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What Happens When Airbnb and the NY Attorney General Meet Today

@jasonclampet

Apr 22, 2014 9:18 am

Skift Take

Airbnb would have to put on quite a show today to get the judge to side with them. But if they lose, expect an appeal as well as a PR blitz that will dwarf all others.

— Jason Clampet

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Later today a judge in Albany, New York will hear arguments from a lawyer with the New York Attorney General’s office and representatives of Airbnb.

The Attorney General subpoenaed the short-term rental site in October for information about hosts who rented their entire home for less than 30 days, which is illegal in New York City. Airbnb refused to provide the information and challenged the subpoena.

The Attorney General’s request was focused on one set of Airbnb’s hosts:

Here, the NYAG seeks the identity of Hosts in New York, the address of the apartment(s) rented, the duration of the rental, and the gross revenue generated from the apartments, for only those apartments where the Host did not stay in the apartment during the rental period.

The information requested is directly related to the NYAG’s investigation to determine who is in violation of the law. The data will identify the Hosts, the buildings they are renting in, and the revenue they are generating from the rental, which are critical components of establishing violations of the Short-Term Zoning Laws, the apartment building bylaws, or failure to pay HOT [Hotel Occupancy Taxes].

Skift reported in February that two thirds of Airbnb’s hosts were likely breaking the short-term housing law. This research was used by the Attorney General’s office in an affidavit submitted to the judge on Monday.

Airbnb and the NYAG’s office were involved in settlement talks until they fell apart on Friday last week over the number of listings Airbnb would allow a host to have on the site.

Today’s Hearing

Today’s hearing will feature oral arguments over Airbnb’s motion to quash the NYAG’s subpoena. The state’s representative will defend the subpoena, while Airbnb will argue why it should not have to comply.

It could last anywhere between five minutes to one hour.

Following the arguments, the judge could rule from the bench, but it could take up to a month.

Both parties would have a right to appeal, first to appellate court, then the state Supreme Court.

More Background From Court Documents.

On earlier negotiations between the NYAG and Airbnb:

During these meetings, Airbnb indicated that it would not produce the information sought by NYAG because it would “hurt their business and upset their customers.”

On the NYAG’s requests:

The definition of “Accommodation” was specifically designed to exclude Hosts that were complying with the zoning laws by remaining present during the rental period. Thus, the subpoena did not seek information from Hosts that rented a “shared” room where the Host was present.

On pushback by Airbnb:

On October 8, 2013, after weeks of refusal and on the eve of the deadline, Airbnb offered to provide the identity of only the top 40 Hosts by gross revenue in non-shared spaces in lieu of compliance with the subpoena. These Hosts amounted to tens of million dollars in rental income to the Hosts over the last three years, reflecting millions in potential hotel tax liability alone.

Because Airbnb has over 15,000 Hosts in New York, its proposal constituted an offer to provide only a fraction of 1% of the information sought by the subpoena, and was insufficient to reveal the extent of illegal use.

On the NYAG’s confidence:

The NYAG’s factual basis for the investigation greatly exceeds the applicable standard. First, there is widespread evidence that a substantial number of Hosts violate the Short-Term Zoning Law, and by extension, their apartment building bylaws and related contractual prohibitions.

Indeed, Airbnb does not dispute that at least some of its Hosts violate the law. It has been estimated that over 50% of the listings on Airbnb.com violate the zoning laws.

Second, there is substantial evidence that the majority of Hosts are not paying HOT. Airbnb has more than 100 times as many Hosts in New York City than there are individuals registered to collect or pay the tax.

The only conclusion that can be drawn from this data is that the vast majority of Hosts are not paying the HOT. This fact alone more than justifies the subpoena.

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