses valuable public land along our precious waterfront, and it can’t even play by the rules in doing so.

Vote no and send the 8 Washington project back to the drawing board.

PROP. D — PRESCRIPTION DRUG PURCHASING

YES

San Francisco is looking to rectify a problem consumers face every day in their local pharmacy: How can we save money on our prescription drugs?

Prop. D doesn’t solve that problem outright, but it mandates our politicians start the conversation on reducing the $23 million a year the city spends on pharmaceuticals, and to urge state and federal governments to negotiate for better drug prices as well.

San Francisco spends $3.5 million annually on HIV treatment alone, so it makes sense that the AIDS Healthcare Foundation is the main proponent of Prop. D, and funder of the Committee on Fair Drug Pricing. Being diagnosed as HIV positive can be life changing, not only for the health effects, but for the $2,000-5,000 monthly drug cost.

Drug prices have gotten so out-of-control that many consumers take the less than legal route of buying their drugs from Canada, because our neighbors up north put limits on what pharmaceutical companies can charge, resulting in prices at least half those of the United States.

The high price of pharmaceuticals affects our most vulnerable, the elderly and the infirm. Proponents of Prop. D are hopeful that a push from San Francisco could be the beginning of a social justice movement in cities to hold pharmaceutical companies to task, a place where the federal government has abundantly failed.

Even though Obamacare would aid some consumers, notably paying 100 percent of prescription drug purchases for some Medicare patients, the cost to government is still astronomically high. Turning that around could start here in San Francisco. Vote yes on D.

ASSESSOR-RECORDER

CARMEN CHU

With residential and commercial property in San Francisco assessed at around $177 billion, property taxes bring in enough revenue to make up roughly 40 percent of the city’s General Fund. That money can be allocated for anything from after-school programs and homeless services to maintaining vital civic infrastructure.

Former District 4 Sup. Carmen Chu was appointed by Mayor Ed Lee to serve as Assessor-Recorder when her predecessor, Phil Ting, was elected to the California Assembly. Six months later, she’s running an office responsible for property valuation and the recording of official documents like property deeds and marriage licenses (about 55 percent of marriage licenses since the Supreme Court decision on Prop. 8 have been issued to same-sex couples).

San Francisco property values rose nearly 5 percent in the past year, reflecting a $7.8 billion increase. Meanwhile, appeals have tripled from taxpayers disputing their assessments, challenging Chu’s staff and her resolve. As a district supervisor, Chu was a staunch fiscal conservative whose votes aligned with downtown and the mayor, so our endorsement isn’t without some serious reservations.

That said, she struck a few notes that resonated with the Guardian during our endorsement interview. She wants to create a system to automatically notify homeowners when banks begin the foreclosure process, to warn them and connect them with helpful resources before it’s too late. Why hasn’t this happened before?

She’s also interested in improving system to capture lost revenue in cases where property transfers are never officially recorded, continuing work that Ting began. We support the idea of giving this office the tools it needs to go out there and haul in the millions of potentially lost revenue that property owners may owe the city, and Chu has our support for that effort.

CITY ATTORNEY

DENNIS HERRERA

Dennis Herrera doesn’t claim to be a progressive, describing himself as a good liberal Democrat, but he’s been doing some of the most progressive deeds in City Hall these days: Challenging landlords, bad employers, rogue restaurants, PG&E, the healthcare industry, opponents of City College of San Francisco, and those who fought to keep same-sex marriage illegal.

The legal realm can be more decisive than the political, and it’s especially effective when they work together. Herrera has recently used his office to compel restaurants to meet their health care obligations to employees, enforcing an earlier legislative gain. And his long court battle to defend marriage equality in California validated an act by the executive branch.

But Herrera has also shown a willingness and skill to blaze new ground and carry on important regulation of corporate players that the political world seemed powerless to touch, from his near-constant legal battles with PG&E over various issues to defending tenants from illegal harassment and evictions to his recent lawsuit challenging the Accreditation Commission of Community and Junior Colleges over its threats to CCSF.

We have issues with some of the tactics his office used in its aggressive and unsuccessful effort to remove Sheriff Ross Mirkarimi from office. But we understand that is was his obligation to act on behalf of Mayor Ed Lee, and we admire Herrera’s professionalism, which he also exhibited by opposing the Central Subway as a mayoral candidate yet defending it as city attorney.

“How do you use the power of the law to make a difference in people’s lives every single day?” was the question that Herrera posed to us during his endorsement interview, one that he says is always on his mind.

We at the Guardian have been happy to watch how he’s answered that question for nearly 11 years, and we offer him our strong endorsement.

TREASURER/TAX COLLECTOR

JOSE CISNEROS

It’s hard not to like Treasurer/Tax Collector Jose Cisneros. He’s charming, smart, compassionate, and has run this important office well for nine years, just the person that we need there to implement the complicated, voter-approved transition to a new form of business tax, a truly gargantuan undertaking.

Even our recent conflicts with Cisneros — stemming from frustrations that he won’t assure the public that he’s doing something about hotel tax scofflaw Airbnb (see “Into thin air,” Aug. 6) — are dwarfed by our understanding of taxpayer privacy laws and admiration that Cisneros ruled against Airbnb and its ilk in the first place, defying political pressure to drop the rare tax interpretation.

So Cisneros has the Guardian’s enthusiastic endorsement. He also has our sympathies for having to create a new system for taxing local businesses based on their gross receipts rather than their payroll costs, more than doubling the number of affected businesses, placing them into one of eight different categories, and applying complex formulas assessing how much of their revenues comes from in the city.

“This is going to be the biggest change to taxes in a generation,” Cisneros told us of the system that he will start to implement next year, calling the new regime “a million times more complicated than the payroll tax.”

Yet Cisneros has still found time to delve into the controversial realm of short-term apartment sublets. Although he’s barred from saying precisely what he’s doing to make Airbnb pay the $1.8 million in Transient Occupancy Taxes that we have shown the company is dodging, he told us, “We are here to enforce the law and collect the taxes.”

And Cisneros has continued to expand his department’s financial empowerment programs such as Bank on San Francisco, which help low-income city residents establish bank accounts and avoid being gouged by the high interest rates of check cashing outlets. That and similar programs are now spreading to other cities, and we’re encouraged to see Cisneros enthusiastically exporting San Francisco values, which will be helped by his recent election as president of the League of California Cities.

SUPERVISOR, DIST. 4

KATY TANG

With just six months on the job after being appointed by Mayor Ed Lee, Sup. Katy Tang faces only token opposition in this race. She’s got a single opponent, accountant Ivan Seredni, who’s lived in San Francisco for three years and decided to run for office because his wife told him to “stop complaining and do something,” according to his ballot statement.

Tang worked in City Hall as a legislative aide to her predecessor, Carmen Chu, for six years. She told us she works well with Sups. Mark Farrell and Scott Wiener, who help make up the board’s conservative flank. In a predominantly Chinese district, where voters tend to be more conservative, Tang is a consistently moderate vote who grew up in the district and speaks Mandarin.

Representing the Sunset District, Tang, who is not yet 30 years old, faces some new challenges. Illegal “in-law” units are sprouting up in basements and backyards throughout the area. This presents the thorny dilemma of whether to crack down on unpermitted construction — thus hindering a source of housing stock that is at least within reach for lower-income residents — look the other way, or “legalize” the units in an effort to mitigate potential fire hazards or health risks. Tang told us one of the greatest concerns named by Sunset residents is the increasing cost of living in San Francisco; she’s even open to accepting a little more housing density in her district to deal with the issue.

Needless to say, the Guardian hasn’t exactly seen eye-to-eye with the board’s fiscally conservative supervisors, including Tang and her predecessor, Chu. We’re granting Tang an endorsement nevertheless, because she strikes us as dedicated to serving the Sunset over the long haul, and in touch with the concerns of young people who are finding it increasingly difficult to gain a foothold in San Francisco.

City Hall must address rising rents

Michael Redmond

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September 24, 2013

73

EDITORIAL Another flurry of public concern over rising rents in San Francisco — driven by one-bedroom apartments listed for almost $4,000, a well-attended forum on gentrification in the Mission, fresh residential and commercial evictions, and a poll showing 63 percent think the city is building too much luxury housing — has been ignited. And once again, it’s falling on deaf ears at City Hall.

Working class residents, small businesses, and nonprofits are being driven out of San Francisco, unable to keep up in a city that increasingly caters to chain stores, wealthy residents, and tourists (both vacationers and conventioneers).

When Mayor Ed Lee and kindred politicians, who have fueled the rising rents with tax breaks and pro-landlord policies, are asked about the problem, they mouth stale rhetoric about job creation, change the subject (gee, we now have bike share!), or cite far-off and insufficient solutions like the Affordable Housing Trust Fund.

San Francisco’s landlords are doing great — despite the sob stories published recently by tone-deaf local media outlets such as San Francisco Magazine — and they’ve actually been emboldened to start attacking rent control as somehow hurting renters, threatening the last lifeline of diversity in the city.

The whole debate has gotten so surreal that it would be funny if it weren’t so serious. The future of San Francisco is at stake, yet nobody at City Hall with any clout seems to be taking it seriously. So here are a few places where our policymakers could start:

– End corporate welfare. Twitter is valued at $1 billion as it prepares its initial public stock offering, so it doesn’t need a $22 million multi-year tax break from city taxpayers. In 2012, city tax breaks nearly quadrupled, reaching $14.2 million (and that’s not even counting the $2 million annually that Airbnb is simply refusing to pay). Enough! We need that money more than Wall Street does.

– Hold developers accountable. Lennar Urban has been sitting on public land in southeast San Francisco for a decade while housing officials just let it slide. Lennar should front-load affordable housing or lose its land. Threaten a citywide moratorium on all market-rate housing permits until more low-income units come online and watch what happens. And protect existing rent control apartments from illegal subletting.

– Stand with people, not capital. Put the clout of San Francisco behind Richmond’s threat to buy underwater mortgages, using eminent domain if necessary, as Sup. David Campos proposed. Mayor Lee’s Housing Authority “reforms” should cater to residents rather than developers. Push for state-level reforms like pro-tenant changes to the Ellis Act, a Prop. 13 split role, and the right to control commercial rents and vacancies.

It’s time to change the conversation.

Shareable, smearable

Michael Redmond

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August 13, 2013

25

After writing critically about problems in the business models of so-called “shareable economy” companies in last week’s issue — including our cover story on Airbnb and other companies that facilitate short-term home rentals (“Into thin air“) and a story on the rideshare company Lyft (“Driven to take risks“) — the topic continued to dominate the sfbg.com Politics blog, with fresh posts and lots of reader comments:

AIRBNB PILE-ON

The excellent bilingual newspaper El Tecolote covered some of the same ground we did in its Aug. 1 cover story, “Unregulated Rental Business Takes Over Housing,” focused on how Airbnb is contributing to gentrification and displacement in the Mission District.

Reporter Jackson Ly found a couple that turned a rent-controlled apartment on 24th St. into a $249 per month de facto hotel room, booking it for 24 nights in August and making $5,976 in just one month, on top of the $3,069 they’re making in August renting out the guest room in the apartment where they actually live for $99 per night.

“It’s cheating the people that pay taxes,” Maria, who lives in the unit below this couple’s investment apartment and is tired of the rotating stream of tourists in her building, told the newspaper.

I got ahold of El Tecolote Managing Editor Iñaki Fdez. de Retana, who said that housing issues like this one are extremely important to the Latino community that lives in the Mission, and he’s been surprised that Mayor Ed Lee has been unwilling to address the impacts of Airbnb and other tech community contributors to the problem.

“It is very important,” he told us, noting that visiting European tourists are changing the character of the neighborhood. “In particular on 24th Street, which was once seen as the heart of the Mission, it’s changing overnight and [Airbnb and other housing rental websites] is a big part of that.” (Steven T. Jones)

UBER UGLY CRASH

Uber’s policy on insuring its drivers will soon be taken for a test drive, as the company that runs the mobile app-based ride requesting service and a driver were served with a court summons last week from a woman severely injured after a crash near a San Francisco intersection.

Those insurance policies were said to meet brand new regulatory requirements on rideshare services introduced by the California Public Utilities Commission on July 30, which was meant to solve the longtime regulatory battle between rideshare services and local governments.

