The issue of short-term vacation rentals continues to roil California cities large and small, but a major compromise in San Francisco agreed to by Airbnb and HomeAway has ended for now the fighting in the city that has the

As of Jan. 16, all such rentals in San Francisco had to be registered with the city, with permits paid for and transient occupancy taxes regularly paid. Online rental platforms that didn’t sign the settlement will face criminal penalties as well as fines up to $1,000 day if they rent out homes, condos or apartments which didn’t comply with the standards accepted by Airbnb and HomeAway.

Hotels, timeshares, bed-and-breakfasts and homes rented for 30 days or more are not affected.

At least temporarily, the compromise has put a dent in Airbnb business in San Francisco, city officials told the Chronicle. Given that the city is rejecting more than a quarter of applications for various reasons, Airbnb might never have as many listings as its peak number in the unregulated era. Homeowners who only rent infrequently may consider the $250 registration fee too high and the bureaucratic hassles too many.

The compromise was finalized last year after a long court battle that began when the home-share companies sued in U.S. District Court over a restrictive city law that was eventually upheld.

Giant apartment chain loses suit over Airbnb rentals

Airbnb – which was founded in San Francisco in 2008 and remains headquartered there – faces further battles across California.

Recently, it won another federal court case, this time in Los Angeles. It involved a lawsuit filed by Aimco, one of America’s biggest landlords, which owns apartment buildings in 24 California communities from the Bay Area to San Diego, as well as throughout the U.S.

Aimco wanted Airbnb to take responsibility for making sure its tenants didn’t use Airbnb, which is a violation of Aimco’s standard lease. On Dec. 29, the U.S. District Court ruled for Airbnb.

Aimco, a Denver-based corporation, denounced the ruling as a violation of its privacy rights. But it has not yet made clear whether it will appeal the ruling.

Stalemate over rental regulations continues in Los Angeles

While Airbnb has secured a deal in San Francisco, officials in the two largest markets  – Los Angeles and San Diego – have been trying to come up with a consensus for years. Both cities have laws on the books that essentially forbid short-term rentals in most neighborhoods but have only rarely been enforced.

The Los Angeles City Council in October held a public hearing on a proposal to impose relatively strict limits on its 23,000 short-term rentals – in particular a requirement that only the home’s primary owner could list a home, not investors who have proliferated in recent years because of Airbnb and similar companies. But a council committee decided to continue looking at the issue after complaints the rules were either too strong or too weak. There was also criticism of a provision to ban renters of rent-controlled apartments from using platforms like Airbnb.

The San Diego City Council in December couldn’t find a fifth vote on the nine-member board for either a tough ordinance that Airbnb homeowners depicted as potentially devastating or a measure that would have added some limits and used ramped-up city enforcement to target “party houses” that disrupt beach neighborhoods. The city has an estimated 9,000 short-term rentals.

Democrats abandon incumbent assemblywoman

Good morning. Happy Hump Day. Democrats are pushing hard to protect and expand their majority in the Legislature. But there’s one odd woman out: Assemblywoman Patty Lopez, a pariah in the Democratic Party since she knocked off Raul Bocanegra, a popular incumbent, two years ago. 

Up for re-election in 2016, the party didn’t endorse Lopez (rare for an incumbent absent a scandal), outside interests want nothing to do with her and her Assembly kin are almost nowhere to be found.

But she expects to be back in her office next year, stronger than ever. To her, nothing could be more challenging than her first term.

“I survived,” the thick-accented San Fernando Democrat said with a laugh in a recent interview with CalWatchdog, reflecting on her first term in office. “Believe it or not, the first year was hard.” 

CalWatchdog has more. 

In other news:

• “Will closing Diablo Canyon spur more fossil fuel use?” writes CalWatchdog. 

• “Delaine Eastin has been out of public office for more than a decade and is confronting a large field of better-known Democrats, but the former state superintendent of public instruction told POLITICO California on Tuesday that she will run for governor in 2018.” Politico has more. 

