SF sanctions Airbnb owners $ 2.25 million for illegal leasing

Airbnb crime does not pay.

This is the message that San Francisco wants to send after raising $ 2.25 million in a legal settlement from a wealthy couple who turned 14 city apartments into illegal hotels through the vacation rental service.

Darren and Valerie Lee agreed to pay the money as a penalty and an investigation fee. In addition, they are barred for at least seven years from offering short-term rentals in any of San Francisco's 17 buildings that they own or manage. The couple had to pledge their real estate as collateral to comply with the settlement, approved by the San Francisco Superior Court on Monday.

"The heavy financial penalty has a significant deterrent effect," said Attorney General Dennis Herrera in a statement. "This sends a clear message to those seeking to illegally profit from the San Francisco housing crisis: do not try it, we will catch you."

The Lees and their lawyer did not immediately respond to a request for comment. In May, their lawyer, John C. Brown III, said the city "relies on many inaccurate facts" in its motion for an injunction – which has now been granted.

"These are not the type of hosts we want on our platform and we are delighted that the city has the tools to enforce the rules," Airbnb said.

Airbnb critics have long accused that illegal hotels are spread throughout the city, engulfing a stock of valuable housing, although the case of Lees seems to be an exception. The housing crisis in San Francisco has led to stricter enforcement of vacation rental legislation, which came into effect at the beginning of the year. Airbnb now has a "host, home" policy in the city, which largely prohibits guests with multiple lists.

A Chronicle survey found that the number of listings on vacation rental sites had dropped by more than half after the implementation of the regulations.

For a year now, Airbnb and its rival HomeAway, faced with a decision by a judge, have begun to enforce San Francisco's obligation to register with the city, allowing for safekeeping. Ensure that guests actually live in rentals and cap total rentals. at 90 days a year.

San Francisco has actually caught the Lees twice. In 2014, the couple evicted tenants under the Ellis Act to convert a property into a short-term rental. The Lees settled the case for $ 276,000 and accepted an injunction against new vacation rentals at their 17 properties, which collectively account for more than 45 units.

However, according to Herrera's office, the Lees have violated the injunction thousands of times, accumulating more than $ 900,000 in short-term leases in the first eleven months following its entry into force. Their prize was $ 700,000.

When the inspectors came to call, the Lees took what the city called "ambitious and underhanded" measures to claim that the apartments were legitimately rented to tenants in the long run: to call on friends, family members and associates to pretend that they lived in the units; establish false leases; and stage the units to appear lived.

The Lees, however, were not criminal brains. The apartments all had the same layout, described by the city as follows: "They had the same Costco food products scattered, the same arrangement of dirty dishes for breakfast in each kitchen sink, the same personal products in each room. bath, the same wet towels draped with art. doors as if someone had just showered, the same collection of shoes and clothes in closets and the same plants inside each apartment.

In addition, they used the same IP address to create Airbnb host accounts for 13 lists.

The 14 properties were in scattered neighborhoods, including Pacific Heights, Nob Hill, Leavenworth, The Mission and North of the Panhandle. Many were upscale, with prices posted on Airbnb from $ 250 to $ 500 a night. According to a complaint filed by Herrera in 2014, the inscription "One Pacific Heights" on a "superbly renovated house" was renting between $ 395 and $ 595 a night, with a minimum of three nights.