The plaintiff in the suit, Claire Farhbach, was a bystander, not a customer, and that unique twist in the injury suit has experts from the taxi industry waiting to see if Uber will step up to the plate to pay for Farhbach’s injuries, or if Uber will leave driver Djamol Gafurov on the hook for the bill.

Fahrbach was walking up Divisadero street near Hayes at quarter of midnight March 12 when Gafurov’s black town car, operating as a private taxi, collided with another car on Divisadero while turning left. One of the cars then collided with a fire hydrant, and in the words of the civil suit, “this impact caused the fire hydrant to be violently sheared from its base and propelled through the air a number of feet northbound…when the fire hydrant struck (Farhbach) with a tremendous amount of force.”

Gafurov’s private taxi was operating as a “partner” of Uber, which is how the company defines its relationship to the network of drivers on its website. No private taxis or drivers are considered to be employees of Uber, as the company has repeatedly maintained, claiming that the drivers, and their actions, are not its responsibility.

Uber spokesperson Andrew Noyes told us repeatedly that drivers are not employees of the rideshare company: “Our legal team took a look at the files you sent. This is not an ‘Uber’ driver, they’re not employed by us. They’re employed by their licensed and insured limousine company.” (Joe Fitzgerald)

MAKING CABS BETTER

For all the (justified) grumbling about the business models of ridesharing services like Lyft and Uber, the so-called ridesharing revolution may prove to be a catalyst for a taxi industry overhaul.

“We’re adding hundreds more taxis, and our board has approved regulations for each vehicle to provide real-time locational information,” San Francisco Municipal Transportation Agency spokesperson Paul Rose told us.

“One of our goals is to move forward with making the data available to our customers to hail a cab with an app,” Rose added, referencing a plan unveiled by the transit agency several weeks ago. Faced with stiff competition from random vehicles adorned with garish pink mustaches, the taxi industry is taking a stab at evolution, or at least imitation.

To be a cab driver right now, paying off the pricey medallion they must purchase in order to operate while oblivious new transplants rake in the cash without following the same set of rules, must be infuriating.

At the same time, let’s be honest here: There’s a reason people are ditching conventional cabs and climbing into cars with random strangers who may be beckoned with the tap of a smartphone. And it has nothing to do with passengers’ sentiments about government regulation or newly minted tech millionaires.

The taxi industry lags far behind the lightning-speed reality many Bay Area residents have come to inhabit, but if it weren’t for the competition, they might not have any incentive to change.

Rideshare services might be your quintessential rogue tech companies backed by nauseating sums of venture capital, but at the end of the day, people also want taxi service that does not suck. (Rebecca Bowe)

Community-based journalists also raising Airbnb’s issues in SF

Sasha Cuttler

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August 7, 2013

111

Mainstream media outlets in San Francisco may be slow to pick up on how Airbnb and other online home rental companies are violating local laws and dodging local taxes — the subject of our cover story this week — but both international and community-based journalists are paying attention to this growing problem.

The excellent bilingual newspaper El Tecolote covered some of the same ground we did in its cover story this week, “Unregulated Rental Business Takes Over Housing,” focused on how Airbnb is contributing to gentrification and displacement in the Mission District.

Reporter Jackson Ly found a couple that turned a rent-controlled apartment on 24th St. into a $249 per month de facto hotel room, booking it for 24 nights in August and making $5,976 in just one month, on top of the $3,069 they’re making in August renting out the guest room in the apartment where they actually live for $99 per night.

“It’s cheating the people that pay taxes,” Maria, who lives in the unit below this couple’s investment apartment and is tired of the rotating stream of tourists in her building, told the newspaper.

I got ahold of El Tecolote Managing Editor Iñaki Fdez. de Retana, who told me, “it seems like we’re on the same page,” noting the Guardian has also recently written about the prison hunger strike and some other issues that his paper has covered.

He said that housing issues like this one are extremely important to the Latino community that lives in the Mission, and he’s been surprised that Mayor Ed Lee has been unwilling to address the impacts of Airbnb and other tech community contributors to the problem.

“It is very important,” he told us, noting that visiting European tourists are changing the character of the neighborhood. “In particular on 24th Street, which was once seen as the heart of the Mission, it’s changing overnight and [Airbnb and other housing rental websites] is a big part of that.

Meanwhile, we’re still waiting for a substantive response from Airbnb to the issues that we and a handful of other journalists are raising. CEO Brian Chesky, who was an amateur competitive bodybuilder before founding Airbnb in 2008, would apparently rather flex his muscles than deal directly with the community where his company is based.

Get tough with defiant disrupters

Michael Redmond

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August 6, 2013

8

EDITORIAL It may sometimes seem like we at the Bay Guardian don’t like the technology industry, but nothing could be further from the truth. We tweet, click, post, and share, playing with all the hot new tech toys that spring from the innovative minds of Bay Area residents. This is an important sector of the local economy, one that often empowers people who were just getting by to remain in expensive San Francisco.

Yes, we do regularly criticize tech (and some of its biggest neoliberal cheerleaders in City Hall), as we do to Airbnb, Lyft, and other so-called “shareable economy” companies in this issue. But that’s only because we strongly believe in open and transparent discussions about public policy and the needs of city residents.

And frankly, that’s not happening these days.

Instead of engaging directly and honestly with the people and our elected representatives, Airbnb has chosen to duck its obligations to the city of its birth and dodge attempts to create a public dialogue about its dangerously flawed business model. Same thing with Lyft, another company that acts as if it’s entitled to undermine civic institutions without so much as a public conversation first.

Yes, these companies have come up with cool ideas that have become popular with Bay Area residents. In a city where it was tough to find a cab on Saturday nights, Lyft made it easier to find rides and allowed people to make some extra cash off their cars. Airbnb was also a great idea that makes travel cheaper and more personal.

The beauty of these ideas is their simplicity — but that is also their main flaw, because San Francisco isn’t a simple city. It’s a complex, dynamic city with difficult landlord-tenant dynamics, and a congested city that tries to achieve the right balance of cabs on the roadways, both systems that are the products of decades-long struggles that have spawned reams of regulations.

These tech-savvy fortune hunters, who don’t understand or appreciate that history, think it’s enough to have a good idea and some rich venture capitalists willing to back it. They espouse vaguely libertarian ideas about “disruptive” technologies empowering people, but then they wait for government officials to solve the problems with their business models, raking in millions of dollars in profits in the meantime and delaying their day of public reckoning as long as possible.

For example, in a May interview on KQED’s Forum, Airbnb’s David Hantman was asked why the company was defying a city ruling that it must pay the transient occupancy tax, he said they were waiting for the city to adopt a new regulatory structure first.

That’s not an acceptable or defensible position, and it is only continuing because Mayor Ed Lee has publicly supported the company’s defiance of city law and rulings. Mr. Mayor, if these are the types of “jobs” you’re creating — part time jobs with no benefits in an underground economy that cannibalizes other industries, breaks city laws, and won’t pay local taxes — then this city is in real trouble.

We’re happy to see Board President David Chiu trying to solve Airbnb’s problems, but he needs the support of other top city officials who are willing to put pressure on the company to bargain in good faith. And yes, we’re talking to Mayor Lee, Tax Collector Jose Cisneros, and City Attorney Dennis Herrera, among others.

If you make the city appear impotent to enforce its own laws or too willing to go easy on wealthy corporations, it will only embolden more young opportunists to disrupt the city’s regulatory authority and its social fabric. You work for us, not the venture capitalists, and it’s time to show some spine.

Into thin air

Sasha Cuttler

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August 6, 2013

97

By Steven T. Jones and Parker Yesko

Airbnb is an audacious corporation, particularly in San Francisco, the city where it’s headquartered and where its business model works best. This city is tech-savvy and popular with tourists, but hotels here are expensive, while rent-controlled apartments are still affordable, creating a strong incentive to rent those rooms at a profit through Airbnb.

The problem is that its business model is basically illegal. Its users violate five different sections of laws in San Francisco, from planning codes to tax laws to rent control. Disrupting complex regulatory systems developed over decades, Airbnb has managed to unite traditional adversaries against it: both the Hotel Council of San Francisco and the hotel workers of UNITE-HERE Local 2, both the landlords from the San Francisco Apartment Association and the renters from the San Francisco Tenants Union.

But Airbnb and its young founders just don’t seem to give a fuck about any of that. Sure, most of its hosts in San Francisco are violating their leases and land use laws, and a string of them have gotten evicted as a result. But Airbnb is rolling in cash, with Forbes now valuing the company in the billions, with a B, thanks to the double-digit percentage it takes from every transaction, low overheard costs, and venture capitalists who can’t seem to throw enough money at the company.

When the San Francisco Tax Collector’s Office last year held hearings on whether Airbnb and similar companies must collect the city’s transient occupancy tax (TOT), the surcharge of up to 16 percent that hotels charge to guests, the company rallied dozens of its local hosts to oppose the taxation and even enlisted the support of Mayor Ed Lee, who shares a financial benefactor with Airbnb: venture capitalist Ron Conway.

It wasn’t enough to overcome the clarity of city tax laws and the equity arguments made by the hotels, and the city ruled that Airbnb and/or its hosts are responsible for collecting the TOT. So what did the company do? Nothing. It just kept making money and stiffing the city, and when the Guardian wrote about how it appears to be shirking that annual tax bill of nearly $2 million (see “Airbnb isn’t sharing,” 3/19/13), the company and its consultants simply refused to answer our calls or questions — then and now, for months.

As this story was going to press, the company did finally send us a prepared statement that was more self-promotional than responsive to our questions, but it included the line, “Airbnb is committed to working with the City on policies that make San Francisco stronger, promote innovation, and ensure the sharing economy continues to grow.”

Really, you almost have to admire these guys’ chutzpah. Except for the fact that Airbnb and similar companies — VRBO, Roomorama, HomeAway, countless new upstarts, as well the DIY option of Craigslist — are exacerbating the city’s housing crisis by taking thousands of apartments off the rental market, driving up rents, and causing evictions in the process.

Board of Supervisors President David Chiu stepped in to mediate this mess early this year, trying to create legislation that would legalize and regulate the activities of Airbnb and other so-called “shareable housing” companies. But hopes of introducing something in the spring turned into a goal of midsummer, then by the August recess, and now sometime this fall, hopefully.

In the meantime, the money keeps rolling into Airbnb, complaints against it mount (here and in other big cities), its tax bill goes unpaid, and the landlords and tenants, the hoteliers and the workers, are all left to wonder why the city can’t or won’t enforce its own laws.

CHIU’S CHALLENGE

Chiu may have met his match with Airbnb. He has forged compromises on some of the toughest legislative challenges that City Hall has wrestled with this year — including condo conversions, CEQA reform, and the CPMC hospital deal — each time finding the acceptable middle ground between the progressive and moderate supervisors and constituencies.

His approach to this one sounds similarly centrist, with Chiu supporting the concept of shareable housing but understanding the myriad problems that Airbnb is presenting in complex cities. He neither sounds Lee’s unqualified boosterism of Airbnb nor does he fret about its impact on the housing market as much as its critics.

“I do not think shareable housing is either the cause or the solution to the housing crisis,” Chiu told us.

He’s striving for something between New York City’s total ban on tenants renting out their apartments while they’re away and the laissez faire approach of other big tourist cities. He sees some merit in Chicago’s requirement that Airbnb hosts register with the city to regulate it, but that’s not quite what he wants to do either.

“It’s a much less materialistic way to live and that’s a good thing,” Chiu said of the basic shareable economy concept of making more efficient use of existing resources, whether it be housing, cars, or consumer goods.

But he’s equally clear in identifying the problems and overhyped claims, acknowledging that “it takes away housing from permanent residents, driving up the cost of housing.”

While he says it’s good to spread visiting tourists and their money around the city — a regular claim of Airbnb and its advocates — that also creates problems when apartments become virtual hotel rooms, disturbing neighbors and upsetting the dynamics of landlord-tenant relations.

“Shareable housing is used and abused in ways that displace permanent San Francisco residents,” Chiu said. “Those are the excesses that need to be reined in, in a serious way.”

So he’s trying to create legislation that will set fair and clear standards, ensure compliance with city laws, improve the city’s enforcement of those laws, and generate “tax revenues to cover the city’s expenses in hosting hundreds of thousands, if not millions, of visitors every year.”

