Now that a judge in New York has ruled that Airbnb is illegal there, a model that violates city tenant laws and state law, that should put pressure on the San Francisco-based company to finally stop snubbing cities and find a way to exist within local regulatory frameworks and finally start paying its taxes.
It was good to hear KQED’s Forum discuss Airbnb this morning – it was getting lonely as the only local reporter highlighting the company’s open defiance of San Francisco’s ruling that it should be paying the city’s Transient Occupancy Tax, just like hotels – and to finally question an Airbnb executive on an issue the company has been refusing to address publicly (yes, they still aren’t returning my calls).
But the answer that David Hantman, Airbnb’s global head of public policy, gave this morning was pretty astounding in its hypocritical arrogance. He acknowledged the tax ruling by San Francisco and the company’s lack of compliance, and said the company was waiting for clarification on the various issues related to the questions of the legality of some of the short-term rentals it facilitates before paying its taxes.
In other words, this company is making tens of millions of dollars annually in San Francisco alone on a business model that it developed – one that often runs afoul of local land use and tenant laws, and in violation of people’s leases – and it’s up to city officials to find a solution to this company’s problems before it will pay taxes?!?
To his credit, Board of Supervisors President David Chiu has been trying to do just that for months, slogging through a number of complex and difficult issues that arise from this business model, and he has been clear throughout that Airbnb should be paying its taxes to the city, which it isn’t.
“It’s reasonable to ask people who benefit from the economic transactions we’re talking about to pay their fair share,” Chiu reiterated on Forum, citing the cost to the city of serving the 16 million tourists who visit the city each year.
Coincidentally, there’s a German television crew from ARD (Germany’s equivilent of the BBC) in San Francisco this week doing a story on Airbnb and the shareable economy, interviewing me about my coverage of the company, as well as others, including Airbnb co-founder Nathan Blecharczyk.
The ARD reporter told me this afternoon that Blecharczyk was animated and expansive when discussing how wonderful his company is and how it’s changing the world, but he became terse and unresponsive when she raised the issue of local taxes and regulations.
As I said on camera today, Airbnb and other shareable economy companies are cool, I’ve used them myself, and they’re certainly here to stay. But I just don’t understand their unwillingness to be good corporate citizens and to pay the taxes they owe to support the city services that their customers use.
Chiu has clearly said that Airbnb should pay the TOT — which my reporting has shown would bring $1.8 million annually into city coffers — and that paying its taxes will be a part of the regulatory package he’s working on. But sources have also told me that negotiations have been hard slog, largely because of Airbnb’s unwillingness to play by the rules and because of the unqualified support the company has from Mayor Ed Lee, whose main political fundraiser, Ron Conway, is also a major investor in Airbnb.
Hopefully the New York ruling and growing media scrutiny will prompt the young executives at Airbnb to finally become good faith partners in a city that has been so good to them — a city whose leaders seem anxious to return the favor and legalize Airbnb’s operations in San Francisco.