2 Investigates: Cities play catch-up on stopping short-term rental abuse

Short-term rental platforms like AirBNB have become a target for criticism amid the Bay Area housing crisis. And according to some city officials, they have also quickly grown into a source of cash for people looking to exploit lucrative loopholes.

For months, 2 Investigates examined an extreme case of alleged home sharing abuse after receiving multiple reports about a host named Steve Barbarich of San Francisco.

Regulators say they know him as a serial renter linked to more than a dozen properties in San Francisco. The city has cited ten of those properties for violating local short-term rental laws, according to records. They say Barbarich was in repeat violation of one of the short-term rental ordinance’s main rules, which requires the host must be the property’s permanent resident.

Two of the alleged victims of the case were landlord Daniel Kahn of Mill Valley and property manager Damon Fanucchi of San Francisco, according to records.

Both say Barbarich rented an apartment, signing long-term leases, but began to list the properties online instead of actually living in the unit.

“He was my tenant that lived here. He would call sometime when there was a leak,” said Kahn who rented out his home on Carolina Street. “In December, one of the neighbors called that there was an enormous amount cars and people coming out of the place. Neighbors were always concerned because they never met him or saw him.”

Turns out Barbarich was listing Kahn’s property and others on home sharing platforms making more than $400 a night, according to documents.

“He’s booked twenty out of thirty days for sure, so he’s making a pot of money,” said one neighbor who didn’t want his identity revealed out of fear of retaliation.

The complaints resulted in citations by the city’s Short Term Rental Office and a pricey daily fine of $484. Exacerbating the problem for the owner was that instead of going to the host/tenant, the fines were levied against the landlord Daniel Kahn and Fanucchi’s client.

Fanucchi said Barbarich refused to take down the violating home sharing listing unless he and the owner gave him free rent.

“Basically threatening if we don’t allow him to have his way then he’s going to continue what he’s doing,” said Fanucchi.  

When asked what AirBNB did about the situation when they contacted the platform, Kahn and Fanucchi both said they received little help.

“It’s been difficult getting through to them, and when you do get through to them, it’s difficult to get our case to be heard,” said Fanucchi.

“I think AirBNB makes it very easy for people to do this. There’s very little incentive for him to stop,” said Kahn.

Kevin Guy, the director of San Francisco’s Office of Short Term Rentals, said there is a sizable although unknown number of egregious actors systematically taking advantage of the growing home sharing movement.

“It’s very lucrative whether you’re doing it legally or illegally,” Guy said. “They can’t do it alone. They need a significant amount of support. There seems to be partnerships anywhere from three to ten people, several of these types of partnerships popping up.”

After a recent legal settlement between AirBNB, HomeAway, VRBO and the City of San Francisco, platforms may now be held liable for home sharing abuse. Also, the platforms will be sharing more of their data with city officials so regulators can see the efficacy of changes.

In a statement to 2 Investigates about the case, AirBNB wrote, “The host [Steve Barbarich] was permanently banned from our platform for violating our terms of service earlier this year. Since April 2017, we have permanently removed more than 1300 listings in San Francisco from the AirBNB platform that appeared to be shared by hosts with multiple entire home listings and were in violation of our One Host, One Home policy. We look forward to working with city officials in the coming months to implement a new registration system that will ensure the City of San Francisco has the information they need to enforce home sharing rules."

AirBNB also said it’s developing a system in San Francisco called “Pass Through Registration” to make complying with city registration requirement easier for hosts. “Hosts will be able to register their short-term rental with the City, obtain a business license, and pay the required fee all through the AirBNB platform.” The system is already up and running in Chicago and New Orleans.

Other changes include having the city send a notice to the owner of the property that is listed “informing them of the receipt of an application to list the space on AirBNB,” cutting down on fraud.

2 Investigates contacted Barbarich over social media and spoke to him on the phone. He declined an interview but insisted that he had permission fro the landlords to list the properties in question. And “when the laws in San Fran changed the city told [him] to stop so [he] complied and moved out of all of them.”

But even with Barbarich out of Kahn’s property, the city was not done with its enforcement actions at the address. In a surprising twist in our investigation, Kahn was recently cited for improperly listing his San Francisco home on AirBNB himself.

After getting Barbarich out of his rental, Kahn listed the same unit on AirBNB for $480 per night, according to online posts confirmed by the city’s Short Term Rentals Office. 2 Investigates caught up to him at his main residence is in Mill Valley.

“I was not aware of the rules. When the City informed me I stopped,” he said.  “Okay, so now it’s off.” Kahn’s listing is down from AirBNB and he is banned from listing that home for a short-term rental in San Francisco for the next year, according to regulators.

San Francisco’s City Attorney Office is currently reviewing Barbarich’s case.

 

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