Some Thoughts On Airbnb's Struggles In New York State

As many readers likely know, this week New York State Governor Andrew Cuomo signed a bill called S6340A/A8704C, which will levy heavy fines on individuals who advertise short-term rentals of residential multiple dwelling units in New York. This ends an effort that lasted several months to convince the Governor to veto this bill which was passed by both legislative bodies in Albany earlier this year.

Airbnb promptly filed a federal lawsuit as the New York Times reported. The Times piece states that:

In its lawsuit, filed Friday afternoon in Federal District Court in the Southern District of New York, the company contends that the law violates the company’s constitutional rights to free speech and due process, as well as the protection it is afforded under the Communications Decency Act, a federal law that says websites cannot be held accountable for content published by their users.

It is possible that this matter will be settled by the courts.

But it is my hope that, instead, calmer heads will prevail and New York State will pass sensible legislation that allows short term rentals when the tenant or owner is not present.

Airbnb has proposed a five point plan that attempts to address many of the issues that New Yorkers have with short term rentals.

This proposal is similar to legislation that has been adopted in large urban cities like Chicago.

There are many reasons why the current situation is not ideal for anyone. Most people living in apartment buildings don’t like the idea of an Airbnb in their building. It is also problematic when landlords to take apartments off the rental market and create illegal hotels. And landlords need a way to enforce the rules outlined in their leases.

On the other hand, many New Yorkers use income from short term rentals to allow them to afford an apartment in NYC when they have jobs that require them to travel extensively. There are also many New Yorkers who rent their homes during busy periods to make some extra income.

An outright ban on short term rentals is a bad thing for many New Yorkers.

I am certain there is middle ground to find a compromise that addresses the legitimate issues while allowing short term rentals to continue. And I am hopeful that will eventually happen.

Both sides are to blame for where we are right now. Airbnb allowed the NY short term rental market to emerge over the past seven years without sufficient concern over the negative impacts of unregulated short term rentals. It took way too long to engage in a real and substantive discussion with legislators and regulators and when it did, there was a lot of bad blood between both sides.

On the other hand, the hotel unions and the real estate industry have used their significant clout in Albany to push for a law that is overly restrictive and hurts many New Yorkers. And they got the legislature and the Governor to support it. It shines a bright light on the kind of back room dealing that voters are sick and tired of, in Albany and all around the US.

I would urge the Governor to provide some leadership here now that he has satisfied the legislature by signing their deeply flawed bill. There is a proposal on the table from Airbnb to regulate short term rentals sensibly. The Governor and the legislature should engage with that proposal. And the real estate industry should engage as well. Short term rentals can be a good thing for them too.

I am confident that we have not seen the end of Airbnb and short term rentals in NY State. If calmer heads prevail we can get short term rentals that make sense for NY State and NY City. And that is what we should do.


Comments (Archived):

  1. Aaron Klein

    We really shouldn’t be surprised when we get the big government politicians we voted for.

  2. Richard

    Airbnb should release all data, which like crime data is relevant to the issues at hand.

  3. Frank W. Miller

    Do you have any investments in AirBnB?

      1. LE

        A most famous case with Fred actually.Anyone not familar.http://www.businessinsider….It’s more than that though. Older people (like me, you, JLM, Fred, Arnold, Sigma, William to name just a few) would certainly be more likely to reject the idea of someone using their belongings that they worked long and hard to get. The way I was raised you didn’t even let your neighbor test drive your car, for fear of your insurance rates going up as a result. Kind of like sharing our wife with another guy. Not something I would do.I worked fucking hard for anything that I have. Really hard. No way I want someone breaking it or damaging it. Dates back to an era where if your parents bought you something and you lost or broke it they didn’t replace it. Plus they didn’t buy you things other than during the holiday or your birthday. So anything you had was extra special.My stepson is watching the game on his laptop today. I keep telling him “wouldn’t it be nice to have courtside seats or got to sit in the owners box”. He honestly replies that he is fine watching the game on TV or on the computer. Shit even I’d like to watch a game in the owners box.Good luck with the Cubs!

        1. pointsnfigures

          Last night was surreal.

          1. LE

            Stuff like this rises to the level where even I am excited.

    1. fredwilson

      No. But we do use Airbnb to list a property in Venice Beach California

      1. LE

        I am thinking that the dynamic here is more “not wanting to be wasteful” as opposed to “offsetting expenses and/or turning a profit”.My twist on this would be to let teams of people that you invest in use the place as a retreat. Which I would think would have a greater benefit and leverage than the money that you are making by using Airbnb. Very likely could equal the tax benefits if creatively done.I recognize that the idea is the easy part, harder part is a framework to make it happen.

      2. Richard

        Im curious, why would you rent out your home?New Rules for VeniceAll homeowners, rental property landlords, and tenants would be required to register with the city. Registration would entail obtaining a “Transient Occupancy Registration” certificate to pay hotel taxes.Tenants would have to get “explicit approval” from their landlord to rent out their units.Hosts would only be allowed to rent out a room or entire residence at their “primary residence”—where they live up to six months per year—for up to 180 days annually or face fines.A non-primary residence, a.k.a. a vacation property, could be rented, but for no more than 15 days.The property couldn’t be under rent control or designated as affordable housing—the goal is to protect tenants from being evicted by landowners seeking higher rents.Guest houses, RVs, trailers and other “second dwelling units” would be barred unless it’s the host’s primary residence.Hosts would be legally responsible for nuisance violations by guests.

