Jersey City, New Jersey — Airbnb was dealt another setback in one of its most important markets Tuesday as voters in a New Jersey city just a few minutes by train from the tourist sights of Manhattan approved restrictions on short-term rental companies in a hard-fought referendum.

The vote in Jersey City was lopsided in favor of the restrictions, despite a fierce and expensive campaign mounted by the company. Airbnb spent at least $4.2 million on an effort to sway voters while its opponents, including the hotel industry, spent around $1 million.

The new rules were initially passed by Jersey City lawmakers in June, but were put on hold after short-term rental advocates gathered enough signatures to force a referendum.

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Housing concerns

Jersey City, a city of around 271,000 people just across the Hudson River from lower Manhattan, has become increasingly popular with tourists seeking an alternative to pricey New York City lodging. Since officials approved short-term rentals there about four years ago, the number of homes being listed nightly on sites like Airbnb has increased tenfold.

That led to complaints about absentee owners turning apartment buildings into de facto hotels and having a negative effect on affordable housing.

When city officials acted to reign in the Airbnb bonanza, short-term renters pushed back, saying putting their homes up on the site helped them defray high housing costs by bringing in paying guests.

Jersey City Mayor Steven Fulop insisted, though, that most city residents were solidly behind reigning in the company. After the vote, he took to Twitter to criticize the company.

"I just want to say publicly that you brought a campaign of misinformation to Jersey City ... and #jerseycity showed you what they thought," Fulop wrote.

A sign urging people to vote on municipal question #1 is displayed in Jersey City, New Jersey, Tuesday, Nov. 5, 2019. Seth Wenig / AP

Airbnb spokesman Christopher Nulty, meanwhile, criticized "hotel-backed special interests" for backing rules that he said went too far.

"From the start of this campaign, we knew this was going to be one of the toughest fights we've faced, with the big New York hotel industry determined to fight home sharing, but we had an obligation to stand up for our community," he said. "Cities from Buffalo to San Francisco, and Boston to Seattle have managed to pass comprehensive short-term rental regulations without punishing tenants or creating red tape and onerous registration systems."

New rules

Jersey City's regulations don't ban short-term rentals, but are expected to significantly trim the number of homes getting listed on sites like Airbnb.

The rules limit how often landlords can rent properties if they don't live on site. They forbid short-term rentals in buildings with more than four units if the owner isn't present. They also prohibit renters from serving as hosts.

The referendum was the latest chapter in a battle that has played out in numerous American cities, including San Francisco, where Airbnb is based. New York City had already reigned in Airbnb listings with similar regulations.

The Jersey City vote generated a flurry of television ads in the New York market with both sides accusing each other of spreading misinformation about the size of the market and the potential effect of the restrictions.

Airbnb and local advocates argued that the restrictions would have the effect of eliminating 90% of the city's properties from the market and would disproportionately affect renters, most of whom are minorities.