Photo by Howie Rosen

Rachel Smith with her granddaughter in front of her historic home

Rachel Smith purchased her Burlingame home in 2007 after receiving an inheritance. The 70-year-old retired high school teacher fell in love with the five-bedroom three-bath, 2996-square-foot historical Craftsman home built in 1912. It was more room than she and her daughter and her granddaughter needed.

In 2013, Smith extended the invitation to travelers wanting to stay in one of America’s hippest and one of San Diego’s oldest communities. She logged on to Airbnb.com and offered two of her five rooms to a family or out-of-towners looking for a place to stay. Her daughter Alexis helped navigate the website and learn the rules, regulations, and tax requirements.

“I bought this house for my family to enjoy and to entertain friends. But I still had these extra rooms. I thought how fun this house, this community, would be for families to come and enjoy. I guess I’m a dying breed, but I wanted to share this beautiful home with others, whether they be friends, my family, or people traveling.”

Smith decided on charging guests $80 a night, with the option of adding the additional room for kids or other members of their party for an additional $20. Guests had their own restroom, unfettered access to the downstairs kitchen, laundry room, backyard garden, and seats under the pergola. Kids had open invitations to play in the custom sandbox.

During the first year, in 2013, Smith had 16 AirBnB visitors. July was by far the busiest month with five groups of guests. In 2014, Smith had 28 guests. Guests typically stayed for two nights, however, on a few occasions, some rented the room for the entire month.

She hosted dinner parties for friends and family regardless of whether there were guests or not.

Smith’s open-door policy as well as her popularity on AirBnB soon drew ire from her Burlingame neighbors. They posted notes on cars parked in front of their houses, regardless of whether the car was owned by Smith’s family, friends, or guests.

Smith tried to accommodate the neighbors. She directed her friends and family to park elsewhere along Kalmia Street. She told the occasional guest to park on her driveway.

Tension with neighbors worsened. The notes turned to agenda items for the Burlingame Community Association to discuss. Complaints then flooded the city’s Code Enforcement department as well as to District Three representative Todd Gloria’s office. The complaints were complete with photos of parked cars and out-of-state license plates. Also included were pictures of people entering Smith’s house towing luggage behind them.

“As a private resident and member of a historical neighborhood, we continue to seek guidance and direction from the city about next steps we can take in regard to our options and rights to eliminate this potential threat to our neighborhood at large,” some of Smith’s neighbors wrote in a July 14, 2014, letter to the city’s Code Enforcement department. “It is not unusual to have several groups check in and out over the weekend, often two people per bedroom. Although there isn’t a noise problem we are concerned about security as there is a constant flow of strangers on the property.”

It didn’t take long for the city to get involved. On July 31, 2014, Smith received a “civil penalty notice” in the mail. “You are hereby notified that the property is in violation of the San Diego Municipal Code and you are subject to civil penalties…. Civil penalties for violations of the Municipal Code may be assessed at a daily rate not to exceed $2,500 per day per violation; not to exceed a total maximum of $250,000 per parcel or structure for any related series of violation(s).”

The city’s notice listed three violations. The first stated Smith was operating a “bed and breakfast establishment” without obtaining a neighborhood use permit. The second infraction accused her of blocking her driveway with a permanent barrier — previous owners had torn up the portion of the driveway along the side of the house to be used as a sitting area, leaving a 20-foot portion in front of the house. Lastly, the city dinged Smith for the graffiti that someone had sprayed on the concrete wall facing the alley.

Smith responded in an August 6 letter to land-development investigator Victor Nunez.

“I believe the allegations against me are unfounded and motivated by neighbors that erroneously feel entitled to intimidate me through frivolous complaints. I endeavor to be a good neighbor and good citizen; however, I am entitled to enjoy my property within the bounds of the law. I believe that I am doing just that.”

Meanwhile, Smith exchanged emails with Luis Carrillo, a business tax representative in the Office of the City Treasurer. On August 6, Carrillo, who said “I really love that website” — airbnb.com — “by the way,” explained that Smith need only pay rental tax, not transient occupancy tax because the house was considered “owner occupied.” He went on to offer, “Also for your friends and neighbors that are, will, or thinking about doing the same or similar thing, just have them email me with the number of rooms and address and we’ll get them set up.”

But down the hall at City Hall, Nunez and the Code Enforcement department weren’t backing down. By October 2014, Smith removed her profile on AirBnB and stopped renting out the extra rooms.