      3. Frank W. Miller


  4. Salt Shaker

    I think we’ll see a spike in NYC hotel pricing as the legislature effectively reduced competition.It should be noted that the law on the books in NYS already precluded short-term rentals of less than 30 days, though that law was not ruefully enforced. The new legislation that was just passed precludes the LISTING of an apt. for less than 30 days, fundamentally eliminating the marketing engine.Slippery slope. I’ve occasionally used Airbnb and VRBO when traveling but frankly resent the revolving door of transients in my NYC apt. building. Hypocritical? Yes, admittedly. I think there needs to be some middle ground on restrictions and most def a transaction should be taxable. All co-ops pretty much disallow, while condo bylaws may restrict or forbid such arrangements too. I believe it should also be illegal for tenants of rent stabilized apts to participate and profit on the backs of landlords who fundamentally are already dealing w/ repressed rent rolls (below FMV). As a former landlord of rent stabilized apts. in NYC, I feel very strongly about the last point.

    1. Richard

      Yep, with HOAs exceeding $1000/month, Airbnb hosts are free loading on other condo owners. If you do Airbnb in a condo, 25% should go to the HOA.

    2. LE

      I think we’ll see a spike in NYC hotel pricing as the legislature effectively reduced competition.Pricing can’t spike more than what the current supply and demand would dictate. Generally with something like this if the price of hotel rooms increases then in theory more hotels would be built thereby increasing supply. Just like is happening with high end condos price in the low to upper 8 figures. Now there is an oversupply. [1]Nobody (as I’ve mentioned) has to take a trip to NYC. And it’s doing just fine with the amount of tourism there currently. Plus as others have mentioned you can stay in other locations around the city.[1] Amazing that developers can not understand a market that is driven in the short term and do that. Shows what happens when it’s so easy to raise money and build build build.

      1. Salt Shaker

        The hotel industry wouldn’t be lobbying so aggressively if it wasn’t already impacting their biz. I’m surprised Airbnb hasn’t done (or maybe they have) an economic impact study by surveying short-term NYC renters using their service. My hunch is that without having a discount on accommodations many wouldn’t travel to NYC cause hotel pricing is too high. The net effect is they may be prone to spend more money in other areas thereby stimulating the local economy. Like you, however, I believe downside risk w/ safety, transient renters, prop values, trumps the above.

        1. LE

          The hotel industry wouldn’t be lobbying so aggressively if it wasn’t already impacting their biz.Why does that matter? What I mean is why does the impact on the hotel industry matter at all? It can be bad for the industry and bad for renters (or condo owners who use and have no interest in renting out) as well. You know the saying “the enemy of my enemy is my friend”.My hunch is that without having a discount on accommodations many wouldn’t travel to NYC cause hotel pricing is too high.So what?Fred is all for this it seems. Because in the end it has little impact on him personally. He is not renting out his place (I am guessing) at least his primary residence. And i don’t believe he lives in a multi unit building, at least not one with 100 units where he would see transients in the elevator or feel any security concern. If I had to guess I am thinking he might consider renting out some of his vacation homes because that is a different situation (not as many valuables there only one factor).The net effect is they may be prone to spend more money in other areas thereby stimulating the local economy.Last I heard the economy in NYC is doing pretty well.And you know this is the same argument that people use to rationalize legalizing pot. Saying it’s a great way to raise tax money (as only one factor) so let’s ignore the impact on anyone.

          1. Salt Shaker

            It’s all about tax rev for the city, and in NYC there’s frankly never enough.

          2. LE

            Democratic city with social programs makes sense. Same reason legalizing weed is in favor. Ignore the downside, look at the upside. Fall of the roman empire.

        2. Drew Meyers

          It’s largely a myth that AirBnB is a budget option these days. They started out as one, but are largely the same price as hotels now (though yes, you get a bigger/different type of space).

          1. Salt Shaker

            Agree. But you do get more bang for your buck. Hotels gen post sq. ft. per room when booking, Airbnb should do the same. Big diff bet. 150K and 1K sq. ft. I think higher end bldgs will increasingly enforce restrictions, which will diminish quality of inventory in markets like NYC.

    3. Kevin Schultz

      I think there is a very big difference between VRBO or AirBnB in a vacation market than in NYC. The vacation condos are designed to be rented out, the means of connecting vacationers and owners just changed. AirBnB in NYC apartments is a whole new ballgame.I generally prefer these things be settled on a building by building level. My landlord prevents AirBnB in no uncertain terms. If I was an owner in a building I would prefer it banned AirBnB. Banning it at the state level is a bit harsh. But this is what happens when you are not responsive to people’s concerns. Even now AirBnB is not getting it.They propose to address some of the market level issues by tamping down on people that are running hotel chains. They have nothing in there to deal with the negative externalities on the other tenants in a building. Sure, setup a complaint hotline. What does that get me? If the people above me have tenants coming and going, how do I know if I should call AirBnB or VRBO or Craigslist? A 3 strikes rule? I’ve never had to call the cops on any of my neighbors in 5 years of living in the city, but you want it to take 3 times before we can do something about an AirBnB unit. And don’t get me started on quoting insurance. If we have to get to the point of making insurance claims, things have already gone horribly wrong. They’re basically just not addressing anything up until AirBnBs units lead to fire/theft/water damage or you have multiple ridiculous parties in one unit.

  5. pointsnfigures

    AirBnb is not Uber because it’s living arrangements. But, I strongly believe that individual property rights are more important than collective ones. AirBnb, VRBO and other sites help people afford going to places like NYC. I have a friend who brought his 5 kids to Chicago and AirBnb’ed. He never could have afforded a hotel, and his kids would never have had the experience.It’s expanding the market. I doubt seriously if the hotel industry has been damaged by AirBnb in major metro areas. It’s just a gut feel, I have no data to back up my claim.If we don’t allow competition, we will put governors and limits on the pace of innovation.

