SAN FRANCISCO LEGISLATIVE UPDATE (2015): Expansion of Enforcement for Short Term Rental Violations

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San Francisco has amended its “Airbnb law” to expand the definition of Interested Parties who may enforce the law through a private right of action. (This now includes permanent residents living within 100 feet of the listing.) It also fleshes out some of the administrative tools required to regulate short term listings, including directing the mayor to create an Office of Short-Term Residential Rental Administration and Enforcement.

You can read the full text of Ordinance 130-15 here.

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Ellis Protesters Succeed in “Bank Shaming”

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SocketSite reports that First Republic Bank will no longer knowingly finance “displacement mortgages“. The bank announced that their loan application will now question whether the prospective borrower plans to invoke the Ellis Act to terminate tenancies in the building.

This news follows a protest at the bank’s headquarters in San Francisco this afternoon, where supporters gathered around the remaining occupants of a Coleridge Street property that was withdrawn from the rental market earlier this year, to chastise the bank for writing loans for buildings – like the one on Coleridge Street – that have been Ellis’ed.

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SF Business Times Blames Bay Area Rent for Dip in VC Confidence

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The San Francisco Business Times attributes a dip in confidence of venture capitalists to Bay Area rental rates. Even with no shortage of funds from the current “herd of unicorns”, these high valuations relate to the cash required to pay high salary demands of employees who are paying record rents to live in the Bay Area (in addition to the soaring cost of commercial real estate for the companies themselves).

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Ellis Act Gets Attention of U.S. Representative Waters

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Congresswoman Maxine Waters, who represents California’s 43rd District, has called for an end to the Ellis Act on a statewide level.

In her letter to the President pro Tempore and Speaker of the California State Senate, she urges that, during California’s worst housing crisis in history, the Ellis Act is being used by real estate speculators for mass evictions of mostly elderly tenants, instead of for small time landlords who simply seek to retire from the rental business. Waters’ district is located in Los Angeles County, where, she notes, there were 725 Ellis Act evictions in 2014 alone (compared to, for instance, 113 in San Francisco that year).

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SocketSite Picks on SF Gate for Sloppy Journalism (again)

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In a City where reporting on the cost of housing apparently amounts to sensationalism, SocketSite seems to be serving the role of the fifth estate to the Chronicle’s SFGate.com. Last time, SocketSite took exception to SF Gate’s methodology for estimating the median rental rate in the City.

This time, SocketSite imposes a tamer view on SF Gate’s pick for “insane flip”:

“Someone gets an award for investment of the year at 1150 Sacramento St., #202. Property records show the unit, a 2-bed, 2-bath co-op on Nob Hill, sold for $690K in June of 2014. It was listed, went pending, fell out, was relisted and then sold for $1.740M in May 2015. No need to do the math: we’ve done it for you. That’s an appreciation of $1,050,000 in one year. Check out pictures in the gallery above.”

SocketSite interpreted public records to mean that this one year “appreciation” from the previous “purchase” likely followed a straw-man transfer between family members, and that the increase in value actually took place over a couple of decades.

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Bay Area Housing So Expensive, Residents Living in Boxes

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Bloomberg Business reports on the apparently inevitable consequence of the Bay Area housing crisis – people living in boxes. While renting modified shipping containers for residential use is obviously illegal, the founder of Boxouse would rather “ask forgiveness than ask permission”. And perhaps this amounts to conventional wisdom in a sharing economy that often does more to “disrupt” the enforcement of regulations than create value through creative destruction.

Bloomberg notes that Boxouse’s “cargotopia” – currently operating from an undisclosed location – leases these modular homes for $1,000 per month. It also intimates some hypocrisy in enforcement: While officials have already chased Boxouse away from two previous locations, San Francisco is insisting on the continued unlawful, residential use of a commercial building at 1049 Market Street, over the protest of its owner, amounting to what Andrew Zacks of Zacks & Freedman refers to as holding the building “hostage”.

While the future of Boxouse is uncertain, shipping containers are at least a step up in comfort from tents.

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Richmond Rent Control Approaches Council’s Bedtime; Takes a Rest

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The San Francisco Business Times reports that the Richmond Council’s required second reading of the recent ordinance to enact rent control stalled this Tuesday. As the meeting had run for hours before the second reading, the Mayor insisted that the Council first pass a motion to extend the meeting past 11:30 p.m. – presumably relying on Robert’s Rules of Curmudgeonry. That motion failed, so the second reading is postponed.

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