Will Airbnb Stiff San Francisco During America's Cup?

Vance Cardell
Nice boats! Where are you staying?
Our across-the-hall colleagues at the Guardian have written a bit about how there seems to be a great degree of ambiguity regarding whether Airbnb is forking over the hotel taxes the city claims it owes.

It's always a pressing question whether a politically connected company is paying its fair share. But it becomes more so when a flurry of hotel taxes is now being relied upon to make up for anemic America's Cup fund-raising.

We've written a lot about this, so forgive us for being a broken record (and forgive us for using an analogy younger readers don't understand). But it's a risky proposal to assume that hotel and other revenues will be so much greater than usual during the America's Cup -- held in peak tourist season -- that the city will make up the money it spent to hold the event (which private fund-raisers have failed to amass).

It'll be even riskier if swaths of San Francisco visitors are using a service that doesn't contribute its fair share of hotel taxes.

See Also: Dueling Takes on Sinking America's Cup Report

Super Bowl, Other Mega-Events Don't Deliver Guaranteed Boons

Of course, hoping and praying that hotel and other taxes make the city whole wasn't part of the original arrangement. Private fund-raisers were tasked to "endeavor" to compensate the city, and additional tax revenues would be just that -- additional.

Relying on tax manna "is a change in the value proposition from where we were to where we are today," controller Ben Rosenfield told SF Weekly earlier this month. "The financial model was that the city would incur expenses, and fund-raising would offset the costs, and any economic benefit the city saw would accrue to the benefit of the overall economy and the city's general fund. But now we're in a different place. We're incurring expenses and we're hoping, when we've gone through and seen what actually occurred with the hotel, business, and sales taxes, there'll be enough to cover the delta.

"But we won't know that until long after we incur those expenses," he continued. This is a different deal entirely. "And one with more risk to the city."

And, with questions swirling regarding just who's paying hotel taxes and who isn't, those risks keep piling up.

My Voice Nation Help

You don't have to apologize for staying on a story, but you should apologize for omitting or distorting the facts. The SF Tax Collector, looking for additional tax revenue, decided last year that airbnb rentals would be taxed at the same outrageous rate as hotel rooms (it's either 14.5% or 16% depending on which side of Van Ness the real estate is located - ugh). 

The Tax Collector  unilaterally imposed the tax on airbnb rentals without any action by the Board of Supervisors by stating it was not a new tax, but was merely clarifying existing tax law.  But these things are always governed by the law of unintended consequences. If this is merely a clarification of existing tax law, then back taxes are due on airbnb rentals hat means that back  that occurred in the 4 or 5 years  before the "clarification" was announced in 2012.  

Of course, people who rented spare bedrooms to visitors did not collect any hotell tax at the time, so they are now facing potentially huge bills for back taxes, interest and penalties - maybe even jail.  And it they don't pay, the city has granted themselves the right to go after airbnb for the "unpaid tax" money.  Yeah, go after the company- that will teach those high tech hipsters to start a wildly successful businesses here in SF!!!

As a result of the Tax Collecto's overreach, it is unclear who owes what for the uncollected "hotel" tax.  But what is clear is this:  journalists should not gloss over the issue and mindlessly conclude that the huge financial hole created by poor planning for the America's Cup should be blamed on Airbnb or it's hosts here in SF. 


Hey - don't apologize for staying on a story!  This web-based firm and the gov't should be absolutely clear about paying what's due and the receipt of payments - no ambiguity!

Rick Claymore
Rick Claymore

Is the bear Catholic? Does a pope shit in the woods?

haggie topcommenter

America's Cup can either foot the bill or the event gets cancelled.

I'm tired of "too big to fail". It isn't true for banks. It isn't true for local special events. If Larry wants to make the Bay his personal playground for a month, he can pay for it.

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