New short-term rental rules move forward at City Hall

San Francisco Supervisor David Campos on Sat. April 23, 2016, in front of a property at 1297 Dolores in San Francisco, California, that the city says was illegally converted into a tourist hotel. Campos along with Supervisor Aaron Peskin want to toughen San Francisco's vacation-rental laws to make platforms like Airbnb and HomeAway more responsible to enforce the law. less San Francisco Supervisor David Campos on Sat. April 23, 2016, in front of a property at 1297 Dolores in San Francisco, California, that the city says was illegally converted into a tourist hotel. Campos along ... more Photo: Michael Macor, The Chronicle Buy photo Photo: Michael Macor, The Chronicle Image 1 of / 1 Caption Close New short-term rental rules move forward at City Hall 1 / 1 Back to Gallery

New legislation that would expose short-term rental companies like Airbnb to big fines and misdemeanor charges when hosts fail to follow the city’s registration requirements moved one step closer to becoming law on Thursday.

The Board of Supervisors’ Government Audit and Oversight Committee unanimously supported the proposal by two of its members. They described the ordinance, by Supervisors David Campos and Aaron Peskin, as a commonsense proposal that ensures existing short-term rental laws are enforced and dismissed concerns that it goes against federal law.

“This is not about changing existing law,” Campos said at the hearing. “It is ultimately about corporate responsibility. About an industry that has made and continues to make tens of millions of dollars in this line of work taking responsibility for the negative impact that they are having on the housing stock.”

The committee — composed of Supervisors Campos, Peskin and Norman Yee — forwarded the ordinance to the full board to consider on Tuesday, where it’s expected to pass. Board president London Breed, who normally sits on the committee but ceded her seat to Campos for this meeting because she had to leave early, also said she supports the legislation.

If the legislation is enacted, San Francisco would have among the most stringent regulations and oversight of short-term rentals in the country. Los Angeles and other cities are considering similar legislation that would require short-term rental companies to police their sites to ensure their hosts are complying with local regulations.

As has become the norm at Board of Supervisors’ hearings involving legislation that would impact Airbnb, dozens of hosts showed up to testify about how it has helped them stay in the city.

Airbnb hosts speak out

Wearing stickers that said “focus on solutions,” many made one point: that the city makes it overly cumbersome to register as hosts. Once hosts register, they must submit an itemized list of all the “furniture, appliances, supplies, equipment and fixtures” in their rentals, as well as their cost and acquisition date. The city identifies those as “business personal property” subject to a tax of slightly over 1 percent of the value.

“The process just needs to be streamlined better so that it will allow people to register, not be intimidated by the registration process,” testified Alice Chiu, an interior designer who has used the money she makes from renting out a spare room to start her own business. She said registering took her an entire day, and included a trip to the city treasurer’s office and the Planning Department.

Under a law that took effect in February 2015, all short-term rental hosts must register with the city. But only roughly 1,400 of the estimated 7,000 or more residents who rent their homes and rooms to travelers have done so, according to city estimates.

Under Campos and Peskin’s bill, short-term rental companies — others include VRBO and HomeAway — would have to verify that all listings have a valid San Francisco registration number before posting them online. When the city flags rentals that appear not to be registered, the listing services would be required to respond with details about those properties within one business day or face fines. Funds generated from the new plan would go to an affordable housing fund.

Companies that disregard the law would face fines of up to $1,000 a day per listing and misdemeanor charges.

David Owen, a spokesman for Airbnb, said the city should clean up its own registration process before making companies monitor their hosts.

“We are disappointed that the board is jamming this through at record speed while not addressing some of the biggest problems with the current registration process,” he said. “Airbnb is committed to helping the city solve the big issues and we recognize the importance of online platforms being part of the solution, but this proposal will just cause more confusion and less enforcement against the truly bad apples.”

Owen declined to say whether the company would sue the city if the bill becomes law. Technology law groups have warned that the legislation appears to conflict with federal law that shields online platforms from liability for content generated by their users.

“Anytime someone proposes to place liability on the platform because the platform users are doing something wrong, that raises concerns,” said David Greene, civil liberties director of the Electronic Frontier Foundation.

‘Voters rejected this’

Peskin called that issue a “red herring” and said the city attorney has advised the supervisors the legislation doesn’t violate existing law.

“This is an evolving area of law. No one has really been down this path before,” Peskin said. “We are making the tweaks (to the law) that I think are necessary to make and we will continue to do so as we learn more about how this phenomenon actually works.”

Mayor Ed Lee has generally sided with short-term rental companies in the past. His spokeswoman, Christine Falvey, said Lee “will consider the legislation when it reaches his desk.” But she suggested a veto is not out of the question.

“It’s important to remember that voters rejected this and other short-term rental restrictions just last year, which the mayor must also consider when weighing this legislation from supervisors,” she said.

Emily Green is a San Francisco Chronicle staff writer. Email: egreen@sfchronicle.com Twitter: emilytgreen