But Airbnb has only complicated Chiu’s goals and his reputation as the legislator who solves tough problems, largely because knowledgeable sources tell us the company has been unwilling to really compromise — perhaps emboldened by support from the Mayor’s Office and the city’s apparent impotence to enforce its own rulings — and is dragging out the negotiations.

Chiu wouldn’t comment on that, but he did acknowledge that these negotiations have been difficult. How can you allow renters to make a little extra money while recognizing the rights and concerns of their landlords and neighbors? How can you protect rent control and still allow tenants to profit from their units? Can you prevent landlords from using Airbnb or VRBO to bypass rent control? If you create a registry to ensure only permanent residents are playing host, what’s to stop landlords from using that list to evict those on it?

“We want to carve out a reasonable opportunity for people to do this,” Chiu said. “This is tough partly because of these complexities, and the laws are on the books for a reason….The more we pull these strings, the more this unravels.”

LANDLORDS AND TENANTS TOGETHER

San Francisco Tenants Union Executive Director Ted Gullicksen has been involved with the Chiu-Airbnb negotiations — from which he hopes to strengthen enforcement of rent control and apartment conversion laws while still allowing limited use of shareable housing sites by tenants — and he told us, “It turned out to be a very slow process.”

“Airbnb has just been balking and wanting more and more,” Gullicksen told us. “This process has been frustrating, but Chiu has hung in there.”

Gullicksen said the goal has been to limit short-term hosting to fewer than 90 days in a 12-month period, with only permanent city residents allowed to host, but Airbnb wants people to be able to rent out their apartments for eight months. And Gullicksen said he wants to see tenant laws and the rental stock protected from conversion to vacation rentals.

“We’re most concerned about the impact on the housing stock and evictions, because there’s so many of these…We have entire buildings that have been on the tourist market for years,” Gullicksen said. “It added a huge new way to remove units from the rental market.”

Gullicksen said that conversions of apartments became an even bigger problem than conversions to condos when the financial crisis hit in 2008, and that could become an even bigger problem now that the condo conversion lottery has been suspended for 10 years under legislation approved earlier this year (“Supervisors approve condo legislation,” Politics blog, 6/11/13).

In fact, he said that there has been a rash of unusual Ellis Act evictions in recent months, with buildings that have six or more units being cleared of tenants even though they are ineligible for condo conversions, raising suspicions that they’re being used for vacation rentals.

Hotel Council Executive Director Kevin Carroll told us Airbnb and similar companies should be paying the TOT, as the city ruled, and he doesn’t understand how they’ve gotten away with it for so long.

“A visitor to San Francisco, whether they are staying with Airbnb or a hotel, they’re using city services,” he told the Guardian, dismissing the arguments that shareable housing companies should be treated differently. “They do compete with hotels.”

Janan New, executive director of the San Francisco Apartment Association, expressed frustration that city officials have let this situation drag on as long as it has.

“I don’t know why [Tax Collector Jose] Cisneros isn’t collecting the tax. I don’t understand it,” New told us. “They certainly have the money.”

Cisneros told us that his office has the power to audit companies, “and we can bring taxpayers into courts of law,” but because of taxpayer privacy laws, he can’t discuss what’s happening with Airbnb.

“I cannot confirm or deny or discuss what is or isn’t being done,” Cisneros said, even refusing to offer an off-the-record assurance that something is being done to back up his ruling last year and address the perception that companies are free to flout his authority with impunity.

Attorney James Parrinello, representing SFAA and Coalition for Better Housing, sent a letter to top city officials on Jan. 14 “to discuss the fast-growing practice of illegal short-term/transient rentals for profit and request the City take immediate action to address the problem.”

New said they never got a response, although she tells us, “We did have a candid dialogue with [Chiu] six months ago.”

“All of these tenants in San Francisco are using their units as pieds-a-terre for out-of-town tourists and they’re doing it in ways that jeopardize their rent control status and the safety of their neighbors,” New said.

She told stories of visitors being loud, disrespectful, even committing an assault. She said one tenant placed a lockbox on his door to facilitate a rotating series of guests, while another rented out a second apartment in his building exclusively for Airbnb guests.

And she confirmed that her association has worked with landlords to search Airbnb and other sites to identify tenants who are illegally renting out their apartments and to serve them with three-day “notice to quit” warnings, otherwise they would be evicted.

“Under rent control, some tenants are making more money than they pay in rent,” New said, noting that landlords are essentially underwriting the rentals. “It’s stealing.”

Gullicksen expressed concerns that landlords are doing that kind of research to try to evict tenants, but he said the Tenants Union is doing similar research to ferret out landlords who are using these services to illegally turn apartments where evictions have taken place into vacation rentals and de facto hotels, focused mostly on VRBO because “they have a greater landlord emphasis.”

“The homes that we’re talking about are owned by the person that’s renting them out. It’s not people that are basically subletting their homes,” VRBO spokesperson Victor Wang told us, refusing to comment on local apartment conversion laws or other issues specific to San Francisco.

Chiu told us he takes the rent control issues seriously: “Our rent control laws are in place for very important reasons and we need to make sure it stays affordable.”

DISAPPEARING APARTMENTS

In a city experiencing what politicians and activists of all stripes have called a “housing crisis,” it might come as a surprise that US Census numbers indicate 8.3 percent of San Francisco’s rental stock was vacant in 2010 — about 31,000 units — up from 4.9 percent a decade earlier.

Scott James, homeowner and small-time landlord advocate, would have us believe that rent control is to blame, arguing in a recent New York Times op-ed (“King of My Castle? Yeah, Right,” 6/11/13) that “San Francisco’s anti-landlord housing laws and political climate make [renting] untenable.”

Faced with a bad tenant at his home in the Castro, James said he “joined the ranks of thousands of other small-time landlords here who will never rent again, adding to the city’s housing shortage.”

Yet the San Francisco Rent Ordinance confers broad authority to evict tenants for a plethora of “just causes,” including late payments, breach of lease (such as, ahem, illegal subletting), nuisance or damage to property, and owner move-in. Since the law dates back to 1979, it probably doesn’t explain the steep rise in vacancies. And with evictions now hitting an 11-year high, it’s hard to paint landlords as helpless victims.

San Francisco Rent Board Executive Director Delene Wolf told us the eviction rate has actually mimicked bullishness in the real estate market rather than beefier tenant regulations. She said it “really spiked around the dot-com years, for obvious reasons went way down during the recession, and it’s back up now because the market heated up.”

Some embittered landlords may indeed live atop empty units for decades but, given a median rental price of $2,764 per month for a one-bedroom unit, there’s an enormous opportunity cost to being disgruntled.

But perhaps that’s what “shareable housing” is really about: getting around the rules to make some money. Short-term rentals have become so lucrative that it’s financially possible, and easier than ever, for a homeowner to exit the long-term rental market for good.

Airbnb is so unregulated that even a homeowner who has used the Ellis Act to supposedly get out of the rental business could easily and anonymously monetize an officially vacant space for higher profit margins and with less oversight as a “vacation” rental.

Annette Fajardo has made clients out of people like James. She started her business, SF Holiday Rentals, just after the first dot-com boom, when she began managing short-term rentals in the homes of her friends. When she had nine properties in her roster, the business became a full-time job.

Over the last decade, demand for her management services has increased so much that she says she’s now “very picky about who she works with.”

Fajardo currently manages more than 40 furnished units that guests can book on her own website, as well as Airbnb, Roomorama, VRBO, HomeAway, Trip Advisor, and Craigslist. Her clients are all owners offering full homes or apartments and all the units she manages have been permanently withdrawn from the long-term rental market.

Quite often, her guests stay for a month or longer. Some are international tourists, but the majority are new corporate transplants to San Francisco. The demand for units like hers keeps growing: She gets 100 inquiries on her properties each day, about half from Airbnb.

“There’s always been corporate furnished rentals,” Fajardo told us in the dining room of a Castro flat that she lists for $350 per night on Airbnb. “That market has always been there. It’s just that there’s so much more business now. We got Google, Apple — you’ve got the busses running here all the time. I get Google people all the time and they spend big bucks.”

And she’s been through it all — battles with the tax collector in three municipalities, catastrophic fires in two properties, fraudulent guests, drunk guests, pornographers, and, worst of all, meddlesome neighbors.

“Your neighbors are a problem,” Fajardo emphasized. “In the Castro, you have to do a 30 night minimum cause the neighbors fink on you.” And when they do, the Planning Department can step in. They “send a letter stating the residential code and to cease and desist. If you don’t stop less than 30 night rentals, then they can fine you.”

COMPLEX LAWS, SIMPLE SITE

City tax and zoning laws ban apartment rentals of less than 30 days, labeling it “illegal hotelling.” Dwellings in residential areas repurposed as tourist housing have, in the eyes of the Planning Department, essentially been commercialized without proper permitting or payment of the TOT.

Rentals for more than 30 days aren’t regulated as commercial properties, but the tenants in those homes have rights under the 1979 rent ordinance, which protects any tenant who, according to Rent Board spokesperson Robert Collins, “pays rent and inhabits a unit for two days. You don’t have to sign a lease to be a tenant — you just have to pay rent and occupy the unit.”

This presents a number of challenges to both tenant- and owner-hosts. Tenants who gouge tourists on nightly rates are often in violation of a rent ordinance ban on “charging upon additional occupancy more than the rent that the tenant pays to the owner,” explained Collins.

Tenants who rent out their apartment for a few days can even lose their rights to reclaim their homes. Collins cited multiple cases where subletters refused to leave and returning tenants had little legal recourse because “they would not have a just cause to evict the subtenant because, if they’ve rented the entire unit, they aren’t themselves a resident in the unit.”

Owners who offer their units on Airbnb assume the same risk of unwanted, long-term guests. But they hedge against it by charging exorbitant nightly, weekly, and even monthly rates. On the off chance that a guest does demand a lasting lease, Fajardo reasons, “if I’m getting $5,500 a month for a two-bedroom, you can stay for the next 10 years.”

Fajardo knows where laws limit her opportunity for gain and to remain within their bounds. But most hosts, the ones Airbnb advertises as offering “unused space to pay your bills or fund your next vacation,” aren’t running a sophisticated business. And Airbnb offers them little help or support.

Airbnb just lists the rentals then mediates the payments. And the company collects revenue at both ends of transactions, charging guests a 6-12 percent service fee upon booking then taking another 3 percent before remitting payment to hosts.

Anyone can create a guest or host profile and Airbnb conducts no user verification, although both can leave online reviews. “We do not attempt to confirm, and do not confirm, any Member’s purported identity,” Airbnb states in its terms of service. “You are responsible for determining the identity and suitability of others.”

The company advertises a $1 million “Host Guarantee” backed by Lloyd’s of London, but warns that it “should not be considered as a replacement or stand-in for homeowners or renters insurance. The Host Guarantee does not cover: cash and securities, collectibles, rare artwork, jewelry, pets, personal liability.”

The site also does not vet the content of property listings for legality. Hosts can set their rates and even add on a cleaning fee or refundable security deposit, but it offers no functionality for hosts to itemize and collect the TOT, now more than a year after San Francisco required that it be collected.

Tax issues are only vaguely addressed in an FAQ section for hosts, noting that “some hosts are required by their locality to charge a tax.” Hosts ambitious enough to attempt compliance must essentially become amateur tax specialists. Few, however, have the experience to decipher the code correctly and even fewer are likely to seek it out in the first place.

A search for the word “tax” across the site’s roughly 4,750 San Francisco listings yielded a mere 174 hits and myriad approaches to the issue. Several hosts mentioned collecting the TOT in cash on arrival or required credit card information in advance — a clear incursion into the secure nature of the transaction. A host named Jesse with 85 listings told the Guardian that he just rolls the TOT up into his daily rates, despite the city’s requirement that it be listed separately.

Fajardo isn’t alone in creating a full-time business of short-term apartment rentals. Casa Buena Vista Rental lists 76 properties on its website, many of which overlap with Jesse’s 85 Airbnb listings. A host named Bernat has 48 listings that also appear on Come2SF.com. Gaylord Suites, a Tenderloin apartment complex, markets at least seven different apartments in the same building on the site.

