The city reached an agreement on Friday with Airbnb regarding a lawsuit the company filed after Governor Cuomo signed a law that made thousands of the New York City listings on the website illegal.

"We very much see this as a material step forward for our hosts," Airbnb spokesperson Peter Schottenfels wrote in a statement. Quoting from the settlement, Schottenfels wrote that Airbnb and the city would "work cooperatively on ways to address New York City's permanent housing shortage, including through host compliance with Airbnb's One Host, One Home policy."

Airbnb threatened to sue the city in September after state lawmakers passed a bill making it illegal to advertise entire home rentals for less than 30 days on Airbnb in June. The state's Multiple Dwelling Law meant it was already illegal to temporarily rent out entire apartments for less than a month—the new bill, which Cuomo signed into law in October—made it illegal for renters to advertise these already-illegal listings and imposed up to $7,500 in fines for lawbreakers.

The company filed a suit against the state, New York City, and Mayor de Blasio which argued that the new regulations were too vague and violated the federal Communications Decency Act because they held Airbnb liable for content created by third parties—the hosts—that were posted on the website. In November, the company dropped its suit against the state but continued to pursue legal action against the city. They notably hired Gibson Dunn, a law firm that has, among other things, represented the people trying to get rid of the Prospect Park West bike lane and defended Chris Christie in Bridgegate.

Airbnb initially accused the city of targeting both the website itself and working- and middle-class hosts who rent out parts of their own homes. However, Assemblywoman Linda Rosenthal said in October that the city would primarily prosecute commercial operators who use Airbnb to convert multiple apartments into rotating rentals for tourists.

"The Office of Special Enforcement understands what their goal is," Rosenthal said. "They weren't set up to pick off individual tenants."

After the settlement was reached, the city again clarified the real target of the regulations. "As Airbnb knows, this state law does not target their company," de Blasio spokesperson Melissa Grace told Politico. "Instead, it provides the City with an additional tool to use against those seeking to turn permanent homes into illegal, short-term stay hotels. The city will enforce this and other existing laws against bad actors, and appreciates the additional enforcement powers this new tool provides to protect New Yorkers and visitors from unsafe conditions."

In November, Airbnb announced its One Host, One Home policy, which states that New York City hosts can only advertise one listing—the home in which they live—on the website for short-term rentals. When hosts try to list more than one entire apartment for less than 30 days, they'll get an error message preventing them from doing so. The company says they're also actively removing listings that violate this policy.

Rosenthal told Politico that the lawsuit is "a win for everyone."

"I expect the city will now get down to the important business of enforcing the law against the serial lawbreakers on the site who turn out affordable housing into illegal hotels," she said.