Board of Supervisors President David Chiu’s reputation for forging decent compromises is being severely tested as his widely criticized legislation to legalize and regulate Airbnb and other short-term housing rental companies now moves to the full board, where its fate is uncertain.
Nobody is happy with this legislation, not even Airbnb and its hosts, whose scofflaw actions in San Francisco would finally be made legal. But because the company has been unwilling to help the city regulate its short-term rentals in order to preserve permanent affordable housing units in the city, the final legislation would be tough to enforce.
That’s why Sup. Jane Kim voted against the legislation yesterday at the board’s Land Use and Economic Development Committee meeting, according to an account by the Examiner, citing the city’s inability to enforce the legislation’s ostensible limit of 90 rental nights per year (it requires hosts to live in their units for 275 days per year).
Nonetheless, the committee voted 2-1 to send the measure on the full board, even though it still has significant organized opposition from both landlord and tenants groups, hotel owners and workers, Airbnb hosts who don’t want to register or pay taxes, and a wide variety of other activists, including those who originally helped forge city laws preventing apartments from being converted into tourist hotels.
Although the San Francisco Tenants Union helped crafted the legislation and was an early supporter, the group has since voiced concerns about many aspects of the legislation, which has grown steadily weaker from a tenant perspective, offering few protections for tenant-hosts and even being amended this month to require that landlords get notified when a tenant registers with the city as a host (making it less likely those hosts will actually register).
At least one of Chiu’s close advisors warned him over a year ago that this was a no-win endeavor for him — particularly as it comes to the board just a month before the end of his Assembly race against board colleague David Campos — and that appears to have been prescient advice.
Yes, someone needed to wade into this muck and mire, given that thousands of apartments in San Francisco have been taken off the market by Airbnb, which has even flouted city rulings that it collect and pay the hotel tax (which the company says it will finally start doing tomorrow [Wed/1]).
But the question facing supervisors next week will be what the city is getting from Airbnb and similar companies in exchange for legalizing their illegal business model, at a time when the city needs every affordable housing unit it can get for actual San Franciscans.
Is Burning Man really making Bay Area technology titans, right-wing ideologues, and other uber-capitalists more community-minded? Do they really come back from the desert feeling more goodwill toward their fellow humans and then push egalitarian innovations to help the masses?
That’s one of the biggest reasons that burner apologists cite in defending the festival from any criticisms, responding to the raft of recent articles critical of how Burning Man is developing, including my own, with their own pieces extolling how the festival is making the world a better place. The rhetoric gets downright creepy and cult-like at times, summarily dismissing all dissent.
Frankly, I’ve long hoped that the stated ethos of Burning Man really would seep out into the world and influence our greed-based economic and political systems. There were even moments over the last 10 years when I really believed it might be happening. But I think that potential has been lost as the party and spectacle that is Burning Man overwhelmed the stated communitarian ethos that underlies it.
Right-wing firebrand Grover Norquist attended Burning Man this year and had a lovely time, as he explained in a UK Guardian opinion piece yesterday and a New York magazine article. Those who hosted him in Black Rock City LLC-run First Camp and showed him around even told us that Norquist “gets it” and how that will help Burning Man going forward.
But there’s a deceptiveness and a hollowness to this rhetoric, by both Norquist and the burner true believers. After all, Norquist flew onto the playa and stayed in accomodations that others set up for him and cleaned up after he left, cooking his meals for him while he was there.
Yet Norquist still has the audacity to write, “The story of Burning Man is one of radical self-reliance….The demand for self-reliance at Burning Man toughens everyone up. There are few fools, and no malingerers. People give of themselves – small gifts like lip balm or tiny flashlights. I brought Cuban cigars.”
Burning Man’s stated principle of Radical Self-Reliance is the one Norquist focused in on because it reinforced his libertarian worldview and belief that selfish actions somehow provide for the common good, and he’s now using Burning Man to promote that notion, to the glee of its leaders.
“A community that comes together with a minimum of ‘rules’ demands self-reliance – that everyone clean up after themselves and help thy neighbor. Some day, I want to live 52 weeks a year in a state or city that acts like this. I want to attend a national political convention that advocates the wisdom of Burning Man,” he writes.
Will Norquist also promote “Civic Responsibility” and “Communal Effort,” also stated burner principles, to his wealthy patrons? After all, the city he enjoyed wasn’t free. Maybe he didn’t pay $380 for his ticket, but most attendees do, much like paying taxes is the price of living in civil society, despite Norquist’s fierce opposition to taxes and government.
But there are other dangerous dynamics at play on the playa that would probably make Grover’s small heart grow three sizes larger, particularly the exploitation of labor by a handful of powerful elites. After all, Black Rock City LLC and its six board members claim the full economic value of all the volunteer labor that builds the city each year, from the art to the big theme camps to the people working gate in the middle of the night, hundreds of thousands of hours of volunteer labor.
At its core, libertarianism denies the very notion of exploitation, or that our freedom is limited by the dwindling economic opportunities that are available to us and the power some have to game markets. It promotes a deregulated world in which those with economic and political power can do pretty much whatever they want — something most progressives see as a race to the bottom that exploits both human and natural resources.
It’s no surprise that Norquist is a big fan of the so-called “sharing economy,” in which companies such as Airbnb, Uber, and Lyft help commodify and monetize people’s homes and vehicles, essentially creating low-wage jobs with no benefits while being heedless of their impacts on local housing markets or established employers like hotel or taxi companies.
Tech titans have been coming to Burning Man since the beginning, and I haven’t seen any evidence in San Francisco that they’ve internalized or promoted the principles of civic responsibility, communal effort, or decommodification. Burning Man may seem like a libertarian paradise to a casual observer, but clean-up crews will be there for the rest of the month to make the “leave no trace” ideal a reality, many big theme camps will be holding fundraisers all fall to pay off their debt from this year, and it’ll be up to cops and courts to decide what justice demands for the woman tragically killed by an art car this year.
Like most libertarians, Grover wants all the benefits of government — public roads, unspoiled federal lands, police protection of person and property, and other services that make Burning Man possible — he just doesn’t think the wealthy should pay their fair share for it.
I had dinner last night with Rev. Billy Talen, the inspiring anti-corporate activist at the center of the NYC-based Church of Stop Shopping and close friend of the festival’s organizers, and he’s also bothered by the trends he’s seeing at Burning Man, and openly wondering when the volunteers (like a surly one he encountered at the gate this year while Norquist was being feted inside First Camp) are going to catch on to the game.
That’s what a lot of people are wondering these days, how long Burning Man will still remain a vibrant and interesting place as more and more people pay to come watch and appreciate the hard work of a dwindling percentage of burners willing to put their time, sweat, and energy into making Black Rock City what it is each year.
And if there really is a larger societal value to the wealthy CEOs who come to party in exclusive camps and private art cars, then I think we’re all still waiting to see what that looks like. And waiting. In the meantime, Burning Man seems to be going the way of Animal Farm, where “all animals are equal, but some animals are more equal than others,” that Orwellian distillation of a list of once-egalitarian principles.
It seems people are agitating for change on all sides of a debate swirling around Airbnb, the San Francisco-based apartment-sharing company whose new logo, by the way, is rumored to be something special.
Turns out, there’s a rolling drumbeat on the other side of the fence, too, resembling a grassroots campaign – yet promulgated by Airbnb itself. Yesterday, Airbnb sent out an email blast proclaiming: “Big News: Launching Fair to Share San Fransisco!” [sic] (#fail).
Misspellings happen, and hey, we all make mistakes. More to the point, what’s Fair to Share want, and when do they want it?
Fair to Share “is working for fair rules for home sharing,” according to the blast, which directs recipients to sign an online petition “urging the Board of Supervisors and San Francisco leaders to enact rules that let people share the home in which they live.”
The blast describes Fair to Share as a coalition, comprised of Airbnb, a company valued at $10 billion; Peers, a nationwide online organizing group whose rise coincided with early signs of regulatory action targeting the sharing economy, and Home Sharers of San Francisco, a group we at the Guardian previously hadn’t heard of.
Perhaps Fair to Share’s motto could be: “Airbnb hosts of the world, unite!”
As the Guardian has previously reported, Board President David Chiu has been working for more than a year to craft legislation regulating short-term rentals, partially in response to the problem that rent-controlled housing stock is quietly being lost to conversions to short-term Airbnb rentals, a practice carried out both by tenants and landlords.
City law technically prohibits apartment rentals of less than 30 days, a measure geared toward preserving the city’s rental stock. Chiu’s legislation, developed in tandem with the San Francisco Tenants Union, would actually help legitimize Airbnb by legalizing short-term rentals in residential areas – with a number of conditions, including a requirement that hosts register with the city and limit rentals to no more than 90 days per year.
According to a “fact sheet” published by Fair to Share, the average Airbnb host earns $4,000 a year by renting out their space. The website also emphasizes that a great many Airbnb hosts, presumably tenants, use the supplemental cash gleaned from online rentals to “stay in their homes,” the subtext here being that rent is so goddamn expensive in this city that welcoming perfect strangers into your home as overnight guests is a matter of basic economic survival (also, sharing is awesome!).
Airbnb’s focus on cash-strapped hosts might lead people to believe that their economic security is somehow threatened by the proposed legislation. But that isn’t the case. The $4,000-per-year average earning potential would go completely unaffected if hosts were limited to the 90 rental days per year proposed by Chiu’s legislation. So why are people being urged to ban together with Fair to Share and join the revolution pushing back against regulatory control?
A closer read of the petition reveals that Airbnb and the Home Sharers of San Francisco are actually worried about the proposed law’s enforcement mechanisms, including a registry that Airbnb hosts would be required to enroll in. The point of these enforcement provisions in the proposed legislation, which will likely be decided on this fall, are to ensure that the rules on short-term rentals are being followed instead of flouted.
Is it fair to share? Sure. But ousting long-term San Francisco tenants to set up a property as a hotel in violation of city law isn’t a very good example of sharing. And that’s the sort of behavior this new regulation is targeting.
“Die techie scum.” Those words are sprayed ominously on sidewalks throughout San Francisco. They’re plastered on stickers stamped on lampposts. They’re even scrawled in the bathrooms of punk bars, the very establishments now populated by Google-Glass-wearing tech aficionados.
Journalists from San Francisco to New York have opined on the source of the hate: Is it the housing crisis? Tech-fueled gentrification? Rising inequality? Those same journalists later parachute into the tech industry to periodically peer at its soul: Is tech diverse enough? Is it sexist? Is it a true meritocracy?
Those issues are often looked at in a vacuum, but perhaps they shouldn’t be. Perhaps those problems are all interconnected, and solving tech’s diversity problem is also part of solving income inequality in San Francisco, giving longtime San Franciscans a chance to join the industry many now view as composed of outsiders and interlopers.
The average Silicon Valley tech worker makes about $100,000, according to Dice Holdings Inc., which conducts annual tech salary surveys. Opportunity in the tech sector may bolster San Francisco’s middle-income earners, vanishing like wayward sea lions from the city’s landscape. Statistics from the US Census Bureau show that 66 percent of the city is either very poor or very rich, showing a hollowing out of the middle class.
Some tech CEOs are addressing their employment needs with a foreign workforce. Mark Zuckerberg and a cadre of tech CEOs have lobbied Senate and House Republicans to reform immigration in their favor, hoping to lure out-of-country workers to fill tech’s employment vacancies. Politico reported Sean Parker gave upwards of $500,000 to Republicans in 2014, all for the cause of immigration reform.
Conversely, a movement is already underway to bring San Franciscans into tech’s fold, based on the idea of a win-win scenario: San Francisco’s public school students are overwhelmingly diverse and lower income, while the tech industry is not.
Google, Facebook, LinkedIn, and Yahoo recently released their diversity numbers, showing the companies are mostly white and male. This accusation has long haunted Silicon Valley.
Two years ago, Businessweek heralded the “Rise of the Brogrammer.” The stereotype is as follows: He preens as he programs in his popped collar, his startup funds fuel the city as he hunts “the ladies,” and he is insensitive toward women in the workplace in the most fratboy-like way imaginable.
Biz dev VP of @path just cracked lame jokes re: “nudie calendars,” frat guys + “hottest girls,” “gangbang” at #swsx talk. Cue early exit.
But while outlier brogrammer douche-bros certainly exist, whose classist opinions ignite widespread ire (think Greg Gopman’s statement comparing homeless people to “hyenas”), the real brogrammer threat is more insidious, more systemic.
“The brogrammer is always someone else,” wrote Kate Losse, a freelance journalist, in an April blog post. “He is THOSE Facebook guys who yell too loudly at parties and wave bottles in the air, he is not the nice, shy guy who gets paid 30 percent more because of his race, gender and appeal to the boy-genius fetishes of [venture capitalists].”
The overarching point of Losse’s article was this: There is a subtle sexism, and also racism, in the tech sector, which shuts out women and people of color. The looming stereotype of a douchey brogrammer can obscure the smaller, more indirect ways in which minorities and women are shut out of the industry.
Tech’s disturbing (but unsurprising) lack of diversity is being highlighted amid an economic backdrop that has resulted in widespread displacement of San Francisco’s working class and minorities.
Some are seeking to create opportunities for Bay Area communities of color within tech, as a way to even the scales. A swell of new applicants with programming skills — including people of color and women — may soon come knocking. But in the time it will take school-age coders to cycle through the first generation of new computer science classes, Silicon Valley is going to have to take a hard look in the mirror.
Some of the Bay Area’s hate toward tech may be rooted in a perceived lack of access. Longtime residents see a sea of newcomers, often white, often male, who aren’t pulling up a seat for minorities to join the new gold rush.
The age of the brogrammer is now, and it’s as socially progressive as the paleolithic era, meaning: not at all.
FAKE IT TIL YOU MAKE IT
Talk to anyone in the realm of new technology companies and startups, and they’ll surely tell you this: Tech is an inspiring, creative field, where pure skill is the key to unlocking any job you’d like. The dress style is casual (hoodies, of course) and the perks flow like wine (or energy drinks).
When the Guardian visited the CloudCamp social good hackathon, we saw video game arcade machines in the ground floor and beer flowing throughout. Another company, Hack Reactor, had desks attached to treadmills and a life coach on hand to mind employee health. These are accoutrements de rigeuer, stunningly standard. But tales of true Silicon Valley excess abound: One CEO offers employees free helicopter rides, many offer in-house chefs and extravagant travel.
Interns in Silicon Valley are enjoying huge perks like free meals, massages, swimming pools, nap pods: http://t.co/BdaaOdC95P
Skill and ability alone are the keys to unlocking this lifestyle, the tech industry says. Workers’ fervor can take on an almost cult-like zeal.