• “A proposal that would have outlawed short-term vacation rentals in most of San Diego’s single-family neighborhoods was rejected Tuesday by the City Council following a nearly seven-hour hearing that drew hundreds of individuals representing both sides of what has long been a contentious and much debated issue,” reports The San Diego Union-Tribune. 

• “Calling it a classic ‘bait and switch,’ a California consumer group on Tuesday lashed out at Anthem Blue Cross of California, claiming it failed to adequately warn customers they were being shifted in 2017 to brand-new, stripped-down plans.” The San Jose Mercury News has more. 

Legislature:

• Gone till December. 

Gov. Brown:

• No public events announced. 

Tips: matt@calwatchdog.com

Follow us: @calwatchdog @mflemingterp

New follower: @oldmanfoster

It’s such a widely used strategy that there’s a Nov. 8 statewide initiative (Proposition 54) which attempts to stop it. But while the state’s voters may quash this type of end-run around the hearing process in Sacramento, San Diego residents are watching something slightly different but equally controversial unfold Tuesday.

In her term as City Council president, Sherri Lightner has been unable to strictly limit short-term rental services like Airbnb and HomeAway, which have caused controversy in a number of beachfront San Diego neighborhoods. City officials and residents have been debating the issue for three years and a consensus is emerging to pass a set of rules that regulate STRs, but allow this emerging industry to continue to grow.

With only one month left in her term, Lightner scheduled a last-minute meeting this morning dealing solely with this issue. Instead of letting the compromise get vetted in the normal manner, she’s trying to quickly push through what the San Diego Union-Tribune calls a “simple definition change in the city municipal code.” But as the article’s headline points out, the modest re-wording is “sweeping” and would result in a “ban” on Airbnb and other similar services.

By reclassifying tourists and visitors as transients, the article explains, the new rule would forbid homeowners from renting out their properties for fewer than 30 days in single-family neighborhoods and require a seven-day minimum stay in multifamily zones. If five council members approve this change, then without much public debate, Lightner will have quickly achieved the goal she was unable to achieve in her years on council. That’s what’s reminiscent of the Capitol end-of-session process.

There are a variety of opinions about this new short-term rental industry, which uses web-based applications to connect tourists with homeowners who want to rent out empty rooms or their entire homes for vacation use. Officials in tourist cities across California have been fighting over the proper regulations for it. Because it’s such a new business model, aged municipal codes don’t clearly address STRs, which means they’ve largely been operating in gray areas.

Advocates for the industry say companies like Airbnb and HomeAway boost the tourist industry and help small business owners. They can also help homeowners, struggling to pay the bills in highly priced coastal real-estate markets, bring in income. It’s a property rights issue, according to some observers. Homeowners, they say, should be free to rent out their own properties, provided they follow some basic rules. And tourists enjoy this affordable alternative to the big hotel chains, which sometimes try to use their political clout to stamp out the competition.

Critics complain that these property owners in many cases (especially those who rent out their entire property) are essentially operating hotel businesses in residential neighborhoods and that those neighborhoods often are plagued by late-night partying and loud music. They say STRs harm the character of neighborhoods and reduce rental stock. As Lightner said at a community planning meeting recently, “Given that STR are a visitor accommodation, there clearly are areas where they are permitted and where they are not permitted. The Municipal Code already regulates that. Where STRs are permitted is determined by the zoning of your property. We are going to protect the sanctity of single-family neighborhoods where STRs are not allowed.”

According to published reports, Lightner said she isn’t trying to ban home-sharing (when people rent out a room or two while they are at home), but short-term rental advocates argue the change she is pushing could easily be interpreted by the city to do just that.

Defenders of these rental arrangements say their status is allowed and that critics are trying to ban them without proper legislative deliberation. Furthermore, they say the city should punish “externalities” – e.g., loud music or bad behavior – not largely ban a type of business. San Diego and other cities already deal with long-term renters and homeowners who misbehave on their properties. Proponents of STRs claim it’s wrong to single out property use, rather than, say, loud music or public drunkenness.

