Airbnb, San Francisco settle lawsuit over short-term rental law

SAN FRANCISCO (Reuters) - Airbnb Inc and the city of San Francisco have settled a year-long lawsuit over a local ordinance forbidding the home-rental company from taking bookings from hosts who have not properly registered their homes.

A 3D printed people's models are seen in front of a displayed Airbnb logo in this illustration taken, June 8, 2016. REUTERS/Dado Ruvic/Illustration

The settlement, which Airbnb announced during a call with reporters on Monday, marks the latest effort by the company to compromise with cities and improve its relationship with regulators globally as it eyes an initial public offering. Airbnb is an online marketplace for short-term lodging, with “hosts” who rent their homes in 65,000 cities.

City officials across the globe have sought to minimize Airbnb’s impact on tight housing supplies and rental costs, sparking legal fights with the company, which has argued that, as an Internet platform, it is not responsible for the listings on its website.

As part of the settlement with San Francisco, where Airbnb is headquartered, the company will create a registration system requiring that anyone in the city who wants to rent room or house on Airbnb must first supply their name, address and zip code, said Airbnb global policy chief Chris Lehane. Only after registering can hosts list their homes for rent.

“Every host on the Airbnb platform will be registered, which is what the city has said it will be looking for,” Lehane said.

The company will turn over host registration information to city officials. The city last year enacted an ordinance, sparking the lawsuit, making it illegal for Airbnb to collect fees for providing booking services for rentals that had not been properly registered. Airbnb makes money by charging a service fee on bookings.

Airbnb’s new registration system, expected to roll out in early 2018, will not prevent hosts that are not compliant with city laws from registering, meaning there could be a lag period during which illegal hosts can rent out homes before city officials identify them. San Francisco limits each host to one rental unit and caps the number of nights a unit can be rented.

Airbnb will also deactivate listings if there is an invalid registration, San Francisco City Attorney Dennis Herrera said in a statement. Currently, there are 2,100 registered short-term rental hosts in San Francisco, but Airbnb has more than 8,000 listings in the city.

Herrera called the settlement “a turning point when it comes to enforcement.”

The settlement must still be approved by the San Francisco mayor and board of supervisors. Airbnb has similar registration systems in the works in Denver, New Orleans and Chicago.

In a statement, Mayor Ed Lee said the settlement “protects our rental housing stock while allowing residents who follow the rules to gain income to help make ends meet.”

The settlement is the latest evidence that Airbnb has lessened its long-standing resistance to turning over data to city officials. In his remarks, Lehane also indicated that Airbnb has backtracked somewhat from its previous argument that any city rules to limit listings published on its website violated a broad federal law that protects internet companies from liability for content posted on their platforms.

“We fundamentally do believe that platforms need to take responsibility,” Lehane said.

Airbnb still has ongoing litigation in Miami and Santa Monica, California.

Reporting by Heather Somerville and Dan Levine in San Francisco; Editing by Jonathan Oatis and Marguerita Choy