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Los Angeles Times

Monday November 16, 2015

Fresh Off Bay Area Victory, Tech Giant Airbnb May Set Sights On L.A.

By David Zahniser

A billboard funded by Airbnb, which opposed San Francisco's Proposition F. On Nov. 3, voters in the city rejected the proposition, which placed restrictions on short-term rentals. (Josh Edelson / AFP/Getty Images)

In San Francisco's bruising fight to put new limits on vacation rental business Airbnb, few players were more important than the hotel workers union.

Unite Here Local 2, working with housing activists and community groups, helped draft the package of restrictions known as Proposition F. Hospitality workers collected signatures to qualify the plan for the Nov. 3 ballot. The union and its New York-based affiliate put a combined $390,000 into the campaign to pass the measure.

In the end, those efforts were dwarfed by the financial might of Airbnb, which spent $8.5 million to defeat the measure. That show of political strength has grabbed the attention of affordable housing advocates in Los Angeles, where policy makers are just starting to develop new rules for "home sharing" companies.

"If [Airbnb] did something like that here and were successful, it would be disastrous," said Larry Gross, executive director of the Coalition for Economic Survival, which wants to bar Airbnb and similar companies from operating in rent-controlled buildings. "Who would oppose them? What type of forces would have the resources to go against them?"

For years, organized labor has been the big dog in L.A. politics, spending huge sums on political campaigns and working to influence policies on transportation, economic development, trash pickup and the minimum wage, to name a few. But the fight in San Francisco has raised the possibility that one day there could be an even bigger dog in town — if tech companies like Airbnb choose to assume that role.

In the days since voters rejected Proposition F, Airbnb executives have made clear that they are set on expanding the company's political clout beyond the Bay Area. Next year, the company plans to develop 100 "home-sharing" clubs worldwide. In Los Angeles, Airbnb executives say they already have an extensive "home-sharing" community: people who use the platform either to make extra money with their own homes or find affordable lodging elsewhere.

"If you just look at the numbers — the size, depth and breadth of our community — it's 100,000-plus in L.A. and growing, growing very quickly," said Chris Lehane, Airbnb's global policy head. "It's a real constituency. There is a real Airbnb/homesharing voter bloc."

"We are investing," he added, "so that that community is going to be heard."

Critics of Airbnb say the company is disrupting residential neighborhoods by attracting large numbers of transient guests who have no stake in the community. Foes also have accused Airbnb of contributing to the city's affordable housing crisis by luring owners of long-term rental units to cash in on the booming, tech-driven tourism sector.

Lehane says Airbnb intends to work with cities like L.A. to pass sensible, enforceable rules that protect rental housing. He also contends that the hotel industry, looking to kill competition, has been his company's true political opposition.

Council President Herb Wesson and Councilman Mike Bonin have proposed legislation to bar property owners from setting up Airbnb-type arrangements in homes that are not their primary residence. Lehane has praised council members for taking a "thoughtful" approach to the issue.

But key details of the proposed regulations, including how the measure would be enforced, have not yet been worked out. Some are already calling for a more stringent set of rules.

Councilman Paul Koretz said he has no objections to Angelenos using Airbnb year-round to rent out rooms within their own homes. But he argued that those who leave town and rent out their entire residence during their absence should be limited to no more than 30 days a year.

"Beyond that, I think we should halt everything else they're doing," he said.

Koretz voiced dismay over the amount of money spent by Airbnb in San Francisco. But Rusty Hicks, who heads the Los Angeles County Federation of Labor, AFL-CIO, said he is not worried about a similar situation playing out in Los Angeles.

Union members already showed their ability to prevail against well-funded interests this year, Hicks said, by persuading city leaders to hike the minimum wage to $15 an hour by 2020. "When there is active engagement by regular people in the political process, regular people win," he said.

Airbnb has been offering its own message of uplift. Lehane argued that by giving homeowners the opportunity to earn extra money, Airbnb is helping members of the middle class survive in an "age of economic inequality."

"Home-sharing is very much generating supplemental income for people who are really facing significant economic stress in their life," said the company executive, celebrating his company's election victory.

In San Francisco, hotel workers have been negatively affected on two fronts by short-term rental operations, said Ian Lewis, research director of Unite Here Local 2, which has nearly 13,000 members.

Hundreds of the union's members have had to leave San Francisco because of high housing costs, he said. Hospitality workers also fear that when the next economic downturn hits, smaller hotels won't be able to survive against the explosion in short-term, app-driven rental listings, Lewis said.

"Over the long term, it has the potential to destabilize the industry that we've worked hard to ensure provides livable wages," he added.

Lewis says Proposition F is only the latest example of tech giants using their financial strength to influence an election in the Bay Area. Last year, tech investors and their family members put nearly $750,000 into a campaign committee to defeat San Francisco Supervisor David Campos, a frequent critic of Airbnb, in his bid for Assembly.

The biggest donor to the anti-Campos committee was LinkedIn co-founder Reid Hoffman, who gave $600,000, according to state contribution records. Hoffman, a partner with venture capital firm Greylock Partners, serves on Airbnb's board of directors, according to Greylock's website.

Hoffman did not respond to requests for comment from The Times. But in a 2014 online essay, Hoffman said he opposed Campos because he was unhappy with the politician's vote to keep San Francisco Sheriff Ross Mirkarimi in office. At the time, Mirkarimi was under fire over his guilty plea in a domestic violence case.

"The elected leaders of San Francisco had an opportunity to take a stand during that situation, and many of them, notably including David Campos, failed to do so," Hoffman wrote in his post.

Campos, who ran with the backing of Unite Here Local 2, lost his Assembly bid by two percentage points. Last week, he said he became a target of tech investors after pushing aggressively for tougher rules on short-term rental companies.

"They were pretty successful in sending a clear message," he said. "If you mess with tech and corporate interests, there's going to be hell to pay."

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