“I think the sharing economy is addictive,” said Rafael Martinez-Corina, a panelist at the Share2014 sharing economy conference in May, touting tech’s biggest stars like AirBNB, Lyft, and Uber. “Once you get it, you want more and more. You get into car sharing, you want to get into food sharing, time sharing.”
He asked the audience, “Who else is addicted to sharing?”
Almost every hand went in the room shot right up. Cheers immediately followed. Hallelujah!
Mars Jullian, an engineer at AdRoll, told the Guardian that employees of tech companies with name-brand apps tend to exhibit more ego. AdRoll is a big player, but more behind the scenes, she said, giving her perspective on the attitudes of her fellow tech workers.
“Sometimes it seems tech people feel like they own the city,” she said. “I don’t know if that’s the right attitude to have. Sometimes it’s more important to be humble.”
One might forgive the tech workers for their enthusiasm. The industry, after all, has ushered in widespread transformation in business and communications, resulting in dramatic economic shifts. But with such a high concentration of wealth and influence in the Bay Area, the question of who gets to participate is key.
Google’s diversity numbers rocked the world outside Silicon Valley, but surprised few in the Bay Area. The behemoth is 70 percent male and 60 percent white, with Asians making up 30 percent of the company’s ethnic representation.
Soon after Google’s numbers were revealed, Facebook, Yahoo, and LinkedIn followed suit with their own diversity reports. Their numbers differ a bit from Google, showing more Asian employees, and slightly more women. The numbers look worse, however, when only technology jobs are factored in. The tech worker population among these companies is about 15 percent female.
Hadi Partovi, an early Facebook investor, now adviser, and ex-chief of Microsoft’s MSN, told the Guardian that despite the industry’s challenges, tech’s doors are open to people with skills, regardless of background.
“The computer doesn’t know if it’s being programmed by someone rich or poor, black or brown,” he told us in a phone interview. “A lawyer, for instance, is looked at more explicitly. Tech has the opportunity to be more meritocratic.”
But the tech sector’s pious belief that it functions as a world-changing meritocracy ignores a host of factors that serve to hinder inclusion.
Many have touted the education pipeline as the root cause of tech’s lack of diversity. The number of women pursuing science, technology, engineering, and math (STEM) fields is stunningly low, 24 percent, according to the US Department of Commerce. African Americans and Latinos also lag far behind their white and Asian counterparts in completing their computer science degrees, according to studies by the East Bay nonprofit Level Playing Field Institute.
Considering Asian groups is important: the Level Playing Field Institute draws a distinction between represented and underrepresented minority groups, acknowledging that ethnicity, income and class intermingle in complex ways. It’s those underrepresented groups like women, Latinos and African Americans LPFI identifies as groups lacking in tech.
But the pipeline is only one part of the problem. Subtle (and not-so-subtle) misogyny and racism, often labeled micro-aggressions, pervade hiring.
Level Playing Field is focused on creating opportunity for people of color and women in STEM fields. In an extensive tech-industry study conducted in 2011, called “Hidden Bias in Information Technology Workplaces,” researchers concluded: “Despite widespread underrepresentation of women and people of color within the sector, diversity is not regarded as a priority.”
Surveying more than 645 engineers, the study’s authors found that white men were the most likely to believe that diversity was not a problem that needed addressing in the tech sector. The study also found that underrepresented people of color (Latinos and African Americans), and women were more likely to encounter exclusionary cliques, unwanted sexual teasing, bullying, and homophobic jokes.
Sometimes, these instances blow up for the world to see.
THE MIRROR-TOCRACY
The workday text messages between Tinder’s co-founder Justin Marteen and former VP Whitney Wolfe went public after Wolfe sued Tinder, revealing the ugly waters women must sometimes navigate in tech. Marteen was allegedly harassing Wolfe over her new love interest, and Wolfe asked him to stop.
“Stop justin [sic]. Were at work,” Wolfe asked of Marteen, to which he replied, “Ur heartless… go talk to ur 26 year old fucking accomplished nobody. I’ll shit on him in life.”
He should have ended there. But he continued his rage at his ex-girlfriend.
“Hagsgagahaha so pathetic I even imagined a life w u. I actually thought u would be a good mother and wife. I have horrible judgement. He can enjoy my left overs,” he allegedly wrote. “You’re effecting my work environment,” she replied, “and this is very out of control. Please don’t do this during work hours.”
Besides an awful command of rudimentary spelling, the squabble showed the very real harassment women in tech are exposed to every day. When Wolfe went to Tinder CEO Sean Rad for help, she found herself out of a job.
Tinder is not an outlier, according to studies by Level Playing Field. Nor is it the only company to see its harassment go public. Earlier this year, GitHub’s CEO Tom Preston-Werner resigned after a former employee, Julie Ann Horvath, alleged she was harassed by him, his wife, and engineers.
While Github denied the allegations, Horvath was defiant: “A company can never own you. They can’t tell you who to fuck and who not to fuck. And they can’t take away your voice.”
But for every example of outright sexism or racism, there are multitudes of more subtle biases in the workplace. Level Playing Field’s studies found these biases are pervasive. They start as early as the hiring process.
Carlos Bueno is a former Facebook engineer, now tinkering behind the scenes at memSQL. He is of mixed ethnicity, Irish and Mexican, among others. “My father called us ‘Leprechan-os’,” he told us.
Bueno trained interviewers at Facebook, and like many there, he also conducted interviews. He said Facebook’s interview process was probably one of the best in the industry for screening out biases of the interviewer, but other companies were not as aware of bias as a problem.
“Every startup wants to be a big dog,” he said, describing the process. “But the point of a startup is to grow very large, very quickly. They don’t have time to learn. Some people take rules of thumb or investor advice and run with it.”
Paypal co-founder Max Levchin is looked to as a thought leader in the startup world. He touts the idea that diversity of perspective in a startup’s early phases can actually hurt its chances of success, hindering its speed in “endless debates.”
Paypal co-founder Peter Thiel once famously put it this way: “Don’t fuck up the culture.”
Bueno pointed to a real estate startup, 42Floors, as an example of a company adopting Levchin’s philosophy. It looks for potential hires who are a “cultural fit,” i.e., making sure the candidate and employer think alike.
One 42Floors interviewer explained this on the company blog: “I asked her how she was doing in the interview process and she said, ‘I’m actually still trying to get an interview. Well, I grabbed coffee with the founder, and I had dinner with the team last night, and then we went to a bar together.’ I chuckled. She was clearly confused with the whole matter. I told her, ‘Look, you just made it to the third round.'”
So the interview process for tech may involve coffee dates or “beer with the guys,” and the onus is on the interviewee to figure all of this out. Similar blog posts from 42Floors go on to call out interviewees who wear suits, or act too stodgy for their liking.
We spoke to Bueno extensively over burgers, but he put it best in his blog.
“You are expected to conform to the rules of The Culture before you are allowed to demonstrate your actual worth,” he wrote. “What wearing a suit really indicates is — I am not making this up — non-conformity, one of the gravest of sins. For extra excitement, the rules are unwritten and ever-changing, and you will never be told how you screwed up.”
Founders back up their faulty hiring practices with faulty logic. “It’s so hard to get in, if you get in you must be good,” Bueno said. “But those two statements don’t support each other.”
Some students of color training to code have already caught a glimpse of how the mirror-tocracy functions.
OPENING THE DOOR
Eight years ago, Kimberly Bryant moved to San Francisco to work in biotech. She moved to the city because she believed it to be more racially and economically diverse. She worked adjacent to Bayview Hunters Point, and has since revised her view of the city as a welcoming multicultural environment.
Instead, she found a city with an African American population dwindling below six percent in a city of over 800,000, and a gutted middle class. Latinos are moving out in greater numbers too. Over the last decade, 1,400 Latinos left the Mission District, according to a recent report on displacement by Causa Justa / Just Cause. In the same time, 2,900 white residents flooded in.
The displacement data reveals a significant parallel: The diverse ethnic groups Silicon Valley lacks in its employed ranks are the very same ethnic groups being priced out of San Francisco.
Seeking to mitigate the ethnic and gender disparity in tech, Bryant formed Black Girls Code, a student mentor and workshop program. It first opened up shop in the Bayview, but has sinced moved on.
“I really saw and experienced the true diversity of the community in Oakland,” Bryant told the Guardian, of the nonprofit’s new home. “It’s just an amazingly incredibly diverse community in terms of race and economy. What San Francisco used to be,” she added, “but is no longer.”
Black Girls Code teaches K-12 students rudimentary coding skills, providing instruction in Ruby and Python. Although companies like Google and others have opened their doors with welcoming arms, she said, convincing her students that the tech world is ready for them has been challenging.
When she brought her young students to an industry event, TechCrunch Disrupt, she dodged a minefield of fratboy-like behavior that made her students feel unwelcome, she said. This is the same event that heralded a prank app called “titstare,” which invited users (presumably male) to upload photos of themselves staring at women’s breasts.
The app was displayed on a stage before some of the most influential players in the tech industry, but Bryant’s students were in the audience too.
“They were shocked, like everyone there. It was disconcerting for the parents and the girls,” she said. Though she’s careful not to overplay the damage done (the girls “laughed awkwardly,” she said), the takeaway of the conference was that women and girls were not the intended participants. “It’s like a frathouse. I thought, ‘oh my god, this is like college all over again. This sucks.'”
At Mission and 19th streets sits MEDA, a nonprofit that has long worked to help Mission residents gain a foothold in San Francisco workplaces. This begins even in the lobby, where a small kitchenette in the corner plays host to a chef who mixes up a mean ceviche, with spices admittedly leaving this reporter in tears. He aspires to open his own restaurant, and MEDA is helping him get there.
The upstairs houses a group of students called the Mission Techies. They seek support in their aspirations to enter the tech industry, but for them the dream may be further off than the chef’s.
Gabriel Medina, policy manager at MEDA, doesn’t mince words. These are the “challenge” kids, he said, but they’ve done him and program manager Leo Sosa proud.
The Mission Techies pull apart computers to learn about their innards.
Sosa described a visit from Google and Facebook engineers who taught his students rudimentary coding skills. One student, Jamar, was so engrossed in programming that one engineer asked: “Is he okay?!”
“Jamar is on the coding program, [and he’s] on fire,” Sosa told the Guardian, while sitting in a MEDA office.
But students like Jamar, an African American San Franciscan, face an uphill battle before they ever get to the step of applying for a job like one at Google.
After visiting some tech offices, the students felt less sure of themselves.
“They were like ‘I don’t see no black guys, I don’t see no Latinos. Leo, do you really think I can get a job here?'” Sosa told us. For them, the mirror-tocracy did not reflect an image they recognized.
By many measures, MEDA’s Mission Techies program is a success, taking kids of modest means and equipping them with digital skills that can aid their employment prospects. Mission Techies, Black Girls Code, and other programs such as Hack Reactor and Mission Bit all nip at the heels of the education pipeline leading to tech industry employment. They also share a common focus: They’re educating largely minority populations, often low-income, and located in the Bay Area.
The solution to tech’s diversity problem and to San Francisco’s displacement may spring from the same well: educate the people who live here to work in the local industry. But in order to do that effectively, afterschool and summer programs alone won’t do the trick.
The schools themselves need disruption.
WORKING TOGETHER
In the midst of the tech hub, the San Francisco Unified School District finds itself surrounded by tech allies. Still, change comes slowly.
Only five of SFUSD’s 17 high schools have computer science courses. Ben Chun, an MIT graduate and former computer science teacher at Galileo High School, told us the outlook is bleak without digital training in schools. Though kids sometimes teach themselves programming at home, most low-income students don’t have that opportunity.
“It’s a privilege thing,” he told us. If you have access to computers at home, you’re more likely to tinker and teach yourself. Those kids are more likely to be the Bill Gates of the future, he said, the self-starters and early computer prodigies.
“If you don’t have those things in place,” he said, “there’s a zero chance it will be you.”
When he first got to Galileo, his computer teacher predecessor taught word processing. But a lot has changed since 2006.
Partovi took his successes at Facebook and Microsoft and parlayed his money into a nonprofit called Code.org. The organization created its own coding classes for kids as young as 6, and compelled 30 school districts nationwide to create computer science courses based on its work.
Code.org’s tutorials have been played by millions of students.
Now it has its sights set on SFUSD’s 52,000 students, potentially solving tech and the school’s problems at once.
“It would for sure level that diversity gap,” Partovi told the Guardian. “All of the data released from Google, Yahoo, and others show a male-dominated industry. The pipeline of educated kids is actually much more diverse.”
But integrating tech in the district is slow, and likely years away. The district needs state standards to require computer science, something SFUSD Superintendent Richard Carranza has already lobbied Gov. Jerry Brown to change.
“The demand [for computer science classes] is coming from everywhere,” Carranza told us, including parents, students, the tech industry, and city leaders.
“What makes it a game changer is the partnership with our tech partners,” he said. “It gives our students the opportunity to interact elbow to elbow with people doing computer science out in the real world.”
But the tech workers those students are interacting with, though well meaning, remain the domain of the brogrammers. Will they hire SFUSD graduates with computer science skills when and if they’re ready? Will they be the right “culture fit?”
“There’s definitely a libertarian thread, a free market, red-toothed nature of things [in tech],” Bueno told us. “Talking to people in unguarded moments, that definitely leaks out. You’re not going to convince anyone by singing kumbaya and holding hands.”
But logical tech workers need look no further than the current numbers facing Silicon Valley to see the need to reach beyond their in-groups: 1.2 million new tech jobs will be created by 2020, studies from the US Department of Labor show. At the same time, 40 percent of the United States will be Latino and black by 2040.
When the minority is the majority, the brogrammers may become a dying species.
In their frantic desire to be first with the next big thing and to grab market share by any means necessary, tech companies often act before really thinking through the implications of their ideas. And with its latest idea — facilitating on-the-spot weddings during Pride weekend — rideshare company Uber has finally jumped the shark.
“We’re thankful to be based in San Francisco, a city that recognizes love doesn’t have to look any certain way. In honor of Pride week, we’re celebrating the inclusive idea that love is love with something that lasts a lifetime,” Uber wrote on its blog today in announcing “on-demand weddings.”
That’s right, this Saturday between noon and 6pm, customers using its app can select “UberWEDDING,” the company will send a crew out to marry you and your sweetie on the spot, promising that you’ll be hitched within an hour — or well before your Pride buzz wears off and you regain your senses.