    1. LE

      I have a friend who brought his 5 kids to Chicago and AirBnb’ed. He never could have afforded a hotel, and his kids would never have had the experience.Quite frankly I don’t get this attitude. If he can’t afford a hotel in Chicago that’s unfortunate however the rights of other owners should be impacted for his non essential benefit. Nobody has a right to travel if they can’t afford to travel. I don’t have a right to use an empty seat on an airplane or pay a nominal fee because it isn’t being used. I have to have enough money to pay for the seat at market price.The issue here is impact to others in some way. Everyone (in the same way the Clintons justify their foundation) is simply looking at one axis of benefit, without considering the downside to others.

      1. Richard

        I suggest this friend do what my dad would have done. Find a less expensive motel outside of town and take the train into town for the day.

        1. LE

          Exactly. In the 70’s when my Dad was exhibiting at the NYC Gift show he would stay at the Holiday Inn near Columbus Circle (where the Coliseum was and the show was at, prior to Javits). The help would stay at the Henry Hudson Hotel [1] which back then was a flophouse. My dad had to make sure one worker in particular was back in his room at night, lest he was out drinking and wouldn’t show up the next day.[1] https://www.morganshotelgro

    2. Anne Libby

      Sorry, but I don’t really care if tourists can afford to visit the city as much as I care about my safety in the laundry room, and the shrinking stock of affordable housing — which is actually chilling to entrepreneurship. And community.

      1. Anne Libby

        (And actually, I’m not sorry!)

      2. LE

        Exactly! It’s entitlement at the extreme.Story: My younger brother in law, a millennial, got married a few years ago. At the time he lived in the city and I actually turned him on (prior to marriage) to airbnb. So he would rent his place out when he traveled. When he got married he still traveled. And he continued to rent out his place to complete strangers while his wife was home alone with them!. We couldn’t believe it. She finally complained and said she was uncomfortable so he stopped doing it. Like he actually had to be told to do this. Amazing.

        1. Anne Libby


      3. pointsnfigures

        Understand “fear in the laundry room”-except you can’t choose your neighbors unless you are in a co-op. So, there is always a risk. I say, embrace the free market. Embrace individual liberty and property rights. Allow it to set prices. The market will clear and it will be better for everyone.

        1. Salt Shaker

          Represses prop values, though. There’s a reason why (smart) prospective buyers of condos look at owner occupancy rates in a building, the assumption being owner’s care and renters less so, since they don’t have an equity stake. Allowing for short-term renters potentially deflates prop values even further.

          1. pointsnfigures

            Unless they band together inside their building to figure out ways to maximize it. Sort of like solar power. Best way to have solar is unbundle. Best way to figure out Airbnb isn’t govt regulation, but unbundle building by building.

          2. LE

            In a shore condo that I own I was told (haven’t verified this) that banks won’t mortgage in a building under x% owner occupied. This was told to me as a justification for charging owners who rent out, even on a monthly basis, a higher condo fee. The other justification was that the management company has more work with renters than it does with owners. Since I am now an owner renting out (don’t use the place anymore, got a long time ago and got tired of it) I wrote a letter implying that it was possible that they would get sued for this policy. I think they are reconsidering it now. What I found out was that if a building had lawsuits pending it also impacted whether a mortgage would be made (haven’t verified that).

        2. Anne Libby

          Jeff, you know me, I am a petite woman. I don’t have the luxury of individual liberty and freedom that a man of your physical stature has. I still get harassed in public — routinely.I have a very finely honed sense of personal risk, traveling by myself starting at about 14 on public transportation and in the street in Chicago and NYC — and traveling all over the world and living in urban centers for more than 30 years.My neighbors may pose some risk, yes. It’s reasonably fixed though, by a number of factors — including the annual lease (which stipulates that anyone with a key is registered with the building, whether they’re on the lease or not.) Part rent goes to making sure that the people we see in the laundry room are indeed our neighbors.You’re giving me a very naive piece of personal advice.If you were to reconsider, I wonder whether this is the advice you’d give to your daughters and other women in your family.

          1. pointsnfigures

            I cannot speak to harassment. I don’t go to neighborhoods where I have the potential to be harassed. I used to back in the day-but times were a lot different. If you got in a fight you got bruises, not shot.I have an apartment. My neighbor blares rap music through the wall. Nothing I can do about it. It’s not cheap to live here. I think Fred is correct that there has to be some sort of common ground. Banning it or regulating it out of business is dumb.Ironically, my daughters AirBnb their place. I would be the first to agree AirBnb is not for everyone. But, it makes a difference for a lot of people. They need the income since I don’t support them.In Chicago, some use it to pay their property taxes which are astronomical. If people don’t understand how oppressive property taxes are in Chicago (and Illinois) go to a real estate site and see how much you’d pay in prop taxes on a place you would consider buying compared to what you are paying now in the place you are at.

          2. awaldstein

            Common ground is everything.Change is coming. Embracing it is the only smart thing to do.

          3. LE

            Where I live the property taxes are high as well. Don’t know Chicago neighborhoods so I can’t compare to what you are saying is high. The offsetting factor though is the house is cheaper than it would be if the property taxes weren’t so high. The downside of that is that you don’t get to take advantage of property appreciation because you are starting with a smaller number so any increase is on a smaller number.I compared houses in both an adjoining community, as well as one across the river which were roughly comparable (when I move to this area after getting married again). What I found out was that what you got for the money was roughly in parody with what your total costs were. So if taxes were low-er the property was high-er and vice versa. It actually made sense.My point? In many cases it’s priced into the market.For your rap neighbor there are two cases. You have good relations with him and don’t want to make a stink and the building says “sorry”. So you are SOL. [1] Other case is you don’t have good relations with him. In that situation you should buy a power saw and run it when he isn’t playing the music” to disturb his peace and quiet. Or set your stereo to play music when you aren’t there with the speakers facing to his unit (or even next to his to create vibrations). Set it to play for maybe an hour or so. You don’t want it to be obvious. Wow what he is doing really pisses me off.[1] Boy do I ever feel your pain on this one.

