Judge dismisses Airbnb’s challenge to NYC’s short-term rental laws

August 10, 2023 Rob Abruzzese

Photo: Bebeto Matthews/AP

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A long-anticipated showdown between Airbnb and New York City culminated in a ruling on Tuesday, as a state Supreme Court justice sided with the city over new regulations governing short-term rentals.

Judge Arlene Bluth dismissed suits that Airbnb and three of its hosts had filed against New York City, asserting that the regulations, embodied in Local Law 18, did not impose undue burdens. Her ruling clears the way for the city to begin enforcing the law on Sept. 5.

“Nearly every commercial activity in New York is governed by a set of rules,” Judge Bluth wrote in her decision. She emphasized that the regulations merely required Airbnb to verify potential listings to ensure their legality.

The law, which took effect in January, has been a point of contention since its inception. Airbnb and the host plaintiffs contended that the new regulations, especially the license registration process, would effectively eradicate short-term rentals across the city’s five boroughs.

Airbnb has pointed to the slow approval rate under the new rules as evidence of its claims. As of May, fewer than 10 short-term rental licenses had been granted. In contrast, Airbnb asserts that over 80,000 guests have bookings for stays beginning on or after the enforcement date.

Attorney Debbie Greenberger, representing the three host plaintiffs, expressed disappointment in the ruling. “The city’s rules target ordinary New Yorkers instead of the illegal hotel operators,” she stated, emphasizing the financial hardships hosts face in the city.

City officials and supporters of the law view it differently. Their stance is that it aims to make more housing units available for full-time residents and curb illegal renting. Over the years, complaints about short-term rentals have mounted, with nearly 12,000 reported from 2017 to 2021.

As the enforcement date looms, it remains to be seen whether the Office of Special Enforcement will be able to process the backlog of short-term rental applications. Airbnb’s data indicates significant demand, with 10,000 guests booked for stays overlapping the initial enforcement week.

Murray Cox’s incisive study, “The Face of Airbnb, New York City – Airbnb as a Racial Gentrification Tool”, reveals startling disparities: in New York City’s predominantly Black neighborhoods, Airbnb hosts are five times more likely to be white. Even more revealing is that 74% of Airbnb hosts in these neighborhoods are white, while only 13.9% of residents share the same racial background. This stark contrast shines a light on a growing economic chasm. White Airbnb hosts in these neighborhoods garnered an estimated $159.7 million, in stark contrast to the $48.3 million earned by Black hosts.

The neighborhood with the most alarming disparity is Stuyvesant Heights in Central Brooklyn, which witnessed a 1,012% disparity in Airbnb listings by white hosts. The economic disparity here is equally glaring, with white hosts earning 857% more than their Black counterparts.

These findings hint at a broader concern: the role of Airbnb in the gentrification of Brooklyn. Historically, neighborhoods like Crown Heights and Bushwick drew artists and innovators due to affordable housing. Over time, their unique cultural flair attracted tourists seeking an “authentic” experience, effectively setting the stage for Airbnb to capitalize. However, while the platform’s hosts reap benefits from this influx, the original community pays a steep price. As Murray Cox’s study underscores, Black neighborhoods bearing the brunt of Airbnb activity are undergoing racial gentrification. Majority Black residents grapple with housing loss, tenant harassment, and the disruption of their neighborhoods.

The Airbnb Effect, a term that encapsulates the platform’s unintended negative impacts on communities, is not just confined to housing disparities. Displacement of locals, overtourism, escalating rents, and housing shortages are side effects that cities globally are contending with.

One pressing concern is that Airbnb listings aren’t regulated like hotels. Hoteliers must pay taxes and comply with safety protocols. But many Airbnb hosts bypass these regulatory standards, creating potential safety hazards for unsuspecting travelers and depriving communities of crucial tax revenues.