“When your UberWEDDING arrives, we’ll get started right away. You’ll first work with our on-site notary to obtain your marriage license. Once the license is official, the violinist will begin to play and the ceremony will commence!” the company wrote.
So in the name of playing catch-up with Lyft and other competitors — and desperately trying to curry favor with the same-sex marriage crowd in the most superficial and tone-deaf way possible — Uber is turning a big decision that “lasts a lifetime” into an act on par with ordering a pizza when you’re hungry.
NOTE: This post has been updated from an earlier version.
Police at the San Francisco International Airport have been cracking down lately on unauthorized drivers working for Uber and other app-based “rideshare” companies. Drivers have been stopped and warned that it’s not legal to operate at the airport without required permits. But three rideshare companies have banded together to fight back – and now they’re trying to get Mayor Ed Lee to intervene on their behalf.
On April 7, SFO sent out hefty permit application packages to Uber, Lyft, Sidecar, and a couple other “transportation network companies,” as they’re formally called. To operate legally under recently passed state regulations and a new airport pilot program, the TNCs were directed to fill out the applications and obtain operating permits for their drivers.
But Uber, Lyft, and Sidecar have so far refused to fill out the applications, because they don’t like the rules.
Government agencies are supposed to write rules in collaboration with the industry stakeholders who are being regulated, Uber spokesperson Lane Kasselman insisted in an interview with the Bay Guardian, but “that didn’t happen in this process.”
Instead, SFO just wrote up a set of rules for rideshares that are similar to those regulating taxis, without ever consulting rideshare CEOs, Kasselman said. In particular, TNCs disagree with a rule requiring them to turn over names and associated information of all registered TNC drivers. They’re also unhappy with a rule stating that they must provide locational data showing TNCs on airport property.
Those rules are unreasonable due to “privacy concerns,” said Kasselman. Uber issues iPhones to its drivers that use GPS to automatically track the movements of drivers and passengers in real-time, for billing purposes.
Rather than enroll in the pilot program and sort out their concerns from there, the TNCs have decided to turn to Mayor Ed Lee for help.
“Despite the potential impact to thousands of rideshare small business owners, any and all requests on behalf of TNCs to meet with the Airport and discuss the level of detail mandated by the April 7th permit package have been rejected,” representatives from rideshare competitors Uber, Lyft, and Sidecar wrote in a jointly signed May 23 letter to Mayor Lee. “We have been told we cannot have a conversation with the airport, even on clarifying questions, until we complete and sign the application.”
What do they expect the mayor to do about it? “We’re hoping the mayor will broker a meeting,” said Kasselman. “They refuse to meet with us,” he added, referring to SFO.
While SFO is reportedly not on speaking terms with the TNCs (except via police officers issuing warnings to their drivers), SFO has been in touch with the California Public Utilities Commission, to enlist its help with the crackdown.
In a May 9 letter, SFO Director John Martin urged CPUC President Michael Peevey to order TNCs to halt all airport trips until further notice, effective until this permit problem had been cleared up.
Has Uber given any indication to its drivers that they shouldn’t be conducting business at the airport? “I think our drivers are looking to their riders about where they want to go,” Kasselman said when we asked about that. Sounds as if nothing has changed there.
What this seems to be leading up to is a standoff, where the airport is hoping the CPUC will intervene to enforce the rules, while the TNCs are hoping the mayor will intervene to get the rules bent to their liking.
Will Lee step into the fray? Outlook hazy, try again later. (Lee’s office hasn’t responded to requests for comment, but we’ll update this post if we hear back.)
UPDATE: Lee’s spokesperson Christine Falvey just responded to us with this comment:
“Mayor Lee is a strong supporter of the sharing economy because of the benefit it brings to everyday San Francisco residents. Ridesharing is an innovative transportation alternative for many City residents and SFO customers and the mayor is supportive of SFO’s proactive efforts to permit and regulate rideshare companies to ensure access, customer service and public safety. To your questions, Mayor Lee defers transportation policy decisions about airport transportation issues to his highly respected Airport Director John Martin and the Airport Commission.”
While everyone is out partying it up on the long three-day weekend, the dedicated staff here at the Bay Guardian will still take a break from the mayhem to bring you two hours of local music and lively, information talk during our bi-weekly Alternative Ink radio show from 6-8pm Sunday, May 25, on BFF.fm. UPDATE: Listen to the show here.
This week will be our special Holiday Party Edition, with the latest news from the recreational and dance-floor front lines, perhaps with a bit more slurring and profanity than usual — and if you’ve listened to us before, you know that’s really saying something.
Art Director Brooke Ginnard will be laying down the tracks and checking our levels, so to speak, while Editor-in-Chief Steven T. Jones, News Editor Rebecca Bowe, and Staff Writer Joe Fitzgerald Rodriguez provide the inside scoops and witty banter.
At the Share conference that I covered for this week’s Guardian, there were wildly divergent claims for how many vehicles carsharing companies such as City Car Share, Zipcar, and Getaround take off the road. I was also a little skeptical of claims that carsharing dramatically reduces overall driving and greenhouse gas emissions, so I decided to take a deeper look at the issue.
“For every car that is shared, we take seven cars off the road,” Board of Supervisors President David Chiu said during his presentation. The next day Getaround founder and spokesperson Jessica Scorpio cited a study claiming that 32 cars get taken off the road for every shared vehicle.
Luckily, one of the country’s top researchers in this area is right in our backyard. UC Berkeley civil and environmental engineering professor Susan Shaheen heads the school’s Transportation Sustainability Research Center and has been doing peer-reviewed studies on car-sharing for almost 20 years.
Her research, which is consistent with the body of academic research on carsharing from around the world, has found that each shared car takes between nine and 13 other cars off the road, figures that she says are amazingly consistent around the world. That big reduction is because households that have cars tend to get rid of at least one of them when they sign up for carsharing, while car-free households that want access to a car will choose (as Shaheen says is the case for about 25 percent of the people in each group, which adds up to 90,000-130,000 fewer cars on the road nationwide).
But Shaheen told us that she’s highly skeptical of the study showing 32 cars being taken off the road, an industry-sponsored study that was far less rigorous than her work, and whose authors intially wouldn’t share their work with her when she requested it. “It appears to be some kind of idealized number,” Shaheen told me. “I take this stuff pretty seriously.
The part about up to 13 cars being taken off the road has always made sense to me, and it’s certainly a benefit to cities have fewer overall cars on the road, particularly as they use parking spaces on public roads. But I was more skeptical of the claim that overall vehicle miles traveled (VMT) is reduced by carsharing.
Shaheen’s biggest study (“Impact of Carsharing on Vehicle Holdings,” a 2009 study she did with Elliot Martin and Jeffrey Lidicker) found overall VMT was reduced by 27 percent, even though her study frankly admits that about 60 percent of carsharing customers come from car-free households.
How can that be? Doesn’t it seem like driving would increase when you give more people access to something as expensive as an automobile, particularly in a small, congested city like San Francisco that has such a variety of other good transportation options? Shaheen does admit that one study focused specifically on San Francisco did indeed find that overall VMT does increase among carsharing customers in their first year using the service.
But the studies by Shaheen and other researchers show that VMT among carsharing customers drops in subsequent years, often quite dramatically, as people figure out that it’s not really so hard to get around by public transit, bike, or on foot. “When people use carsharing, they use it less and less and less,” Shaheen told us.
And when it comes to air pollution and greenhouse gas emissions, Shaheen said her studies and those of other researchers — including the 2010 “Greenhouse Gas Emission Impacts of Carsharing in North America,” who she and Martin did for the Mineta Transportation Institute at San Jose State University — found dramatic reductions.
“This study contributes to mounting evidence that carsharing is lowering GHG emissions
by providing people with automotive access on an as-needed basis,” the study concludes, with the reduction in VMT compounded by the fact that carsharing encourages people to get rid of older, more polluting cars and instead drive new, more efficient vehicles.
Still, despite all of that evidence, Shaheen admits that it’s tough to say carsharing causes less overall driving in the city of San Francisco, although she thinks it’s likely that it does. Not only is her survey based on self-reported data, but it’s also based on national aggregations that can’t be unpacked to comment on specific locales.
And her study predated rapid and drastic changes on the streets of San Francisco over the last five years, where bike lanes and ridership have been expanded, bikesharing has been introduced (another area that Shaheen has studied in detail), Muni has had its ups and downs, the population has increased, parking costs have increased and morphed, and Lyft and other ridesharing companies have filled the streets with a new category of cars (that latter development is the subject of her latest research project that is now underway).
“Things are changing really rapidly,” she told us.
Each of those variables affect whether someone chooses to drive a car, and they can be constantly shifting. For example, driving might become a far less attractive option as automobile congestion increases, particularly if the city expands the capacity for cyclists and Muni riders.
Shaheen is also looking forward to technological advances in data collection, allowing her to use less self-reported data, something she is already able to do with Bay Area BikeShare: “With bike sharing, they are so transparent. They share all the data, it’s like a party for me.”
So as carsharing and ridesharing companies seeks to bolster their claims to being an unqualified benefit for society, those companies should be willing to share detailed usage data with Shaheen and other independent researchers, which will help us all move beyond the hype to make informed public policy decisions.
“This is important,” Shaheen told us. “I take this very seriously because I want these to be numbers that policymakers can use.”
As I covered the last week’s Share conference for this week’s Guardian, I finally got the chance to poke around the 888 Brannan Street headquarters of Airbnb, the company I’ve been doggedly reporting on and getting stonewalled by over the last year or so. Alas, CEO Brian Chesky and other Airbnb bigwigs were nowhere to be found at this opening reception for the Share conference, but I did do a few other illuminating interviews.
It’s a big, wide open space dotted with weird little nooks designed to look like homes, connoting the company’s shared housing business model. Attendees noshed on rack of lamb and other gourmet yummies served from the company’s top floor cafeteria overlooking SoMa and the freeway. Several Airbnb employees took plates of food back to their workstations in the open office area with an iMac on every desk.
Over dinner, I chatted up Whitney Vosburgh and Jeff Nelder from Brand New Purposes, a Berkeley business that “builds brand communities,” they say. I was interested to hear what they thought of industry’s branding of the whole “sharing economy” concept, but they don’t really see it as a brand.
“I think the sharing economy is a movement,” Nelder said, using a label that would be repeated many times at the conference by its most fervent proponents.
But c’mon, I said, isn’t this also a concept that these companies have been working diligently to brand into the public consciousness, particularly among political leaders, often as a way to disguise the fact that renting isn’t really sharing?
Actually, Vosburgh said, this movement is tapping into something essential that humans need and aren’t getting these days. The idea of sharing is about building connections to one another at a time when social isolation is growing despite our online connections.
“The greatest threat to civilization is social death,” Vosburgh said. “There’s an old-fashioned longing for connection.”
That’s true, but is the commodifying of that need a healthy thing for society? I told them about my concerns that the hype and business models don’t seem to really match the values that are being espoused. But they seemed enamored of the concept and speaking mostly in its buzzwords.
“There’s the buzz and then there’s the reality,” Vosburgh said. “But if it’s not real, there’s no deal.”
Hmm. I decided to move on, and I soon found myself chatting with Lena White, an Airbnb host from Southern California who did seem real, talking positively about how Airbnb became her new profession, but also expressing concerns about its bottom line behaviors.
“I got a personal invitation from Airbnb and I wanted to see this,” White said of the conference and the company’s posh headquarters, adding that the company invited her because “I make them a lot of money.”
And she makes quite a bit of money herself, now that she hosts hundreds of Airbnb visitors a year in two properties that she owns and two that she rents, enough money to quit her job as a high school teacher in Santa Monica.
While she was still teaching, she would spend her summers off traveling and visiting family from her native Russia, “so our beautiful property on Venice Beach was open the whole summer,” and she began to rent it out through Airbnb. “Even when I rent it for really low, I make more than I made as a teacher.”
So she became a full-time Airbnb host. “We wanted to extend it and make some real income,” she told us. “But there were so many questions. We wanted to come up here to get answers.”
She has questions about taxes and local regulations in the three Southern California cities where she has properties (Venice Beach, Marina del Rey, and Palm Springs). “Me, as a host, I would love to be legal,” she said. “I would rather pay that 14 percent [transient occupancy tax] and be in the system. These properties that I rent, even with that 14 percent, I’ll be fine.”
Her main frustrations aren’t with her local officials, but with Airbnb, which she criticizes for failing to offer guidance or mechanisms for legalizing her hosting activities while at the same time marketing her property in deceptive ways that can cause a backlash from her guests.
For example, she said that Airbnb insisted on sending a professional photographer out to shoot her properties, over her objections, and then had a graphic designer redo her profiles to make them more attractive to guests.
“I couldn’t recognize my own property. The bedroom looks ten times bigger than it is,” White told us, noting that some of her guests have felt tricked. “It puts us in a position where is seems like we’re lying. But we’re not lying.”
She is also critical of the Airbnb website for marketing properties as if they are hotel rooms, without being honest that the guests will be sharing someone’s living space.
“Nowhere on their site does it say ‘sharing economy,’ that you’re going into someone’s home,” White said, acknowledging that the company needs to expand its customer base to make itself attractive to investors. “I know they need to sell us to make money.”
But she said that Wall Street’s values are squeezing out those of the sharing economy.
“That’s what scares me and I don’t want it to go that way,” White said, saying that she has sent the company messages complaining about how it markets itself and properties such as hers, but it’s fallen on deaf ears. “I don’t like it, it’s like a hotel and it takes something out of it. I don’t want to be part of a big corporation.”
At the very least, she thinks that Airbnb needs to come clean in the communities where it operates and to start helping its hosts more. BTW, Airbnb once again refused to respond to my request for comment for this post or my article in this week’s paper.
“They’re using all the best brains and minds to sell us, but they don’t tell us what to do,” White said, saying that she’s found kinship with other hosts at the conference, but not answers from the company. “Nobody knows what to do. But I’m learning it’s not my personal problem, lots of people have it.”
Documents obtained by the Bay Guardian show the active role that Airbnb played in helping craft the legislation by David Chiu that would regulate and legalize the company’s activities in San Francisco.
Emails we received through a Sunshine Ordinance request show that Chiu staffers and politically connected lobbyist David Owen, working for Airbnb, worked closely to craft the legislation. The emails, mostly from January 2013, detail conversations between Chiu’s staffer Amy Chan and Owen on how best to craft proposed regulations of “shared” housing spaces.
“Hi David, Take a look and see if this is useful,” begins a Jan. 30, 2013 message from Chan. “I included all the big picture policies and I left out some of the legalese. I’ll call (Deputy City Attorney) Marlena (Byrne) first thing in the morning if I don’t see a draft from her later tonight. And let’s definitely check in tomorrow.”