          4. Anne Libby

            The “neighborhoods” where I “have the potential to be harassed” include Tribeca, the parking lot of an upscale suburban shopping mall, a doctors office, an Amtrak train (quietly seated and knitting, in that very memorable case)…to name a few.So, yeah, while you can’t speak to harassment, I can.And for all of you guys out there — and I do mean “you guys” — recent events have created a great opening for you to talk with some of your loved ones about this.Note the comments from men in this article:

          5. Adam Sher

            Chicago real estate taxes are a perpetual guillotine over the heads of the real estate owners.

          6. LE

            I think the thing that men aren’t recognizing is that there is a multi part danger to women.a) The obvious physical disadvantage that they have.But more importantly…b) They are desirable targets. What I mean by that is as a man, even a man who has no ability to defend himself because of his stature, you are simply less of a target. This is important. Women don’t attack men. Men generally don’t attack men (in a sexual way I mean). You never hear about that.So women, even if they can defend themselves, have a great deal more to fear.As a man I can do things that I know would never be wise for a woman to do. I can’t even imagine how women do some of the things they do (show real estate to strangers and so on only one example).

          7. PhilipSugar

            I agree completely with you. We have several B&B’s in our small Chesapeake town. They are regulated and occupied. But if somebody wanted just to rent the house next to mine? There are strict rules against. And I’d worry about my kids. Hotels at least have some controls.And to your harassment comments. I also completely agree. I am a large man not as tall as Jeff, but you are right about the harassment.I travel a tremendous amount. I stay in nice hotels. I have been doing this for 25 years. I have never been harassed. None of my male co-workers either. (well overseas I get asked if I’m lonely in the elevator when I come back late at night, but never touched and left alone immediately when I say no, you probably don’t experience that)But lately I have started traveling more and more with women. I am shocked. These are professionally dressed, professional women (not that makes a difference, but obvious business attire). I have never seen a touch but the shit I’ve heard makes my skin crawl. These are in nice places.The first time was the most shocking because I wasn’t expecting it and it was especially graphic and he said it to three women. It was in a Westin on a River in your first city.I said, ok let’s meet in the lobby bar go over plans and get light food and drinks. They were early or I was late, they were seated, and as I walked up this creep said something I will not repeat.I literally said what the F did you just say? Did you say that?? and he turned and I started to follow, one of my coworkers jumped up grabbed my arm and said Phil just sit down get a beer, its not worth it.I said did he just say what I think he said? She said yes he said XShe said look it happens all the time. I said no way. ?!Then I was treated to one hour of comparison stories, as they compared who had the worst story. I was dumbfounded.

          8. Anne Libby

            Phil, thank you.And I’m sure that your colleagues thank you for hearing their stories…I don’t even know you in real life, but I feel confident that you’ll use them to be a better leader and boss than I already suspect that you are.(Editing to add: if your colleagues are like many of us, I suspect that they told you stories that they’ve never told their loved ones. I know that this is true for me, at least.)

          9. PhilipSugar

            The two worst were by co-workers. Let me be very clear, not for any company that I have worked for or been affiliated with.One was when she said her boss said meet at his room in the morning and answered the door completely naked.The other was when she said she came back from the bathroom and three male employees described what they wanted to do with her.And yes I think you are right that it is not discussed, because I would want to give that person what we say in Philly is a “wood shampoo”…

    3. Adam Sher

      AirBnB is absolutely detrimental to the hotel industry, specifically in NYC. HVS released its data that shows the negative impact on occupancy and ADR (average daily rate, cumulatively revenue per available room) to the hotel industry. If you are a NY hotel owner (generalizing), AirBnB has given you nightmares. Below is a link to the HVS information. In addition, BU also updated its research on this mater, again linked below.

  6. jason wright

    Incumbents strike back.

    1. Richard

      As someone who enjoys the luxury hotel experience, I say more power to them for defending their business model.

      1. LE

        Agree. I have no interest at all in staying in someone’s home. I like the hotel experience. The pursuit of profit is good not bad. Money allows companies to make great products or services. If you can’t afford to stay at a hotel in NYC then you can vacation somewhere else or stay in New Jersey and take the train in.

        1. Richard

          Exactly. Our family stayed at many a Days-Inn as a kid to save a few $ and make the vacation a little longer. Moreover, why should a VCs ROI be made off the backs of homeowners.

  7. LE

    I am 100% against short term rentals in any way shape or form. Let me get that out front. What it ends up doing is allows landlords to charge more for what they rent out by giving tenants more income to pass along to the landlord. I know this because as a small commercial landlord I have a particular tenant that is paying a higher than market rent that was considering leaving because they weren’t using the suite more than a day or two per week. So I went out of my way to find another party that can sublet from them on those unused days! Problem (almost) solved. I actually have a few cases like that going on. And in these cases there is little to no impact on anyone else in the complex (professional tenants transient clients to begin with). I get to keep the high rent that I am charging. I am able to raise the rent most likely when the current lease expires.It’s very simple economics really and definitely the direction of where something would go. It’s kind of common sense. The landlords who would not be in favor of this have one of two situations a) They aren’t easily able to raise rent b) They realize that having transients in a building has an impact on what they are able to charge in some way.

    1. sigmaalgebra

      Looks to me like the US and likely much of the world already has a hotel industry, an important part of the economies, complete with lots of prudent laws and regulations, competition, etc.Then it looks to me that, in simpler terms, AirBnB wants to be in the hotel industry but violate lots of the existing laws. Nope. They shouldn’t be able to do that.Similarly for Uber.