Some public-opinion surveys suggest that most San Diego voters want to regulate rather than shut down this innovative new business. The STR industry notes that California’s big coastal cities are on the cutting edge of technological innovation, which would make it out of character to shut down this business model in its infancy, rather than find creative solutions to legitimate problems.

Such bans can also simply drive short-term rentals underground. As long as San Diego neighborhoods are close to the ocean, there will be property owners who find a way to rent their homes to tourists for short stays, they add. Opponents say the answer to scofflaws is more enforcement and fines. If Lightner’s rule change goes into effect, property owners would face $2,500 fines for single infractions and with a maximum of $250,000 in fines per property.

Lightner’s Tuesday morning special council session may bring a new criticism to the process, with some observers arguing that such an important and contentious battle ought to be debated through the normal process, not fast-tracked in a way that short-circuits unfolding efforts to compromise. And they believe a hastily drafted effort to rewrite city code so dramatically is more reminiscent of the controversial dealings in Sacramento than the type of transparent government Lightner promoted throughout her City Hall career. Stay tuned for a contentious council meeting, one way or the other.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at sgreenhut@rstreet.org.

Pensions cost taxpayers billions, but weren’t supposed to 

Good morning. Hope y’all had a good weekend. There’s a really interesting story in the Los Angeles Times today about a pension-improvement bill signed by then-Governor Gray Davis and how much the measure is costing taxpayers, despite the sales pitch almost two decades ago that it would pay for itself.

“Proponents sold the measure in 1999 with the promise that it would impose no new costs on California taxpayers. The state employees’ pension fund, they said, would grow fast enough to pay the bill in full.

“They were off — by billions of dollars — and taxpayers will bear the consequences for decades to come.

“This year, state employee pensions will cost taxpayers $5.4 billion, according to the Department of Finance. That’s more than the state will spend on environmental protection, fighting wildfires and the emergency response to the drought combined. …

“Today, the difference between what all California government agencies have set aside for pensions and what they will eventually owe amounts to $241 billion, according to the state controller.

“Davis, who was elected in 1998 with more than $5 million in campaign contributions from public employee unions, says that if he had it to do over, he would not support the pension improvements.

“’If you’re asking me, with everything I’ve learned in the last 17 years, would I have signed SB400 … no, I would not have signed it,” Davis, now 73, said in a recent interview at his Century City law office.'”

The Los Angeles Times has more. 

In other news:

• “A lawsuit served this month against five California Coastal Commissioners could cost them millions of dollars in civil fines if the courts confirm hundreds of alleged transparency rule violations,” reports The San Jose Mercury News.
• “Sneakiness abounded on the last, hectic night of California legislature’s session,” reports The Sacramento Bee. 

• “As cities around the country attempt to regulate the growing home-sharing industry, Airbnb is going on the offensive with a barrage of lawsuits intended to kill local rules it doesn’t like. Airbnb has sued San Francisco, Santa Monica and Anaheim over ordinances that force the company to remove or refuse bookings that violate city laws, and it has threatened to sue the state of New York if a similar bill there is approved.” The San Jose Mercury News has more. 

• “The oddest of Senate odd couples — California Democrat Barbara Boxer and Oklahoma Republican Jim Inhofe — have accomplished something highly unusual in this bitter election year: significant, bipartisan legislation on the environment that has become law,” reports AP/SF Gate.

Legislature:

• Gone ’til December.

Gov. Brown:

• Continuing his statewide signing tour, Brown will be in Long Beach at 10:30 a.m. to sign a measure fighting “super pollutants.”

Tips: matt@calwatchdog.com

Follow us: @calwatchdog @mflemingterp

New followers: @samchung47

Enter San Francisco, where officials often don’t play by the normal economic rules. No metropolitan area is more closely identified with the burgeoning high-tech economy than the Bay Area. Yet in June, three of the city’s 11 supervisors proposed a 1.5-percent payroll tax that would be imposed specifically on technology companies that earn $1 million in gross receipts.

