Airbnb may soon be legal in its hometown of San Francisco by Laura Lorenzetti @FortuneMagazine October 8, 2014, 11:37 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons Airbnb is on its way to becoming legal in its hometown, San Francisco.Local legislators have passed an initial bill that will allow locals to rent out their apartments and homes as long as they meet a list of stipulations. The law is meant to both legalize the practice — which has already taken root via companies such as VRBO and Airbnb — while also placing limits to prevent the “hotelization” of residential properties, reported the San Francisco Business Times.The approval of short-term rentals allows residents to better afford rising rents in the area said David Chiu, president of the San Francisco Board of Supervisors. San Francisco rental prices have been sky-high recently, even beating out New York City’s historically high rents. The median rental price in San Francisco is $3,200 a month, up almost 14% so far this year.However, if left unchecked, the service could put more pressure on the housing market by renting full-time to tourists, Chiu added.The Board of Supervisors will mandate that residents looking to rent out their homes have $500,000 worth of liability insurance coverage, have lived in the dwelling for 275 days out of the prior year, have a business license, and secure a permit from the city. The location also must not have any building code violations.Airbnb said the legislation is a “great victory.” The legislation “will give regular people the right to share the home in which they live and make it fair to share in San Francisco.”The technology-driven company, which is worth more than $10 billion, operates in more than 34,000 cities in 190 countries, and faces specific legal challenges depending on the city and state. Airbnb has also faced significant opposition in New York City, where Attorney General Eric Schneiderman is investigating hosts who participated in the service for possibly breaking housing laws and costing the city millions in foregone hotel occupancy taxes.The San Francisco legislation could set a precedent for other cities, though the bill still has to pass a second vote, which is expected on Oct. 21. Afterward, it would go to the mayor’s office for a final signature.