  8. sigmaalgebra

    To me, AirBnB looked from the beginning like poking a short stick into a large legal hornet’s nest. Similarly for Uber.For one more, Trump’s recent statement that the US has been giving “billions” to UN efforts to fight climate change, billions I had not been aware of, “explains like a lot”. US, billions, to the UN, about the total flim-flam, made up fraud of the threat of “climate change”, the corresponding vicious, brain-dead propaganda on social media, the NYT long all wound up on fighting “global warming,” the Obama administration giving wind turbine operators a pass on the birds they are killing, Obama’s Paris statement that climate change is our biggest problem, Obama administration subsidies for renewables, Obama signing some globalist treaty on climate change, the Obama administration sticking it to US carbon-based energy sources, Hillary wanting to fight climate change, Hillary’s recent statements about her dreams of renewables, with next to nothing in the mainstream media (MSM) about the billions — looks like reeking, fuming, flaming, toxic, orange, sticky stuff, Obama-Hillary, DC, pay off, kick back, propaganda-based corruption to me.There is a danger: As Trump makes the US wealthy again, we will have too little discipline and, then, fall for lots more total brain-dead, moonbeam, manipulated, hidden-agenda based, wack-o, spaced-out, flim-flam fraud, pay-off, kick-back, wasteful, dysfunctional, destructive, dangerous nonsense and extract miserable defeat from the jaws of magnificent victory as we did in our born again, democratize Iraq W, affirmative action O, and run the world LBJ/Nixon.Maybe as a country we need a more broadly accepted set of well considered, foundational, fundamental values — rationalism, prudence, security, empathy, productiveness.

  9. LIAD

    https://uploads.disquscdn.c…Had this on the front door last time I stayed in an Airbnb in NYC.Not sure its right for innocent consumers to be on the front line.Thought I’d wake up to residents bashing on the door with pitchforks.

    1. Anne Libby

      At least one of my AVC friends has talked about an Airbnb host asking her to lie and say that she’s a “cousin.” Lol.

  10. Rob Underwood

    My wife and I own one of four units in a brownstone in Brooklyn. We are the “new people” in the building having owned our place for 14 years. All four units are owner occupied as our bylaws prohibit tenants (and the intent of that bylaw is around year+ leases, not short term, having been written in 1983).My downstairs neighbor has a 2nd home in Mexico. They go there for 4-6 weeks at a time a couple times a year. Believe it or not, they actually pay people to stay there (rather than the other way around — i.e., AirBNB) to watch their cats. The effect though is the same – strangers in our building.As co-owners of the building for now almost two decades we are in an effective business partnership. We are all also friends and it’s our personal relationships that form both this basis of our self-governance and a feeling of safety. This is something that Airbnb misses — the governance of small buildings is not the same as 100+ unit condos. It’s far more intimate.We have never had an issue with the 4 week cat sitters, but as a parent of 3 I can say that it’s unnerving to live in a small building where you know everyone extremely well (unlike bigger buildings, it’s very uncommon to see strangers on the stairs) and then all of the sudden, one day, there is someone new (and their friends, and parties) in the mix. Again, we’ve never had an issue, but when you have young kids especially, it gives you pause.I find myself conflicted on this. I generally, in the abstract, believe and accept the free market, anti-regulation argument for Airbnb. I respect our host as well as my high school friend Chris who is working on this for AirBNB (side note: never underestimate the reach, drive, and passion, of people from Kennebunk / Kennebunkport, Maine).But as a parent in a small building, I get the concerns. And as a someone who cares a lot about Brooklyn and has seen first hand some extremely painful fights in our communities about gentrification and displacement, I want to be sensitive to that as well. A fundamental element to what makes Brooklyn so great is that it is in of itself “owner occupied.”I still feel myself deeply scarred by watching so many friends and decades long residents of Prospect Heights, especially older renters, lose their homes for the Atlantic Yards project (ironically which in part was/is a plan to build some affordable housing, along with of course and arena and lot of luxury condos too – tear down homes to build other homes). See the 1:13 mark of the following video– I remember this older couple and how desperate they were (they have both since passed away) …

    1. LE

      My downstairs neighbor has a 2nd home in Mexico. They go there for 4-6 weeks at a time a couple times a year. Believe it or not, they actually pay people to stay there (rather than the other way around — i.e., AirBNB) to watch their cats. The effect though is the same – strangers in our building.And they do it a couple of times per year.This is an odd example. We have a couple who can a) afford to have a 2nd home in Mexico and b) Afford to pay someone to watch their cats! (You would think they would simply take the cats to Mexico with them.) Unless their 2nd home is in a condo building that doesn’t allow cats.So now this becomes others (you) problem.

      1. Rob Underwood

        Taking pets across borders is a major hassle.Like I said, it’s never really been a problem per se. But it’s always odd when all of the sudden there is someone new in such a small building and one with kids to boot.

        1. LE

          My brother in law wanted my wife to write him a note so he could travel with his dog when he goes on vacation. By saying it’s a therapy dog so it could travel in the cabin. To me that’s the ultimate chutzpah. Wanting to inconvenience others on the airplane so you can take your dog with you on a trip. Of course she didn’t do it for him. Totally ridiculous.

          1. Rob Underwood

            Well, they are great neighbors and have been wonderful partners which which to own a building together, cat situation aside. I was just trying to point out that our situation – a small 100% owner occupied building – is very common in places like Brooklyn and I get why people would be unhappy by having strangers in and out after years or decades of the stability (and implied safety) of owner occupied.

          2. LE

            Well at least in a small building like that there is some motivation to police who gets to stay in someone’s buildings. Because there is the evil eye if it doesn’t work out. In a larger more anonymous building I’d imagine that isn’t the case.

          3. Rob Underwood

            I guess that’s it – we don’t have a say who stays and when, which is the total opposite of a typical co-op interview process. We could let our neighbor know when they get back if we had had an issue of couse. But not ahead of time. And it that way it’s also like Airbnb … The other folks in the owner occupied building have no say unless they want to pull the bylaws card which can be be hard and uncomfortable when you live so close together in such as small building.