Fajardo said she’s pushed Airbnb for a dedicated TOT field “until [she’s] been blue in the face,” but she feels strongly that the company should not be held responsible for the collection of tax itself. “It’s not their burden,” Fajardo argues in defense of Airbnb. “They’re a booking agent. They funnel the money and they expect you to do the taxes.”

OTHERS CAN DO IT

The New York- and Singapore-based Roomorama was founded in 2009 and has a nearly identical payment model to Airbnb’s. But it has a formal host verification process and a higher price point that CEO Jia En Teo told us helps to filter out bad guests.

“Our host verification is very tight,” explained Teo. “When a host is listed on our site, they don’t go live immediately. They go through a quality control and validation process. We have a team that will call the host and ask for utility bills and ID. We do due diligence.”

Teo said a TOT field has been included in Roomorama’s price template from the beginning since the vast majority of the site’s listings are “professionally managed properties, people that are actually licensed to run short-term rentals. They’d already been paying and collecting these taxes….One of the first things that was requested was a way to collect.”

Teo also said that if Roomorama, as an operator, was deemed responsible for collection and remittance of taxes, it wouldn’t be “difficult from a logistical standpoint. It would add more work to our load but, to be honest, most of it is automated anyway. Once we put in the mandatory tax field, it would simply be paid the same way a consumer pays when they eat at a restaurant.”

She’s unsure why Airbnb has been so reluctant to address the tax issue head on, but “if I could venture a guess,” she said. “I’m guessing it’s because they work more with the occasional host, and that makes their value proposition a little bit less appealing.”

Other industry competitors include Craigslist and VRBO, both founded in 1996, and VRBO’s parent company, HomeAway. All three share a similar business model and one that’s considerably different from Airbnb’s — they are not financial gatekeepers in the transaction between guest and host. At their essence, these sites are little more than digital classified ads.

No competitor comes close to the market share that Airbnb has captured in San Francisco and globally. In New York, Roomorama has 2,688 listings compared with Airbnb’s 25,724, despite its questionable legality there. In San Francisco, Roomorama hosts 303 properties and VRBO features 1,123 — and Airbnb has about 4,750 throughout the city.

Airbnb’s statement to us touted that financial impact: “We are proud of the $56 million that Airbnb’s users generated for the San Francisco economy last year. The vast majority of Airbnb hosts share the home where they live, and more than half directly use their Airbnb income to pay their rent or mortgage.”

THE CITY’S SHARE

When the San Francisco Tax Collector’s Office discussed the matter last year and issued “Tax Collector Regulation 2012-1: Tax on Transient Occupancy — Multiple Party Transactions; Occupancy of Private Residences,” it made clear Airbnb should be collecting the tax as it processes the transactions.

“A website company, or any other person acting as merchant of record who receives rent in connection with an occupancy transaction, is an ‘operator’ who is responsible for collecting the TOT owed by the occupant and for remitting the TOT to the City. Any person receiving such rent shall provide a receipt to the occupant. Such receipt shall include a separate line item specifically identifying the TOT,” reads the regulation.

While it’s also true that the city tax codes make Airbnb and its hosts jointly liable for the tax debt — which the company’s apologists have used to accuse the Guardian of unfairly picking on the company in an avalanche of online comments —it would be a regulatory nightmare for the city to go after thousands of individual hosts, most of them small-time tenants who don’t even have business licenses.

Fajardo is diligent about compliance, but she can afford to be. She works with a team that includes assistants and an accountant and she does it full-time. She is not the casual homeowner supplementing her income (and it’s unlikely many of her clients are either) — she is an entrepreneur. And even she admits to having found the TOT difficult to interpret.

Fajardo contacted the Guardian in June in response to our coverage of Airbnb, citing the city’s complicated tax system and the difficulty that small users have in paying the TOT, which has varying fees tacked onto the base rate of 14 percent. (Although she also wrote, “We collect and pay sometimes as much as $10,000-20,000 per quarter.”)

“Don’t blame Airbnb, blame the SF Tax Collector for a shoddy website, incompetent workers, and their inability or lack of desire to chase individual lessors. It is not the responsibility of Airbnb to collect taxes; it is the responsibility of the lessor to collect the taxes, just like a hotel,” Fajardo wrote.

It’s certainly true that TOT rates aren’t simple — the 14 percent base rate gets another 1.5-2 percent tacked on it, depending on where the host is located, to fund the Tourism Improvement District proposed by hotels and approved by the city. (That fee just went up again July 1 to fund an expansion of the Moscone Convention Center.) The TOT also isn’t simple for Airbnb hosts to collect and pay.

We forwarded Fajardo’s criticisms and concerns to Greg Kato, the policy and legislative director for the Tax Collector’s Office. He acknowledged that the system is complicated — particularly for Airbnb hosts who aren’t legally allowed to operate as a hotel — but he said they try to simplify it as much as possible.

To pay taxes, a business first needs to register with the city by paying a $26 fee and filling out an application, which includes a line indicating whether transient occupancy is part of the business. “There are few, if any, barriers to initially register as a business,” Kato said.

The problems come when that business applies to the city for its “certificate of authority” to collect the taxes, and applicants are asked whether they have the relevant licenses and proper zoning to conduct that kind of business. And most Airbnb hosts don’t have that because they are actually violating a variety of city codes.

“In a residentially zoned area, this type of use is at least a conditional use [which requires a permit obtained after giving neighbors notice and going through a public hearing] if not a banned use,” Kato told us. “Those land use issues are what Sup. Chiu is trying to address with his legislation.”

Although Kato said such legislation is beyond the scope of his office, those issues can interfere with a host’s ability to receive a certificate of authority to collect the taxes.

“There are a lot of other parties interested in this issue that might have other issues that would break that authority,” Kato said, citing landlords, homeowners associations, and neighbors as parties that might object to someone essentially turning his or her apartment into a hotel room, which was banned decades ago by the Apartment Conversion Ordinance.

It’s pretty easy to see on the Airbnb website that it isn’t charging the TOT or making it easy for its hosts to do so (see “Airbnb isn’t sharing,” 3/19/13). Using Airbnb’s own stated figure that its San Francisco hosts collect about $12.7 million in rents each year, that would amount to nearly $2 million annually that the city should be collecting on these transactions.

When Airbnb’s 31-year-old founder and CEO Brian Chesky spoke at a hospitality conference organized by USF in April, he didn’t acknowledge any complexities or downsides to his business model, instead casting his company as saving the world.

“It’s like the United Nations at every kitchen table. It’s very powerful,” Chesky said of the social benefits of his company. “I think we’re in the midst of a revolution.” He wasn’t talking about revolution in the sense of challenging the authority or legitimacy of San Francisco, its laws, or its elected leaders, although that seems to be implicitly what he’s doing. And he certainly didn’t seem to be taking into account his evicted hosts, their upset neighbors and landlords, or the city’s disappearing apartments and rising rents when he said, “For us to win, no one has to lose.”

Chiu: centrist compromiser, effective legislator, or both

Michael Redmond

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July 30, 2013

0

Chiu: centrist compromiser, effective legislator, or both

At the start of this year, when I wrote a Guardian cover story profile of Sup. Scott Wiener (which SF Weekly and San Francisco Magazine followed shortly thereafter with their own long Wiener profiles), he seemed like the one to watch on the Board of Supervisors, even though I noted at the time that Board President David Chiu was actually the more prolific legislator.

Now, it’s starting to seem like maybe we all focused on the wrong guy, because it is Chiu and his bustling office of top aides that have done most of the heavy legislative lifting this year, finding compromise solutions to some of the most vexing issues facing the city (ironically, even cleaning up some of Wiener’s messes).

The latest example is Wiener’s CEQA reform legislation, which the board unanimously approved on July 23, a kumbaya moment that belies the opposition and acrimony that accompanied its introduction.

That effort comes on the heels of Chiu’s office solving another big, ugly, seemingly intractable fight: the condominium lottery bypass legislation sponsored by Wiener and Sup. Mark Farrell. To solve that one in the face of real estate industry intransigence, Chiu showed a willingness to play hardball, winning over swing vote Sup. Norman Yee to get six votes using some hostile amendments.

In the end, Chiu won enough support to override a possible veto by the waffling Mayor Ed Lee, who has always echoed Chiu’s rhetoric on seeking compromise and consensus and “getting things done,” but who lacks the political skills and willingness to really engage with all sides. For example, it was Chiu — along with Sups. Farrell and David Campos — who spent months forging a true compromise on the hospital projects proposed by California Pacific Medical Center, replacing the truly awful CPMC proposal that Lee readily accepted.

“It’s been a very long year,” Chiu told the Guardian. “It’s been important for me to not just to seek common ground, but legislative solutions that reflect our shared San Francisco values.”

Next, Chiu will wade into another thorny legislative thicket by introducing legislation that will regulate the operations of Airbnb, the online housing rental corporation with a problematic business model.

After posting the preceding analysis of Chiu on the SFBG.com Politics blog on July 23, we heard lots of back channel concerns and complaints from progressive San Franciscans (and even some from moderates and conservatives who consider Chiu a raving socialist for helping suspend the condo lottery).

Nobody really wanted to speak on the record against Chiu, which is understandable given the powerful and pivotal position that he’s carved out for himself as a swing vote between the two ideological poles and on the Land Use Committee, whose makeup he personally created to enhance that role.

The main issue seems to be that Chiu allows both progressive and anti-progressive legislation to be watered down until it is palatable to both sides, empowering the moderates over the progressives. That’s a legitimate point. It’s certainly true that Chiu’s worldview is generally more centrist than that of the Guardian and its progressive community, and we’ve leveled that criticism at Chiu many times over the years.

The fact that he ends up in a deciding role on controversial legislation is clearly a role that Chiu has carved out from himself, no doubt about it. And that’s certainly why he played the pivotal role that he has this year. But when he uses that role to empower and support tenant groups, as he did on the condo lottery bypass measure, I think that’s something worth noting and praising.

On the CEQA reform legislation, it’s also a valid criticism of Chiu to note that Sup. Jane Kim had five votes for her legislation and that it was only Chiu who stood in the way of its passage (whether Mayor Ed Lee would have vetoed it, necessitating the need for two more votes, is another question).

In the end, Chiu can be seen as an effective legislator, a centrist compromiser, or both. Perspective is everything in politics.

Calling all trolls: you’ll have to come to our forum to comment next week

Sasha Cuttler

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July 25, 2013

151

We are all very excited about our July 31 public forum on the future of the Bay Guardian and progressive journalism in the Bay Area. We’ve already received lots of great community support and input since our recent turmoil and leadership transition — and we want even more feedback as we work to rejuvenate the paper.

But there is one piece of advice that we’ve received over and over again from readers: do something about the trolls that pollute our comments section. So we’ve decided to turn that input into a little week-long experiment starting on the day of the forum. As we post next week’s Guardian here at sfbg.com, we will disable the comments on the stories and in our blog posts that week.

We always welcome reader input and we appreciate thoughtful commentary, criticism, and debate on our stories, which we’ve seen plenty of this week, particularly in our posts on the Giants labor impasse, Board President David Chiu, privatization of the Botanical Gardens, problems at SFDPH, racial profiling, and our editorial on democracy, as well as on last week’s op-eds on the Trayvon Martin aftermath.

Unfortunately, under the Guardian’s bridge live a few nasty trolls who hate everything that we and our progressive community do and are usually the quickest to comment on the things we write, often making the same pointed, off-topic criticisms, over and over again. Sometimes it’s racist, usually it’s reactionary, often it’s self-indulgent, and it always lowers the level of debate on our site.

Many of our regular readers and supporters have repeatedly told us the often toxic nature of these discussions chases them away and needlessly undermines the reporting and information that precedes it. Sometimes, we’ve seen organized misinformation campaigns from anonymous but clearly self-interested parties that post to our site, as we’ve seen in our coverage of Airbnb’s legal troubles and tax avoidance.

So in addition to all of our proud, loyal, flesh-and-blood readers, we’re hereby inviting all of our trolls — Matlock, Lucretia Snapples, Anon, and all the rest — to come to our forum and defend your domain. Among the many orders of business at the forum, we will consider changing our online comment policies and registration system, particularly as we redesign our website this fall.

If you want to comment next week, you’re going to have to come to our forum. Or you can always send us good, old-fashioned letters to the editor, either through email (steve@sfbg.com or marke@sfbg.com) or snail mail. Then, in our Aug. 7 issue, we’ll devote a page or two in the paper to those letters and the input that we receive at the forum.