Whether or not that level of cooperation is acceptable depends where you stand: housing activists who see Chiu’s legislation as weak would no doubt cry foul, but sharing economy advocates may appreciate Chiu reaching out to the company on important legislation.
San Francisco Tenants Union Executive Director Ted Gullicksen was also copied on some of the emails and gave input, but Gullicksen didn’t seem to actually help write the legislation, only offering a few suggestions on proposed language.
Owen’s emails went further. “A slightly more cleaned up, consistent version. Please disregard previous,” Owen wrote to Chan and Byrne on Jan. 28. The title of the attached document was “AdmincodeBJcomments1-28revised,” and contained a draft of Chiu’s legislation with recent edits and revisions which were revealed using the Microsoft Word “track changes” function.
Was it unusual or inappropriate for Airbnb to play such an active role writing the legislation? “Is it common practice for stakeholders to give us feedback directly? Yes,” Chan told us. “We’ve had a number of stakeholders give us feedback.”
She referenced Gullicksen’s emails, and said she also sought input from other stakeholders such as unions and the Hotel Council. But Owen, who was a legislative aide to Chiu’s predecessor, Aaron Peskin, was the only one to make in-document changes and send them back to Chiu’s office.
Chan defended this by pointing out that other groups provided some language suggestions, but admitted that they did not write it directly in the legislation itself, nor was the feedback as extensive and detailed. Among Owen’s edits were small word-choice changes, from “unit” to “hosting platform,” from “will comply” to “is in full compliance,” from “for rent” to “rented.”
Seemingly minor changes were numerous, but other changes were more extensive, although not all were accepted. Owen emailed Chiu with a list of new proposed changes, including changing the number allowable rental days from 90 to 120, “understanding we’re not in full agreement here.” The final legislation kept it at 90 days.
“From the big picture perspective to say we’re only taking direct feedback from one group versus other groups is incorrect,” Chan said. “The direction comes from us, and we make the decision after all.”
Last week’s two-day Share conference in San Francisco came at an auspicious moment for companies that define themselves as part of the new “sharing economy,” which ranges from peer-to-peer services and products brokered online to various cooperative ventures designed to minimize resource consumption.
Most of these growing companies are part of San Francisco’s technology industry, using web-based interfaces to conduct their economic transactions. And some have been making local enemies and headlines recently by disrupting key aspects of urban life, from Airbnb impacting the housing and hotel markets to Lyft and Uber upending the taxi industry.
In fact, the biggest battle brewing at City Hall these days is over widely watched legislation by Board of Supervisors President David Chiu to regulate and legalize the short-term rentals facilitated by Airbnb and similar companies. And state agencies based in San Francisco are now working on regulations that would affect Lyft and its ilk.
So we decided to listen in as disciples of the sharing economy talked among themselves about the challenges and opportunities facing what they call the “new economy,” one that is at an important crossroads that will determine whether the interests of communities or capital guide its evolution.
CHIU DECLARES WAR
When Chiu took the stage at the Share conference, he was joining a sharing economy community that, he said he would probably be a part of today if he hadn’t gone into public service, citing his own experience with tech startups before running for supervisor.
“I believe we are becoming the capital of the sharing economy,” Chiu said, citing examples of San Francisco’s “ethos of sharing” that include the Summer of Love, Burning Man, and the fact that “we are a community that wants to foster trust among strangers to build what I think is one of the most amazing cities in the entire world. But we’re also a city that is expensive. The rent is too damn high.”
Chiu spoke proudly of San Francisco’s environmentalism and his own legislative contributions to that legacy. And he said “we are a city of innovation,” lauding the technology industry. “We understand that keeping up with the Joneses may not be the way to go,” he said. “In fact, sharing with the Joneses, I think, is the better path.”
In Chiu’s formulation, the sharing economy is the synthesis of all of these values and goals. By using computers and smartphones to facilitate the sharing of goods and services, we use less stuff and consume fewer resources, in the process opening up economic opportunities for more people.
He sounded like the most enthusiastic of sharing economy true believers, but with a couple of caveats, acknowledging how those “pesky taxes” on most of these economic transactions go unpaid, and how Airbnb and similar companies have removed apartments from the housing market for local residents.
“Shareable housing has both helped and exacerbated our housing crisis,” Chiu said, describing how he spent more than a year working on legislation that would regulate and legalize short-term housing rentals in San Francisco, where they are now considered illegal “hotel conversions” (see “Into thin air,” 8/6/13, and dozens of other Guardian stories and blog posts on the issue).
Chiu’s legislation would require Airbnb hosts to register with the city, rent out only their primary residence, and occupy that space for at least 275 days per year (which Chiu has said limits Airbnb hosts to just 90 rental nights per year, although critics dispute that interpretation).
“I thought this was a reasonable solution, but two weeks later there was a major press conference attacking it,” Chiu told Share attendees, referring to the coalition of landlord, neighborhood, labor, and affordable housing groups that have come out against the legislation, calling it a blanket rezoning of residential property around the city, pledging an initiative campaign challenging it.
“In part, this is politics. I’m in the midst of a race for the state Assembly this year, my opponent has supporters who have been protesting the Twitter headquarters, throwing rocks at Google commuter shuttles, vomiting on Yahoo buses, referring to tech workers as not real San Franciscans,” Chiu said.
Then Chiu ramped up his rhetoric, equating progressive concerns about the tax breaks and special treatment that Chiu, Mayor Ed Lee, and others have extended to tech companies in San Francisco with a war on the sharing economy and the forced deportation of its workers.
“They are calling for war on you, even though they don’t realize that what you are doing is helping to make sure we’re addressing our income inequality, we’re empowering everyday people by building community and using technology,” Chiu said. “All of you need to get involved in the political debate. You’re busy trying to change the world, but status quo interests are actively trying to ship you to Menlo Park, Oakland, and San Jose.”
In the end, Chiu did urge those starting up companies to “think early about how your paradigm meshes with existing laws and regulations,” but that tepid call for civic responsibility and good corporate citizenship did little to dull his feeding of techie exceptionalism, fearmongering, or appeals to vaguely libertarian values.
AIRBNB’S BOOSTERS
The pep rally atmosphere of the session got pumped up even more by Airbnb’s Douglas Atkin and venture capitalist Ron Conway, both of whom had nothing but glowing praise for the burgeoning industry and its customers, offering none of the caveats put forth by Chiu or the speaker who followed him, White House staffer Greg Nelson, who talked about the challenging access, equity, and regulatory issues facing the industry.
“We at Airbnb and PEERS think the sharing economy is a jolly good thing,” Atkin said in a charming British accent, presenting the sharing economy as an unstoppable and uniformly positive force that is replacing “the old economy, the last economy.”
As an advertising executive in that old economy, “I was the devil,” Atkin said. Now playing the role of savior, he spoke with an evangelical flair as he flashed Airbnb slides and videos, telling the crowd “there’s been a decentralization of wealth, control, and power” because “you can’t do this new economy without creating community.”
It was easy to forget that Atkin represents a company that Wall Street analysts have valued at $10 billion, despite having a business model that is illegal in many cities, causing some hosts to be evicted and others to evict their tenants, while the company and its investors move quickly to cash out with an initial public stock offering.
Among those who would profit handsomely from that IPO is Conway, a billionaire who already got far richer late last year from being “an early investor in Twitter,” as he described himself to the crowd after being introduced as someone who “has really led the way of connecting the tech industry to the public sector.”
Indeed, Conway spoke proudly of funding the politicians who pushed the package of tax breaks for Twitter and other technology companies that followed it into the mid-Market area, most notably Mayor Ed Lee, the biggest beneficiary of Conway’s largesse among San Francisco politicians.
Conway speaks the language of the technology sector that he’s been sponsoring with angel investments since the early days of the last technology boom, making seemingly common sense appeals that hide his conservative ideology, just as he switched his political party registration from Republican to decline-to-state when he became active in San Francisco politics (see “The Plutocrat,” 11/27/12).
But for the careful listener familiar with San Francisco political history, there were some intriguing revelations in his address that were probably lost on the average techie in attendance that morning.
For example, Conway talked about his role following up his advocacy for the Twitter tax break with behind-the-scenes work helping to craft the business tax reform measure in 2012 — which the Controller’s Office analysis found just happened to give the technology companies that Conway was invested in a substantial tax cut.
“Now all the companies enjoy this,” Conway said in reference to Twitter’s tax break, “because Prop. B was passed a year and half ago.”
He also then admitted that Airbnb owes its phenomenal growth to the widespread economic desperation triggered by the financial collapse of 2008 and an economic recovery that still hasn’t reached the average citizen struggling to cover their housing costs.
“Airbnb, for example, would not be here today if there wasn’t an economic crisis and a recession in 2008 in New York, where people had to decide to rent out a room in their house or I get foreclosed on my mortgage. It was that basic. Airbnb wouldn’t be here today if people all over New York didn’t save their mortgages and start using this product. And then by word of mouth it spread around the world because it is so convenient and so practical,” Conway said.
Conway is conservative on financial issues, but more moderate on social issues, and he talked about his advocacy work on gun control and immigration reform. Yet even on those issues, where it is almost exclusively Republicans who are blocking the changes Conway says he wants, he turns the gridlock into an anti-government argument.
“We need term limits in Congress,” the former Republican said, citing a standard conservative trope that got a big applause from the Share conference crowd.
Finally, he elevated the current struggles in San Francisco over the sharing economy into key battles that will shape the future of the new economy.
“This [Airbnb] legislation that David Chiu has proposed, which in the next few months will go to the Board of Supervisors is crucial legislation the whole country will watch,” Conway said, calling for everyone in the crowd to get involved and lobby their supervisors. “David Chiu needs help. This would not pass if it went to a vote today, it wouldn’t come close to passing. So we have to change this. We want to do on the local level what we have to do on the national level: Organize and conquer!”
ACCESS AND EQUITY
After Conway came an intriguing panel discussion about equity and environmental issues with Nikki Silvestri of Green for All, Vien Truong with the Greenlining Institute, and Adam Werbach, the former Sierra Club executive director who started the stuff-sharing company Yertle.
It was moderated by GreenBiz.com editor Joel Makower, who cited information from the previous day’s sessions about how it’s mostly middle class white people who use the sharing economy. “The reality is it’s not that inclusive,” he said, and all his guests agreed and talked about the need to broaden its benefits.
“How do you marry the economy with people?” Truong said as she discussed that challenge. And it’s an urgent need, as Werbach said while answering a question about how the sharing economy could help bring about a new kind of environmentalism aimed at producing and consuming less stuff.
“What’s wrong with the old environmentalism is we’re not achieving our mission. Climate change is what’s wrong with the old environmentalism,” he said.
Werbach cited the goal of replacing about a quarter of the things we now buy with shared goods, even though Amazon and other companies have made it easier than ever to have new products shipped around the world: “It is cheaper, faster, and easier to get something new than to get something used from right next door.”
But Silvestri said the limited participation in the sharing economy makes it difficult to see it as the solution yet, calling for the sharing economy to address access and equity issues, something that marginalized groups would respond to if it was based on true values of sharing.
“Coming from my own background, African Americans had to share because white people wasn’t giving us nothing,” she said. By that same measure, she also said that low-income people feel wary of being taken advantage of by sharing companies and customers: “When you’re in survival mode, you’re wary of people taking from you.”
That’s one reason why Silvestri said that black communities are slower to adopt sharing with strangers, whether it be their homes or cars, something that could be overcome with more personalized outreach: “If I look you in the eye, you might not come take my shit.”
She said that for all the talk at the conference about “community,” the community of strangers that makes up the sharing economy isn’t a true community, something that needs to change to realize the lofty goals that many espouse.
“The sharing economy is new enough that if we figure out this problem early then all of us can actually participate,” Silvestri said.
Werbach agreed, saying the sharing economy has great potential, but only if it makes the right moves now. “This is the beginning of a movement, but the people aren’t here yet,” he said. “We’re at the very beginning of this story.”
He defines the struggle of the moment as one between human and economic values, hoping the sharing economy’s customers will determine its values: “There is an interesting wild west movement now. We need people to do the recruiting so Wall Street doesn’t do the recruiting.”
STRAIGHT TALK
The closing plenary session at Share illustrated the divergent attitudes and goals that mark the sharing economy, in which some members feel a collective responsibility to meet important societal goals, while others seem more interested in just making money and mouthing the rhetoric of sharing.
New York University economics professor Arun Sandararajan, who runs the Collaborative Economy Project that studies and promotes the sharing economy, said it has the potential to develop in ways that will either exacerbate or reduce the income inequality that has become such a growing public policy concern.
Sandararajan expressed hopes that the sharing economy could increase the economic growth rate and lower the wealth gap by broadening access to capital and opportunities for entrepreneurship. But he also argued that the sharing economy has the potential to change the terms of the debate by giving more people access to goods and services than their incomes might otherwise allow.
“We have to go beyond measuring inequality in terms of income and wealth,” he said, offering a conception likely to appeal to the wealthy, but probably not those struggling to get by, even if they were able to get more hand-me-downs through Yerdle or odd jobs through TaskRabbit.
Others on the panel illustrated the dichotomy between do-gooders and profit-seekers more clearly, showing how broadly those in the sharing economy are trying to define it these days.
Jose Quinonez runs the nonprofit Mission Asset Fund, a nonprofit on Valencia Street that assists with peer-to-peer microlending, an amazing program that seemed to have little in common with the investor-backed companies that dominated the agenda. “I didn’t know I was part of the sharing economy until today,” he told the crowd.
In an earlier session, Quinonez called out the self-congratulatory tone by some boosters. “As we talk about the word inclusive it’s very easy to forget the people not invited to the party…We have to make sure we’re not making an exclusive sharing economy.”
Next came Denise Cheng, an academic who has been studying the sharing economy for the MIT Center for Civic Media, and she had perhaps the most poignant and insightful answer to the question the conference posed about what will best catalyze the sharing economy.
“Straight talk will catalyze the sharing economy,” Cheng said.
She discussed how the broad label of the sharing economy gets claimed by everyone from small idealists who truly want to promote the idea of sharing to self-interested corporations who use the label for political cover and really mean “renting.”
“When we say sharing economy, we actually mean a lot of things,” she said. “Companies that adopt the sharing economy label are not necessarily adopting the values of the sharing economy.”
Compounding that deception is the fact that companies like Lyft, Uber, and Airbnb are profiting from business models that are often illegal on the local level, but doing little to help drivers or hosts who get in trouble with local authorities: “When someone has to answer on the local level, it’s the providers who are on the front line.”
