Why did Airbnb give in to de Blasio?

Questions and answers about the company’s settlement with NYC

TRD New York /
Jun.June 15, 2020 08:50 AM
NY State Senator Liz Krueger (iStock)

NY State Senator Liz Krueger (iStock)

Airbnb and the de Blasio administration announced Friday a settlement to the lawsuit the company filed when the city demanded lots of information about its hosts. But the agreement gives the city all that information.

That raises several questions — some answerable today, others which won’t be resolved for months, if not years.

What was the company thinking?

Two years ago, under pressure from the hotel industry and affordable housing advocates, the City Council and administration enacted the data-sharing law. The idea was to make it easier to enforce Airbnb’s most despised state law, a measure banning rentals of fewer than 30 days in buildings with three or more units without an owner or tenant present.

Airbnb explained the settlement to its hosts by saying — in so many words — that it could lead to a revision of the 30-day law.

“We hope that our willingness to be transparent enables the state and the city to feel reassured that short-term rentals can be effectively regulated without blunt prohibitions,” Airbnb executive Nathan Blecharczyk emailed hosts. The deal will help Airbnb shed an outlaw image that set back legislative efforts.

But state Sen. Liz Krueger, a Manhattan Democrat and the company’s primary foe in the legislature, told The Real Deal that the 30-day law — which she pushed through the Senate in 2010 — is in no danger of being gutted.

“There’s nothing related to this lawsuit that increases the possibility of Airbnb getting anything like that,” she said. “The purpose of the 30-day rule is to make sure units are not taken out of permanent housing for people who live in New York City.”

Does Airbnb have a prayer in Albany?

Airbnb has a different view of its prospects at the state level. When its representatives meet with legislators about amending Krueger’s law, the first question they get is often why Airbnb doesn’t reveal more information about its bookings to the city. Now it will have an answer: “We gave the city everything it wanted.”

At first glance, it seems like the company jumped off a diving board without knowing if the pool had water. Its primary ally in Albany, Sen. James Skoufis, has a bill that would regulate and tax short-term rentals in New York City in a manner acceptable to Airbnb, and fellow Democrats Pete Harckham and the retiring Velmanette Montgomery are co-sponsors, but the settlement hardly guarantees it will pass. Last year it was amended twice, but it remains stalled in committee, as does the Assembly version, carried by Joe Lentol.

Krueger acknowledged some of her colleagues may see things differently, “I can only speak for me,” she said.

Without a new state law, is Airbnb viable in New York City?

Airbnb does have a fallback: As the pandemic eases and tourism resumes, the home-rental company might succeed in New York City even with the new disclosure rules. (The settlement calls for the rules to take effect six months after the city passes a law to enact them.)

Homeowners who meet certain criteria and agree to let Airbnb share their information with the city will see a chance to list short-term rentals without being harassed by city inspectors. And those hurt by the pandemic may be looking for extra income. An increase in homeowner hosting could make up for any dropoff from commercial operators, which one study found accounted for 28 percent of Airbnb’s New York City revenue. Airbnb disputed that study and says it has cracked down on illegal hotels.

Can cheaters beat the new system?

Various analyses have shown that a sizable portion of Airbnb’s New York City revenue was coming from illegal rentals — landlords renting out empty apartments to tourists rather than tenants — but stopping them has been difficult. The disclosure of host data will make enforcement easier, but not eliminate the lawbreaking.

“No matter how you write something, someone will figure out a way to get around it,” Krueger admitted.

Before the city passed its host-data law, the state made it illegal to advertise rentals that would be illegal. Hefty fines were authorized. Some thought that would allow the city to crack down on illicit rentals without inspectors having to catch violators in the act. But had that measure been a panacea, the city would not have bothered passing more legislation.

Evasion will certainly be harder under the new system. Creating multiple Airbnb profiles will no longer suffice to disguise a large Airbnb operation, because the city will get an account identifier for each transaction and can see if money from seemingly unrelated rentals is flowing to the same place.

“It’s very important that the city can get the exact information about [hosts] because there’s so many ways of doing anonymous accounts,” Krueger said.

Did the city concede anything?

Not much. The de Blasio administration agreed to carve out low-level hosts that it would rather not bother anyway. Of course, city government being what it is, inspectors still occasionally knocked on the doors of average-Joe Airbnb hosts who were actually following the rules and fined them for unrelated violations. Some of these stories ended up in the media, embarrassing City Hall. One judge who sided with a small-time host wrote in his decision, “Leave the poor guy alone.”

In another concession, the city settled for quarterly, rather than monthly, disclosures from Airbnb. One anti-Airbnb source said the city bureaucracy would never have been able to keep up with monthly data dumps in any case.

Will the pandemic change Airbnb politics?

Given the economic damage wreaked by the coronavirus shutdown, Airbnb is likely to double down on its message that home-sharing provides crucial revenue for struggling New Yorkers — keeping some in their homes. The company could also say that it can help draw tourists back.

But anti-Airbnb forces — the Hotel Trades Council, Hotel Association of New York City and their political allies — have a pandemic argument as well: Hotels in the city have closed by the dozens and occupancy at those still open remains under 50 percent. The last thing they need is competition from San Francisco-based Airbnb.

Will the new regime ease the housing crunch?

The main policy argument for banning short-term rentals of apartments is so New Yorkers can live in them. Airbnb has about 50,000 hosts in the city. If the settlement with Airbnb were wildly successful, it would increase the number of city residences by 1 percent. That would not make a noticeable difference in rents, but it would help — and cost the city nothing at a time when it’s slashing the capital budget for housing.


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