We’ll probably just leave our comments turned off for one week — but you never know. So for now, let us know what you think as we rethink our approach at the Guardian. And please stop by our event page on Facebook and let us know that you’re coming to the event on July 31 from 6-8pm on the fourth floor of the LGBT Center, 1800 Market Street … if you dare.

Chiu becomes City Hall’s go-to guy for solving tough problems

Sasha Cuttler

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July 23, 2013

60

Chiu becomes City Hall’s go-to guy for solving tough problems

At the start of this year, when I wrote a Guardian cover story profile of Sup. Scott Wiener (which SF Weekly and San Francisco Magazine followed shortly thereafter with their own long Wiener profiles), he seemed like the one to watch on the Board of Supervisors, even though I noted at the time that Board President David Chiu was actually the more prolific legislator.

Now, it’s starting to seem like maybe we all focused on the wrong guy, because it is Chiu and his bustling office of top aides that have done most of the heavy legislative lifting this year, finding compromise solutions to some of the most vexing issues facing the city (ironically, even cleaning up some of Wiener’s messes).

The latest example is Wiener’s CEQA reform legislation, which the board is poised to unanimously approve at today’s meeting, a kumbaya moment that belies the opposition and acrimony that accompanied its introduction. Rather than a battle between developers and the coalition of progressives, environmentalists, neighborhood activists, and historic preservationists, Chiu and board aide Judson True transformed the legislation into something that benefited both sides.

[UPDATE: For reactions to this post and another perspective on Chiu, read this.]

That effort comes on the heels of Chiu’s office solving another big, ugly, seemingly intractable fight: the condominium lottery bypass legislation sponsored by Wiener and Sup. Mark Farrell. To solve that one in the face of real estate industry intransigence, Chiu showed a willingness to play hardball and practice a bit of gamesmanship, winning over swing vote Sup. Norman Yee to get six votes using some hostile amendments to the legislation.

In the end, Chiu won enough support to override a possible veto by the waffling Mayor Ed Lee, who has always echoed Chiu’s rhetoric on seeking compromise and consensus and “getting things done,” but who lacks the political skills and willingness to really engage with all sides. For example, it was Chiu — along with Sups. Farrell and David Campos — who spent months forging a true compromise on the hospital projects proposed by California Pacific Medical Center, replacing the truly awful CPMC proposal that Lee readily accepted.

“It’s been a very long year,” Chiu told the Guardian. “It’s been important for me to not just to seek common ground, but legislative solutions that reflect our shared San Francisco values.”

Next, Chiu will wade into another thorny legislative thicket by introducing legislation that will regulate the operations of Airbnb, the online shared housing share corporation whose basic business model often violates local landlord-tenant laws, zoning codes, and lease conditions, in addition to openly defying rulings that it should be paying the city’s transient occupancy tax.

“This challenge has been particularly difficult,” Chiu told us, referring the many hard-to-solve issues raised by companies such as Airbnb, who Chiu and board aide Amy Chan have been working with for several months. In fact, after originally predicting the legislation would be introduced before the board takes its August recess, Chiu now tells us it may need a bit more time to hammer out the details.

We’ll be watching to see how he sorts through the many tough issues raised by Airbnb’s approach, here and in other big cities with complicated landlord-tenant relations, which I will be exploring in-depth in an upcoming Guardian cover story. But if there’s anyone at City Hall capable of solving this one, it’s probably Chiu.

Mr. Mayor: Stop supporting tax cheats

Andrew Lam

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June 11, 2013

14

EDITORIAL Mayor Ed Lee’s love affair with all things tech shouldn’t extend to allowing a large company to cheat on local taxes.

It’s no secret that Airbnb, the successful startup that allows people to share their apartments as hotel rooms, has failed to collect or pay San Francisco’s Transitory Occupancy Tax, which every traditional hotel has to pay. Our stories have shown that the city is losing $1.8 million a year, and that number will only grow as the service becomes more popular.

The company claims that all it’s doing is facilitating private transactions. But the city’s treasurer, Jose Cisneros, has investigated the situation and ruled that Airbnb is liable for collecting and remitting the tax. It’s not that hard — the company could simply add the 14 percent onto the prices on its website, make sure the people renting out their homes receive that money, and turn it over to the city.

But that would open the “sharing economy” site to similar rules in all the other cities where it operates. It would force Airbnb to admit that it’s a business, like any other business, and that the Internet hasn’t made obsolete the notion of following the rules that apply to everyone else in the same line of work.

So the company, funded in part by investor Ron Conway — a close ally of the mayor — takes unfair advantage of the situation, refuses to pay taxes, and undermines the existing hotel industry, which not only pays taxes but employs thousands of San Franciscans.

Lee was asked about the situation on a recent edition of KQED’s Forum, and when host Michael Krasny pushed him, Lee said: “They’re not so much dodging it, they’re making arguments, like any business would, about what applies to them and what doesn’t.”

That’s flatly, factually untrue. Airbnb has already had a chance to make its arguments — to Cisneros — and he rejected them. The company could go to court to overrule the treasurer, but it hasn’t. It could go the Board of Supervisors and seek to have the Hotel Tax modified, but it hasn’t. The people who run Airbnb aren’t making any arguments at all, in any public forum; they’re just refusing to pay.

And the mayor is not only letting them get away with it but defending the practice.

This is disgraceful.

A judge in New York City has ruled that Airbnb violates local laws, and people who use it as hosts are now subject to steep fines. There, at least, the company is asking the state Legislature to modify the ban on short-term apartment leasing.

In San Francisco, most renters who sign up with Airbnb to make a little extra money by turning their apartments into hotel rooms are in violation of their leases and could be subject to eviction — something the company doesn’t warn about.

It’s time for the supervisors to pass legislation regulating this industry. In the meantime, Lee needs to stop defending a company that’s openly violating the city’s tax laws and direct the city attorney to crack down.

The adulation of the technoriche

Zelda Bronstein

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June 5, 2013

31

It’s hardly news at this point that billionaire tech mogul Sean Parker tore up a public campground to build the sets for his $10 million fantasy wedding in Big Sur. And it’s been widely reported that Parker paid a $2.5 million fine to the Coastal Commission, which he tried to spin as a wonderful environmental gift to improve the state park system.

But I read with interest in the Chron that both Lite Guv Gavin Newsom and Attorney General Kamala Harris were reportedly at the wedding. Both are very smart people; both have the ability to observe the world around them. So I have to wonder:

Didn’t either Newsom or Harris think it was a little bit odd to see all this new development in a protected area? Did it occur to either of them that their richy-rich-rich pal, who has a history of snubbing laws he doesn’t like, might have done the same thing here?

Could the state’s top law-enforcement official and a member of the state Lands Commission really look at artificial ponds and large new structures, which involved bulldozers to create, and not say:

Huh? Aren’t there rules against this sort of thing?

Okay, it was a wedding, and nobody wants to be the one to throw the turd in the punchbowl. The politician guests were there to celebrate with a person who is capable of helping to fund future campaigns (and since both Harris and Newsom are considered possible candidates for governor when Jerry steps down, I bet they had a great time together).

But didn’t either of them feel at least a little weird about it?

I called Newsom’s office and left a message for Dierdre Hussey, his press person. She hasn’t called back. Nick Pacilio in Harris’s office told me someone would get right back to me; hasn’t happened yet. So we don’t know what the two were thinking.
But I do know this: The level of adulation of the technoriche has reached levels we haven’t seen since the Gilded Age.

Technology columnist James Temple puts it this way:

To the outside observer, Parker’s actions look like contempt for the piddling rules that we non-billionaires can’t buy our way around. And they certainly do nothing to alter the increasingly popular local view of the tech class as selfish and aloof, conspicuously relishing their venture capital rounds and IPO winnings, as a growing portion of the Bay Area population struggles to make the skyrocketing rents.

And politicians seem to adore the most selfish and aloof (and clueless) among them.

Take Mayor Ed Lee’s comments about Airbnb. The company is clearly cheating on its taxes. The city treasurer investigated the situation and ruled unequivocally that airbnb needs to collect and remit the Transit Occupancy Tax money that should be charged on its rooms.
When Michael Krasny asked the mayor on Forum about the issue, Lee defended airbnb (which is funded by his buddy Ron Conway), saying that the company is just “making arguments” about whether it owes the tax.

But that’s just false: The arguments are over. The company argued with the tax collector and lost. And it isn’t arguing anywhere anymore — not in court, not in the political sector. It’s just …. not paying. And because it’s a tech company, and Conway is nurturing it, the mayor seems just fine with that.

It appears that big corporations are big corporations. They may claim that they won’t be evil, and they may be headed by people in their 20s who dress like hipsters, and they may make really cool products — but their operating just like the robber barons of old. And the great wealth they’ve created has, to a great extent, also created great arrogance.

Before the trolls accuse me of fomenting class warfare, let me repeat: I didn’t start this war. I didn’t rig the political and tax systems so that the middle class would be wiped out as all of the net new wealth in a generation goes to the top 1 percent. I’d much prefer we all share in the bounty, as the middle class and working class did in the post-War era.

Meanwhile: Does anyone really need a $10 million wedding in a state park?

Banned by Facebook

Andrew Lam

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June 4, 2013

10

steve@sfbg.com

Facebook and other popular gathering places on the Internet are fast becoming the equivalent of a public commons, where many of our essential personal, professional, and governmental interactions take place, and a portal through which we access a large and growing variety of goods and services.

Yet I have no right to access or remain in this corporate-controlled space, from which I can be ejected at any moment for any reason, with no meaningful ability to appeal that decision, plead my case, or even learn about what prompted my corporate masters to cast me into exile.

That’s what I learned last week when Facebook mistakenly removed a page that I created two years ago to promote my book, The Tribes of Burning Man — ostensibly for “bullying” — and then temporarily suspended my personal posting privileges. My inquiries to find out what happened were ignored until I threatened to turn up the journalistic heat, and even then I couldn’t get any explanation beyond Facebook’s admission that “The removal was a mistake.”

Not that I expected any real substance or accountability. If there’s one thing I’ve learned from covering the technology industry over the last few years — from challenging the tax breaks designed to keep Twitter in town two years ago to my recent revelations that Airbnb is refusing to pay the Transient Occupancy Tax it owes the city — it’s that these companies address issues of public access, rights, and equity on their terms or not at all.

That’s even the case in the emerging realm of wiring cities with fiber to offer high-speed Internet access to all citizens, where Google is moving quickly to short-circuit municipal broadband efforts like the plan San Francisco is now considering. GoogleFiber is making Kansas City and other cash-strapped jurisdictions offers they can’t refuse, while simultaneously undermining the long-established principle of requiring telecommunications companies that use public rights-of-way to offer universal access.

“Telecommunications remains a utility,” says Matt Wood, policy director for Free Press, which works on net neutrality and municipal broadband issues .

I heard Wood speak in a May 24 conference call that The Media Consortium organized for journalists. He was joined by a Kansas City official and Institute for Local Self-Reliance member. Google refused to provide a representative.

Wood emphasized “the need for a public oversight role and commitment to universal access” by Google and other companies that contract with cities to lay fiber, similar to how phone companies were required to serve every household, and he told us that “no rules will apply if certain companies get their way.”

But even though the federal government created the Internet and still has clear legal authority to regulate telecommunications access and fairness — and even though Facebook’s billion-plus users give it unrivaled market share and power — Wood (a Harvard Law School graduate) doesn’t think private citizens have any rights in that realm or expectations of accountability.

In other words, in the virtual world it created — regardless of how extensively and aggressively it partners with other companies to make Facebook membership a prerequisite to accessing goods and services offered by hundreds of companies — Facebook is in charge, period.

SEEKING ANSWERS

I’ve read stories about Facebook users futility fighting decisions to ban posts that should enjoy free speech protections — from breastfeeding photos and diagrams of female reproductive systems to radical political speech — while allowing content that is racist or misogynist, and their difficulties in getting the company to explain its decisions.

But I began to experience the problem first-hand on May 28 when I was notified by Facebook that my page had been removed for violating it terms of service, specifically the ban on bullying, and that I could appeal by pressing the “appeal” button, which I did.