This “tech tax” was designed to raise money to battle the city’s homeless problem. But the economic rationale was epitomized in a statement by the bill’s author, Supervisor Eric Mar: “The rapid tech boom in our city and region threatens our city’s ability to thrive and prosper,” he said, in a Guardian report. “Five years after the boom, it’s time for San Francisco to ask the tech companies to pay their fair share.”

Earlier this month, the measure that would have placed the tax proposal on a citywide ballot was defeated in committee. Enough San Francisco legislators apparently understand an idea that goes back to Aesop’s day: Strangling a golden goose is a quick route to poverty. But this won’t be the last San Franciscans will hear about such a tax increase, nor is it the only example of increasing hostility by city officials and local activists to the tech industry.

“Corporate buses that Google and other tech companies (use) to ferry their workers from the city to Silicon Valley, 30 or 40 miles to the south, are being targeted by an increasingly assertive guerrilla campaign of disruption,” according to a 2014 Guardian article. Protesters have blocked buses. A window was busted on one of them. As the article put it, protesters complain that “the tech sector has pushed up housing prices in the city and made it all but unaffordable for anyone without a six-figure salary.” The Google buses make it easier for tech workers to live in beautiful San Francisco, rather than in the more mundane San Jose area.

Likewise, San Francisco supervisors recently passed a law that legalizes short-term rentals in the city, but imposes restrictions on them. Property owners can only rent out their entire house 90 days a year. It must be their primary residency. They must pay hotel taxes. They must follow the city’s rent-control laws. The most controversial element: Hosting sites, such as Airbnb and HomeAway, would be responsible for making sure hosts – i.e., the people who post their homes for rent on company sites – are registered with the city. Airbnb filed a lawsuit arguing the law violates the First Amendment and Communications Decency Act. The latter is a 1996 federal law that protects websites from being held accountable for what individuals post on them.

Advocates for the short-term rental law use a similar argument as those who defend the “tech tax” proposal. They blame these rentals for depleting the city’s housing stock and driving up the cost of apartments. “It is ultimately about corporate responsibility,” according to Supervisor David Campos, quoted in the San Francisco Chronicle. “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.”

Once again, many San Francisco officials see thriving tech companies as a problem. They blame their success for driving up housings costs. Apparently, the best way to drive down housing costs is to drive businesses – and residents – out of the city. It’s the kind of zero-sum rationale that’s fashionable in San Francisco. Yes, demand drives up costs if – and it’s a big if – supply remains the same. Thanks to strict building restrictions and growth controls throughout the Bay Area, the supply of housing is largely capped.

Within the city of San Francisco, rent control is a staunch disincentive for property owners to rent out their apartments or to invest in the construction of new ones. In essence, a tenant can stay for many years in apartments at below-market rates. Rent increases are capped. Evictions are difficult, thanks to the city’s notoriously pro-tenant rent laws. Over the years, the city has only built a tiny portion of the units needed to keep up with the population growth. The permit process for building anything is costly and cumbersome. Even some state legislators from the Bay Area recognize the need to build more supply, but most proposals are modest or focus on building more subsidized units.

“(O)ver the long run, setting an artificially low price on a product (in this case, apartments) guarantees that the supply of that product will diminish,” explained Peter Byrne in a prescient 2000 San Francisco Weekly article. “Among other things, when people are unable to move – due to excessively high rents – they tend to stay in one place, that is, to hoard their apartments, effectively removing these units from the market.”

Property owners become afraid to rent out their apartments. It’s one thing to rent out an apartment for market-based rents. You can always raise the rent after the lease is up or give tenants notice and move into the building. But in San Francisco, such reasonable behaviors are restricted. As a result, “thousands of units are simply being kept off the market,” according to a 2014 report by KALW. “Some estimate up to 10,000 of these units exist. Many sit unrented because tenants are proving too risky an investment for some property owners.” Tenants can get free attorneys and even tie up legitimate evictions (for nonpayment) in a costly legal process.