There was a very different tone and message that came from the subsequent guests to join the panel, who shamelessly promoted their companies and didn’t seem to take heed of Cheng’s call for straight talk.
“Sharing cars is how we can catalyze the sharing economy,” Jessica Scorpio, wearing a T-shirt of the car-sharing company she helped found, Getaround. She called car-sharing “a gateway drug to the sharing economy,” noting that car-sharing customers often go on to use other sharing economy products and services.
“Sharing cars is transforming the fundamentals of our transportation system,” Scorpio said, claiming that each shared car takes up to 32 cars off the road, a figure that doesn’t square with the body of peer-reviewed research on the subject, which places the actual number at nine to 13 cars.
Hyperbole and exaggeration are common among the biggest boosters of sharing economy companies, as are the sins of omission and misdirection — all of which are perhaps what prompted Chang’s “straight talk” prescription.
Sunil Paul, co-founder and CEO of the ridesharing company Sidecar, gave a long and detailed presentation on the supposedly ambiguous definition of “commercial transactions,” calling for what he called a “safe harbor” for sharing activities, without once mentioning the word that he was actually talking about and dancing around: taxes.
“There are certain activities that should be beyond the commercial reach of government,” Paul said, describing his clients who drive customers around the city like taxi drivers less than full time. “We need a safe harbor for sharing that protects these activities from being considered commercial.”
Paul said that Sidecar and other sharing economy companies have “blurred the line between what is personal and what is commercial,” comparing the activities his company facilitates to carpooling and arguing that people should be able to cover the annual cost of driving, say around $10,000, without it being considered a commercial activity (i.e. a taxable transaction).
“As long as you don’t make a profit from it, it’s not a commercial transaction,” Paul said, redefining the very concept of commercial.
And remember, this is a company that is already having a profound impact on the regulated taxi industry — of which Sandararajan said, “I think the taxi service as we know it will largely cease to exist in a few years” — just as other sharing economy companies steal market share from other industries, as Airbnb is doing to the hotel industry, also while avoiding taxes on those transactions.
FROM TALK TO ACTION
“One of the things we like to do in the sharing economy is talk about the sharing economy — a lot!” Jesse Biroscak, an Airbnb host and founder of BayShare, said during a session at Share entitled “Shareable Cities: From Concept to Action.”
It was the first thing I heard upon arriving at the conference, but I already knew it was true after covering this movement over the last couple years, a point that was emphasized strongly by the excited evangelism that I heard again and again over the next 24 hours.
But for all the talk that those in the so-called sharing economy do about the sharing economy, there is often a deliberate vagueness to it that tries to mask its many contradictions and paradoxes.
Its biggest proponents are anxious to go big — defined by a strange mix of idealism (for environmentalism, libertarianism, economic and social equity, and an odd and often contradictory assortment of other goals) and the desire to cash in on the new gold rush — before the opportunities slip away (thanks to competitors, government regulators, or an economic downturn).
“I’m tired of talking about it, I want to do things,” said Biroscak, a regular Airbnb host from San Francisco, without ever really defining the things he wants to do.
BayShare also seems to have a vagueness of purpose, defining itself on its slick website as “an organization whose mission is to make the Bay Area the best place on the planet for sharing. As this movement grows, BayShare will explore how city stakeholders and the sharing community can work together to help the Sharing Economy flourish in the Bay Area to benefit the city, businesses, and communities. The organization looks to be a resource for the Mayor’s Working Group on the Sharing Economy.”
But that working group, which Mayor Ed Lee announced when Treasurer Jose Cisneros was holding hearings two years ago to determine whether Airbnb and other companies should pay the city’s transient occupancy tax, never actually convened. It was simply a stall tactic that evaporated after Cisneros ruled that the tax was indeed owed.
Still, BayShare lists many of the biggest sharing economy companies among its “members,” including Airbnb, RelayRides, Lyft, Yerdle, Vayable, City Car Share, Suppershare, and Get My Boat. Biroscak described the advocacy work that he and BayShare do, work that he urged all of the attendees to get involved with, so that public agencies understand and support this growing economic sector.
“This is called lobbying, and that’s okay. Lobbying is not a dirty word,” Biroscak told the crowd.
Lobbying may not be a dirty word, but it is a regulated activity in San Francisco and other cities, and neither Biroscak nor BayShare are registered lobbyists with the San Francisco Ethics Commission, which they should be if they are indeed lobbying.
Biroscak even boasted of a partnership with the San Francisco Department of Emergency Management that BayShare secured last year on behalf of its member companies to provide their services to local residents in the event of an emergency.
“The sharing economy was born here, and partnering with BayShare, we are committed to ensuring that San Francisco supports this emerging sector’s success and nurturing even greater civic involvement,” Mayor Ed Lee said last June in a press release announcing the partnership, while Chiu said, “I’m confident that BayShare will improve the communication between this emerging sector and local government as ‘collaborative consumption’ evolves and grows in San Francisco.”
But when we reached Biroscak by phone, he said that BayShare doesn’t really have any agreements with the city, and that it doesn’t actually represent its “member” companies or get any money from them. And he said BayShare “definitely does not consider itself a lobbying organization,” instead defining it more vaguely as “a convener and facilitator.”
But as a self-styled spokesperson for the movement — “I try to speak for the San Francisco sharing economy as an industry,” he said at the conference — Biroscak issued a call to action to a crowd that mostly seemed to be puttering on their electronic devices and only half paying attention: “We need to stand up for what we want, but we want to do it in a coordinated way.”
Joe Fitzgerald Rodriguez contributed to this report.
At last week’s Board of Supervisors meeting, Mayor Ed Lee showed up for Question Time, that scintillating moment when the city’s top-ranking official reads off a written response to a pre-submitted question. Despite knowing in advance that District 1 Sup. Eric Mar would ask him how much he was considering raising the minimum wage, Lee still didn’t fully answer.
“Mayor Lee, San Francisco is now the city with the fastest-growing gap between rich and poor … Some labor groups in the City have proposed to increase the city’s minimum wage to $15 an hour,” Mar noted, referencing a ballot initiative led by Service Employees International Union Local 1021 to ask voters to approve that increase. “Can you share what level you are currently considering increasing the minimum wage to and how you plan on mitigating impacts on small businesses and nonprofits?”
But Lee did not respond by naming a concrete dollar amount, instead saying he hoped all stakeholders could “work together” to arrive at a mutually agreeable figure. “I am, along with Sup. [Jane] Kim and others, working closely with labor unions, advocates, business leaders, and nonprofit representatives to craft one consensus measure that we can put on the ballot this November,” Lee said. “I am completely committed to increasing it this year, and I hope we can all work together to support one consensus measure.”
OAKLAND FAST FOOD WORKERS JOIN INTERNATIONAL STRIKE
Hundreds of Bay Area fast food workers joined in protests against McDonald’s and other chains that exploit low-paid workers as part of a day of action that spanned 150 US cities and 33 countries across the world.
In Oakland, a march targeted a McDonald’s on East 12th Street and a Burger King at 13th and Broadway, among other locations. KFC worker Jose Martinez helped organize a similar march in Oakland last year. Since then, he said, his bosses have shown little inclination to help workers.
“Nothing has changed,” Martinez said. “I’ve been working there four years, and I haven’t had a raise — $8.25 is nothing, I can’t live on that.”
Martinez is a student, and says the pay isn’t enough to cover basic needs while he focuses on his studies.
Meanwhile, other workers rely on fast food restaurant jobs to support their families.
“I haven’t had a raise in three years,” a McDonald’s worker who identified herself as Markeisha told us just after she went out on strike from an Oakland McDonald’s in December. Markeisha said she’s the sole provider for her two children.
Fast food workers also contend they are a vulnerable workforce. Wage theft, low salaries, slashed hours, and punitive measures for speaking out are among the grievances they allege against chains including McDonald’s, Burger King, and Taco Bell.
“One thing we found when talking to fast food workers was wage theft issues were high,” Service Employees International Union Local 1021 Political Director Chris Daly told the Guardian. “When you’re making $8-11 an hour, a couple shifts can be the difference between paying the rent or not.”
APPEAL FILED IN SUNDAY METER DEBATE
Transit advocacy groups filed an appeal May 14, challenging a controversial vote by the San Francisco Municipal Transportation Agency’s Board of Directors last month to end paid Sunday meters.
The appeal argues that the paid Sunday meters program was highly beneficial, and charges that the decision to terminate it was made without adequate review under the California Environmental Quality Act.
It was filed by transit groups Livable City, The San Francisco Transit Riders Union, and an individual, Mario Tanev. It will now go to the Board of Supervisors, for a vote to approve or deny review under CEQA.
“The enforcement of parking meters on Sunday in San Francisco has been doing exactly what it was designed to do,” the appeal argues, “reduce traffic congestion, reduce greenhouse gas emissions, increase parking availability, and increase revenues in the City and County of San Francisco.”
SFMTA spokesperson Paul Rose told the Guardian, “We’ll take a look at the appeal, but it wouldn’t be appropriate to comment at this time.”
The Sunday meters program brought in $11 million, more than enough to cover proposed programs such as free Muni for seniors and disabilities.
At the meeting where the program was shot down, many seniors told the SFMTA board that the rising cost of living in San Francisco, combined with declining federal assistance and retirement funds, are making it tough to afford basic needs such as transportation on Muni.
CHIU ACCUSES CAMPOS OF STARTING A WAR ON TECH
Speaking to an audience of tech enthusiasts at last week’s Share conference, Board of Supervisors President and California Assembly candidate David Chiu aggressively courted votes — by accusing his opponent, Sup. David Campos, of declaring war on the tech sector.
“They are calling for a war on you, even though they don’t realize you are addressing our income inequality,” Chiu said of Campos and his progressive allies.
Chiu was the only elected official invited to address this $795-per-person conference on the “sharing economy,” the term adopted by companies that facilitate peer-to-peer online economic transactions.
Before the session began, meanwhile, a Chiu campaign worker stood outside the conference entrance to hand out photocopies of an anonymous May 11 hit piece, titled “3 Things Every Tech Worker Should Know About Supervisors David Campos.”
Also speaking at that session was venture capitalist Ron Conway, a key investor supporting many of these companies and a financial backer of Mayor Ed Lee. Conway’s spouse, Gayle, chairs an independent expenditure committee that funded a mailer attacking Campos for voting against the ouster of Sheriff Ross Mirkarimi in October of 2012. At that time, Mirkarimi faced possible removal for official misconduct, following charges of domestic abuse stemming from an incident in which Mirkarimi grabbed his wife Eliana Lopez’s arm and left a bruise. The mailer features a photo depicting the mother of a murder victim killed by a domestic abuser. The vote, legally speaking, was held to decide whether the charges rose to the level of official misconduct.
“For someone who says he tries to bring people together, David Chiu is trying to scare people into thinking there’s a war going on. I don’t know where that comes from,” Campos said in response. “The idea that we have a war on the techies and the tech industry is ridiculous.”
Instead, he said he and progressive allies have been trying to address the eviction and displacement crisis that is connected to the tax breaks and other special treatment that Chiu, Mayor Lee, and supporters delivered to tech companies.
“Asking that they pay their fair share doesn’t mean we’re against them,” Campos said. He added: “It seems that David Chiu and Ron Conway are joined at the hip.”
Global capitalism is a wasteful system that produces way too much stuff and uses too much energy shipping that stuff all over world, causing problems ranging from global warming and pollution to trade deficits and exploitation of workers. It certainly makes sense to facilitate more local economic transactions, include peer-to-peer transfers of services, goods, and other resources.
So there is real potential for social and environmental good in the so-called sharing economy that we again cover in this issue (see “Renting isn’t sharing”). But there are also important concerns about equity, access, honesty, and transparency that are being raised within the movement and by its outside critics.
The sharing economy is at a crucial crossroads right now, facing rising demands for government regulation. Yet the greedy self-interest of wealthy investors and the young company executives they fund is threatening to subvert what really could develop into an important movement.
So it’s time for Airbnb, Uber, Lyft, and other local companies to finally come clean with San Francisco and other cities in which they operate, pay their taxes, take responsibility for their impacts, and engage in an honest public dialogue about how to promote what’s best about their companies and minimize the harm they’re doing.
It’s been over two years since the San Francisco Tax Collector’s Office ruled that Airbnb should be paying the city’s transient occupancy tax on the short-term rentals it facilitates, which the company simply refused to do, abetted by Mayor Ed Lee and other powerful supporters.
That’s bad corporate behavior that is an insult to the values espoused within the sharing economy. Now that Airbnb has legislation it helped craft that would legalize and regulate its activities, it has finally agreed to start collecting and paying that tax sometime this summer.
That’s not good enough. Airbnb should pay its back taxes — at least going back two years, or even further if it wants to be a good corporate citizen — before City Hall considers legalizing its disruptions to the local housing market. All the players involved should also be open to a full and open discussion about short-term rentals this summer, with the possibility of substantial changes in the proposed legislation.
The sharing economy genie is out of the bottle and it’s not reasonable to think San Francisco can stop home- or ride-sharing at this point. There are too many people that value these services and they do have benefits. But it’s time to have a more full and honest debate over reasonable regulations that will serve as a model for other cities.
Learning to share and make better use of limited resources is an important goal that could indeed lead to new economic models, but the perversion of that term by greedy capitalists such as Ron Conway is an insult to the shared progressive values of San Francisco.
San Francisco’s “sharing economy” may be on its way to getting “catalyzed” thanks to this week’s Share Conference, but ridesharing companies also are getting called out – by the director of San Francisco International Airport, for operating illegally.
In a May 9 letter to California Public Utilities Commission President Michael Peevey, SFO Director John Martin requested assistance in enforcing new rules governing Internet-based companies such as Lyft, Uber, and SideCar.
Known in regulatory parlance as TNCs, or transportation network companies, these “ridesharing” businesses are mandated by a CPUC decision to acquire permits before picking up or dropping off airport passengers. The companies provide apps and online payment systems allowing drivers to earn cash driving people around.
In early April, SFO sent out permit application packets to Lyft, Uber, Sidecar, Summon (formerly known as InstaCab) and Wingz (formerly known as Tickengo). Included in the packets “was a letter reminding the TNCs that operating on the airport’s roadways without a permit violates” the state requirement, the letter notes.
But more than a month later, “none of these TNCs have applied for an airport permit,” Martin informed Peevey, “yet they continue to conduct commercial business on the airport’s roadways.”
