
Airbnb Listings Mostly Illegal, NY State Contends - lr
http://www.nytimes.com/2014/10/16/business/airbnb-listings-mostly-illegal-state-contends.html
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msoad
I wondering if we are living in a short era of cheap and semi-legal sharing
economy and eventually all these sharing economy companies will get relegated
and become too expensive to make sense. I'm saying this because from what I
experienced using Uber and Airbnb, none of people who provided the service
were "sharing" their own stuff. They were doing business. The Uber driver
usually is a full time driver. The Airbnb landlord had multiple apartments to
rent. So they are the same old taxi drivers and motel owners. We are just
paying less because it's illegal.

~~~
nugget
Another perspective is that it's cheaper because it lowered the barrier to
entry so that the smallest of entrepreneurs could enter the market. Rather
than purchase a hotel, you can rent out a studio apartment. You can start with
one studio and then expand over time. You don't need much (if any) additional
capital. Airbnb is your entire marketing department and you only pay them when
they deliver a client. Handy cleans for you and fixes the shower if it breaks.

Brands are very lucrative assets. Maybe part of this shift is an Airbnb brand
tax of 6% in place of a Hilton, Marriot, or SPG tax of 30%.

How much of the old model was there to protect monopolies and how much of it
was there to provide for consumer safety? How do we incorporate the latter and
eliminate the former? That's the real question in my mind.

~~~
trhway
>How much of the old model was there to protect monopolies and how much of it
was there to provide for consumer safety?

when medallion costs $200K-$600K is it to protect monopoly or to provide for
consumer safety? Tough question :)

~~~
rtpg
the medallions are distributed in auction, to align with the great american
myth that those who can pay the most deserve it the most.

Granted, alternatives would probably involve taxi companies wining and dining
to get preferred treatment.

Once we've decided on having some sort of system to limit the number of taxis,
there's going to be some form of selection. Apparently people thought auction
was the "least worst" way (compared to some other selection method).

~~~
trhway
>Apparently people thought auction was the "least worst" way

Auctions only confirmed the intrinsic value of medallion in that system -
$2K/month rent pay for a medallion in SF before the auctions corresponds to
something like $200K value of a rent-generating asset.

>Once we've decided on having some sort of system to limit the number of taxis

exactly, protecting monopoly as such a limit has nothing to do with consumer
safety.

Edit: just googled - the medallion price in NY is $1M and in SF - $300K. Sorry
for using obsolete data (holy macrel what a nice exponentially looking price
ride of recent 3 years Uber has killed : [http://www.aei-
ideas.org/2014/06/chart-of-the-day-nyc-taxi-m...](http://www.aei-
ideas.org/2014/06/chart-of-the-day-nyc-taxi-medallion-prices-are-flat-uber/) )

~~~
rtpg
>exactly, protecting monopoly as such a limit has nothing to do with consumer
safety.

There's other reasons to want that. Congestion control is one of them. No
comment on the validity of such a fear, though

~~~
_delirium
I believe that's historically what caused the first introduction of such a
system, in London some centuries ago: residents complained there were too many
hackney carriages driving around the streets, and wanted them limited to a
fixed number. (They also wanted them better maintained and more safely driven,
which led to additional rules.)

~~~
omonra
But funny enough, there is no fixed number of cabs in London now.

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pbreit
The right answer seems to be somewhere in the middle but neither side has put
forth anything reasonable.

For one thing, HOAs and landlords should have pretty liberal abilities to
forbid short-term rentals and pretty much all have.

Renting out a room where the owner/tenant is present should be allowed on a
limited basis (perhaps several weeks/months per year).

Renting out a full residence in a non-zoned area should be allowed on a more
limited basis (perhaps up to 1 month per year).

Just like on Ebay, et al, "casual sellers" should be able to execute some
limited amount of quasi-business activity before triggering all the business
rules.

Finally, AirBnB-style rentals should be regulated more like BnBs (duh!) than
hotels.

The question is, what's the right answer for these situations? And no kudos to
AirBnB, et al for offering up no suggestions.

~~~
kijin
If you own a property (or have the owner's permission), why does it matter
whether you actually live in it or rent it out to other people? Should we be
prohibited from lending our physical books to other people just because
publishers would rather we didn't?

Why does it matter who you rent out your property to? Why does it matter
whether you rent it out for 30 days a year or 300 days a year? Why does it
matter whether you rent it out for 30 days to one person or one day each to 30
people? The last one is especially arbitrary, and the only reason it means
anything at all is because the hotel industry uses it as a threshold for
market segmentation.

