SAN FRANCISCO (CN) – After months of negotiating, Airbnb and HomeAway have agreed to drop their federal lawsuit against the city of San Francisco over what they called an unconstitutionally onerous short-term rental law.
The city announced the settlement on Monday.
“This settlement ensures that the two largest rental platforms in San Francisco will only include legal listings. It also guarantees that enforcement with real teeth begins in short order. This will help prevent our precious housing stock from being illegally turned into de facto hotels as we work hard to turn the tide on San Francisco’s housing crisis,” City Attorney Dennis Herrera said in a statement.
Airbnb sued the city this past June after it passed an ordinance making it a crime to collect fees from unregistered rentals in the city.
The ordinance took effect in February 2015, but only 2,100 of the city’s roughly 8,000 short-term rental hosts had bothered to register.
HomeAway joined the lawsuit, arguing alongside Airbnb that the law requiring them to police their websites to ensure that all rentals are registered with the city violates Section 230 of the Communications Decency Act, a provision of the 1996 law that protects those who republish or provide an online platform for information or speech.
U.S. District Judge James Donato rejected that argument in November, saying the law does not prohibit Airbnb from publishing the listings – only collecting fees from unregistered rental bookings.
“As the text and plain meaning of the ordinance demonstrate, it in no way treats plaintiffs as the publishers or speakers of the rental listings provided by hosts. It does not regulate what can or cannot be said or posted in the listings. It creates no obligation on plaintiffs’ part to monitor, edit, withdraw or block the content supplied by hosts,” Donato wrote. “The ordinance holds plaintiffs liable only for their own conduct, namely for providing, and collecting a fee for, booking services in connection with an unregistered unit.”
The case was put on hold while the city considered changes to the ordinance, which it then amended this past August.
Under the amended ordinance, restrictions on postings was abandoned but it remains illegal for Airbnb to collect fees from the rental of any property not registered with the city. The ordinance imposes a $1,000 fine per day for every unregistered booking, and Airbnb and similar sites could also face misdemeanor charges under the law.
Under the settlement, hosts looking to rent in San Francisco will have to input a special registration number to post a listing. Airbnb and HomeAway agreed to give the city a monthly list of all short-term rentals in San Francisco so the city can verify the hosts’ registration numbers, and the companies will remove any listings and cancel future stays at unregistered rentals.
They also agreed to install a pass-through system to send hosts’ registration applications straight to the city.
The changes will go into effect over the next eight months.
Herrera praised Airbnb and HomeAway for agreeing to work out a deal, after Donato ordered it. “They came to the table at the court’s direction and worked hard to hammer out a deal. Now we have one. This agreement ensures these companies will play by the rules, it makes it simpler and more convenient for their users to follow the law, and it makes our enforcement more effective. It’s a good deal for everyone,” he said.
He added, “While we’re happy to see a homegrown San Francisco company like Airbnb succeed, it can’t be at the expense of residents being evicted or units being removed from the housing market so people can make more money putting apartments on Airbnb.”
Airbnb Head of Global Policy Chris Lehane did not respond to an email seeking comment.