From April 16 to May 5, police based at the airport apparently performed a TNC crackdown, issuing warnings to 110 drivers for unpermitted operation. By May 15, the number of drivers to receive warnings from law enforcement had climbed above 150, according to SFO spokesperson Doug Yakel.
“Several drivers did not have proof of insurance,” Martin wrote. “One did not have a driver’s license.” Of the 110 who were discovered to be operating illegally, 101 were driving for UberX.
“Eighty percent of the Uber-x drivers did not have trade dress [logos marking them as TNCs] on their vehicles,” as required under the CPUC ruling, Martin wrote. “One Uber-x driver reportedly asked to an officer, ‘why should I advertise for them?’ Four of the Uber-x drivers had no proof of insurance.”
“It’s not the drivers, per se,” Yakel said. “It’s up to the companies they are driving for to submit the permit. We want the TNCs to communicate to their drivers.” He noted that the permitting would begin as a pilot program.
The Bay Guardian phoned Uber for comment, and received this statement from spokesperson Lane Kasselman: “Although SFO’s proposed pilot program raises some concerns about rider and driver privacy, we look forward to working with airport leadership to resolve these issues and ensure that uberX driver partners are able to serve Bay Area residents wherever and whenever they need a ride.”
The TNCs are edging into the market of taxicabs, limousines, and other ground transportation vehicles that have traditionally operated at the airport. While Yakel noted that SFO is “very open to new forms of ground transportation,” and interested in helping the companies to comply with state and airport permitting regulations, he characterized illegal TNC operation as a safety concern.
He also said the companies should be operating “on a level playing field” with existing transportation providers.
That means displaying an airport-issued decal in car windows, offering proof that the drivers are covered by TNC-provided insurance as long as they’re on airport property, and paying a trip fee of $3.75. “Every other form of transportation at SFO that’s authorized … is subject to the same standard,” Yakel said.
In his letter, Martin called on the CPUC to “engage in enforcement activities” and to issue a notice to Uber, Lyft, SideCar and the others to stop allowing rides to the airport until airport permits have been issued. He also asked that the CPUC require TNCs to post prominent notices on their websites, informing drivers and customers that there would be no more rides to the airport until further notice.
Airport administrators are scheduled to meet with the CPUC next month for further discussion.
Board of Supervisors President David Chiu and his campaign for the California Assembly aggressively courted votes and support from the technology community this morning [Wed/14] at the two-day Share conference, accusing opponent David Campos and his progressive allies of “calling for a war on you.”
Chiu spoke at the Opening Plenary session, the only elected official invited to address this $795 per person conference on the “sharing economy,” the term adopted by Airbnb, Lyft, TaskRabbit, Yerdle, Uber, and the rapidly growing list of companies that facilitate peer-to-peer online economic transactions.
Conway called on attendees to lobby their supervisors to support current legislation by Chiu to legalize and regulate Airbnb’s business model in San Francisco. “This legislation by David Chiu is crucial, legislation the whole country will be watching,” Conway said. “David Chiu needs your help. This would not pass if it came to a vote today.”
Chiu spent more than a year crafting his Airbnb legislation, which was greeted with mixed reactions last month, including being slammed by a coalition that has pledged to put a rival measure on the November ballot, a campaign that Chiu today implied Campos was part of (Campos told us he has not taken a position on either the Chiu legislation or the proposed ballot measure).
“I thought it was a reasonable solution, but two weeks later there was a press conference attacking it,” Chiu told Share attendees, ramping his rhetoric in describing “people throwing rocks at Google commuter shuttles” and other alleged local hostilities directed at the tech industry.
“They are calling for a war on you, even though they don’t realize that what you are doing is helping to make sure we’re addressing our income inequality, we’re empowering everyday people by building community and using technology,” Chiu said.
Before the session began, a Chiu campaign worker stood outside the conferene entrance at the Marine Memorial Building handing out photocopies of an anonymous May 11 hit piece on the new blog called SF Techies Who Vote entitled “3 Things Every Tech Worker Should Know about Supervisor David Campos.”
Campos told the Guardian that the attacks, including the Conway-funded mailer that just hit mailboxes today, shows that Chiu and his supporters are desperate with just 20 days until the primary election, but that Chiu’s tone belies his claims to focus on civility and getting past the divisive political rhetoric of old.
“For someone who says he tries to bring people together, David Chiu is trying to scare people into thinking there’s a war going on. I don’t know where that comes from,” Campos said. “The idea that we have a war on the techies and the tech industry is ridiculous.”
Instead, Campos said that he and his progressive allies have been trying to address the eviction and displacement crisis that is connected to the tax breaks and other special treatment that Chiu, Mayor Ed Lee, Conway, and their allies have given to big technology companies.
“Asking that they pay their fair share doesn’t mean we’re against them,” Campos said, noting how overtly Chiu has recently been casting his political fortunes with Lee, Conway, and their economic policies. “It seems that David Chiu and Ron Conway are joined at the hip.”
We at the Guardian will have much more coverage for the Share conference and its claims to be the “new economy” that will change everything — including some revealing interviews that I did at last night’s reception at the Airbnb headquarters — in next week’s Bay Guardian.
With thousands of San Francisco apartments converted to rooms for tourists by a company that has flagrantly flouted city laws and a ruling that it should have been collecting and paying the city’s transient occupany tax, Airbnb and its ilk create problems the city must finally address. And after being the only local journalist regularly highlighting this issue for the last two years, it’s good to see people finally paying attention.
But this challenging policy and political issue — how does San Francisco put the Airbnb genie back in the bottle with effective and enforceable limits? — has quickly turned into a circus driven by self-serving stances, big egos, unrealistic grandstanding, half-baked solutions, and hidden political agendas, as we’ve learned by talking to some of the players involved.
So let me walk you through this story from the beginning, including new revelations on the behind-the-scenes machinations in recent weeks, which may have as much to do with Chiu’s race against David Campos for the Assembly District 17 as it does with Airbnb, even though Campos doesn’t appear to have had anything to do with it.
Two years, when I wrote a Guardian cover story entitled “The problem with the sharing economy,” which included information about how most Airbnb hosts were violating city laws against short-term rentals, most of the concerns about Airbnb focused on how it wasn’t paying the city’s transient occupany tax, although Ted Gullicksen and the San Francisco Tenants Union also raised the issue of landlords using the service to remove apartments from the market.
After the Tax Collectors Office ruled that Airbnb and its ilk must collect and pay the TOT, the issue died down until a year later when I discovered Airbnb was simply ignoring the ruling and an annual tax obligation of about $2 million. Around that same time, Chiu started working on legislation to legalize and regulate short-term rentals, but it dragged on and on for more than a year — during which time complaints to the city increased.
But the Mayor’s Office continued to ignore the issue, at least partially because Mayor Ed Lee shared a political benefactor with the company in venture capitalist Ron Conway, and city departments under Lee’s control issued few notices of violation against short-term rentals.
“The enforcement has been lax because there are political forces in Room 200 that do not want that law enforced,” Chiu predecessor Aaron Peskin said at this morning’s rally against the legislation and for stronger city enforcement.
Meanwhile, the City Attorney’s Office was preparing to file lawsuits against a couple of the most egregious short-term landlords and Airbnb began to clean up some of it intransigence, included finally agreeing to pay its taxes starting this summer, so Chiu decided to move quickly to introduce the regulatory legislation to capture the media moment.
“He dusted off a half-finished draft from the last meeting,” was how Gullicksen, who had been involved with crafting the legislation from the beginning, put it to us today.
But Gullicksen is even more critical of this week’s response to legislation that he largely supports, calling for just some minor cleanups. Two weeks ago, during a meeting of the San Francisco Anti-Displacement Coalition, longtime progressive housing activist Calvin Welch suddenly announced that he had crafted competing legislation aimed for the November ballot.
“Calvin said he’d be doing this ballot measure, which is the first that any of us had heard about it,” Gullicksen told us, noting that Welch has resisted working with tenant advocates to cure what Gullicksen said are some extremely problematic aspects of his proposed ballot measure.
Among its problems is it would create a publicly available list of tenants who register to do short-term rentals, which landlords would use to evict such tenants (“He doesn’t really want to protect tenants, he just wants to ban short-term rentals,” Gullicksen said); and with encouraging would-be hosts to rezone their properties commercial or seek a conditional use permit, which could end up diminishing the affordable housing supply.
“The problem with that is even if Planning [Department] gives conditional use approval, its still violates the apartment conversion law,” Gullicksen told us, noting how they violate both housing and planning codes. “The conversion is already illegal twice, and we don’t need to make it illegal again, we just need enforcement.”
Welch hasn’t returned a Guardian call seeking a response to such points, but at this morning’s rally, he issued a full-throated condemnation of short-term rentals and what he says is Chiu’s broad attempt to legalize them.
“It is a backdoor rezoning of every residential neighborhood in San Francisco, and it undermines years of housing advocacy work in San Francisco,” Welch said, accusing Chiu of an “arrogant disregard of established land use procedure in San Francisco.”
But Chiu aide Judson True disputes the characterization that this is a blanket rezoning on residential properties, noting how it limits rentals to just 90 days per year, creates a vehicle for enforcing a law that has been ignored, and that it reins in a practice that has become widespead.
“The idea that the people here don’t want to participate in the legislative process is disturbing,” True told us at this morning’s rally, where he noted a significant part of the crowd were landlords, including one woman who vocally called for means testing for rent control, which tenant groups have long resisted.
Indeed, the unlikely coalition opposing the Chiu legislation includes Janan New of the San Francisco Apartment Association, who said the short-term rentals “will only exacerbate our housing crisis. The practice is detrimental to our existing rent control law.”
Other speakers at the morning rally included UNITE-HERE head Mike Casey, who said competition from Airbnb is hurting hotels and hotel workers, who are being displaced from the city; AIDS Housing Alliance head Brian Basinger, who noted that vulnerable people are being forced from their homes and “the main driver of that is evictions and a lot of those evictions are being done to facilitate illegal hotel conversions;” and Peskin, who said, “The city has to step up enforcement action.”
A couple hours later, Airbnb hosts and other advocates of short-term rentals held a City Hall rally to call for changes in city law to allow short-term rentals with few restrictions. The event was organized partly by Airbnb itself, which sent a message to its customers saying, “At this time, it’s essential that lawmakers hear from not only San Francisco residents, but also from people all over the world who want safe and affordable options when they visit our great city. I hope you’ll make your voice heard now.”
With strong positions on both sides of the question about how to regulate Airbnb and other short-term rentals, it might seem like an issue tailor-made for Chiu and his propensity for getting compromises approved. But it’s also possible that this issue will end up on the fall ballot no matter what, partly because the Campos-Chiu contest will also be on that ballot and it could highlight any missteps that Chiu makes on the issue.
“I do think the Campos-Chiu race may be playing into this,” Gullicksen said.
In fact, he said that the SFTU has tentatively decided to withhold its endorsement in that race and wait until the fall runoff election to endorse, after this legislative fight plays out, which he said Welch and other Campos supporters may be unhappy about. In the meantime, Gullicksen said he’s focused on creating the strongest legislation possible by strengthening the enforcement provisions in Chiu’s legislation and borrowing parts of Welch’s
“What we really want to do is merge the two, so to speak,” Gullicksen said, although he was more critical of Welch’s version, saying “has been kind of rushed, which is problematic” and the “he doesn’t really want to protect tenants, he just wants to ban short-term rentals.”
Peskin told us he had nothing to do with Welch’s plan to introduce a fall ballot measure. Welch told us that he will pursue getting it placed on the ballot by the supervisors, or that he’ll do it by initiative if necessary, but that he does intend to pursue it if Chiu doesn’t drop his legislation, which True says he won’t do.
“It’s a very real possibility, one might even say a probability,” Welch said when asked whether he intends to take him complaints all the way to the ballot. Asked to characterize the main thrust of what it does, he said, “All the measure does is reinstate existing law.”
Then we end up back where we started a year ago, but with some high-profile elections behind us, with a few lonely voices urging the city to enforce the law and put the Airbnb genie back into the bottle.
[UPDATE: Welch got back to us and took issue with Gullicksen’s characterization that he only learned about the legislation a couple weeks ago and wasn’t given a chance to help shape it: “I have no idea why Ted wants to pretend I’m playing hide the ball on this measure.” Welch also said that other tenants advocates support his effort but that “people do not want to break unity with Ted, it’s that simple.”
Welch also said that he directly asked Chiu whether he would reconsider changing the law to allow short-term rentals on residential properties, which Welch considers the starting point for any possible legislative compromise, and Chiu refused. “Everything else is just window dressing. That is the 900-pound gorilla,” Welch said, emphasizing that any relaxing of short-term rentals restrictions on residential property hurts the city.
As for what he hopes to gain with a measure that would reinforce the ban on short-term rentals, rather than trying to legalize and regulate them, Welch told us, “I want to force Airbnb and the other platforms to come forward with a proposal.”]
Who is Raymond “Shrimp Boy” Chow? In the 137-page federal complaint detailing charges that led to the high-profile arrest of Sen. Leland Yee, Chow, and 24 others two weeks ago (see “Crime and politics,” April 1), Chow is described as the powerful “Dragonhead” of an ancient Chinese organized crime syndicate, “overseeing a vast criminal enterprise involved in drugs, guns, prostitution, protection rackets, moving stolen booze and cigarettes, and money laundering,” as we reported at the time.
Not so, famed defense attorney Tony Serra told a crowd of reporters at Pier 5 Law Offices in San Francisco’s North Beach, where he and fellow attorneys were joined by supporters wearing red tees bearing the slogan “Free Shrimp Boy” last week.
Attorneys Serra and Curtis Briggs described a five-year federal operation to target Chow and ensnare him in wrongdoing, insisting he had wanted no part in criminal activity. Serra said agents had “stuffed money into his pocket” despite his protests, and noted that his legal team was representing Chow pro bono because he has no money. (Rebecca Bowe)
AIRBNB COMES CLEAN
Airbnb came clean last week, sending out new terms of service drafted April 7 that customers must agree to before conducting further business starting April 30. The new agreements seem intended to address longstanding issues in San Francisco that the Guardian first raised in May 2012 (“The problem with the sharing economy,” 5/1/12), and have been recently joined by other journalists in spelling out and highlighting.