Is it safety that matters? If so, let's drop all the "up to X days" bullshit
and actually focus on safety. How can we check whether an AirBnB listing is
"safe", whatever that means in this context, how do we compensate victims of
"unsafe" listings, and how do we come up with a good incentive structure to
encourage "safe" listings and weed out "unsafe" ones?

Is it taxation that matters? Of course people should pay taxes on all of their
income. In fact, AirBnB income should be easier to track down than the
proceeds from that MacBook you just sold on Craigslist. AirBnB keeps excellent
records of all of your income (and their fees), after all. Then it's just a
matter of getting those records into the hands of the IRS.

Is it zoning that matters? If so, why do we care about zoning at all? Over the
last few decades, the only thing that zoning achieved in the United States is
the complete segragation of residential areas from all other areas of modern
life, so that everyone needs to drive a dozen miles to work and another dozen
miles to get their groceries. Many cities are now beginning to toy with the
idea of vibrant mixed zones, where people can live, work, shop, and play all
within easy walking or cycling distances. A hostel next door suddenly doesn't
seem like a bad idea after all. (Oh, it's not properly managed and people are
shooting crack up their arms in the backyard? Well, that's a problem with poor
management, not a problem with the mere fact that it's a hostel. Would you ban
houses with basements because some basements have meth labs in them?)

So I refuse to believe that the right answer has anything to do with how long
you should be able to rent out a property. It's your property, you should be
able to do whatever you want with it within reasonable bounds (like paying
taxes and keeping your property safe for other users).

As long as we keep focusing on peripheral issues that are framed by existing
business models with conflicts of interest, we'll never get to ask the really
pressing questions, such as reasonable safety and insurance standards for
small-time landlords.

And yes, I agree with you that AirBnB's reactive (as opposed to proactive)
attitude toward this issue isn't helping, either.

/rant

~~~
pbreit
I'm guessing you don't own a home or condo because your arguments all violate
common sense. First, do you understand why owners don't like renters? Do you
understand why short-term renters are worse than long term renters? Do you
understand why owner-present is more desirable than owner-unpresent? Do you
understand why a residential owner/renter would prefer not to have commercial
activity next door? Do you understand why zoning exists? Do you understand why
citizens are granted certain abilities to conduct business-like activities
before triggering various business rules?

You're fighting a pretty losing argument here.

~~~
kijin
You're right, I don't own any real estate, and I do not plan to do so at any
time in the foreseeable future. I don't like being tied down to any arbitrary
segment of the Earth's crust, and I'll gladly pay more for the freedom to move
somewhere more exciting at a few weeks' notice. (Yeah, so that's part of my
motivation for defending AirBnB.)

The answer to the first four of your rhetorical questions all seem to involve
some version of "I don't want my property to lose value". Since I have little
sympathy for that kind of sentiment, it seems selfish to me for you to force
(i.e. legally require) someone else to do this or that with _his_ property
just because it might negatively affect the value of _your_ property. As long
as your neighbor doesn't produce loud noises or obnoxious smells that cross
into your property, you have no right to interfere with his use of his
property. Would you also seek to ban African-American tenants from your
neighborhood? Because, you know, the racial makeup of the neighborhood does
have an impact on property values.

Note that I'm not saying everyone should bear with a hostel next door. If you
want to live in an all-residential neighborhood, you are absolutely free to go
and live in a place where everyone voluntarily agress to HOA rules against
business-like activity. All I'm saying is that this should be voluntary, not a
legal requirement, and there are already plenty of places in the U.S. where
such voluntary agreements exist. If Manhattan doesn't happen to be one of
those places, well, too bad.

As for the other two two questions, yes, I do understand the rationale for
such policies, but I think that they have been corrupted to serve a narrow
range of entrenched interests, and that they are badly in need of more
flexible rethinking.

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cookiecaper
Everyone knows this, and has known this. Airbnb knew it too. Hopefully they
used their runway to develop a better plan than the denial that's been ongoing
up to this point, since it's been obvious since its inception that Airbnb
would have to deal with these regulatory problems if it ever reached critical
mass.

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jschlesser
Suppose it is mostly "professionals"

1\. is it bad for individual "professionals" to invest capital on a small
scale to provide services that people want at a greater or lesser price? Be it
cars or houses.

