We know that many New Yorkers are curious about NY Governor Andrew Cuomo's signing of Assembly Bill A8704C, regarding New York City's home sharing laws, and how it affects Airbnb rentals. In this blog post, we will help to explain the likely ramifications and outcomes from this decision, who it affects, and additional context, that I hope you will find informative.
What is the law that Governor Cuomo signed?
A8704C is an amendment to the Multiple Dwelling Law ("MDL"). Under the MDL, apartments in a building with a certificate of occupancy specifying that the building is a Class A multiple dwelling location, are to be used for residence purposes only and may not be rented out for periods of fewer than thirty days. Violation of the MDL can subject a host to potential fines from the city.
Before October 21st, the city lacked both the resources and mechanisms to effectively enforce the law because the onus was placed on the city to demonstrate actual violation of the MDL. This made the complaint-driven process both burdensome and costly for the city and often yielded few or no results.
A8704C eases the city's burden by applying penalties not only to the renting of an apartment in a Class A Multiple Dwelling, but also to the advertisement of any such unit. Under the MDL, as amended, penalties can now be as high as $7,500 per violation and the Mayor's Office of Special Enforcement ("MOSE") will no longer need to prove that an actual rental has taken place for a period of less than thirty days. The MOSE will simply need to show that a unit was advertised in a manner inconsistent with the MDL.
What happens if a person violates this new law?
Violations of the MDL, as amended, are now punishable by a civil penalty of not more than $1,000 for the first violation, $5,000 for the second violation, and $7,500 for the third and subsequent violations. If the city does issue a violation, the accused is entitled to a hearing to contest that violation.
These penalties are significant but only time will tell if they are levied across the board to all units in the city. Legislative proponents of A8704C have consistently stated that their chief concern has been a depletion of housing stock and upward pressure on housing prices. This is because by using Airbnb, commercial operators could easily convert long-term residential units into more lucrative short-term rentals. In the eyes of Albany, doing so takes residential units off the market and harms low and middle income New Yorkers (a process legislators have referred to as "rental arbitrage").
All in all, the majority of Airbnb hosts in New York earn low, moderate, or middle incomes, many of who use Airbnb income to afford and stay in their homes. It is unclear at this moment of the enforcement of A8704C will be focused on all properties or only towards commercial operators.
One significant bright spot, is that the bill's author, Assemblywoman Linda Rosenthal, is on record as saying that the bill is looking to target commercial law breakers, not average New Yorkers looking to rent out their home while they travel. "The Office of Special Enforcement understands what their goal is," Rosenthal says. "They weren't set up to pick off individual tenants." Rosenthal adds "What we're after are the commercial operators...When you jay-walk, nobody is going after you. It's the exact same thing."
Taken at face value, Rosenthal's words should be very reassuring to anybody who still relies on the rental of their home when they travel for work or leisure.
What is Airbnb doing to fight this?
Immediately after the signing of the bill, Airbnb filed a federal lawsuit in Manhattan's Southern District, naming state Attorney General Eric Schneiderman, Mayor Bill de Blasio, and the City of New York as defendants. The suit alleges that the new law violates the First and Fourteenth Amendments, as well as the Federal Communications Decency Act, which can protect websites from legal accountability for third-party content posted thereon.
Airbnb spokesman Peter Schottenfels released the following statement following the signing of the law: "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...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."
Airbnb held a rally on Wednesday October 26th outside Governor Cuomo’s office in midtown Manhattan. The rally brought together members of the NYC Airbnb community, including MetroButler, to show unity and support for Airbnb in New York.
What is MetroButler's opinion on this development?
Looking at these factors in aggregate, enforcement against middle class New Yorkers runs directly contrary to the expressed intent of the legislators who drafted this bill. Not only does the bill run against the legislators' stated intent, but given Airbnb's history of successfully using grassroots tactics to mobilize its user base in other cities, this will likely be a drawn out political and legal battle.
At MetroButler, we are of the strong opinion that the city should not target individual hosts, and that the city should indeed focus its efforts on the large scale commercial operators that Assemblywoman Linda B. Rosenthal and Senator Andrew J. Lanza, sponsors of the bill, have consistently referred to as "bad actors".
What does it all mean?
The short answer is, it's too early to tell. While this is certainly a hurdle for Airbnb, home-sharing hosts, and New York City, there are several variables at play and ways this story might unfold in the coming months. Airbnb has already sought emergency injunctive relief that could place a hold on the law, pending the outcome of Airbnb's current lawsuit.
We’ll keep updating our blog as any developments occur in the Airbnb vs. NYC regulation balance. For additional reading on this topic, we encourage you to check out Skift's amazing breakdown of the complete history regarding Airbnb's legal jousting in New York City.
CEO @ MetroButler