In the opening of its new Terms of Service, Airbnb wrote (in all caps): “IN PARTICULAR, HOSTS SHOULD UNDERSTAND HOW THE LAWS WORK IN THEIR RESPECTIVE CITIES. SOME CITIES HAVE LAWS THAT RESTRICT THEIR ABILITY TO HOST PAYING GUESTS FOR SHORT PERIODS. THESE LAWS ARE OFTEN PART OF A CITY’S ZONING OR ADMINISTRATIVE CODES. IN MANY CITIES, HOSTS MUST REGISTER, GET A PERMIT, OR OBTAIN A LICENSE BEFORE LISTING A PROPERTY OR ACCEPTING GUESTS. CERTAIN TYPES OF SHORT-TERM BOOKINGS MAY BE PROHIBITED ALTOGETHER. LOCAL GOVERNMENTS VARY GREATLY IN HOW THEY ENFORCE THESE LAWS. PENALTIES MAY INCLUDE FINES OR OTHER ENFORCEMENT. HOSTS SHOULD REVIEW LOCAL LAWS BEFORE LISTING A SPACE ON AIRBNB.”
It seems like a good first step. Next we’ll see whether the company follows through with paying its local taxes and working with the city on legislation to legalize more of its business model in San Francisco. (Steven T. Jones)
NEW RIDESHARE REGULATIONS PROPOSED
Rideshare companies must provide their drivers with insurance. That was the gist of a public letter released last week by the California Insurance Commission, addressed to the California Public Utilities Commission, which regulates transportation network companies such as Uber, Lyft, and Sidecar.
“While smart phone technology is bringing new business opportunities to the marketplace and new transportation choices for consumers, our investigative hearing revealed serious insurance gaps in the current business model of Transportation Network Companies such as Uber, Lyft and Sidecar,” Insurance Commissioner David Jones wrote in a statement to press. “As long as TNCs are encouraging non-professional drivers to use their personal vehicles to drive passengers for a profit, a risk which personal automobile insurance simply does not cover, TNCs should bear the burden of making sure that insurance is provided. Our recommendations will ensure there is insurance protection for passengers, drivers and pedestrians.”
Whether the TNCs should provide insurance has been the subject of intense debate in state and local governments over the past year. The recommendations to the CPUC come specifically out of a hearing on TNC insurance that Jones held March 21. The Guardian also wrote an editorial, “Sharing economy should share its wealth,” calling for rideshares to provide insurance, not only because it’s unfair competition (insurance costs money to provide, a burden taxi companies carry but not TNCs), but because people and TNC drivers in accidents were left for broke, lacking inadequate insurance. (Joe Fitzgerald Rodriguez)
ELLIS ACT REFORM ADVANCES
Sen. Mark Leno’s Senate Bill 1439 — which would protect rent-controlled housing in San Francisco by amending the Ellis Act, including making property owners wait at least five years after buying a property to evict tenants under the act — cleared its first legislative hurdle last week.
The Senate Transportation and Housing Committee passed the measure on a 6-4 vote, and it heads to the Senate Judiciary Committee next. The bill has strong support in San Francisco, from progressive constituencies through Mayor Ed Lee to support by leaders in the business community and tech world.
Yet the measure faces a tough road in Sacramento, where the landlord lobby and other conservative interests oppose it. “A bill that could strip San Francisco landlords of their freedom to leave the rental housing business heads to a key Senate committee next month,” the California Apartment Association wrote last month in an alert to its members.
But as Tenants Together demonstrated in a recent study of how the Ellis Act has been used in San Francisco since its passage in 1985, a legislative reaction to a California Supreme Court case upholding rent control laws, the legislation has largely been a tool used by real estate speculators to clear rent-controlled buildings of tenants. The study found that 51 percent of Ellis Act evictions took place within a year of the property being purchased, 68 percent within the first five years, and 30 percent of Ellis Act evictions were from serial evictors, often by businesses specializing in flipping properties for profit.
“California’s Ellis Act was specifically designed to allow legitimate landlords a way out of the rental business, but in San Francisco this state law is being abused by speculators who never intend to be landlords,” Leno said today in a prepared statement. “As a result, longtime tenants, many of them seniors, disabled people, and low-income families, are being uprooted from their homes and communities. The five-year holding period in my bill would prevent these devastating evictions from forever changing the face of our diverse city.” (Steven T. Jones)
FROM GOOGLE BUS TO GOOGLER’S HOME
The morning of April 11 kicked off with yet another Google bus blockade in San Francisco’s Mission District, only this time housing activists said a Google employee is directly to blame for displacing residents.
The blockade, which took place at 18th and Dolores streets, was short-lived but featured speeches by tenants facing eviction, as well as a giant cardboard cutout depicting 812 Guerrero, a seven-unit building where tenants are facing eviction under the Ellis Act.
The property owner is Jack Halprin, a lawyer who is the head of eDiscovery, Enterprise for Google. He moved into one of the units after purchasing the building two years ago and served eviction notices on Feb. 26, according to tenant Claudia Triado, a third grade teacher at Fairmount Elementary in San Francisco who lives there with her 2-year-old son.
The Bay Guardian left a voice message for Halprin requesting comment, but got no reply
After the bus blockade, activists proceeded to 812 Guerrero and staged a short rally on the front steps.
Evan Wolkenstein, who teaches Jewish literature at the Jewish Community High School of the Bay, said he’s lived at 812 Guerrero for eight years. Other tenants facing eviction from the property include an artist and a disabled person, he added. During the Google bus blockade, minutes before police officers arrived to clear a path for the bus by urging protesters onto the sidewalk, Wolkenstein gave a speech about the overall impact the tech sector is having on San Francisco. (Rebecca Bowe)
After more than a year in development, Board of Supervisors President David Chiu is introducting legislation today to legalize and regulate the short-term housing rentals facilitated by Airbnb and other online companies. But the legislation won’t address all the concerns of Airbnb’s critics — from landlords to tenants to labor to neighborhood associations — and it’s unclear why it took so long to develop.
Yet the introduction of legislation is the latest in a rapid series of developments surrounding the scofflaw but politically connected SF-based Airbnb, which announced a couple weeks ago it would finally collect and pay the transient occupancy taxes it has been dodging in recent years, and it issued new terms of services to its SF hosts making it clearer that short-term rental aren’t legal in San Francisco.
As the Chiu legislation says, “Under Chapter 41A of the San Francisco Administrative Code, renting a residential unit for less than a 30-day term is prohibited. Similar prohibitions are found in the Planning Code. These restrictions are designed to prohibit owners, businesses, and residents from converting rental units and other residences in the City from longer-term residential use to tourist use.”
The most significant change the legislation makes to the lawless status quo is legalizing most short-term rental and limiting them to just 90 nights per year, the flip side of the legislation’s requirement that residents physically occupy their units at least 275 days per year.
“You have to be physically present in your apartment for 275 days,” Chiu told the Guardian.
This legislation changes that prohibition for permanent city residents (which it defines as living in the city at least 275 days per year and 60 days in a row and with an intention to make the unit a permanent dwelling) who maintain liability insurance and register with the city — a requirement that could help landlords more easily identify and evict tenants who are breaking their leases by subletting (while names will be redated from the publicly available list, addresses won’t).
“This has been a difficult process but we didn’t see any other way around the issue but to do a registry so we know who’s doing these rentals,” Chiu told the Guardian.
The legislation doesn’t give many new protections to tenant renters, such as attempting to give them greater rights to sublet their units, and it explicitly reinforces city laws against charging guests more that tenants pay for their rent-controlled units. But it does prevent landlords from immediately evicting them after the first offense.
Airbnb and other companies would also be required to specifically notify San Francisco hosts about local laws and restrictions, which would be a step further than Airbnb’s recent move.
Chiu’s office will hold a press briefing on the legislation at 1pm before formally introducing the legislation at today’s Board of Supervisors meeting, so check back later for updates.
UPDATE 5PM:
In a press conference this afternoon inside City Hall, Chiu told reporters there has been “an explosion of short term rentals” in San Francisco in recent years, and even though they’re been illegal, “the current reality is these laws are broken everyday and enforcement in difficult.”
He described four major components of the legislation: distinguishing being unacceptable and reasonable short-term rentals, code compliance and enforcement, regulation of Airbnb and other rental platforms, and ensuring that taxes are paid on these rentals.
While Chiu said he wants to allow people to supplement their income by occasionally hosting paying guests, he said the legisation really targets “the worst offenders that have taken entire units off the market and turned them into year-round hotels.”
Planning Director John Rahaim, who also spoke at the press conference, said his office has been inundated with complaints and needed the tools to act: “This is an important issue we’ve been hearing about for quite some time.”
Significantly, Chiu said his legislation extends the short-term rental controls to buildings with two or more units, which have been increasingly targeted by owners seeking to skirt rent-control restrictions.
Ted Gullicksen of the San Francisco Tenants Union, who worked with Chiu on crafting the legislation and spoke at the event, said his group is currently working with the City Attorney’s Office to help residents of eight small apartment building who were recently evicted by landlords seeking to make more money through short-term rentals.
“We’ve identified thousands of units that have been removed from the rental housing stock,” Gullicksen said.
While the legislation goes a long way toward addressing the situation, there are still some tricky hurdles to navigate. For example, although the legislation prevents tenants from charging more than they pay in rent, it does so on a monthly basis, potentially still allowing tenants to cover full month’s rent while living in the units at least three-quarters of the time — a provision sure to draw opposition from landlord groups such as the San Francisco Apartment Association, who consider that stealing.
Landlords will also likely use the registry to find tenants who violate no subletting clauses in their leases. Although the legislation prevents such tenants from being evicted for a first offense, they would need to comply with orders to desist. And those who don’t register would be blacklisted from using the sites, under a provision that requires the companies to cooperate with the city.
Airbnb issued a statement commending Chiu for introducing the legislation and supporting the goal of legalizing its operations, but it took issue with specific provisions and promised to rally its customers to help shape the legislation, which won’t like be considered in hearings until this summer.
“There are certainly provisions in this proposal that could be problematic to our hosting community, including a registration system that could make some of their personal information public, so there is much work to be done to ensure that we pass legislation that is progressive, fair, and good for San Francisco and our hosting community,” Airbnb wrote. “But this is an important first step, and it is just the beginning of what promises to be a very long process during which the entire Board of Supervisors will look at this proposal, hear from all sides—including our community—and make decisions about how to proceed.”
Mayor Ed Lee, who has been a steadfast supporter of Airbnb — a company invested in by Lee’s biggest political benefactor, venture capitalist Ron Conway — today seemed to signal his tentative support for the legislation, without committing to its details. Previously, Lee had supported Airbnb’s two-year effort to stonewall the city and refuse to pay its taxes, even after the Tax Collectors Office concluded they were owed, a position that became untenable as problems associated with short-term rental mounted.
“We were focused on helping an industry begin, but I believe with some smart regulation — particuarly now that Airbnb and perhaps others have indicated they want to pay the taxes associated with those rentals — I think we have a way forward. But we’ll get into all the details,” Lee told us following his monthly appearance before the Board of Supervisors.
As to whether he supports limiting short-term rentals to 90 days a year, Lee said, “That’s an open question. There needs to be some guidelines established because we do have very congested neighborhoods and I know that companies like Airbnb want to be good neighbors as well.”
“They’re totally unfair competition,” said cab driver Jonathan Khin, a 20-year cabbie who came to San Francisco decades ago from Burma. “They don’t have to pay regulations and fees that we do.”
The drivers complaints over the rideshares, known legally as Transportation Network Companies, were many: the TNCs don’t provide adequate insurance for drivers, don’t have the number of cars regulated (like cabs are), and don’t have to pay regulatory fees that cabs currently pay. This all leads to an uneven playing field, and the taxi cab industry is getting creamed.
“I have 50 percent less daily riders,” than he used to, said Myo Winn, a 10-year driver for companies like Yellow Cab and DeSoto.
Cabbie Jonathan Khin holds up his SFMTA issued taxi ID, one of the many regulatory elements of the taxi industry that rideshares, or TNCs, do not provide.
But the taxi industry has its own cross to bear. It’s no secret that finding a taxi in San Francisco can be nigh-impossible at some hours, and even in some neighborhoods. Carl Macmurdo, the president of the Medallion Holders Association, didn’t mince words about it: “There’s been bad, poor service over the years from our industry.”
That bad service left the taxi companies wide open for “disruption,” as the tech companies call it. But that disruption came at a cost — the still-young TNC industry has struggled to provide adequate insurance to its drivers, even suggesting that drivers personal insurance policies would protect them while ferrying customers. As we’ve written about before, this has left passengers, drivers, and even pedestrians left with huge bills for collisions that taxi companies have a history of paying out with less hand-wringing.
If the TNCs provided insurance like taxis did, would the taxi industry still have a problem with them?
“Yes,” Macmurdo told the Guardian, as the horns from nearby cabs continued to honk. “Seattle deregulated taxis and let medallions be open, and it was chaos. Government [regulations] balance the need between available cab service and the ability of drivers to make a decent living. There are thousands of the TNCs on the road and it’s destroyed the industry. There are too many vehicles on the road competing.”
“Our role is not to play favorites,” she told the Guardian, standing in the courtyard of the CPUC building just after the protest ended. “We made the [TNC industry] safe, and let the free market do its job.”
Other regulatory bodies have gone the opposite way. Seattle City Council last month voted to limit TNC vehicles to 150 in the city at any one time, and the protest came on the heels of the California Insurance Commissioner Dave Jones issuing a public letter to the CPUC calling for TNCs to carry the burden of insurance.
Uber and Lyft have made progress in expanding their insurance coverage, he said, but the gap still exists, putting drivers, passengers, and pedestrians at risk.
“Our investigative hearing revealed serious insurance gaps in the current business model of Transportation Network Companies such as Uber, Lyft and Sidecar,” Jones wrote in a statement to the press. “As long as TNCs are encouraging non-professional drivers to use their personal vehicles to drive passengers for a profit, a risk which personal automobile insurance simply does not cover, TNCs should bear the burden of making sure that insurance is provided. Our recommendations will ensure there is insurance protection for passengers, drivers and pedestrians.”
The report from the insurance commissioner asserted a long standing complaint of taxi drivers. Personal auto insurers, the report wrote, are not planning to offer coverage of TNC drivers “in the near future, if ever.”
Now it’s up to the CPUC to create new, stricter regulations to protect the public. Those regulations may come as soon as September, Zafar said.
Rideshare companies must provide their drivers with insurance. That was the gist of a public letter released today from the California Insurance Commission, addressed to the California Public Utilities Commission, which regulates transportation network companies such as Uber, Lyft, and Sidecar.
“While smart phone technology is bringing new business opportunities to the marketplace and new transportation choices for consumers, our investigative hearing revealed serious insurance gaps in the current business model of Transportation Network Companies such as Uber, Lyft and Sidecar,” Insurance Commissioner David Jones wrote in a statement to press. “As long as TNCs are encouraging non-professional drivers to use their personal vehicles to drive passengers for a profit, a risk which personal automobile insurance simply does not cover, TNCs should bear the burden of making sure that insurance is provided. Our recommendations will ensure there is insurance protection for passengers, drivers and pedestrians.”