          4. creative group

            Rob Underwood:Totally understand the concerns of the owners but it could appear to others an exclusivity clause when one of the owners sell. I have no idea why anyone would put themselves through that process. If we have the funding and comply with said created house rules (HOA) then the litmus test of other owners because we are not cut from blue blood, Ivy League, etc is a burden. (Can image how Madonna felt when denied access to a Co-Op during the eighties. Just because they could)

          5. creative group

            LE:”Totally ridiculous”People who love their pets consider them family, etc.We realize animals are not human, are replaceable, shouldn’t inconvenience other humans at the pet owners reasoning. And concur with it being totally ridiculous.

    2. creative group

      Rob Underwood:Can you briefly expand the process if one of the owners of the unit wants to sell their property? Does it require the other tenants approval of a new owner? Relates to your stating you don’t know the other tenants temporary sitters.We own multi units and there is an opposite effect in that building of renters living at said apartments before we acquired it and the majority of tenants don’t know each other and don’t want people in their business. No holiday cards exchanged, etc.Thanks for that trailer. Could definitely apply to Harlem.

      1. Rob Underwood

        Like most (all?) co-op buildings in NYC, the co-op board does have to approve the sale to a new owner. Hence the notorious co-op board interview. For our building, with just 4 units and owners, we’re all on the board. So it means we all have to be on board to approve a buyer. Given the intimacy of owning one floor each in what was once family hope, you want to know who sharing a building with you.Our bylaws further state that units may not be rented out — i.e., that the units must stay owner occupied. There are numerous reasons for the rule – safety, insurance, and property value all being some (generally owner occupied is considered higher value despite the decrease in flexibility)We’re not sure if the bylaws imagined/cover a day to day or week to week situation, probably because it was just not really a thing back then (other than outright flop houses, which our co-op was not).

    3. Adam Sher

      Your situation is an excellent example of how a private market solution would be appropriate and applicable. If short-term rentals are not illegal, then it would be up to the ownership groups to create by-laws for their buildings that govern short-term use. In your case, you would protect your community and not allow it. This debate occurred in condo buildings long before AirBnB. In luxury condos early unit owners get the benefit of more lax condo by-laws and can rent units or have large animals. Once their buildings sell-out, owners suddenly want less pets (with a grandfather policy) and no rentals.

      1. Rob Underwood

        Maybe. We’re already considering getting a lawyer to review if the “no tenants” bylaw covers the Airbnb short team lease situation. Since no one is doing Airbnb yet, we don’t feel compelled to shell out for a bunch of hours at $500-700+/hour to evaluate and maybe update our by laws — a big expense for a small co-op like ours. On the other hand, as you imply, it would be better to establish the policy before the next sale.I would just add that in small co-ops it’s not just a matter of the legal framework, bylaws, and free market. It’s a lot like a partnership, probably a bit like how Fred has to work with Albert, Andy, John, and Brad. Sure there’s many pages of documents that govern their working relationship, but it’s probably much more about the human and personal dynamics. This isn’t Airbnb’s fault per se, but it’s dividing and causing all sorts of frictions in small co-ops and condo associations about how to handle it, pitting fellow co-op members who always got along suddenly against each other. Again, that’s not really something for which Airbnb can be directly blamed, but it certainly is happening and a result of this new business model.

        1. Adam Sher

          Agreed, and good luck! If you decide to update your documents, make sure you and your co-op partners have agreed to the personal side of the policy first. Doing that will benefit you three-fold, first your co-op family will be in agreement prior to speaking with attorney’s; second, your intentions will be more clear for your attorney; third, you will be better positioned to understand and question what your attorney’s are writing.

        2. AlexHammer

          In the short term legalistic solutions seem most attractive, and may be.But in the long term it really comes down to public opinion, in terms of what is ultimately allowed and not allowed.As a result, narrative and positioning becomes as important (and ultimately more important), long term, than lawyering.

  11. LE

    On the other hand, many New Yorkers use income from short term rentals to allow them to afford an apartment in NYC when they have jobs that require them to travel extensively. There are also many New Yorkers who rent their homes during busy periods to make some extra income.As I’ve mentioned though what this does is drive up the price of rentals and impact other tenants by creating a less than desirable usage situation.I own a condo in a vacation spot. They don’t even allow you to rent it for less than 1 year. I like that even though I am now renting out the unit because I never used it enough. I like the fact that the building isn’t trashy like some others that actually allow weekly rentals. And I feel the same way now, even though I am never there and it wouldn’t impact me.

    1. Drew Meyers

      What about sublets, ie a 3 month rental?

  12. Matt Zagaja

    A couple weeks ago I saw an ad on Facebook about a teacher using AirBnb to continue to afford living in Cambridge and it really shifted my opinion against AirBnb. I am ok with the world where people are AirBnbing their place because they’re away on their own vacation or just want some extra slush fund money, but the world where people are using AirBnb to stay in their residences seems a bit fucked up. I think LE made a good point about the fact that once using AirBnb to do that becomes the norm, it no longer becomes optional for many people and that’s not a desirable outcome. I want my apartment or home to be mine, and have no desire to AirBnb it.

    1. Susan Rubinsky

      I met a pubic school teacher at a camp ground in Cape Cod a few summers ago. She could not afford to buy or lease on the Cape so she lived in camp grounds during the summer and then leased summer cottages at a lower rate as academic rentals from Sept – June. I see AirBnb as a nice solution to enable some people to afford to live but there is also a much larger need for affordable housing in major metro areas in the United States. AirBnB is not the solution to that.

      1. Matt Zagaja

        I think the following report is worth reading to understand the challenges around affordable housing:…TL;DR: In the Boston area in 2016 it is not possible to build new housing that is affordable and break even.

    2. Anne Libby

      Ads that ran in the NYC subways 18 months or so ago were designed to look sort of like they were ads for a social service agency that existed to “help” people to keep their homes. Grating.