By contrast, in the booming city of Tokyo, home prices have been steady for 20 years, according to a new article by Alex Tabarrok for the Foundation for Economic Education. That’s because the city “has a laissez-faire approach to land use.” In 2014, it issued more than 142,000 building permits – far more than the entire number of permits in all of California that year. Yes, even a densely populated city with virtually no vacant land can build its way out of its housing crunch. Keeping supply up also makes it easier to deal with the homeless issue.

The proposed “tech tax” is counterproductive for any number of reasons. “It’s solving a housing crisis by hurting an economy,” said Mark Pincus, founder of Zynga. As Forbes’ Travis Brown reported, “The same innovative individuals who would be paying this 1.5 percent payroll tax already pay 13.3 percent on their earned income (the highest rate in the nation).” San Francisco is a great city, but there are other great cities competing with it for these jobs.

The tax is dead for now, but the same illogical reasoning – and fundamental problem – is alive and well. Why, yes, it might be possible to at least marginally reduce housing prices by chasing jobs and taxpayers away. But is that a road the city wants to travel? Isn’t it far better to try something sensible and create new incentives to create rental properties?

Steven Greenhut is the Western region director for the R Street Institute. He is the founding editor of CalWatchdog. Write to him at sgreenhut@rstreet.org.

Although they didn’t make the same headlines as President Obama, several members of California’s congressional delegation accompanied him on his historic visit to Cuba — underscoring the importance California officials and business put on the prospect of restored relations with the Communist country.

House Minority Leader Nancy Pelosi, D-San Francisco, was joined by House Democratic Caucus Chairman Xavier Becerra, D-Los Angeles, along with Reps. Karen Bass, D-Los Angeles, Sam Farr, D-Carmel, Barbara Lee, D-Oakland, and Alan Lowenthal, D-Long Beach.

The president’s move to normalize relations has been controversial, especially among Republicans, who have counted Cubans among their reliable supporters after they began fleeing the Castro regime in large numbers and settling in the U.S. But Cuban-American opinion on mending relations has shifted over time, with a gap opening up between younger and older generations.

A new market

California businesses have set their sights on Cuba, which has been able to access goods and services from European firms, but has yet to be opened to American ones. In a sign of their influence on California officials, the state’s two U.S. senators have begun a push to ensure that Golden State airports receive priority as Cuban markets open up.

“Senators Barbara Boxer and Dianne Feinstein advocated establishing nonstop flights from California to Cuba in a letter to Secretary of Transportation Anthony Foxx,” the Sacramento Bee reported. “As part of the opening of diplomatic relations that has allowed Obama’s journey — the first by a sitting president in several decades — Cuba and the United States have agreed to begin allowing commercial air travel.”

In the letter, sent March 18, Feinstein and Boxer called it “crucial that all Americans have convenient access to Cuba, including the thousands of companies, businesses, and educational institutions that are clamoring for scheduled air service to Cuba. Direct service from California to Cuba will be an important step in ensuring this engagement.”

Opponents say they’re killing neighborhood quality of life by bringing a never-ending series of loud, rude, drunken visitors to once-quiet communities. Defenders say they’re an economic engine and a bulkhead in the new sharing economy that can be made more tolerable and less disruptive with proper regulation.

But the loudest critics don’t want a compromise. They generally want a ban on rentals of less than three weeks, and some also urge limits on how many such rentals are allowed.

In Los Angeles, the leading concern is that the city won’t enforce existing rules that make short-term stays illegal in most residential communities. The Los Angeles Times reported last week on Venice residents who provided vast evidence that a home was being used as a de facto hotel — including a short-term rental contract for the property — only to have the city decline to pursue the matter:

As Airbnb and other platforms make it easier to rent out rooms or whole homes for short stays, the debate over regulating such rentals has revolved around what kinds of rules Los Angeles should enshrine. But for many Angelenos, the bigger question is whether the rules will have any teeth.