2\. If it is bad, why, and who for? Is it bad for consumers or bad for
existing businesses?

~~~
URSpider94
It's complicated.

On one hand, traditional regulation keeps small or part-time players out of
the market, because regulatory overhead is too high. The relative burden of
regulation on large companies is much less, because they can amortize the cost
across more business.

On the other hand, this only works if these smaller players get relief from
regulations -- which means that they are operating outside the laws and
regulations. For instance, turning an apartment building into a hotel via
Airbnb sidesteps rules around zoning, tax collection, housing policy, etc. You
could decide that these regulations are just annoying red tape, but they were
put in place for legitimate purposes in the past and it seems like we ought to
at least consider the impact before we throw the baby out with the bath water.

A third argument is that peer to peer marketplaces are changing the balance of
power between producer and consumer. As a consumer, this sounds great -- but
the person at the other end of the line is now an individual, not a giant
corporation. When I have a bad cab ride, I go on Facebook and bitch about it,
and life goes on. When I have a bad Uber ride, I give the driver one star and
they may very well get fired -- and Uber will just replace them with one of
the teeming masses hoping to make it rich driving strangers around for a
living.

~~~
_delirium
_On one hand, traditional regulation keeps small or part-time players out of
the market, because regulatory overhead is too high._

I suppose it discourages some, but it's not like there aren't small or part-
time players in property rental. There are a _lot_ of them! Small-time
landlords who own a few rental units are everywhere; I know two such people in
my circle of friends who do that. You can either do it as a part-time job, or
hire a management company for a fee to oversee the actual management. The
difference is that they do it legally. They own apartments in buildings where
it's legal to rent out the units, and they rent them out legally.

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JacobAldridge
Interesting that the AG's report is titled _AirBnB in the City_ , likely a
reference to the classic NYC tv show _Sex and the City_ [1].

Interesting, in that many people incorrectly call that program _Sex IN the
City_ , which the producers object to. They point out that the _AND_ is
deliberate - the City of New York is an integral character in the story, not
just a location where the story (and sex) occurs.

In this dispute, the government is making a similar gambit - arguing that they
need to be part of the conversation, via regulation and enforcement etc, not
just the location in which the lettings take place.

In other words, the report title seems to mis-quote the name of the TV show.
And in doing so it missed the opportunity to position the State more strongly
as a central actor in this drama.

[1] And lest anyone observe the title may be a coincidence, note that Eric
Schneiderman is the AG of New York State, not just the city.

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csense
With the Internet, you can't stop people with spare rooms and people who need
a place to stay from finding each other. We now stand at a crossroads.

Down one road we recognize this is a new kind of interaction enabled by
technology, which leads to legalization, with light regulation to deal with
new patterns of abuse that aren't handled effectively by existing rules.
Reasonable taxes and fees so the new industry covers the additional costs it's
imposing on government and pays its fair share to the city, state, and
country.

Down the other road is heavy-handed regulation, and punitive taxes and fees
that drive small entrepreneurs and the websites that enable their business
model out of the legitimate market and into the shadows. AirBNB is legitimate,
but if they stop servicing an area due to regulation, I'm sure a sketchier
copycat will try to take over that market. The government misses out on taxes
and fees from the grey/black-market transactions. Hosts / guests that have
been abused or scammed will be reluctant to seek recourse through the legal
system if it will mean admitting their own illegal conduct, and will have to
either endure their suffering or try to self-help.

It's really the same story as abortion, drugs, or Bitcoins.

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pyrophane
> But the attorney general’s report says rentals in three areas in Manhattan —
> Lower East Side/Chinatown, Chelsea/Hell’s Kitchen and Greenwich Village/SoHo
> — accounted for 40 percent of private stay revenue, or $187 million.

This surprised me not at all. I live in the Lower East Side and see an almost
non-stop parade of groups of tourists with suitcases waiting to get let into
apartments here. I know friends-of-friends who have four or five apartments
that they rent out for this purpose.

People who operate these illegal hotels are attracted to neighborhoods like
LES/EV/Chinatown, aside from them being trendy, is because there are a lot of
non-doorman buildings that have relatively inexpensive rent. Unfortunately,
those buildings are a critical source of semi-affordable housing in Manhattan,
and more and more of it is getting snatched up by hoteliers.

I'm glad that NY is not taking the same approach as SF. People should
absolutely be allowed to rent out a room or a couch, but the illegal full-
time, full-apartment listings are terrible for residents who aren't aspiring
hoteliers.

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secabeen
AirBNB also provides a product that was very hard to find before. Although
most of the NYC housing market consists of units kitchens and living spaces,
it was very hard to find a two-bedroom apartment to rent short term before
AirBNB. As someone with a family, the ability to rent a traditional apartment
for a short time is a significant improvement in the market.

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jgalt212
It must be nice to have friends in high places. I know if the NY Attorney
General said 75% of my business was illegal, I'd be shut down tomorrow. Yet,
Airbnd can fight these charges (mostly in the court of public opinion and
somewhat in the court system).

