BY JACKSON CHEN | Governor Andrew Cuomo has signed into law a bill that imposes escalating fines on those who advertise rentals of unoccupied apartments for periods of less than 30 days. Cuomo signing the new law on October 21 triggered the popular home-sharing company Airbnb to file a lawsuit later that day.
The new law, sponsored by Upper West Side Democratic Assemblymember Linda Rosenthal and Staten Island Republican Senator Andrew Lanza, prohibits tenants from advertising the rental of their entire apartment — like listing a unit through Airbnb — for less than 30 days when that tenant isn’t there. Landlords are similarly barred from listing empty apartments for such short-term rentals.
Rosenthal explained that the aim is to crack down on commercial operators of residential buildings using Airbnb to fatten their profits while, in turn, reducing the available permanent housing stock in the city.
The measure Cuomo signed builds on a 2010 law prohibiting such rentals in multi-unit buildings by penalizing those advertising offers of the short-term arrangements.
Under the new law, first-time offenders would receive a $1,000 fine that would increase to $5,000 for the second offense and $7,500 for the third strike. The bill passed the State Legislature overwhelmingly in June and was delivered to Cuomo on October 18. He signed it three days later.
“This is an issue that was given careful, deliberate consideration, but ultimately these activities are already expressly prohibited by law,” Rich Azzopardi, a spokesperson for the governor, said in a statement, referring to the earlier 2010 enactment. “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.”
Rosenthal praised Cuomo’s signing of her bill, noting the eagerness of numerous elected officials and the tenant advocacy community to see it become law.
As it made clear during the September launch of its Fighting for Hosts campaign, however, Airbnb was prepared to fire back once the governor signed the bill. During the lead-up to Cuomo taking action, it had repeatedly warned it would pursue legal action if it was signed.
On Friday, just hours after the bill became law, Airbnb sought an injunction to prevent it from taking effect and filed a lawsuit charging that the measure violates the Communications Decency Act, which frees website operators from liability for what their users post on their sites, and the First Amendment of the US Constitution.
“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,” Josh Meltzer, Airbnb’s head of New York public policy, said in a written 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 people, not the powerful.”
To counter the law, the San Francisco company retained the California-based Munger, Tulles, and Olson and the New York office of Gibson Dunn to file a lawsuit against Eric Schneiderman, the state’s attorney general, as well as the City of New York and Mayor Bill de Blasio.
Just days before Cuomo announced his decision, Airbnb attempted to appease its naysayers with a reform proposal that revolved around five new rules for home-sharing. According to its October 19 announcement, hosts would only be able to list one property, Airbnb would require them to register on an online system, landlords would be able to secure a portion of the revenue from tenant hosts’ rentals to put toward building maintenance, the company would enforce a “three strikes” policy barring hosts after repeated breaking of the rules, and Airbnb would collect taxes on their hosts that would be dedicated to tenant protection and affordable housing in the city.
But Rosenthal argued the announcement of a reform proposal shortly after Cuomo received her bill was “a disingenuous way to work on issues.”
“The things they suggested at the 11th hour, no one has stopped them from doing those the whole time,” the assemblymember said. “They could’ve always done that, why did they have to be dragged to do that?”
Instead, Rosenthal argued, Airbnb could have been proactive in preventing and removing those who were clear abusers of its system and should have listed New York State laws on its website to inform potential hosts of their rights and limitations.
In July, Airbnb, in reaction to criticism voiced by legislators, announced the removal of 2,233 listings in New York City it suspected of being posted by illegal operators.
With the two sides now enveloped in a legal battle, Rosenthal insisted that her bill does not clash with the Communications Decency Act because the fines target the hosts who are the users of the site, and not Airbnb itself. Acknowledging the matter is now in the courts’ hands, the assemblymember added, “We’re doing what we think is right.”
“Airbnb has faced these issues everywhere in the world,” Rosenthal said. “Increasingly, everyone is saying this is ruining our stock of affordable housing. The people who lose are the permanent residents who end up living in de facto hotels because the people who live next door to them change overnight.”