    3. Drew Meyers

      Does it change if trust is pre-established. ie with friends or friends of friends? Would that make you more likely to consider the prospect?

  13. LE

    On the other hand, many New Yorkers use income from short term rentals to allow them to afford an apartment in NYC when they have jobs that require them to travel extensively. There are also many New Yorkers who rent their homes during busy periods to make some extra income.It’s the opposite. It actually drives up the price of rentals and real estate.Why do you think so many people who have vacation homes (or large yachts) rent them out? Offsets their costs and allows them to justify paying more for their unit. Hence people selling in those markets can charge more for the base inventory or get more on a resale.There was a condo building in Miami that I was looking at buying. It had a program that allowed the hotel located on the property to rent out the unit when you weren’t using it. When I looked at the numbers it seemed that the extra amount that you were paying for the unit was not offset by the money that you would receive in the best case scenario.

  14. Maurice

    As a close observer of a similar dynamic here in San Francisco, I agree that both sides are to blame for the current standoff.But I’m frankly put off by Airbnb’s arrogance on these matters. They present their brand as progressive and community oriented, while in dealing with the impacts of their service they present disingenuous arguments (and Data!). There’s something distinctly out of touch about the way this company worth $30 billion dollars deals with critics.

    1. fredwilson

      Yes. That’s a fair critique

    2. Nick Hencher

      Agree with you. There are more and more examples of disruption and sod the wider consequences and societal impact

    3. kidmercury

      yes, arrogance is exactly it. i was and also still am disgusted by their insistence to play by differnt rules than hotels. rather than pushing for rules that would benefit all in the short-term rental category (hotels and them), they insisted they are different and pursued legislation that would tilt the game in their favor. glad to see it backfire upon them.

  15. LE

    On the other hand, the hotel unions and the real estate industry have used their significant clout in Albany to push for a law that is overly restrictive and hurts many New Yorkers.Exactly. With lots of money comes lots of clout. The way it is and will always be.I was amazed that the WSJ opinion piece (which I typically agree with but didn’t in this case) about this used this example as a justification, ala “salt of the earth” example:This cuts the core of Airbnb’s business, which allows a family or young professional to earn cash by renting out a room or apartment while traveling away from home.I hope they aren’t going to Disney for that family vacation. Have you ever seen what it costs to get into those parks and to stay there?In any case how much traveling are these young people doing? How often does this actually happen? So they have the money to travel (non-essential) but need to offset that by inconveniencing their neighbors by allowing transients into the building? Apparently on a regular basis?….. https://uploads.disquscdn.c

  16. awaldstein

    I’m with you Fred.This is a nuanced topic as yes, people, most people, can use the income as prices are crazy here. And yes, short-term rentals are a disruption to the status quo.But change will happen and compromise and embracing change is the only way to make a different and better future less painful.

    1. LE

      Hmm. You can also fight change if it is not good for you. People not wanting to fight change is why bullies get away with things. Take advantage of those that are weaker.I have fought change at some buildings that I own at. And come out ahead. And enjoy doing it as well as long as I think that I am right and believe in what I am doing. The others? They are lazy and don’t want to spend energy to get what they think that they want.

      1. awaldstein

        Not disagreeing.What I know is there are arguments on every side. But I also believe that the world has changed and is changing even faster.Cities will get more dense. Space will become more precious. More dense cities will be built.What airbnb offers will be part of it in some way. Just like Uber will as well.Smart governments will embrace this and find common ground.Change will happen. It will not be as good as we define good today perhaps but it will change.Depends on whether you want to help and be part of it or wait till the smoke clears.Almost nothing in the growth of the smart city is anything but grey and open to interpretation and arguments on all sides.

        1. LE

          Well that is true. However I am typically on the side of recognizing the impact on existing parties. Generally.For example zoning takes into account (in the suburbs) that certain qualify of life should be preserved “last man over the bridge”. So you don’t want commercial next to residential. And you also don’t even want the signs to not meet certain graphic standards. In many places you can’t tear down a historically significant property. My dad was offered money by the city to retain the facade on a property in a historic area. I believe Fred was prevented from tearing down a property that he owned because it had historical significance. He wanted to build new. I don’t think he could. That is change as well. The bigger picture is impact on others who may have other values.I am curious. How would you feel if you or a friend bought a vineyard only to find out that someone wanted to put dense apartment housing next door or an large auto repair place? I know I wouldn’t be happy with that. [1][1] I am not trying to bait you. Just curious if you would say ‘it’s change and I understand’. I know I wouldn’t. And even if I wasn’t the owner of the property I would certainly understand why he didn’t want that.

          1. awaldstein

            Zoning is a great example.And of course, no one wants a factory next to their home, dense housing next to their country house, a vineyard that sprays in an urban area (it happens btw) and on and on.Many years ago I moved into an area (Rose Garden) of San Jose and just after I moved, both the airport needed another runway and they got zoning approval for the hockey stadium–both which impacted me personally.Spent four years on a zoning committee as these changes came with commitments to my neighborhood and dealt with every issue–buildng new buildings, closing of porn theatres, putting in traffic circles, closing block entrances to residential streets and so forth.What Iearned was compromise, patience and negotiation in a way that I never learned from negotiating deals for work.But in both, the more all parties start with a shared goal, the further you get.My point though is that in urban areas–back to airbnb–this change will happen in some way. What can I do–elect people who understand the changes needed for urban life and get involved in the places I”m willing to put in the time.

          2. Adam Sher

            Zoning is a great example (quoting awaldstein below). Houston zoning in particular is informative because it generally has no zoning laws. Some micro-markets within Houston created their own zoning to avoid this problem. In many cases, the citizens and businesses developed their micro-markets and avoided this problem.American urbanization also goes against zoning because it is desirable (among certain Millennial and retirees) to lived in mixed-use areas. Perhaps zoning laws are doubly fallacious because they reflect (a) current views on how cities should be developed (b) views, which are fads.

