Governor Cuomo today signed legislation effective immediately that makes it illegal within the five boroughs to advertise entire apartments on home "sharing" websites like Airbnb for fewer than 30 days. Renting out an entire apartment for a stay shorter than 30 days is already against the law for most New York City hosts, but that hasn't stopped New Yorkers from advertising short term stays—a recent data dump from Airbnb revealed that over half of NYC Airbnb users advertise this way.
The state legislature passed the regulation back in June, but Cuomo demurred on whether he would sign or veto for several months. Earlier this week, Airbnb presented a series of proposals they hoped might sway Cuomo to veto, including prohibiting short-term rentals in public housing and limiting short-term rentals in rent-stabilized housing.
"This is an issue that was given careful, deliberate consideration, but ultimately these activities are already expressly prohibited by law," said Cuomo spokesman Richard Azzopardi in a statement. "They also compromise efforts to maintain and promote affordable housing by allowing those units to be used as unregulated hotels, and deny communities significant revenue from uncollected taxes, the cost of which is ultimately borne by local taxpayers."
Councilmembers and advocates have long argued that Airbnb should be transparent about New Yorkers who use the platform to operate illegal hotels. Unlike the cheery couples renting a spare room in Airbnb subway ads, these operators, they say, jeopardize the safety of longterm tenants, break state laws, and snatch up a significant portion of the city's already-dwindling affordable housing stock by renting out entire apartments, often in bulk.
"This law was desperately needed to stem the steady loss of affordable housing and to protect tenants," said Assemblywoman Linda Rosenthal, who sponsored the legislation.
The hotel industry also favors Airbnb regulation, as the startup has cut into its business. "Airbnb facilitates the creation of a black market for illegal and unsafe commercial rental properties that don't follow any of the same regulations as legitimate hotels," Vijay Dandapani, chairman of the Hotel Association of New York City, stated this summer.
Airbnb has countered that their platform is an important source of income for working people—according to the company, 78% of its users in New York earn "low, moderate, or middle incomes." The company has also promoted its efforts to self-regulate, announcing over the summer that they spent the last year removing 2,233 listings from their platform over concerns they might be illegal hotel operators.
At a city council hearing last fall, Airbnb's global policy head Christopher Lehane accused Council Member Jumaane Williams, a longtime proponent of stricter Airbnb regulations, of waging war on the middle class.
The new legislation, which applies to any illegal short-term rental advertisement regardless of the platform, will punish first-time offenders with a fine of $1,000, going up to $5,000 for the second violation and $7,500 for the third.
It's important to note that the city won't immediately start combing the site for all violators and issuing fines. Instead, fines will be administered by the Mayor's Office of Special Enforcement, which responds only once an illegal hotel complaint is filed.
City regulators have also said that illegal hotel legislation is intended to punish the worst actors. Vito Mustaciuolo, Deputy Commissioner of Enforcement at the NYC Housing Preservation and Development [HPD], testified last year that "the problem of illegal hotel rentals is not homogenous. We support the overarching goal to deter the most egregious offenders."
In response to today's news, Airbnb is making good on its threat to sue, on the grounds that the regulation violates the First and Fourteenth Amendments and the federal Communications Decency Act, which can protect websites from legal accountability for third-party content published on their sites. The defendants named are Mayor de Blasio, the City of New York, and Attorney General Eric Schneiderman. (While a September 7th letter from Airbnb's legal council to Governor Cuomo mentioned suing New York State, a spokesman confirmed Friday that the company has decided to sue the law's enforcing agents instead.)
Airbnb will be represented in part by Gibson Dunn. Partner Randy Mastro was involved in the action against the fast food wage increase in NY
— Matthew Hamilton (@matt_hamilton10) October 21, 2016
"In typical fashion, Albany back-room dealing rewarded a special interest—the price-gouging hotel industry—and ignored the voices of tens of thousands of New Yorkers," said Airbnb spokesman Peter Schottenfels in a statement. "A majority of New Yorkers have embraced home sharing, and we will continue to fight for a smart policy solution that works for the the people, not the powerful. We are filing a lawsuit in New York this afternoon."
Rosenthal said she was not intimidated. "Airbnb's legal claims amount to nothing more than empty threats," she stated. "We here in New York know how to write strong tenant protection legislation that does not run afoul of federal law, and I hope other cities and states will soon follow our lead."