Immediately, I scanned The Tribes of Burning Man page, which had been largely dormant in recent months, and I could find nothing that might even remotely be considered bullying. The next morning, I was informed by Facebook that my appeal had been denied, my page was permanently removed, and my posting privileges were suspended for the day will I reviewed Facebook’s terms of services.

There was no way of knowing what the offending post might be or what prompted my ban, and I fruitlessly searched for a way to speak with someone by phone, eventually settling for sending electronic messages to Facebook as both a user and a journalist working on story.

No reply came, so I made plans with a videographer to go to Facebook’s Menlo Park headquarters the next morning to try first-hand to reach a human being. But I decided to delay my trek by a day when I woke up that morning to discover that not only had by posting privileges returned — but my “permanently banned” page was back.

Yet I still didn’t know why. Had I been sabotaged for critical coverage of the tech community? Did my blog post, Twitter tweets, and other journalistic pressure force a change in heart? Was it just a random glitch? Facebook wasn’t saying.

TECH-LOVING POLITICIANS

San Francisco’s tech-loving mayors have only emboldened these corporations’ most imperious tendencies. Then-Mayor Gavin Newsom was an early adopter of Twitter, using it to promote his official pronouncements, which I was able to follow until early 2009 when he blocked me for asking an impertinent question.

His successor, Ed Lee, has been an even biggest tech cheerleader and enabler, repealing the law that Newsom signed to subject corporate stock options to the city’s payroll tax and giving technology companies a pass on paying other taxes as well.

For months now, I’ve been trying to get answers from Airbnb officials about why the corporation is refusing to collect and pay the city’s 14 percent Transient Occupancy Tax on the room rentals that it administers, shirking an annual tax debt to the city of more than $1.8 million.

My media brethren have been slow to pick up on this important and fairly outrageous act of corporate stonewalling — which has been abetted by Mayor Lee, who shares a financial benefactor with the company: venture capitalist Ron Conway.

KQED’s Forum host Michael Krasny did ask Lee to respond to my stories and the company’s dodging of its tax debt during the May 28 program, and Lee replied, “They’re not so much dodging it, they’re making arguments, like any business would, about what applies to them and what doesn’t.”

Actually, that simply isn’t true. The company and its allies did make those arguments last year as part of public hearings and processes held by the Tax Collector’s Office to determine if the tax applies, and our elected Treasurer/Tax Collector Jose Cisneros determined that the company does, indeed, owe it.

Airbnb and its allies could have gone to the Board of Supervisors to make arguments for changing the law, but didn’t. It could have sued the city to challenge its ruling, making arguments in court, but didn’t. It could have even launched a public campaign, perhaps even sponsoring a candidate to challenge Cisneros and make its arguments publicly, but it didn’t do that either.

Instead, the company just ignored its tax debt and hoped that nobody would notice. And when I noticed and started writing about the issue, the company refused to return my calls or make any reasonable public arguments for its behavior.

Large, wealthy corporations already enjoy huge advantages over the rest of us when they do decide to make arguments and engage in public discussions about the implications of their actions on the public commons. We need them for jobs and for access to vital public services, and they have the money and media access to make sustained arguments and implied threats that can prove very compelling.

But when they choose to refuse to have that discussion, and when they stonewall legitimate questions involving public interest, then they undermine the concept of democracy. And it’s just fucking irritating.

FACEBOOK RESPONDS

Facebook restored my service, but I still wanted to find out what happened and was having no luck. Finally, in the early afternoon, I sent another message to press@fb.com to reiterate my questions, and this time I let them know of my plan to show up on their corporate doorstep the next morning.

Within minutes, I finally got a response from Facebook’s Frederic Wolens: “Thanks for reaching out, and I apologize for the delay. We made a mistake removing content, and have restored it,” continuing for another paragraph of boilerplate corporatese.

I responded that I appreciate the response and apology, but that I was still trying to find out what happened and get answers to the questions that I sent him. I asked if we could please speak by phone and listed some of my unanswered questions, such as what triggered the removal, why my appeal was denied, and how my page suddenly came back.

He ignored my request to talk, and offered me links and answers that still didn’t address my questions, such as “we use a combination of automated and manual review systems and a mistake was made in the review of your Page causing it to be deleted, but it has now been restored. Unfortunately, we can not go into more detail.”

Finally, I just asked to talk to a live person, him or someone else, either by phone or I could come on down to Facebook HQ.

“Unfortunately, despite the size of our user base, we are a small company and won’t be able to provide a spokesperson at this time,” he responded.

“Apologies that we could not be of more help for the moment.”

A small company. With a market capitalization of $57.66 billion. Seems the folks that run it could afford to answer media questions — if they wanted to.

Zynga implosion shows the danger in SF’s technophilia

Sasha Cuttler

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June 3, 2013

58

Zynga implosion shows the danger in SF’s technophilia

We’ve long been skeptical of the overblown and self-interested claims by tech titans and their political allies that this dot-com boom changes everything and that it could never go bust, like last time. We questioned the wisdom of slashing taxes on Twitter, Zynga, and other tech firms and doubted claims by Mayor Ed Lee and others that their skyrocketing growth would more than make up for our giveaways.

Then today, we learn that Zynga is laying off a fifth of its workforce and its stock is tanking. Hmm, apparently San Francisco’s policy of taxing stock options — which Mayor Lee repealed, costing the city millions of dollars when Zynga went public last year — wasn’t the only problem facing this company.

As was clear before the last dot-com bubble popped: companies can’t survive on hype alone, they still have to be able to make money, a rather obvious problem that Zynga, Facebook, Twitter, and lots of other tech companies that have been snapping up San Francisco office space with their venture capitalist stakes still haven’t figured out yet.

Unfortunately, that’s still apparently lost on Mayor Lee, whose new budget proudly notes that 55 percent of the office space leased in the city last year was taken by tech — as if that couldn’t possibly present any risks (hint: Mr. Mayor, ask City Economist Ted Egan about the concept of diversifying our economy). KQED Forum host Michael Krasny last week asked Lee about my stories showing that Airbnb is shirking its $1.8 million Transient Occupany Tax debt to the city (listen here starting at the 13:00 mark), eliciting this comment by our mayor: “They’re not so much dodging it, they’re making arguments, like any business would, about what applies to them and what doesn’t.”

Actually, Mr. Mayor, that’s what Airbnb did last year before the Tax Collector’s Office concluded that it does indeed owe the money. Now, the company isn’t even returning my calls about dodging this tax obligation, let alone making any arguments. Following suit, the Mayor’s Office of Communications still hasn’t return my call with questions about where and how Airbnb might be making these alleged arguments.

But it does appear that Lee’s political mentor, Willie Brown, may be sensing a shift in the political winds when it comes to the tech sector and its regular claims to be changing the world (which, of course, means that we need to give it every possible bit of help and appreciation we can muster).

In his June 2 “Willie’s World” column in the San Francisco Chronicle, Brown had this enigmatic but telling item: “It’s interesting to watch the Silicon Valley titans evolve politically.

“Strip away the rhetoric about globalization and innovation, and it turns out they’re pretty much like the bosses of every other type of business: They want their tax loopholes. They want to bring in more foreign workers. They want the government to keep its hands off their offshore operations.”

“Republican Sen. Rand Paul or President Obama, they’ll host a fundraiser for either one. They’ve got to play both sides. They cannot afford to be allied with just one party, because the shareholders will suffer if the company goes all in with losers.”

They also seem to have learned that if neither major political party is willing to hold them accoutable to the public interest, they can pretty much continue to snub the public and do what they want.

Censored by Facebook and I don’t know why

Sasha Cuttler

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May 29, 2013

24

Censored by Facebook and I don’t know why

UPDATED Today I got banned from posting on Facebook and I don’t know why, but it has left me feeling very unsettled about this brave new world we find ourselves in, one where a few large technology corporations have ever more power over our lives and liberties.

I’ve been a full-time newspaper journalist for almost 22 years, and this is the first time I’ve been censored. Facebook has managed to do something that the government agencies I’ve critically covered could never dream of doing, shut me up, and it did so without even having to explain why or face any accountability for how it uses the power it wields.

Here’s what I do know: Yesterday, I was notified by Facebook that some piece of content on the page I created two years ago for my book, The Tribes of Burning Man, had been flagged for violating its terms of services, specifically the ban on bullying. That was very strange because the page has been fairly dormant for months, and when I reviewed all the posts, I didn’t see anything that might even vaguely be considered bullying. Shameless self promotion? Sure. Links to stories that had sometimes critical coverage of Black Rock City LLC. Yeah. But there wasn’t even any harsh language or communications targetted at any individuals, let alone bullying.

Facebook didn’t indicate which post had been flagged, it just let me hit an “appeal” button, which I did. Then today, Facebook notified me that my “appeal” — a strange label for a process that didn’t allow me to make arguments or even know what I was defending — had been denied, my page removed, and that my personal posting privileges were suspended for 12 hours while I review Facebook’s terms of service.

The list of suspects who might want to sabotage me is a long one, considering the work I do and particularly my recent critical coverage of the technology industry, including venture capitalist Ron Conway’s cozy relationship with Mayor Ed Lee and the tax breaks that have been given to Twitter, Zynga, Airbnb, and other tech corporations. Or maybe it was someone in the Burning Man world unhappy with how I’ve covered the leadership of that event, a subject that I’ve returned to recently for a story in next week’s paper.

Who knows? All I know for sure is that I’ve been cut off from a communications medium that has made itself increasingly central to our lives through its ubiquity and the strategic partnerships it has made with a wide variety of other corporations that offer essential services such as transportation, housing, business development, and access to job opportunities and government officials.

But I’m going to spend some time this week trying to get to the bottom of this, and I’ll let you know what I learn — as well as offering some thoughts on what it means to have unaccountable corporations mediating our social, professional, and civic interactions with little regulatory oversight — in next week’s paper.

UPDATE 5/30 11am: This morning, just as I was preparing to head down to the Facebook headquarters in Menlo Park, my Tribes of Burning Man page reappeared without explanation. Still no replies from Facebook, neither to my user inquiry nor my journalistic contact, but I decide to delay by trip down the peninsula by a day to see whether I hear back. Stay tuned…

UPDATE 5/30 11:45AM: After a second email inquiry to the Facebook press office, in which I said that I planned to show up at its headquarters with a videographer tomorrow if I didn’t hear from someone today, I got this response (I’m still waiting to hear back with answers to the many follow-up questions this raises): “We made a mistake removing content, and have restored it. Our dedicated User Operations Team reviews millions of pieces of this content a day to help keep Facebook safe for our nearly billion users. Our policies are enforced by a team of reviewers in several offices across the globe. This team looks at hundreds of thousands of reports every week, and as you might expect, occasionally, we make a mistake and remove a piece of content we shouldn’t have. Sorry again.”

Airbnb is still snubbing SF, even after a NY judge rules it illegal there

Sasha Cuttler

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May 23, 2013

39

Airbnb is still snubbing SF, even after a NY judge rules it illegal there

Now that a judge in New York has ruled that Airbnb is illegal there, a model that violates city tenant laws and state law, that should put pressure on the San Francisco-based company to finally stop snubbing cities and find a way to exist within local regulatory frameworks and finally start paying its taxes.

It was good to hear KQED’s Forum discuss Airbnb this morning – it was getting lonely as the only local reporter highlighting the company’s open defiance of San Francisco’s ruling that it should be paying the city’s Transient Occupancy Tax, just like hotels – and to finally question an Airbnb executive on an issue the company has been refusing to address publicly (yes, they still aren’t returning my calls).

But the answer that David Hantman, Airbnb’s global head of public policy, gave this morning was pretty astounding in its hypocritical arrogance. He acknowledged the tax ruling by San Francisco and the company’s lack of compliance, and said the company was waiting for clarification on the various issues related to the questions of the legality of some of the short-term rentals it facilitates before paying its taxes.

In other words, this company is making tens of millions of dollars annually in San Francisco alone on a business model that it developed – one that often runs afoul of local land use and tenant laws, and in violation of people’s leases – and it’s up to city officials to find a solution to this company’s problems before it will pay taxes?!?

To his credit, Board of Supervisors President David Chiu has been trying to do just that for months, slogging through a number of complex and difficult issues that arise from this business model, and he has been clear throughout that Airbnb should be paying its taxes to the city, which it isn’t.