  17. jason wright

    if airbnb’s lawsuit fails it must give up NYC or move to a blocktech solution and create a decentralised network for which it has no direct responsibility. how the economics of that will work is something others are already working on.the process of disruption can apply to the disruptor as well as the incumbent.

    1. William Mougayar

      True, in theory this could happen. But a decentralized blockchain business would still need to gain traction, build inventory and brand reputation.And users could still be liable if they are breaking the law.

      1. jason wright

        airbnb could experiment in one of its existing lawful locations with a blocktech approach.

  18. jason wright

    i met a couple from NYC in Munich. they were travelling in Europe for three weeks and had let their furnished apartment for the duration to fund the trip. at the time i was surprised to hear that people did that sort of thing, but i totally understood the economics of it.i fail to see how this new law is going to be effectively policed in NYC.note. i would not be happy to see a constant stream of new people coming and going at the house next door to me.

  19. William Mougayar

    I don’t have a dog in this fight, but I’ll wait to see how it unravels.I wonder if there has been public hearings about this situation.

  20. Adam Sher

    If a state determines that AirBnB type rentals are not illegal, then individual owners can self determine rules. If the state also applies a combination of hotel and apartment safety standards to owners who wish to allow transient guests, that should get people most of the way there. This completely ignores politics, which you mentioned, but would provide a framework around which to operate.The AirBnB cat is out of the bag, and banning these in NY will create a black market. There are enough lessons about how much risk increases in illegal markets, that the ban should have been avoided.

  21. creative group

    CONTRIBUTORS:Off Topic Post.those Conservatives who promoted the slogan of repeal Dodd-Frank, regulations are hurting business, etc read how big businesses really feel about regulations they adapt to use as competitive advantages to stifle new competition. The lobbying to create exceptions to the regulations that grow which they complain about to hoodwink the uneducated base.A good read by Fortunes Brian O’Keefe…

  22. JLM

    .Real estate is the ultimate “my property” rights asset. That is until it is part of an apartment building, a condo, a co-op or any other form of multiple owners in a single piece of real estate.While real estate is the ultimate ownership asset, it is also the most likely type of property subject to encumbrances — regulatory, lenders, leases, condo associations, co-op boards.The bottom line is that there are far fewer sympathetic owners than there are unsympathetic owners in multi-owner properties. Then, there is the issue of “fraud in the inducement” whereby an owner is entitled to the terms and conditions in effect when they bought the property or the rules were subsequently properly modified.AirBnB is just like Uber — so full of their own vision/mission/disruptive self-congratulatory baloney that they think they don’t have to adhere to existing laws (or new laws which are spawned by their ham handed attempt to be something other than a short interval residency product).Having said that, the AirBnB model begins to break down when the regulations require a law degree to understand, are subject to local administration/licenses/taxes, require liability insurance for the bad actions of individual renters, disturb the comity and peaceful enjoyment (a legal term), and other “normal” real estate ownership headaches.The subletting prohibitions of residential and commercial leases — a normal feature of such a lease — have long prohibited much of the behavior AirBnB wants to instigate. This is not remotely new.There is one ownership model which would work quite handily for companies like AirBnB — time share or interval ownership with an offsetting availability pool.This is the model for many foreign vacation destinations wherein an individual buys a “week” which morphs into “points” and which points allow them to use the facility in accordance with some schedule of availability and time dependent point pricing schedule.At the end of the day, they are prepurchasing time under the camouflage of obtaining a direct interest in real estate subject to management/owners agreements.I doubt anyone in real estate has the political clout to screw with NYC hotels.JLMwww.themusingsofthebigredca…

    1. Adam Sher

      Condo-hotels (“condotels”) are another example of a long-term resident + transient solution. The tax component could be overcome through a combination of existing policies. The regulatory (mostly safety related) and insurance compliance would put a lot of renters out of business. This is a good thing as it will remove some actors who cannot afford the consequences of their and their tenant’s actions.

    2. Vasudev Ram

      Interesting. Your comment about the hotel industry reminded me of the novel “Hotel” by a best-selling author of yesteryear, Arthur Hailey.…Many of his novels were big hits.”Arthur Hailey (5 April 1920 – 24 November 2004) was a British/Canadian novelist, whose works have sold more than 170 million copies in 40 languages. Most of the novels are set within one major industry, such as hotels, banks or airlines, and explore the particular human conflicts sparked-off by that environment. They are notable for their plain style, extreme realism, based on months of detailed research, and a sympathetic down-to-earth hero with whom the reader can easily identify.”

      1. JLM

        .Small world department — I served in the US Army with his son who was a SSgt. He was a good guy. His father was famous but not as famous as he was going to be.JLMwww.themusingsofthebigredca…

        1. Vasudev Ram

          Cool.I liked the twist at the end of the tale in “Hotel”.

  23. Darell

    I hope that the empire state does not become the place where innovation dies due to all of the backroom deals that Albany is…

  24. Carrie Bradshaw

    It would be good if nyc changed the rent guidelines to eliminate “squatter’s rights” that make it difficult, it not impossible for people to evict subletters. Easier to rent out via Airbnb.

  25. sigmaalgebra

    Flash! Wait, this just in! Some weeks ago we were talking a lot about Hillary’s “temperament”, e.g., how good it was.Uh, that was Hillary as in:…Right?

  26. AlexHammer

    It comes down to narrative, expectations and vision.With any disruptive business model, what is acceptable and not acceptable shifts over time.As a society we are not completely sure what we are comfortable with, and what not.

  27. nycebo

    This is a great article with some valid concerns on both sides. We had a pleasant conversation about this at dinner over the weekend so the timing is excellent. I do like one suggestion that a building by building approach seems the best step forward but alas, it appears that Airbnb well overplayed its hand here.