 

“They’re talking about writing a new law, when all they need to do is enforce the existing law,” said Patricia Rickles, one of the Venice Canals residents. …

 

The lack of action has convinced some critics that the online platforms need to lend a helping hand. “No city has the resources to send inspectors to all these properties,” said Judith Goldman, one of the co-founders of Keep Neighborhoods First, a group concerned about “commercialized” short-term rentals.

Goldman and others want a stern, Santa Monica-style assault on such rentals.

Anaheim passes restrictions, considers crackdown

In Orange County, Anaheim has emerged as ground zero in battles over short-term rentals. This is from a Sept. 15 Orange County Register story.

ANAHEIM – The City Council voted 4-1 Tuesday night to temporarily stop accepting applications from Anaheim homeowners wanting to join the lucrative business of renting out their properties to tourists bound for Disneyland, local conventions or Angel Stadium.

 

Dozens of residents complained about noise and the rapid proliferation of these short-term rentals, prompting the council to approve the so-called “urgency ordinance” for the next 45 days, with an option to extend the moratorium.

 

City officials said that the permit moratorium will give them time to study how to better regulate the businesses, which may include an increase of the current $250 registration fee charged annually to homeowners renting their properties. A report is due back to the City Council on Oct. 20.

 

Councilwoman Lucille Kring suggested that the city’s code enforcement officers crack down on unpermitted short-term rentals, revise the city’s occupancy limits for rentals and place a cap on the number of vacation homes allowed in each neighborhood. …

 

Anaheim police have responded to about 300 calls for service at short-term rentals over the past year, mostly to deal with complaints of loud parties and parking issues.

San Diegans complain about disrupted neighborhoods

In San Diego County, complaints are most common in the coastal strip from Ocean Beach north to Mission Beach and Pacific Beach. One Republican City Council member, Chris Cates, warns against making regulations too strict. Another, Lorie Zapf, sides with those who say their quality of life is under assault. This is from a story posted Sept. 21 by the Union-Tribune.

The widening debate over the proliferation of short-term vacation rentals intensified Monday as a newly formed residents group called on the San Diego City Council to significantly tighten restrictions on who can rent out their property and how often.

 

The latest proposal, offered up by a group calling itself Preserve Our Communities, comes as the council prepares to take up the increasingly contentious matter later this year.

 

At issue is the growing number of property owners who are renting out their entire homes or a single bedroom for short-term stays, thanks to the huge popularity of online platforms like Airbnb and HomeAway. …

 

“The biggest problem is not knowing what you’re going to get day to day: a peaceful family, a drunk person on the street, a bachelor’s party, a Marine Corps graduation party, people parking in other people’s driveways,” said Scott Gruby, a resident of the Bay Ho area and spokesman for Preserve Our Communities. “We wouldn’t be in this situation if this was just a few bad apples.”

 

Under the proposal offered up by Gruby’s group, in cases where owners are renting out entire homes but are not present, the minimum stay permitted would be 21 days or more. And for those renting out a room in their homes, stays of no less than 7 days would be permitted.

What if  beach neighborhoods are all short-term rentals?

A writer for an Ocean Beach-centric website and publication, the OB Rag, worries about more than neighborhood disruption. Frank Gormlie says the attractiveness of the San Diego beach lifestyle and the easy money to be made with short-term rentals could hollow out communities.

The problem occurs when for residents and local small property and home owners develop the motivation to turn their condo, cottage, second unit, apartment or house over to short-termers who will pay big bucks instead of keeping the interests of the community over that of the immediacy of cashing-in.

 

If there’s no one left to care about the community or that section of it, then there is no community. … [Take] a walk or bike ride along the boardwalks that run along Mission Beach and Mission Bay. Try to count the buildings where actual residents live. It’s depressing.

