The Real Deal New York

City Council warns Airbnb investors of illegal hotel crackdown

Letter to Jeff Bezos, Ashton Kutcher and others threatens "the value of your investment"

March 11, 2016 01:15PM

Airbnb NYC Council

Map of Airbnb listings in New York (credit: Inside Airbnb) (inset, from left: Jumaane Williams and Helen Rosenthal)

City Council politicians are striking a new tone in their war against Airbnb, warning the financiers and celebrities backing the home-sharing giant that the city’s crackdown on illegal renters “could impact the value of your investment.”

Council members Helen Rosenthal and Jumaane Williams sent a letter Wednesday to more than 30 Airbnb investors – the likes of Amazon founder Jeff Bezos and actor Ashton Kutcher, as well as investment firms Fidelity, Sequoia Capital and T. Rowe Price.

The note cited how increased city funding for inspections and evictions of illegal short-term rentals poses a threat to their investment in the San Francisco-based company, according to Crain’s.

“For our part, if we were invested in a company that knowingly engaged in so much illegal activity, we would think twice about keeping our money in that company,” the letter said.

The correspondence is the latest wave of attacks from local politicians who claim illegal rental services like Airbnb are exacerbating the city’s housing crisis. The has roughly 1.5 million listings in 34,000 cities in 190 countries around the world.

New York state law prohibits apartments from being rented for less than 30 days unless the primary occupant also lives there, while the City Council will soon pass legislation increasing fines for New Yorkers caught posting their apartment as an illegal rental, Crain’s reported.

The Mayor’s Office of Special Enforcement saw its budget increased last summer as part of city efforts to battle such illegal subletting, and the crackdown recently saw authorities from the office raid an East Williamsburg property serving as an illegal hotel.

Airbnb, for its part, hit back in a statement against the City Council’s latest condemnation of its business model.

“Council members Williams and Rosenthal are clearly committeed to punishing middle-class New Yorkers who simply want to share the home in which they live in order to make ends meet,” a company spokesperson said. [Crain’s]Rey Mashayekhi

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