The American Interest
Analysis by Walter Russell Mead & Staff
NYC to AirBnB: All Your Data is Belong to Us

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Airbnb—the popular service that allows people to rent out their apartments or houses to guests in need of cheap lodging—has recently been fighting battles throughout the country with cities that want a slice of the pie. In particular, city officials want those renting out their spaces through Airbnb to pay the hotel tax on the income they get from renters.

Airbnb’s owners has previously agreed that users should pay this tax, but they’ve been understandably reluctant to enforce it. The tax will make it harder for their clients to rent out their space (more forms, more regulation), and it will reduce the financial incentives to do so. Now, in New York, the State Attorney General Eric Schneiderman is looking to force Airbnb users to pony up, and has subpoenaed all of the company’s user data. But Airbnb is fighting back:  

On Wednesday, Airbnb filed a motion in New York State Supreme Court challenging the subpoena. Airbnb’s petition contends that Schneiderman’s request is a “fishing” expedition because there’s no proof of any wrongdoing…By renting their couch, [representative Airbnb users] Lauren and Rob aren’t breaking the law, which requires that hosts be home while their paid guests are sleeping there. But Schneiderman’s actions could mean that they will soon have to pay New York hotel taxes every night they have a guest. (The attorney general’s office told Airbnb that the subpoena relates specifically to tax issues.) That would reduce Lauren and Rob’s nightly income by about $12 a night—or they’d have to make their guests pay taxes, which would reduce demand for their couch

And not only the company: a petition circulated by one of the Airbnb renters has already garnered over 60, 000 signatures and climbing. NYC’s effort to subpoena the data is a perfect example of the heavy-headed regulation that could crush entrepreneurial services like Airbnb. The wild west of the new app “sharing economy” will have to be brought under some regulation and oversight, but this isn’t the way to do it. Local governments need to work to encourage incipient innovation, while still ensuring new service companies fulfill their civic responsibilities. That balance is hard to strike, but NYC is far from achieving it.

[Image of Bed and Breakfast from Shutterstock]

Published on October 19, 2013 10:15 am
  • USNK2

    NY AG Schneiderman may indeed be solely concerned with collecting the ‘hotel tax’ from Airbnb clients.

    However, you can bet Mead Manor that the real issue is that Big Real Estate does NOT want anyone, whether it is a condo, co-op, or rental, to lose control over who is sleeping in anyone’s apartment.

    A far better priority would be to finally deal with the plague of co-operative apartments in the outer boroughs with Boards of Directors who defer all to the Managing Agent, who needs NO license other than that of a real estate broker.

    Because NYS law only requires disclosure of structural failure in sales of one-to-four family homes, Managing Agents have zero incentive to maintain the physicial structure of these co-operative corporation apartment buildings, many built in the 1920′s.

    When AG Schneiderman takes a hard look at what is happening at Brady Court Co-operative in Pelham Parkway, The Bronx, maybe he can gain credibility as someone not hostage to Big Real Estate, of which the Schneiderman family business is a member.

    Managing Agents and their Building Managers need to be licensed so they know the difference between mortar and caulk, as one example.

    Boards of Directors of co-operative corporations need to know they have fiduciary obligations as Directors of corporations governed by NYS Business Law.

    And, there must be a mechanism for replacing clueless co-op Boards to avoid more Brady Courts.

    It is also the height of hypocrisy that mayoral candidates always pledge more “affordable housing” when they always fail to notice the thousands of outer borough co-operatives being destroyed by clueless Boards and ignorant Managing Agents.

    Tackling Airbnb is solely a distraction from the far more destructive consequences of the complete failure of New York State to license Managing and Building Agents, and require disclosure of structural failures for ALL sales, in order to force Boards and their Agents to take preservation of the building structure seriously.