Airbnb has finally come to the table in New York - but it might be too late

On Wednesday, Airbnb released a new set of rules to guide homesharing in New York City.

But with the bill that could cap Airbnb's business in the city sitting on Governor Cuomo's desk, Airbnb's move could be too little, too late.

Airbnb, the homesharing platform worth around $30 billion, says its new rules go further to regulate homesharing in New York than its rules in any other city, and it touts them as "comprehensive reform" that brings housing regulations into the 21st century. Airbnb's global head of public policy Chris Lehane even goes so far as to compare what Airbnb is doing to the rise of the automobile, which outpaced existing laws.

But now that the Airbnb bill has been called to Cuomo's desk and the governor has until Oct. 29 to veto it, sign it, or do nothing - which would effectively sign it into law - Airbnb's new rules might be a "Hail Mary" pass to save itself at the 11th hour.

The law

The proposed law in question arrived on Cuomo's desk on Tuesday, meaning that the governor now has 10 days to make his decision. The bill passed in both houses of the New York State Legislature in June.

The bill is a follow-on to a 2010 law that bans rentals of less than 30 days in a multi-unit building if the tenant is not present, which was aimed at cracking down on illegal hotels. The 2016 bill bans the advertising of such rentals, meaning that hosts could not list a full apartment for rent on Airbnb for less than 30-day increments. Hosts caught listing their unit would be fined up to $7,500 - more than most hosts in New York make in a year.

The reaction

Airbnb claims that the law is harmful to the middle class and would impose harsh penalties on its hosts, 96% of whom are hosts with one listing who rent their space 41 nights a year on average, Airbnb says.

"It's baffling to us in this time period of economic inequality that folks would be looking to impose fines as high as $7,500 on a middle class person looking to use the home that they live in to help make ends meet," Lehane said during a call with reporters on Wednesday. "Those who want to be on the right side of history really need to understand what's at stake here."

But proponents of the new law have argued the opposite, saying that Airbnb is responsible not only for gentrifying neighborhoods, but for contributing to the city's lack of affordable housing. Advocates for the bill say that commercial operators are listing vacant apartments for short-term rentals on the app, rather than making them available to tenants for long-term leases.

In June, a report titled "Short Changing New York City" was released, which stated that rental rates are rising most quickly in neighborhoods where Airbnb is popular, and that Airbnb is responsible for gentrifying predominantly minority neighborhoods. The study was commissioned by advocates for affordable housing.

At the time, Airbnb pushed against that report, saying it had taken down 2,233 listings within the last year that appearded to come from hosts listing multiple homes that "could impact long term housing availability." The report states that Airbnb removed 1,585 listings in Manhattan, 464 in Brooklyn and 126 in Queens.

The new rules

Airbnb is introducing five new rules in its proposal, which the company titled "Sharing for a Stronger New York":

1. One host, one home - Starting Nov. 1, Airbnb is rolling out new technology that will prevent hosts from listing more than one home in the city.
2. Simple, mandatory registration - Airbnb plans to create an online registration system for its hosts similar to its system in Chicago. Airbnb says the mandatory registration process in San Francisco is "an onerous, paper­based registration system" and the New York system would be quick and straightforward.
3. Making home sharing work for all - Landlords will be able to use part of the revenue from an Airbnb rental for building maintenance.
4. Good neighbor rules - Airbnb will implement a "three strikes" rule that would bar hosts from renting their property if they violate city or state laws
5. Pay tourist taxes to support affordable housing - Hosts in New York would pay all local and state lodging taxes, which Airbnb estimates would generate $90 million per year in New York State. Airbnb already collects taxes in Pennsylvania, Connecticut, and Rhode Island.

The rules are aimed at making it tougher for commercial operators to list their available apartments on the site and to ensure that those listing their homes are regular, middle class people "just trying to make ends-meet."

So why is Airbnb publishing these rules now, when they could have done so earlier on, perhaps avoiding this government scuffle?

"Any number of the policies that are represented here on this document are policies that we've been talking about for some time in New York," Lehane said. "We put them all on this one piece of paper here so folks can see them and package them together. These are all things that we can substantively solve for."

But the bill's sponsor, Assemblywoman Linda Rosenthal, told Bloomberg that the new rules are a last-minute attempt to negotiate a better deal.

"Airbnb's entire business model is predicated on breaking the law," she said. "At the 11th hour they're desperate to change the narrative, and we do not negotiate in newspapers, in the press, and especially with the lawbreakers."

What's next

Airbnb has threatened to sue the state if the bill is signed into law, writing in a formal letter to Cuomo in September that it "would have no choice but to immediately file suit against the State of New York and ask a court to declare the statute invalid and unenforceable as well as to award any damages and fees as appropriate."

Chris Meltzer, head of public policy in New York, said Wednesday that Airbnb will keep working on the problem, whether the bill is passed or not.

"Regardless of the outcome, our work on this issue continues," Meltzer said.

"We look at this bill as not really addressing the problem here, which is making sure that regular New Yorkers who are sharing their home occasionally to make some extra money to make ends meet are protected while we target enforcement at the commercial operators who are really running illegal hotels and taking housing off the market."

It's unclear how much Airbnb stands to lose if the bill passes, but New York is Airbnb's second-biggest market. As of June 1, there were 41,373 total active listings in New York's five boroughs and 22,253 of those were entire homes, which are not legal, according to the 2010 law.

If those homes can no longer be listed on the app if the bill passes, Airbnb could stand to lose half their listings in New York. Since the company makes as much as 15% off each listing - between 6% and 12% from guests and 3% from hosts - this could be a significant financial blow to the company.

But for now, Lehane seems unconcerned about the hit Airbnb might take in 10 days. The company is successfully regulating its hosts in cities around the globe, he said, and is confident that lawmakers and advocacy groups in New York will accept Airbnb's new rules, too.

"At the end of the day, if Havana, Cuba, can figure this out, it seems to me that New York City ought to be able to figure this out," Lehane said.

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