 

This is the same threat, now, aimed at Ocean Beach. If enough little cottages, homes, apartments are turned into vacation rentals, then this is a larger threat to the culture of Ocean Beach than gentrification. …

 

OBceans need to be vigilante on this issue. It isn’t over yet. Along with gentrification, short-term vacation rentals have the ability to undermine parts of the community, change the character of the neighborhood for the worse and turn a vibrant village into a beach resort for vacationers.

But Ocean Beach and other communities aren’t likely to get clarity soon from San Diego City Hall. The City Council has been considering updating short-term vacation rental rules for months, and nothing close to a consensus has emerged.

Whether you’re planning a weekend trip to Napa Valley or the family’s spring getaway to Disneyland, non-traditional accommodation services, such as Airbnb, provide travelers with a range of lodging options — from small studio apartments to luxury cabins. The service is widely popular with solo travelers that can use a person’s spare bedroom and families that can rent an entire home, rather than multiple hotel rooms.

“Airbnb hosts share their spaces in 190 countries and more than 34,000 cities,” the company, which was founded in 2008, explains on its website. “All you have to do is enter your destination and travel dates into the search bar to discover distinctive places to stay, anywhere in the world.”

But it won’t be that easy if one state lawmakers gets his way. State Sen. Mike McGuire, D-Healdsburg, plans to introduce legislation that would require Airbnb hosts to abide by a complicated maze of outdated local ordinances and mimic big corporate hotel chains in collecting transient occupancy taxes.

In some cities, Airbnb and other short-term rental services would be halted altogether, costing consumers more for accommodation and benefiting the bottom line of corporate hotel chains.

Local government revenue grab

McGuire has yet to put the specifics of his proposal into the text of Senate Bill 593, which currently references the Motor Vehicle Fuel Tax Law. However, he says that a new state law “will empower communities to protect the quality of life of their residents by upholding local ordinances that protect against the degradation of neighborhoods, or in some cases, not allowing vacation rentals based off of local Online Vacation Rental Businesses (OVRB) ordinances.”

“Where vacation rentals are legal, this legislation will provide cities and counties the tools they need to collect bed taxes which help build stronger neighborhoods,” McGuire said in a recent press release. “Where vacation rentals are illegal — the bill prohibits the online platforms from making the rental.”

He’s already lined up a long list of supporters from local governments that would see a boost in tax revenue.

“The California State Association of Counties (CSAC) greatly appreciates Senator McGuire’s leadership in making sure local communities have the ability to regulate on-line hosting platforms,” said CSAC Executive Director Matt Cate. “In particular, we support the Senator’s legislation to ensure cities and counties can collect transient occupancy taxes that fund critical services in our communities.”

Transient occupancy taxes are imposed by local governments for “the privilege of occupying” a lodging for 30 days or less. In some jurisdictions, this “invisible tax” is spent in ways that benefit big hotel chains and tourism-based businesses, such as infrastructure improvements near the hotels. Individual hosts with just one property are unlikely to see any benefit from the tax revenue.

Outdated local ordinances written before Airbnb

Many local ordinances governing short-term rentals, originally drafted to combat seedy motels, establish unreasonable or impractical burdens on hosts who are just trying to make ends meet. In San Diego, the city’s current regulations require hosts to obtain hard-to-get permits and secure additional parking in order to rent a spare bedroom.

“Hosts who rent rooms in their homes on a short-term basis would need either a neighborhood use permit or a conditional use permit, depending on the neighborhood in which they live,” explained Voice of San Diego’s Andrew Keatts. “The city’s own data, however, shows a resident can plan on waiting about a year to get one of those permits.”

Hosts that refuse to comply face threats and intimidation from local government officials. That’s what happened to a 70-year-old Burlingame woman who, according to the Voice of San Diego, was ordered to stop renting rooms in her home or face a daily fine of $2,500.

