Judge Puts San Francisco Vacation-Rental Law on Hold

SAN FRANCISCO (CN) – A federal judge gave home-share giant Airbnb a two-week reprieve from San Francisco’s short-term rental law, blocking the city from instituting criminal fines on any company that collects fees from unregistered bookings.
Airbnb had sued to block the ordinance on constitutional grounds, but U.S. District Judge James Donato nixed most of its challenges in a ruling earlier this month.
While Donato’s ruling denied Airbnb’s motion for a preliminary injunction, he also asked for further briefing on how the city plans to verify short-term rental hosts.
In response, San Francisco City Attorney Dennis Herrera sent a letter to Donato last week outlining numerous ways it can confirm a host’s registration status, including an automated real-time verification system which the city had previously offered to develop alongside companies like Airbnb.
But in an order issued late Friday, Donato said he was concerned about the city enforcing the law without the automated system already up and running.
Donato said the city wouldn’t be harmed by delaying enforcement, but Airbnb and other hosting platforms could face $1,000 per day fines for every property listing not registered with the city.
“Plaintiffs face a likelihood of irreparable harm by being exposed to criminal penalties,” he wrote. “The balance of hardships tips sharply in their favor for that reason and because San Francisco will not face any significant burden from a short continuation of a stay that it has previously agreed to voluntarily. And the strong public interest in enforcing criminal laws in a fair and rational manner weighs in favor of a TRO.”
He added, “To be clear, the court has determined that plaintiffs’ First Amendment and Communications Decency Act claims did not show a likelihood of success on the merits or raise serious questions requiring more litigation. This TRO goes only to the serious questions relating to fair enforcement.”
The restraining order will expire on Dec. 1, but Donato said he might extend it depending on how the case develops.
He also ordered the city and Airbnb to file a report by Nov. 30 on the status of the enforcement issue, and referred the parties to a magistrate judge to work out a plan for implementing the automated verification system.
An Airbnb representative did not respond to an email requesting comment.
While Airbnb’s global head of policy and public affairs Chris Lehane said in a San Francisco Chronicle opinion piece last week that the company will work with the city to “to help enforce sensible rules” on short-term rentals, city attorney spokesman John Cote said Monday that up until a hearing last Thursday, Airbnb had not reached out.
“We’re pleased the court has ordered Airbnb and HomeAway to actually come to the table and work with the city on an automated system for registration verification. Prior to that, we had proposed a number of possible solutions. We hadn’t heard from Airbnb or HomeAway on those. Airbnb was making plenty of comments to the press about partnership, but they weren’t following through with the city until the court ordered them to the table,” Cote said.

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