In the latest development in the short-term rental saga, vacation rental provider HomeAway has filed suit against the City of San Francisco in an attempt to block recent legislation regulating the industry.
The lawsuit, filed against the city and county of San Francisco, seeks an immediate injunction to prevent enforcement of any of the elements of the short-term rental ordinance passed last month. HomeAway believes that the ordinance is unfair and discriminatory towards second home owners and non-resident companies and individuals.
At face value, it would appear that this discrimination was the whole point of the legislation, as homeowners and residents wanted to prevent larger companies and non-residents from renting homes for profit and negatively affecting neighborhoods in which they don't even live.
The truth of the suit is that HomeAway feels that the law gives the lion's share of the market to Airbnb, which is confirmed by this language from the HomeAway release: "[and] effectively turns over control of short-term rentals to the San Francisco-based company Airbnb."
The company goes into further detail, stating:
HomeAway claims the ordinance violates the Constitution’s interstate commerce clause by requiring companies providing “Hosting Platforms,” defined as “a person or entity through which an Owner [or lessee] may offer a Residential Unit” for short-term use, to conform to one specific business model, or face legal penalties.
HomeAway alleges the ordinance is also unconstitutional in that it allows only San Francisco residents to rent on a short-term basis, banning individuals who live in the city part-time from what is now otherwise a legal activity. While the San Francisco Board of Supervisors maintains its goal is to “preserve housing stock” and “reduce negative effects on affordable housing,” there is no evidence that shows prohibiting non-residents from having short-term rentals has an impact on affordable housing.
HomeAway co-founder Carl Shepherd is also quoted in the release on the lawsuit, pointing out that its platform is also a means of engaging homeowners in positive entrepreneurial activity:
In a community known for promoting equality and an entrepreneurial spirit, it is shocking the Supervisors passed a law that, in our opinion, stifles opportunity in such a discriminatory manner. In its apparently single-minded goal to ‘legalize Airbnb’, we claim the Supervisors ignored the benefits of responsibly regulating a well-established industry, and embraced an unconstitutional and unenforceable regulation.
As the industry leader, HomeAway feels a duty to fight for the entire short-term rental industry and the rights of all property owners, including the owners of the 1,200 San Francisco properties who advertise on HomeAway.
Shepherd returns to the restriction of choice piece, saying that the ordinance unfairly tilts the balance towards Airbnb while creating onerous - and unenforceable - standards industry-wide:
Ultimately, this rule restricts consumer choice in both how to offer or find a property and requires HomeAway and most of its competitors to overhaul their businesses to comply with a regulation that is almost entirely unenforceable.
Our goal is to work with the city to amend the law to one that balances the needs of the community with the rights of all people to rent their properties, regardless of who they are, where they choose to live and how they choose to market those properties.
We expected any ordinance in San Francisco would be thought-leading public policy, but instead it fails on all counts resulting from a desire to anoint winners and losers, not to create policies that are fair to all.
Read the full SF ordinance here. Check back for a full copy of the lawsuit as it becomes available.
NB: Scales image courtesy Shutterstock.