“It’s reasonable to ask people who benefit from the economic transactions we’re talking about to pay their fair share,” Chiu reiterated on Forum, citing the cost to the city of serving the 16 million tourists who visit the city each year.

Coincidentally, there’s a German television crew from ARD (Germany’s equivilent of the BBC) in San Francisco this week doing a story on Airbnb and the shareable economy, interviewing me about my coverage of the company, as well as others, including Airbnb co-founder Nathan Blecharczyk.

The ARD reporter told me this afternoon that Blecharczyk was animated and expansive when discussing how wonderful his company is and how it’s changing the world, but he became terse and unresponsive when she raised the issue of local taxes and regulations.

As I said on camera today, Airbnb and other shareable economy companies are cool, I’ve used them myself, and they’re certainly here to stay. But I just don’t understand their unwillingness to be good corporate citizens and to pay the taxes they owe to support the city services that their customers use.

Chiu has clearly said that Airbnb should pay the TOT — which my reporting has shown would bring $1.8 million annually into city coffers — and that paying its taxes will be a part of the regulatory package he’s working on. But sources have also told me that negotiations have been hard slog, largely because of Airbnb’s unwillingness to play by the rules and because of the unqualified support the company has from Mayor Ed Lee, whose main political fundraiser, Ron Conway, is also a major investor in Airbnb.

Hopefully the New York ruling and growing media scrutiny will prompt the young executives at Airbnb to finally become good faith partners in a city that has been so good to them — a city whose leaders seem anxious to return the favor and legalize Airbnb’s operations in San Francisco.

Wealth vs. work

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April 30, 2013

52

steve@sfbg.com

May Day, also known as International Workers Day, began in the United States, but it’s been all-but ignored by most Americans for decades. And on this May Day, 2013, in the city of San Francisco, it’s a good time to note that the growing wealth and income gaps between the rich and the rest of us are reaching historic highs — a dangerous situation, many economists warn — and hardly anyone at City Hall is talking about it.

The job boom in San Francisco, much touted and promoted by Mayor Ed Lee, has been largely in the tech sector, which has created great wealth. But some economists are starting to argue that the Internet, rather than creating economic and political democracy, has done just the opposite.

We’re talking about more than just high rents and gentrification — the industrial sector that San Francisco is pinning its future on, critics say, is one of the most brutally monopolistic and exploitive in modern history. It should come as no surprise that the Bay Area has among the highest income and wealth inequality in the nation.

There’s no shortage of data pointing to growing inequality and the danger that it poses, but the bottom line is that hoarding of wealth by the rich is causing the middle class to shrink and to make it harder for those on the bottom to just get by.

“About 6 in 10 of us believe that the tax system is unfair — and they’re right,” Nobel-laureate economist Joseph Stiglitz noted in a recent New York Times column. “Put simply, the very rich don’t pay their fair share,”.

But Americans generally don’t understand how bad things really are. Polling done by Harvard and Duke University researchers in 2010 found most Americans vastly underestimate this country’s wealth gap (most thought the top 20 percent controlled 59 percent of the country’s wealth, rather than the true figure of 84 percent), and overwhelmingly preferred far more economic equity (most respondents thought it would be fair for the top fifth to control 32 percent of the wealth, which is the case in Sweden).

Part of the misunderstanding comes because “the economy” of the wealthy is doing great, even if that doesn’t help most Americans. “The stock market is basically back to where it was in 2000, while corporate earnings have doubled since then. Yet the real median wage is now 8 percent below what it was in 2000, and unemployment remains high,” UC Berkeley Professor Robert Reich, another leading voice on the issue, wrote on his blog last month.

“Most of the Western world has experienced an increase in inequality in recent decades, though not as much as the United States has,” Stiglitz wrote. “But among most economists there is a general understanding that a country with excessive inequality can’t function well.”

GEN Y, X, HIT HARDEST

The wealth divide is not only growing, but it is impacting young people and minority groups particularly hard, and with that concentration comes the potential for social instability and unrest.

The growing divide between the rich and the rest of us is being felt most acutely by Hispanics and African Americans, according to a new report by the Urban Institute, “Less Than Equal: Racial Disparities in Wealth Generation.”

In 2010, white families earned about $2 for every $1 earned by black and Hispanic families, a ratio that has held steady for about 30 years. But an even more important and telling figure is the gap in wealth, which includes savings, investments, and home values minus total debts. Before the recession that began in 2008, white families had four times the wealth of black and Hispanic families. That ratio widened to 6-1 by 2010. The most recent figures show the average wealth of white families is $632,000, compared to $98,000 for black families and $110,000 for Hispanic families. The reasons range from inheritances to tax policies skewed in favor of the wealthy, such as mortgage deductions and low taxes on retirement savings and capital gains.

“The federal government is subsidizing asset building and it’s going to high-income people,” Caroline Ratcliffe, a senior fellow at Urban Institute who helped write the study, told the Bay Guardian.

She called that policy dangerously short-sighted because it causes social ills such as crime and poverty, as well as putting a damper on future economic growth, which in this country relies on consumer spending by a strong middle class.

Ratcliffe also helped produce an Urban Institute study that came out last month, “Lost Generations? Wealth Building among Young Americans,” which showed how Generations X and Y — those under 40 years old — are in worse shape and have far fewer opportunities to build wealth than previous generations.

“Their average wealth in 2010 was 7 percent below that of those in their 20s and 30s in 1983,” the study states. “Even before the Great Recession, young Americans were on a strikingly different trajectory. Now, stagnant wages, diminishing job opportunities, and lost home values may be merging to paint a vast different future for Gen X and Gen Y. Despite their relative youth, they may not be able to make up the lost ground.”

The situation is even worse is supposedly prosperous California. A November 2011 study by the California Budget Project, “A Generation of Widening Inequality,” found that “a disproportionate share of income gains in recent decades has accrued to the very top of the distribution, in spite of continued productivity gains.”

A big reason for the disparity is policies that tax work at higher rates than investments, which make up a significant portion of wealthy people’s income. The top 5 percent of California taxpayers made 54.5 percent of their incomes from work and 42 percent from investments (and 3.5 percent from retirement income), compared with the bottom 95 percent of Californians, who made 80.8 percent of their income from wages and 11.3 percent from retirement income.

Among the 50 states, California ranked seventh in income disparity, between Alabama and Texas. Among urban areas in the US, the Bay Area has the seventh highest income disparity in the country. Economists and historians say such inequities aren’t sustainable, and they are bound to put pressure on the political system whose policies created them. As Ratcliffe concluded: “We need our federal leaders to focus more on these disparities.”

Or, as San Francisco economist Peter Donohue put it, “We’re moving toward a moment when the opportunity to restructure American politics is approaching. I’m content to be patient and watch things come apart this year.”

And San Francisco — a rich city with glaring and growing economic inequities, where city policies continue to subsidize technology companies backed by wealthy investors even though unemployment is low and the cost of living is rising steeply — could be one of the places where things begin to come apart.

THE IRONY OF TECHNOLOGY

In many ways, the technology sector has played a cruel hoax on the American people. Computer technology promised to expand the economy, increase productivity, and democratize society. Instead, it has helped downsize the US workforce, made the average person work harder for stagnant wages, and accelerated the decline of the media, unions, and democratic institutions, replacing them with a cacophony of bloggers and often powerless voices drowning in a sea of idle chatter.

True, the Internet and related technologies did generate wealth and prosperity — but economic data since the dawn of the Worldwide Web clearly shows that prosperity has not been broadly shared. Instead, the Internet — along with the illusory ideals of libertarian individualism its biggest backers support — has helped usher in the biggest consolidation of wealth since the Gilded Age.

Robert McChesney is a communications professor at the University of Illinois who has written several books on the relationship between democracy and our increasingly corporate-controlled media. His new book, Digital Disconnect: How Capitalism is Turning the Internet against Democracy, examines how technological and political changes have consolidated wealth and power.

McChesney said that 20 years ago, the Internet was presented to the public as “the mightiest weapon ever against inequality, both political and economic inequality,” a message still sounded by its biggest boosters. But instead, he noted that almost half of the largest corporations in the US got that way by monopolizing technology sectors and gobbling up smaller competitors.

“One of the great ironies of the Internet is it is one of the greatest creators of economic monopolies in history, bar none,” he told the Guardian.

Whether it’s Google, Facebook, Airbnb, or Twitter, he said the leaders in any realm of technological innovation become the de facto gathering spots for consumers — and the corporations then use that market power to kill off any would-be competitors, a reality that extends from the globalized virtual world into the localized real world.

“It has eliminated the ability to have local alternatives,” he said.

McChesny is no fan of Mayor Lee’s embrace of tech-centered economic development.

“It’s tragic, it’s pathetic, it’s outrageous, it’s obscene — but it’s also what you’d expect,” McChesney said. “This is they world we live in, one of extraordinary monopolies. These companies are so large that it’s a new Gilded Age. And they have nothing to fear from the government, even when they blatantly rip people off.”

The other great irony of the Information Age is how the investor class has appropriated for itself the worker productivity gains enabled by technology. Nowhere is that more true that with tech workers themselves, who tend to work longer than legal hours creating tools that increase productivity — which should allow us to work fewer hours.

The economic data clearly shows that the average American has been working steadily more hours for at best stagnant wages since the 1970s when the country’s prosperity was last shared in an equitable way across classes. And technology companies themselves, and the tax laws that govern them, are some of the worst examples of the problem.

“They are produced largely by companies with intangible assets, and they produce intangible assets, so it’s largely under the radar…People don’t understand that intangible assets are often far greater than real assets,” said Donohue, noting that everything from the venture capital funds that fuel Internet start-ups to the patents and intellectual property they produce largely escape taxation, particularly here in California (whereas Oregon, Florida, and other states do tax some intangible assets, such as the money tied up in investments). “California has a tax code that has gone out of its way to exempt intangible assets.”

McChesney and others do think things are slowly changing, with the old lies and deceptions getting less believable as economic hardships get more widespread and the monopolies stifle innovation, a process that he said has already begun.

“The start-up phase of the Internet is slowing down,” said McChesney, whose book documents that trend, which is attributable to everything from patent law to the unfair competition of monopolies. “This system isn’t working and most people are being dealt a bad hand,” he told us, noting that many polls show the people are ahead of political and economic leaders on the understanding the issue. “But it is a declining system, a decaying system…Something has to give. You can’t have the continuation of corruption at the political level and the economic damage it does and not have a backlash.”

The hype, reality, and accountability of collaborative consumption

Sasha Cuttler

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April 24, 2013

55

The hype, reality, and accountability of collaborative consumption

Collaborative consumption, aka the shareable economy – the labels given to a new generation of Internet-based companies that facilitate peer-to-peer exchanges of goods and services – certainly has some positive attributes. But does it really live up to the overhyped claims of its biggest boosters, who evangelize it as a “revolution” that forever alters the economy in only positive ways? Have they really figured out a way to create something from nothing, or are there hidden costs, impacts, and complications?

I was hoping to hear that kind of balanced discussion today at a symposium hosted by the University of San Francisco’s Department of Hospitality Management, featuring What’s Mine is Yours author Rachel Botsman and Airbnb CEO Brian Chesky giving the keynote luncheon address: “The Rising of the Sharing Economy: How is it expanding the Global Hospitality Industry.”

Moderated by the department’s administrative director, Dr. David Jones, I thought I’d hear a little academic skepticism, particularly given the hotel industry’s concerns about unfair competition from Airbnb. And I wanted to ask Chesky directly why his company isn’t paying the $1.8 million per year in Transient Occupancy Taxes that it owes to the city, as well as how his business model relies on hosts who are violating their leases and tenant protection laws here, in New York City, and other cities.

Instead, all I heard was uncritical boosterism, grandiose claims, creepy futurism, and the unfettered hubris of a 31-year-old CEO who claims to be altruistically saving the world while getting filthy rich in the process and refusing to even pay the local taxes that a fair public process concluded that Airbnb and its hosts owe. And after Dr. Jones failed to ask the questions I had submitted and cut off the Q&A early, Chesky turned and darted out a back door before I could ask him myself (his company’s spokespeople also still haven’t responded to my inquiries from last month).