Whether the TNCs should provide insurance has been the subject of intense debate in state and local governments over the past year. The recommendations to the CPUC come specifically out of a hearing on TNC insurance that Dave Jones, the insurance commissioner, held March 21. The Guardian also wrote an editorial, “Sharing economy should share its wealth,” calling for rideshares to provide insurance, not only because it’s unfair competition (insurance costs money to provide, a burden taxi companies carry but not TNCs), but because people and TNC drivers in accidents were left for broke, lacking inadequate insurance.
A taxi driver-led protest calling for the CPUC to require TNC companies to provide insurance is starting at noon, today. Below we’ll embed the insurance commissioner’s letter to the CPUC.
[Update 4/10: Visit our story on the taxi driver-led protest, here.]
The valuation of San Francisco-based technology companies has been skyrocketing, with Airbnb reaching a reported $10 billion last week, Uber at about $3.5 billion, and Twitter’s market capitalization just shy of $30 billion.
But in each of these cases, the companies and their wealthy investors are profiting from exploiting their communities and refusing to play by the rules. That’s a point of pride among the tech titans, who speak proudly of the “disruption” that they create and adopt vaguely libertarian anti-government postures when it suits their interests.
Yet there’s mounting real world damage being done by scofflaw companies that refuse to take responsibility for their actions or to use some of their growing resources to help clean up the messes they create. The companies deceptively call themselves the “sharing economy,” even though renting isn’t sharing, and they’re utterly unwilling to share their wealth.
California Insurance Commissioner Dave Jones held a March 21 hearing that included representatives of Uber and other so-called rideshare companies, and representatives from the insurance industry, trying to create a regulatory framework that would protect drivers and the general public.
As we’ve reported, Uber and similar “transportation network companies” undercut San Francisco’s taxi industry without providing commercial insurance for their drivers, leaving both its drivers and those they injure on their own in many cases.
Insurers and regulators dismissed Uber’s claim that it’s “only an app,” an argument used to justify not fully insuring drivers or taking on others responsibilities shouldered by taxi companies, with one insurance industry spokesperson calling on the TNCs to “step up, and be the insurers of their drivers.”
Airbnb has a similar business model as what ValleyWag last week called an “outlaw middleman,” creating a simple online system for connecting tourists with cheap rooms in San Francisco and other cities, heedless of the fact that such short-term rentals often violate local zoning, housing, and tenant laws, as well as the leases of many tenant hosts.
And when San Francisco ruled two years ago that the 15 percent Transient Occupancy Tax applies to Airbnb stays, the company simply refused to comply and tack on the tax. It recently added insult to injury by saying it would support requiring hosts to pay the tax — an unworkable solution to a problem that this company got rich creating.
With the power to disrupt comes the responsibility for that disruption, something these companies refuse to accept. Twitter extorted more than $50 million from San Francisco taxpayers by threatening to leave town, and now it refuses to even provide meaningful benefits to this community, a condition of that subsidy.
Just because they’ve found ways to make money, and/or a bunch of rich investors who are willing to lend them the power that comes with their wealth, that doesn’t validate their business models or excuse bad corporate behavior. Bullies riding bubbles are still bullies, even if they have cool apps.
Transportation Network Companies, more commonly known as “rideshares,” have operated in legal limbo regarding their insurance since their creation. This came to a head on New Year’s Eve with the death of six-year-old Sofia Liu, who was killed in a collision with an Uber car driven by a man named Syed Muzzafar. Uber claimed in a blog post that because Muzzafar was not ferrying a passenger at the time, and only using the app to search for fares, that he was not officially covered by their insurance.
It was an insurance gap that left the driver on the hook for the death of a little girl and the injuries of her family. San Francisco Municipal Transit Agency Taxi Director Christiane Hayashi estimated the lawsuit to be at around $20 million, based on her experience. No amount has been specified by either party as of yet, but so far Uber has not compensated the family for Liu’s death.
Now it seems there’s a glimmer of hope that future collisions may be covered.
“In order to fully address any ambiguity or uncertainty around insurance coverage for ridesharing services, Uber is becoming the first and only company to have a policy in place that expands the insurance of ridesharing drivers to cover any potential ‘insurance gap’ for accidents that occur while drivers are not providing transportation service for hire but are logged onto the Uber network and available to accept a ride.”
The policy will cover $50,000/individual/incident for bodily injury, $100,000 total/incident for bodily injury and $25,000/incident for property damage, according to their blog post.
But Sofia Liu’s family is still out of luck, apparently.
The blog specifies that the money will not kick in if a driver’s personal insurance covers a collision, and that seems to be the case with the New Year’s Eve incident.
In an interview with the San Francisco Chronicle, Uber CEO and co-founder Travis Kalanick said that the Syed Muzzafar’s personal insurance policy had offered to pay the claim, but had not yet followed through.
When we contacted Uber’s spokesperson, Andrew Noyes, to offer proof of this, he declined.
Uber has also promised insurance coverage before, in the form of their $1 million policy. But still many pedestrians and passengers have filed suit with the company when Uber declined to pay for their medical coverage, like Claire Fahrbach, a woman who was walking down Divisadero when an Uber car hit a fire hydrant, sending it flying into her. Her injuries were substantial, and she quit her two jobs. She immediately left San Francisco to live with her parents for financial and medical support. Her hospital bills are steep, and she is currently tangled in a lawsuit with Uber.
When we asked Noyes if the new policy agreements would allow Uber to pay out insurance to the many injured passengers and pedestrians suing Uber for coverage, Noyes would only speak off the record. But in case you’re wondering, it all basically amounted to “no comment.”
Uber’s lack of coverage extends well beyond Fahrbach and her injuries, with drivers nationally left uninsured to various degrees. Popular car insurance provider Esurance wrote about it on its blog shortly after Valentine’s day:
“Though TNCs are now required to carry $1 million in liability insurance, this coverage is designed to protect riders and pedestrians and pay for damages to other vehicles. The policy doesn’t have to cover the driver’s car or the driver’s injuries (and it doesn’t kick in at all unless the TNC driver is found at fault). And because of the livery exclusion, the driver’s standard personal insurance likely won’t cover accidents either. So, instead of adding to their income, the TNC driver could be left holding the bag.
…
Though we can’t speak for all insurance companies, the livery exclusion is pretty universal. According to our definitions of coverage, TNC drivers would need commercial insurance since a personal auto policy through Esurance doesn’t cover both personal and commercial use of a vehicle. In all states except California, we’re unable to offer a standard policy to TNC drivers. And in California, the driver’s standard coverage doesn’t apply during a ride-share trip.
If you’re driving for a TNC, the California Department of Insurance urges you to contact your insurance company and see if there are gaps in your coverage that are putting you at risk. You might be better off with a commercial policy. (Esurance doesn’t offer commercial auto insurance, but you can get it through our partner.) Since Lyft is already available in 20 cities (and UberX in dozens), this is good advice no matter where you live.”
So Esurance’s personal policy does not cover an Uber driver, and other insurance companies have stated on the record at KQED and other outlets that they won’t cover personal or commercial insurance for a TNC driver (like Uber).
Notably, a coalition of rideshares including Lyft and Sidecar and a handful of insurance companies banded together to develop new insurance policies. The group’s work is ongoing, though the intent looks positive — new insurance policies specific to Transportation Network Companies developed by a coalition of industries would be a great step for driver, passenger and pedestrians alike.
But for now, commercial and personal insurance policies rarely, if ever, cover TNC drivers. And Uber’s new insurance? It’s great, as long as Uber follows through.
The San Francisco City Attorney’s Office is finally preparing to take action against the illegal short-term housing rentals facilitated by Airbnb, something we’ve been hearing that the Examiner also reports in today’s issue, an action that would address the company’s apparent stall tactics.
“We’re aware of multiple housing allegations, including some that community leaders have brought to us,” City Attorney’s Office spokesperson Matt Dorsey told the Guardian today, confirming that the office is considering taking legal action to enforce local laws governing short-term housing rentals but refusing to provide details.
Board of Supervisors President David Chiu took on the problem over a year ago, working with the company and its critics to develop compromise legislation that would legalize and tax the activities of Airbnb and its hosts, but the multi-layered legal and logistical challenges in doing so have so far proven too much for the otherwise effective legislator.
“My staff has held meetings with Planning staff and its enforcement team to discuss enforcement and related challenges. We’ve also been in touch with the City Attorney’s Office on these issues,” Chiu told the Guardian, saying he and his staff have recently been focused on other tenants and secondary unit legislation, but they “plan to refocus on our shareable housing efforts soon.”
Sources also say there has recently been some behind-the-scenes progress made in getting the company and/or its hosts to pay their taxes, which the Guardian found amounts to almost $2 million annually, although details aren’t clear because of pending negotiations and taxpayer privacy laws.
Airbnb has been shielded by unqualified support from Mayor Ed Lee, who shares a financial benefactor with the company: venture capitalist Ron Conway. But complaints about Airbnb being used to remove apartments from the market and to violate rent control laws have prompted increasingly frustrated complaints from groups representing tenants, landlords, neighborhoods, and hotel workers and operators.
The Guardian has been covering issues arising from Airbnb’s business model for years, often the only journalists highlighting this illegal behavior, and neither the company nor Mayor Lee has been willing to offer substantial responses to us for a long time. But if you want to read their hollow replies to this latest development, you can find them in the Examiner’s story.
Dorsey told us that City Attorney Dennis Herrera has a proven history of taking on powerful corporations, from Pacific Gas & Electric to CitiApartments (which once controled more apartments in San Francisco that any other landlord), but that the office has just been trying to be deliberate in how it approaches the complicated issues arising from Airbnb’s business model.
Airbnb, a mainstay of the “sharing economy” that connects hosts with guests for short-term apartment rentals, allegedly flouts city and state regulations across the United States, not just in San Francisco. Unlike our foggy city and sunny state, however, the state of New York has aggressively pursued the tech firm in what can almost be seen as a “tale of two Airbnbs.”
New York Attorney General Eric Schneiderman issued a subpoena to Airbnb last October, demanding information on New York City’s 15,000 hosts and 25,000 listings. The concern? In New York City, it is illegal for a room or apartment to be rented out for under 30 days without a tenant present, the attorney general wrote in the subpoena. Basically, “apartment sharing” without a tenant present is illegal.
Additionally, his office found evidence that few (if any) Airbnb users had paid the city’s hotel tax, a legally required payment that hovers around 14 percent of a hotel’s fees.
Unlike in San Francisco, where little has been done to address the ways in which “apartment sharing” runs afoul of the law, Schneiderman subpoenaed Airbnb’s user data to give his office the information to hone in on how many citizens are skirting local regulations.
Airbnb refused to hand over the numbers. Now it’s headed to court, and oral arguments begin next month. If the attorney general is successful, the public will get its first glimpse into Airbnb’s role in dodging local hotel and rental laws.
Legal issues are just some of the concerns of two first-time Airbnb users, whom we met in Brooklyn, NY, in a Polish neighborhood called Greenpoint.
Landlord Jeff Meilandt, 66, and tenant Aubrey Roemer, 29, are also concerned about legal liability and trust.
Roemer’s apartment is beneath Meilandt’s. She’s an artist whose recent trips to Bali inspired her work. Now she wants to go back and help her mentor, Wolfgang Widmoser (who studied under Salvador Dali), to make a film debating different art styles.
Roemer says when she’s in New York, she “busts ass” to make ends meet as an artist.
Subletting her apartment via Airbnb would allow her have an income while she travels, she said. But her landlord, Meilandt, is worried about the legal murkiness in New York around Airbnb.
“Liability, liability, and liability,” he said. Artwork in their shared home exceeds $100,000 in value, which worries him. On its website, Airbnb offers what it calls a “$1,000,000 Host Guarantee.”
“The Host Guarantee is not insurance,” Airbnb clarifies on its website, adding that the guarantee doesn’t cover cash and valuables, including “rare artwork.”
Meilandt is nervous about having a stranger renting for a short period. “My art here [includes] rated collectibles, and Aubrey’s art is also quite valuable.”
Roemer’s work is strewn all over the apartment. Bursts of color depict her co-workers, friends, and also strippers from a local club called Pumps.
“I’ve been working with this group of dancers for about a year now, one is masturbating on that sheet to your right,” Roemer said, pointing out a blue painting on cloth. “I would say I was interested by the direct honesty in their transaction. Directly offering their ‘product,’ if you will, without any guise,” she said.
“That’s what drew me.”
Honesty in transactions is at the heart of the New York attorney general’s subpoena of Airbnb.
In San Francisco, housing advocates worry that landlords and tenants have an incentive to reserve space for lucrative, short-term Airbnb rentals, displacing traditional long-time renters and removing rent-controlled units from the market.
Without clear regulations or enforcement, there are few checks in place to stem the consequent loss of affordable housing (see “Residents vs. Tourists” in this week’s issue).
According to the New York attorney general’s subpoena, more than 2,500 complaints submitted to New York City’s Office of Special Enforcement in recent years provide evidence that renters are facing pressure from landlords to vacate, in order to make way for Airbnb guests.
Those landlords see Airbnb as more profitable than long-term tenants.
“Complaints reflect landlords and operators of these illegal hotels pressuring the permanent residents to vacate their apartments so they can pursue the more lucrative transient market. There are reports of landlords withholding heat and other basic services, verbal harassment and illegal eviction,” Schneiderman argued in the subpoena.
Websites with how-to guides have sprung up, including NeedWant.com’s “I BOUGHT OUT AN APARTMENT TO RENT ON Airbnb.” NeedWant.com’s Jon Wheatley, a San Francisco resident, tells his readers they can turn a tidy profit in just four years.
Luckily, Roemer isn’t worried about losing her place from Meilandt. Watching them interact is like watching family, and it’s easy to see why, as their home in Greenpoint straddles a fine line between apartments and a commune. They and the other tenants in the building have an unlocked-door policy, eating meals together like bosom buddies.
“Jeff will be in his robe, playing Bach on his guitar while I paint in my studio. We share everything, we have our own family,” Roemer said. “This is the Brooklyn Tales of the City.”
The New York State attorney general’s subpoena cites numbers showing nearly half of Airbnb’s rentals violate New York City’s short-term zoning laws, allegedly converting long-term housing into short-term rentals for a profit.
Airbnb is changing the face of housing in New York City and San Francisco, but in New York, at least, someone is doing something about it.