Airbnb to face grilling by NYC City Council

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 — The pressure on online apartment rental company Airbnb to scale down operations here is expected to ratchet up Tuesday with a hearing at City Hall that will include angry tenants of rent-stabilized apartments.

Several New York City residents are set to testify before NYC's City Council that illegal rentals have been driving out tenants and hurting living conditions, according to prepared testimony obtained by USA TODAY.

Anne Cunningham, for example, plans to say that tenants of her rent-stabilized building on on West 73rd Street have suffered "deplorable living conditions, with repairs going unmade, drugs and prostitution in the building, and constant harassment by a landlord who sought to kick out long-term tenants in favor of tourists."

Another tenant will testify that the number of rent-stabilized units in her building on West 55th Street has shrunk significantly in recent years, to eight out of 37, because of companies such as Airbnb, Booking.com and Hotels.com, the testimony shows.

The Committee on Housing and Buildings, which is holding the hearing, is also expected to discuss safety issues tied to people renting out their apartments to tourists.

Airbnb has been facing mounting pressure in the Big Apple following data from New York Attorney General Eric Schneiderman revealing close to 75% of Airbnb's NYC rentals are illegal. New York state law prohibits people from renting out their apartments for less than 30 days without an owner also being present.

The fear is that the proliferation of illegal rentals is pushing up costs in an already sky-high market by reducing the number of units that are rented or sold — especially in buildings that restrict rents to below-market rates.

Airbnb, which was valued at a whopping $10 billion last year, is expected to fight back on Tuesday by agreeing that mass rentals are bad for New York, but asking for more leniency for regular New Yorkers looking to rent out their primary residences.

On Friday, Airbnb's head of public policy, David Hantman, sent a letter to all members of the New York state legislature and the New York City Council agreeing that "illegal hotels are bad for New York City," according to a copy of the letter obtained by USA TODAY.

In the letter, Hantman suggested that N.Y. state and NYC begin to collect taxes on Airbnb hosts and guests and allocate some of the money, estimated to be about $65 million this year, to go toward cracking down on "true, large-scale illegal hotels."

Hantman also requested that sate law be amended to allow regular New Yorkers to occasionally rent out their primary residence without having to be present.

Schneiderman found 6% of NYC hosts were responsible for 36% of short-term bookings, bringing 37% of all host revenue.

It is this group that Hantman is expected to ask the City Council to target, rather than folks who rent out their primary residences for a few weekends a year for extra cash.