Everyone just seems so enamored of what Botsman called “the wonderful world of collaborative consumption,” with its focus on economic “disruption,” that tech-lovers label she used over and over, without really stopping to think about the impacts of disrupting established economic and regulatory systems.

“This isn’t a threat to the hospitality industry, it’s a massive opportunity to innovate,” she enthused, claiming it would only make the economic pie bigger, with no downsides.

Chesky then told the story about how he and a buddy slapped together the Airbnb website in three days to advertise the flophouse they turned their San Francisco apartment into using air mattresses in advance of a design conference, an idea that has now blossomed into a multi-million-dollar business that places about 100,000 guests each night around the world.

“It’s like the United Nations at every kitchen table. It’s very powerful,” Chesky said of the social benefits of his company. “I think we’re in the midst of a revolution and not a lot of people are talking about it.”

Actually, it seems that everyone is talking about collaborative consumption these days, which is why Chesky was recently on the cover of Forbes and The Economist. But not a lot of people seem to be asking tough questions or challenging assertions that Chesky and his young bretheren are making, such as, “For us to win, no one has to lose.”

That would have been a good time for Dr. Jones to ask, “If that’s true, why are you refusing to pay the $2 million in TOT you owe the city, money that helps pay for Muni, street maintenance, the police, and other city services that visitors use?” Because the more Airbnb wins business from traditional hotels that do pay the TOT, the more the rest of us lose.

Similarly, in big, expensive cities that have developed complex systems regulating landlord-tenant relations – an essential system that determines who gets to live in these cities and how diverse and inclusive they remain – Airbnb offers a mechanism for circumventing those rules, a system it barely even acknowledges.

I’ve used Airbnb, and I understand that it can be a cool way to avoid expensive hotels and meet locals while traveling. That’s great. But it’s just not that simple, and it’s simplistic to focus simply on its benefits, divorced from the larger economic and environmental systems in which is operates.

“This is not a niche phenomenon. This could have enormous historic precedence,” Chesky said, later adding, “This is like a Golden Age we’re going to be entering.”

It is an age when anyone can become an entrepreneur and get rich, when the system of mass production itself will be replaced by the myriad ideas of people like Chesky in unforeseeable ways. “I think it will change dramatically the hotel and restaurant industry,” Chesky said. “Hotels themselves are going to be much more local and personal.”

He envisions the next generation of hotels creating rooms that cater to the individual tastes and preferences, from the music piped into the room to what’s in the mini-bar, all discerned from Facebook and other online mechanisms that create what Bostman called our “digital exhaust.”

“Consumers aren’t strangers, they all have profiles and you can know everything about a person,” Chesky said, sending the chill of dystopian futurism down my spine.

And we’re all going to travel freely around the world, owning little, sharing everything, and elevating Airbnb and its allies into the “trillion-dollar-industry” he’s pushing toward.

“We’re wired to be nomads,” Chesky said. “We’re going to be moving all over the world much more.”

So says the young, entitled CEO who doesn’t even have a home, flitting around the world to stay with various Airbnb hosts. But for most of us, air travel is still expensive and our vacation time is limited. And from the perspective of climate change, nothing could be worse for the environment than substantially increasing air travel to facilitate this expanded globe-trotting lifestyle that Chesky envisions.

The environmental claims of collaborative consumption companies have always struck me as the most overblown. That’s why I also cornered Adam Werbach – who went from heading Sierra Club to working for WalMart on its sustainability programs to launching Yertle, a stuff-sharing website – at an event promoting the new company on Monday, aka Earth Day.

“There’s nothing that’s green,” Werbach said when I asked whether Yertle was. “I’ve never used the term green.”

But he does make the argument that facilitating sharing allows less stuff to be produced overall, which is good for the planet.

“Is sharing a greener alternative than buying new?” he asked, citing examples such as pasta- or bread-makers as products that people may want to try without buying. “Can you find a way to sample or test those things without buying a new one?”

That’s true, but as I perused the pages and pages of stuff available on Yertle – which is sort of a high-tech version of a garage sale or thrift store, except that everything is free – I couldn’t help but be struck by its promotion of materialism and accumulation. Can we really tackle big environmental challenges and still keep all our toys?

Werbach, who graciously indulged my questions, admits that the shareable economy can’t adequately address big problems like climate change, which will require a major cultural and economic shift. It’s more like tinkering on the margins, and making some positive incremental changes, as he felt he was able to do at WalMart. “I do think we made them somewhat better. But, has it been adequate? No,” he said.

His Yertle co-founder Andy Reuben was someone Werbach met and worked with at WalMart. Reuben seemed even more hopefully that the younger generation will use collaborative consumption to create a lighter footprint on the planet.

“One thing we’re seeing is it will be an asset-light generation that can just get it and pass it on,” Reuben said, describing Yertle as “based on better utilizing the stuff what we have.”

That’s a goal that most of us probably share, and one that the shareable economy can certainly help us address. But its big boosters – from venture capitalist Ron Conway down to the random techie true believer – have to be willing to engage in an honest discussion with the rest of us, rather than just bulling their way forward, heedless of their impacts and dismissive of our concerns.

Maybe Lyft and Uber have a role to play in augmenting San Francisco’s taxi system, but we shouldn’t destroy that taxi system in the progress. Yes, City Care Share and Zipcar enable people to sell their cars, but how do they actually impact the number of cars on the roads? Airbnb is certainly a popular site with both hosts and guests, but that doesn’t mean it should be exempt from taxes and regulations.

After today’s event, I spoke with Dr. Jones – a longtime Bay Area tourism booster with a fairly libertarian outlook – about why he didn’t ask tough questions or express more skepticism. “I’m really not [skeptical]” he said, although he did note the dearth of academic research on collaborative consumption and the validity of some of my questions.

“There’s a massive value shift and there’s no way we’re going back,” Botsman said of the rapid rise of the shareable economy and its disruption of traditional economic models. That may be true, or that may be self-serving hype, but either way, it’s worth talking about in an open and collaborative way that involves more than just the insular tech world.

Last year, Mayor Ed Lee and Board President David Chiu announced the creation of a shareable economy task force, which was supposed to be reporting back some recommendations about now. I asked the Mayor’s Office of Communications for an update on its status three days ago, and I’m still waiting to hear back.

Meanwhile, Chiu’s office is still negotiating complicated legislation that would govern Airbnb’s operations in San Francisco, so there will likely be hearings on that company and the issues it raises this summer. That’s important for a city like San Francisco that is so diverse and engaged.

If San Francisco wants to help lead this collaborative consumption revolution that we keep hearing about from Lee and other boosters, hopefully we’ll also take a clear-eyed and precautionary view of what this brave new world looks like, how it’s regulated, what its byproducts may be, and whose interests it serves.

Mayor Lee’s trip to China raises questions of ethics and influence

Sasha Cuttler

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April 4, 2013

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Mayor Lee’s trip to China raises questions of ethics and influence

[UPDATED(x3)] Mayor Ed Lee barely had time to unpack from his recent political junket to Paris before he was off on his current trip to China – both of which were paid for and accompanied by some of his top political supporters and among the city’s most influential power brokers. No wonder Lee doesn’t have time to weigh in on Airbnb’s tax dodge, the condo conversion stalemate, or other important city issues.

Local good government advocate Charles Marsteller learned of the current China trip from Willie Brown’s column in Sunday’s San Francisco Chronicle, whose editors (including Editor Ward Bushee, who we’re still waiting to hear back from about this trip) consider it a “man about town” column immune from conflict-of-interest policies that normally require journalists to disclose who is paying them on the side.

“I’m here with Mayor Ed Lee for my seventh official visit,” Brown cheerfully wrote, although readers were left to wonder just what official business Brown might be conducting with our mayor and his entourage. So, being an expert on political disclosure laws, Marsteller went down to the Ethics Commission to pull the Form SFEC-3.216(d) that state law requires elected officials to file before leaving on trips paid for by outside interests.

But it wasn’t there, so Marsteller filed an official complaint with the commission, telling us, “I did so to impress upon our Elected and other City Officials the need to properly report gifts in a timely way and in the manner as called for by State law and on the forms provided by the SF Ethics Commission.”

When we contacted mayoral Press Secretary Christine Falvey, she forwarded us a copy of the form that should have been filed before the trip and told us, “I’m not going to answer the question about why we failed to file the appropriate forms with the Ethics Commission, as we worked closely with the City Attorney’s office to exceed reporting requirements by all appropriate deadlines.” [UPDATE: The time stamp on the form indicated it was filed on May 25, before the trip, even though it wasn’t publicly available at the Ethics Commission office when Marsteller went down to look for it].

The form indicates that Lee’s portion of the trip was paid for by the San Francisco Chinese Chamber of Commerce, whose influential leader Rose Pak conspired with Brown to get Lee appointed mayor more than two years ago. This is also the same Rose Pak who was admonished by the state’s Fair Political Practices Commission for illegally funding another political junket to China in 2009 with Sups. David Chiu and Eric Mar and then-Sup. Carmen Chu, who Lee appointed as Assessor earlier this year.

Those officials were forced to repay the expenses after the FPPC found that Pak, that time acting under the auspices of the Chinese New Year Festival Committee, was not allowed to make gifts exceeding $420 per official that year. “Please be advised that since the Chinese New Year Festival Committee is not an organization that falls under Section 501(c)(3) of the Internal Revenue Code, no public official may accept gifts of any type from this organization valued in excess of the applicable limit,” FPPC counsel Zachary Norton wrote in an Aug. 22, 2011 enforcement letter to Pak.

In other words, because this committee and “other 501(c)(6) chamber of commerce organization[s]” are in the business of actively lobbying top elected officials for favorable policies, rulings, and projects, they are barred by ethics law from giving them the gifts of big overseas political junkets. As Marsteller noted in his complaint letter, violations are punishable by fines of $5,000 per violation, or if they are “willful violations of the law” – which doing the same thing you were sanctioned for just two years ago certainly might be considered – the criminal penalties are $10,000 per violation or up to a year in jail.

Mayor Lee’s portion of the trip cost the Chamber $11,970, according to the form. But this time, to get around the FPPC restrictions, Pak seems to have passed the hat among various business elites to fund the trip. The mayor’s form shows that 41 people paid up to the current gift limit of $440 “to defray the cost of the mayor’s trip.”

They include Pak, Brown, four people from Kwan Wo Construction, three from American Pacific International Capital, two each from Boyett Construction, Young Electric, and Bel Builders, Harbor View Holdings Director Gorretti Lo Lui, and SF Immigration Rights Commissioner Sonya Molodetskaya – most of whom were also part of the trip’s 43-member delegation.

Among others who tagged along for the trip are Public Works Director Mohammed Nuru (who has a history of political corruption under Mayors Brown and Newsom and no clear business being on a Chinese trade delegation, but who doesn’t love a free trip?!), Kofi Bonner from Lennar Home Builders, Harlan Kelly with the SFPUC, Jay Xu with the Asian Art Museum, the wives of Lee and Bonner, Kandace Bender with San Francisco International Airport, and Mark Chandler with the Mayor’s Office of International Trade and Commerce.

It’s not clear who paid for those other public officials or even what they were doing there. [UPDATE: Department of Public Works spokesperson Rachel Gordon told us that Nuru paid for the trip himself, but that he’ll be studying China’s instrastructure, from its separated bikesways to greening of public rights-of-way, as well as meeting with Chinese businesses involved in the redevelopment of Hunter’s Point. “He’s been looking at a lot of the infrastructure in China,” Gordon said. “I expect a dozen if not more ideas when he returns.”] Then again, it also wasn’t clear why venture capitalist Ron Conway – Lee’s top campaign fundraiser and possible reason for publicly subsidizing big tech companies, including many that Conway funds – joined and helped sponsor Lee’s recent trip to Paris. This is just how business gets done in San Francisco.

“Willie Brown is the former Mayor of San Francisco,” Falvey told us when we asked why Brown was on the trip and what its purpose was. “The purpose of the trip is to promote San Francisco, its local manufacturing, cultural exchanges, he is signing an MOU and meeting with high level, new Chinese government officials.”

[UPDATE 4/5: Marsteller has withdrawn his complaint from the Ethics Commission alleging the mayor’s form wasn’t filed on time, but he and another citizen have filed separate complaints with the FPPC alleging the trip and its funding mechanism may violate the agency’s 2011 ruling against Pak.]