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Airbnb gains legitimacy in L.A., but opponents unite in New York

The city of Los Angeles last week announced an agreement with the lodging reservation website Airbnb that will require the technology company to collect transient occupancy taxes from the swelling ranks of short-term renters.

The agreement, which takes effect in August, helps to legitimize what’s known as the sharing economy, which matches travelers looking for rentals with hosts willing to loan out their properties. The L.A. deal also comes as the city works to upgrade zoning regulations to legalize short-term rentals and balance the benefits and potential downsides of such activities.

In contrast, the state of New York has been less receptive to accommodating short-term lodging in the sharing economy. Supported by a coalition that includes New York City Council members, housing advocates and the real estate industry, the state legislature just sent a bill to Gov. Andrew Cuomo that would slap steep fines on rental hosts who post listings for stays of under 30 days.

A spokesman for the governor’s office told AMI Newswire this week that the short-term rental bill remains under review.

In Los Angeles, supporters of Airbnb and other online peer-to-peer platforms see city officials moving to write an ordinance that acknowledges their concerns.

Last month, the city Planning Commission passed a draft ordinance that would allow hosts to rent out their primary residences to guests for 180 days, or six months out of the year. The draft would also allow city residents to rent out their second homes for 15 days per year.

Robert St. Genis, executive director of the Los Angeles Short-Term Rental Alliance, told AMI Newswire that his group and other supporters of short-term rentals have been working with the city on a new ordinance for two years.

Though he said progress has been made – an earlier draft ordinance allowed short-term rentals of primary residences for only 90 days per year – St. Genis argues that the city should not place any limits on the number of days a residence can be rented out to guests and should remove the primary residence requirement.

But he also saluted the city for signing the Airbnb agreement.

“We do welcome it because it is good for all parties involved,” St. Genis said, noting that it would benefit the city with additional millions of dollars per year and put the responsibility of collecting taxes in the hands of Airbnb rather than individual members of his group.

John Choi, Airbnb’s Southern California policy manager, also said the tax agreement is a sign of progress.
“This agreement is a huge milestone and will generate millions of dollars in hotel tax revenue for L.A. and also help local Airbnb hosts comply with the tax laws,” Choi said in a blog post.

In New York City, however, opponents of short-term rentals say technology companies are facilitating law breaking in a state where subletting apartments for fewer than 30 days is illegal.

In a recent op-ed in the New York Daily News, John Banks, president of the Real Estate Board of New York, and City Councilman Jumaane Williams argue that the growth of short-term rental activities has effectively taken coveted rental housing units off the market while threatening jobs in the city’s hotel industry.

Banks and Williams also noted that a 2014 study released by the New York Attorney General’s Office found that 72 percent of reservations made through Airbnb’s online platform violated state law.

James McShane, senior vice president of communications for the New York Real Estate Board, told AMI Newswire that short-term rentals also raise safety issues. Building owners must ensure that their buildings are insured and that residents understand proper procedures in the event of a fire or other emergency, McShane said.

“When an apartment has been illegally sublet, occupants may not be aware of these procedures,” he said, adding that there have also been complaints from tenants about excessive noise and security as a result of short-stay rentals.

Such sentiments have been echoed by members of the Progressive Caucus of the New York City Council. In a letter to Cuomo earlier this month, caucus members urged the governor to sign the bill that would crack down on illegal short-term rentals.

“This groundbreaking measure will go a long way toward stopping the proliferation of illegal hotels that currently puts affordable housing at risk,” the letter states.

Caucus members also contend there are now nearly 26,000 illegal listings online for New York City rentals and that these posts include almost 2 percent of the housing units in Manhattan.

But recently released Airbnb data, covering the period from June 1, 2015, to June 1, 2016, takes issue with some of the opponents’ arguments. While the caucus members point to the problem of “illegal hotels,” Airbnb contends that 96 percent of the hosts in its online community have only one listing, share their spaces only occasionally to supplement their middle-class incomes and struggle to survive financially in a city with a high cost of living.

Airbnb also said it has voluntarily removed more than 2,200 listings for New York City units that the company found could negatively affect the availability of long-term housing.

Another organization that opposes the New York legislation is the Travel Technology Association. The legislature’s passage of the bill last month prompted Travel Tech’s Matt Kiessling to charge that the state was standing in the way of economic progress.

“This legislation sends a clear signal that New York legislators are more interested in protecting legacy interests than the thousands of New Yorkers who use supplemental income from short-term rentals to make ends meet or the ever-growing numbers of travelers who prefer alternative accommodations to traditional hotels,” Kiessling said in a prepared statement. “New York should be at the forefront of encouraging innovation and entrepreneurship rather than enacting regulations that stifle it.”

In Los Angeles, St. Genis disputed the contention that short-term rentals have any significant impact on housing availability in the city. Full-time vacation homes – those rented out to guests for more than 120 days annually – account for only 0.002 percent of the housing market in the city, he said.

In order to keep up with the rising demand, the city would need an additional 100,000 homes per year over the next decade, St. Genis argued.