Bill would give local governments personal information

McGuire’s proposal also could put hosts in jeopardy of identity theft or home burglaries. His proposal would require hosts to disclose personal information, including their address, number of nights with visitors and amount paid by the guest to cities and counties in a manner that is “similar to the way hotels” do it. Such disclosure of personal information to city and county employees on insecure local government computer systems could put hosts at risk of identity theft.

Even secure state and federal government systems are vulnerable to attack by hackers. Last March, the California Department of Motor Vehicles announced it was investigating a possible data breach for credit card payments from Aug. 2, 2013 to Jan. 31, 2014. According to KPCC, the responsibility for the data breach rested with an “outside vendor they (DMV) use to process online credit card payments or from the credit card companies themselves.”

Earlier this month, the online security experts at KrebsOnSecurity shared a horror story of a taxpayer who had his tax refund stolen due to vulnerabilities at the federal government’s online tax system at IRS.gov.

“The IRS’s process for verifying people requesting transcripts is vulnerable to exploitation by fraudsters because it relies on static identifiers and so-called ‘knowledge-based authentication’ (KBA) — i.e., challenge questions that can be easily defeated with information widely available for sale in the cybercrime underground and/or with a small amount of searching online,” the security firm warned taxpayers.

In addition to online vulnerabilities, local government employees would have access to a list of unoccupied homes, a list of easy prey for burglars.

A December 2014 report by State Auditor Elaine Howle detailed numerous cases of “theft of state funds, waste of public resources, improper headquarters designation and improper travel expenses, dishonesty, incompatible activities, and other violations of state law.”

The legislation regulating Airbnb and other services also sets up another battle between California’s new high-tech companies and local governments similar to that involving Uber, Lyft and other ridesharing companies.

The state, which remains the global center of such start-ups, is being forced to work out compromises. Gov. Jerry Brown brokered one last September between the ridesharing companies and local governments influenced by powerful cab companies.

“Today, the largest companies coming out of Silicon Valley no longer exclusively target greenfield territory. Take some of the highest valuation companies from the past year, such as Airbnb and Uber. These companies are not operating in empty space, but rather against significant entrenched non-technology businesses. This is a first for Silicon Valley, and it is the start of something fundamental – we are not just creating whole new categories, but reconfiguring non-technology ones as well.

“This new type of disruption is far more pernicious and far more political to boot. Silicon Valley still believes that it exists in a creation world, where it builds new things that create exclusively positive value. That has been a fair assessment historically, but that is no longer the case. Today’s companies are increasingly destroying the value of existing companies to create the next generation of products and services. We can argue whether the end result is a net benefit to society, but we cannot avoid the immediate impact our work has on the rest of the country anymore. …

“[Silicon Valley startups have] almost always been bolstered by positive media coverage and a general sense from policymakers that what we did was fundamentally good. Now that the Valley’s companies are increasingly competing against traditional businesses, society is not so quick to give us a pass on this behavior. Take Airbnb and Uber again, both of which have attempted to avoid regulations and taxes in their fields (hotel taxes and taxi and license commission regulations, respectively).”

Social issues not a helpful focus

Given that Silicon Valley is by far the greatest creator of wealth in California, the political implications of the backlash it’s facing are something that the Republican Party should think about.

The tech world already has a libertarian impulse. It hates the “you didn’t built that” mentality of liberals; it can barely hide its contempt for the increasing complaints from the left that a lack of “diversity” is a big problem in IT firms, which are as meritocratic as it gets. The techies I know express disbelief that anyone — read, Democrats — believes government should guide and/or dominate the economy.

If the California GOP can position itself as a pro-free market, pro-entrepreneur defender of Silicon Valley against unfair critics, the party could benefit for decades to come. Tech political power is going to keep getting bigger and bigger.

If Republicans want to take advantage of this, focusing on culture wars and hot-button social issues is the absolute wrong thing to do. Instead, they should celebrate and stick up for the state’s most transformative businesses and their workers.