Airbnb blamed for rising housing costs in NYC

Kaja Whitehouse | USA TODAY

Show Caption Hide Caption Activists gather at NYC's City Hall to protest Airbnb Activists in Manhattan gathered to speak out for and against San Francisco startup Airbnb as the City Council heard arguments over what critics call "illegal hotels" in New York City.

NEW YORK — Hundreds of New Yorkers descended on City Hall here Tuesday to battle over the future of apartment rental website Airbnb.

Affordable housing advocates, hotel industry workers and Airbnb hosts all stood on City Hall steps to make their stories heard ahead of the City Council's first oversight hearing on Airbnb and its impact on housing prices.

Housing advocates and some city officials are blaming Airbnb for rising housing costs, arguing that the $10 billion start-up has given landlords an incentive to keep apartments vacant to make way for short-term rentals.

They are calling on Mayor Bill de Blasio to crack down on the San Francisco-based company, which has been bandied about as a potential candidate for an initial public offering.

The crackdown threatens to slow Airbnb's growth in Manhattan, and potentially other large cities that see the online home-rental company as a threat to housing prices and the hotel industry.

Audrey Smaltz told the City Council her rent-stabilized building in Midtown Manhattan has suffered because of Airbnb, Booking.com and Hotels.com. The entire fourth floor is now made up of short-term rentals, she said. And once a tourist wandered out onto her balcony.

In October, New York Attorney General Eric Schneiderman issued a report saying one-third of the revenue from NYC Airbnb rentals was going to commercial renters, or people who were renting out multiple units. Some 6% of NYC hosts were responsible for 36% of short-term bookings and 37% of the revenue, the report found.

Schneiderman also found that 72% of Airbnb rentals in NYC are illegal — thanks to a state law that says apartments cannot be rented out for less than 30 days without the owner also being present.

Airbnb is requesting that the law be changed to allow people to rent out their primary homes — akin to recent changes in San Francisco. Airbnb's head of public policy, David Hantman, has suggested New York collect taxes on hosts and renters to help pay for enforcement against commercial operators.

Airbnb has also battled with its hometown of San Francisco on similar issues, which has resulted in new rules, set to take effect on Feb. 1, that will restrict rentals to permanent residents and limit rentals of entire homes to 90 days a year.

But in New York, some politicians argue Airbnb shouldn't be allowed to have a say over the rules because it has been breaking them for too long.

"Like a marauding army, they have blanketed the city with illegal hotels," said New York State Assembly member Linda Rosenthal. "And now they come to us after they have invaded our city and say, 'We're reasonable. Why don't you deal with us?' "

Hotel industry workers, including labor unions, also came out to protest.

"We need to support our union," said Ozzie Solorzano of Valley Stream, N.Y., while waiting on a long line to enter the City Hall grounds where the different sides were giving speeches. "Our hotels and the industry is being diluted" by Airbnb, he said.