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City Cheers 14% Rent Hike (on Tourists)

Scott Lucas | April 1, 2014 | Story Real Estate

The cost of rent—at least a small category of rent—in San Francisco went up again—but this time it's being widely applauded by San Franciscans.

No, this isn't an April Fool's joke.

Short-term rental website Airbnb agreed that to pay the city's 14% hotel tax by this summer. According to the Chronicle, the decision would make San Francisco the second city, behind Portland, to which the company would be collecting a hotel tax, though the firm has made similar overtures in New York City. By the plan, Airbnb would collect the 14% tax as an extra charge on customer's bills—which is identical to how hotels operate. That means that the price increases will be bled out of tourists, the taxation of whom is as close as the city gets to panning for gold.

In a blog post, David Hantman, the company's head of global public policy, wrote, "We have repeatedly said that we believe our community in San Francisco should pay its fair share of taxes. We know from countless discussions with our hosts that they want to pay taxes, but some of these rules are arcane and difficult to follow. Some hosts have even tried to pay taxes in San Francisco and been turned away. We want to help solve this problem. We’re still working on some operational details, but our goal is to launch this program for San Francisco hosts this summer.

It also comes as local officials, including Board of Supervisors President David Chiu, have been working on a plan to regulate Airbnb. Chiu's bill has been in the works for the past two years. Airbnb has also come in for its share of criticism from both landlords, who argue that tenants using the service violate the city's short-term lease laws (and, in some cases, make market-rate profits on rent-controlled units) and from progressive activists, including the Bay Guardian, which has repeatedly argued that the company is "tax scofflaw."

But let's not kid ourselves about the likely source of the tax move. Local efforts probably didn't affect the decision—after all, why would Airbnb be taking similar steps in other cities?—as much as the company's widely-expected public offering. After all, looming regulatory fights and unpaid tax liabilities mean risk.

Like we said, bookmark this one. You'll be telling your grandkids about the day the city cheered a cost increase. And hey, now that the Airbnb tax looks to be taken care of, we can go back to figuring out how to charge the shorts and cameras brigade six bucks for Muni.

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