Airbnb Sues Over New Law Regulating New York Rentals


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Apartment buildings in East Harlem, New York. Gov. Andrew M. Cuomo has signed a bill that will impose steep fines on Airbnb hosts who break local housing regulations.

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Danny R. Peralta for The New York Times

Hours after Gov. Andrew M. Cuomo of New York signed a bill that would impose steep fines on Airbnb hosts who break local housing regulations, Airbnb filed a federal lawsuit contending the new law would cause it “irreparable harm.”

The heightened battle in New York follows lawsuits that Airbnb has filed against its hometown San Francisco and in Santa Monica, Calif., which have both moved to fine the company for illegal listings.

The company, which operates in a regulatory gray area around the globe, is also fighting tough battles in Amsterdam and Barcelona, Spain, which penalizes hosts who list illegal rentals, and in Berlin, which has banned most short-term rentals.

The new law in New York allows authorities to fine hosts up to $7,500 if they are caught listing a property on a rental platform such as Airbnb.

“New York is taking a bold step that will hopefully set a standard for the rest of the country and other countries in the world that are struggling with the impact of Airbnb on affordable housing,” said Assemblywoman Linda B. Rosenthal, a Manhattan Democrat who sponsored the bill.

Airbnb, which has tripled in value in just two years to $30 billion, is fighting hard against any regulation that would affect the number of hosts on its platform. The company cannot expand without a steadily increasing number of hosts, and its rental revenue growth could slow as more cities around the world move to push potential providers off the platform.

The New York law is particularly worrisome for Airbnb. New York City is the company’s largest market in the United States. The city’s hosts generated about $1 billion in revenue last year, and the company took a cut of that amount in fees.

In its lawsuit, filed Friday afternoon in Federal District Court in the Southern District of New York, the company contends that the law violates the company’s constitutional rights to free speech and due process, as well as the protection it is afforded under the Communications Decency Act, a federal law that says websites cannot be held accountable for content published by their users.

The new law “would impose significant immediate burdens and irreparable harm on Airbnb,” the company said in its complaint. “In order to be assured of avoiding liability, including potential criminal prosecution, Airbnb would be required to screen and review every listing a host seeks to publish.”

The lawsuit was filed against Eric T. Schneiderman, the state attorney general, Mayor Bill de Blasio and the City of New York.

New York lawmakers, including State Senator Liz Krueger, one of Airbnb’s primary legislative foes, counter that they had the Communications Decency Act in mind when they drafted the bill, which is why it holds the hosts responsible for advertising illegal listings and does not impose any fines on Airbnb.

“This is an issue that was given careful, deliberate consideration, but ultimately these activities are already expressly prohibited by law,” Rich Azzopardi, a spokesman for Mr. Cuomo, said in a statement.

Mr. Schneiderman said in a statement: ”Airbnb can’t have it both ways: It must either police illegal activity on its own site, or government will act to protect New Yorkers.” Austin Finan, a spokesman for Mr. de Blasio, said in a statement, “We would apply this tool, just as we do our current ones, to hold bad actors accountable.”

Regulators and affordable housing advocates around the world worry that Airbnb is making it easier to illegally rent out apartment units for short stints to travelers, taking units off the market for full-time residents and driving housing costs higher. Mr. Azzopardi said that illegal rentals “compromise efforts to maintain and promote affordable housing by allowing those units to be used as unregulated hotels.”

Airbnb made several attempts over the past few months to convince Mr. Cuomo to veto the bill, a move that would have rankled Democrats, Republicans and affordable housing advocates. The company commissioned a study to show that voters support Airbnb and it has used a super PAC valued at $11 million to pay for ads explaining where different legislators stand on the short-term rental business.

Since 2010, it has been illegal in New York to rent out a whole apartment for fewer than 30 days. But some tenants and landlords have ignored those rules and have been using Airbnb to rent out their apartments for much shorter periods.

Earlier this week, Airbnb offered an alternative to the legislation, saying it would crack down on hosts with multiple listings who essentially run illegal hotels and provide a registry of hosts to local regulators to make it easier for them to enforce existing housing rules. The company also emphasized that it had already removed nearly 3,000 commercial operators from the service.

But supporters of the state regulations, which were drafted in January and passed in June by a nearly unanimous vote in the State Assembly and Senate, criticized the company’s offer as a last-minute public relations stunt.

“Airbnb put a lot of pressure on Governor Cuomo and spent millions, so I’m gratified that he stood up for the cause of affordable housing and protecting tenants,” Ms. Rosenthal said. “This will help stop the bleeding and the loss of units that should be occupied by New Yorkers and not tourists who are here for a few nights.”

On Friday, Airbnb reacted with anger to Mr. Cuomo’s decision.

“In typical fashion, Albany back-room dealing rewarded a special interest — the price-gouging hotel industry — and ignored the voices of tens of thousands of New Yorkers,” said Josh Meltzer, head of the company’s New York public policy.

The legislation followed years of haggling between Airbnb and New York officials. In 2013, Airbnb irked the state attorney general’s office by initially fighting a subpoena for data on who used the platform and what they used it for.

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