Bed, no breakfast

Keeping up with online home sharing websites such as AirBnB, VRBO, and Homeaway will continue to pose problems for the City of San Diego, especially if it continues to depend on old zoning laws to enforce current trends.

Take the claim that Smith was running a bed-and-breakfast, for example. According to the city’s own zoning laws, “bed and breakfast establishments are visitor accommodations within a residential structure where breakfast is typically provided for guests.”

Smith did not promise her guests breakfast, nor do any Airbnb hosts.

The language raises questions for Smith’s attorney and fellow AirBnB “host,” Omar Passons. “At a minimum, you’d think at least occasionally someone would need to serve food to be considered a bed-and-breakfast.”

There are other issues, says Passons.

“The state constitution requires that, at a minimum, a law must be clear enough for people to know what conduct is prohibited. The language describing a commercial bed-and-breakfast is more than a little vague.... It seems the Code Enforcement department realized it didn’t have a specific code section that fit, so rather than create one for AirBnB and other sharing economy sites, it is just trying to make this new round peg fit in a very old, square hole....

“Every person who rents out a room in their single-family home or lets someone rent their place while they are out of town should be very concerned about this precedent.”

However, instead of working with Smith to mitigate any impacts to her neighbors while the city looks into addressing home sharing, the Code Enforcement department has decided to stick to their guns and has scheduled an administrative hearing on March 5 to decide how much in fines Smith will be forced to pay. As part of the hearing, the city is using the dossier-like complaints from her neighbors as evidence.

“My client received over 200 pages of documents [which] let her know her neighbors had been taking pictures of her friends and family and that she could be subject to hundreds of thousands of dollars of fines for something that thousands of San Diegans are doing,” says Passons.

“Those neighbors mistakenly believed the photos were all Airbnb guests. It seems invasive. That neighbors can exert this much influence over another without even so much as a courtesy conversation is frightening.”

Some hosts believe the city is trying to crack down on home-sharing or at the very least, bowing down to pressure from needy neighbors.

“The guests are all vetted. The hosts are as well. If I were a real bed-and-breakfast, I’d have to accept anyone off the street. No, thanks,” says one host who wishes to stay anonymous for fear of retribution.

“Who are we hurting? If the neighbors really have issues with noise, parking, or trash, then there should be police reports filed. Then real infractions would be documented, not just a group of neighbors running to the city with complaints and Code Enforcement trying to find ordinances that apply to make them happy.” And yet, while the city applies archaic zoning laws to home-sharing websites, it has been proactive in ensuring that tourism taxes are paid.

In that regard, Smith followed the law. Since learning the tax requirements, she has paid a total of $421.80 taxes. There have been reports that city officials are demanding that hosts pay fines for not paying taxes. This despite, as in Smith’s case, running an Airbnb is in violation of the city’s municipal code.

Sitting at a large wooden table inside her Burlingame home, Smith remains surprised by her neighbors’ response as well as the city’s way of handling the matter.

“I live in a historic home and can’t imagine a more authentic experience for a traveller than to stay here and be part of the history. Why should people have to experience San Diego alone in a hotel room with a guidebook and Yelp, when they can have an actual person who loves their city?

“The sharing community is undeniably a mutually beneficial arrangement: I benefit from meeting new people, making new friends, and enjoying my home through their experiences. Most of all, I find pleasure in sharing my knowledge of the city, not to mention, my beach chairs, towels, and sunscreen.”

The city and council are currently grappling with the issue. Since a council committee heard several hours of testimony by AirBnB operators and users in support of the rental sharing website and the right to rent a room as a way to earn extra money. The city and its top attorney however, seem to be headed in a different direction. The city attorney has tried to steer away from a 2007 memo from former city attorney Michael Aguirre that concluded, “there are currently neither regulations nor prohibitions on short-term vacation rentals in single family residential zones in the City of San Diego.”

City attorney Jan Goldsmith says his predecessor was discussing renting out entire homes in residential areas, not rooms. That leaves in limbo over 1600 property owners who rent out rooms on a nightly basis. Until there is a policy, property owners such as Smith remain at risk of being fined tens, maybe hundreds of thousands of dollars.

“This case,” Passons says, “isn’t about noise or nuisance or the problems in other parts of the city with party houses, because none of that happened in my client’s home. The city’s position is that since no law actually exists for Airbnb, this commercial bed-and-breakfast law is ‘close enough.’ In this country, we don’t hit people with $250,000 in civil penalties for ‘close enough.’”