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.

From the Mexican border to the Bay Area, local governments along the California coast fret about short-term rental operations such as Airbnb eating up already limited housing stock. In response, homeowners who use such rentals to deal with the high cost of living fire back with claims that they’re being scapegoated for local officials’ ineffective response to the Golden State’s affordable housing crisis.

In Oakland, these arguments keep growing more intense as tech workers keep moving in. Uber’s plan to build a new headquarters in the city by 2018 only adds to city leaders’ concerns about housing costs.

But recent reports and surveys leave little doubt that in Oakland, both short-term renters and local officials bear responsibility for severe housing headaches.

At a recent city workshop on housing issues, officials said that only 333 of the 2,252 Oakland listings on such websites as Airbnb and VRBO — less than 15 percent — were available for long-term housing. The rest are only for short-term rentals.

With Oakland apartment vacancies running at 2 percent, it’s difficult to challenge the contention that the Airbnb effect is reducing availability and helping push long-term rental costs up.

A report by two groups which advocate for low-income residents —  Community Economics Inc. and East Bay Housing Organizations — showed that Oakland Airbnb listings had soared by 50 percent in the year ending in May 2016. This trend is accelerating, according to some activists, and is a contributing factor both to Oakland emerging as one of the costliest cities for housing in the U.S. and to a surge in homelessness. Zillow reports that in the five years ending in December, Oakland had the highest percentage increase in rent of any city in the nation.

But the deaths of 36 people in a December fire at an Oakland warehouse known as the “Ghost Ship” brought national attention to the city’s and the region’s hostility to adding housing stock. A Forbes analysis noted that from 2010 to 2015, while the greater San Francisco metropolitan area had added a half-million residents, only 100,000 new housing units were built, about half what was needed.

City plan would add 600 units — over 1o years

The problem is particularly acute in Oakland. From January 2013 to January 2016, the city only issued 1,332 permits to build new housing, the San Francisco Chronicle reported — fewer than far smaller cities such as Sunnyvale, Brentwood and Redwood City. Forbes depicted this as being driven by the “demonizing” of both developers and newcomers. The new housing wasn’t remotely enough to accommodate the 28,000-plus residents Oakland has added to the 390,000 it had in the 2010 census. In June 2014, a San Francisco Business Times article noted that at a time when the Oakland housing market was hot, there was not a single significant housing project being built in the city.

Mayor Libby Schaaf’s and the City Council’s most direct response to Oakland’s housing crisis came last March, when they approved new policies on fees that were intended to clear the way for construction of relatively inexpensive housing. But attempts to depict this as a major step forward were deflated by the city administrator’s office, which estimated the changes would only yield about 600 new housing units over the next decade.

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.