San Francisco shuts down "illegal Airbnb ‘Hotel Chain’"

Most elected officials in California have been fighting the use of Airbnb since its earliest days and one of the biggest examples of that is in San Francisco. They’ve passed numerous laws applying to “short term rentals” which are designed to make it harder for residents to take advantage of the gig economy. Now, in a “major bust” they’ve shut down the operations of one family who own multiple properties in the city and had been renting them out as Airbnb hosts. (CBS San Francisco)

A San Francisco couple has been fined $2.25 million and ordered to not engage in listing their real estate properties on sites like Airbnb until 2025 for repeated violations of the city’s short term rental laws, the city attorney announced Monday.

City Attorney Dennis Herrera said landlords Darren and Valerie Lee have been running “an illicit hotel chain” during San Francisco’s housing crisis rather than lawfully renting the units to residential tenants.

Herrera first sued the Lees in April 2014 after the couple evicted tenants from their property at on Clay St. using the Ellis Act and then unlawfully converted it into short-term rentals.

The Lees settled in May 2015, agreeing to pay $276,000 in fines and a court-authorized injunction prohibiting them from maintaining any of their San Francisco properties as short-term rentals.

Unfortunately for the Lee family, they appear to clearly be in the wrong under current San Francisco law. They’d already been fined for leasing out apartments on Airbnb in the past and it appears that they intentionally attempted to deceive officials by using relatives as “straw tenants” posing as Airbnb hosts. They skirted the law and will likely now have to pay the price for their actions.

But what should really be on trial here are not the Lees but the laws that San Francisco has put in place to stifle the gig economy. The Lee family owns those apartment buildings and they pay the taxes, are responsible for all the maintenance and took the risk of investing in the properties. Clearly, there is a market for short-term rentals because if there weren’t they wouldn’t be able to remain profitable. Why is the city telling them how they must rent out their property?

The public doesn’t benefit from these laws, providing the owners keep the properties up to code and safe to inhabit. The only beneficiaries are the major hotel chains who charge outrageous prices for rooms and lobby politicians heavily (as well as donating generously to their campaigns) to try to squeeze out the gig economy. If the Lee family has any hope of prevailing here it should come by way of a challenge to these short-term rental laws and the chance to expose the influence of the hotel lobby that drives them.

The name of the Lee family was corrected from the original version of this article.