Airbnb Under the Microscope

It didn’t very long for the poster child for the sharing economy, Airbnb, to start acting like just another large Fortune 500 company; contributing heavily to political campaigns along with getting involved in sponsorship of community-friendly local events such as a marathons and barbecues. What makes Airbnb different from most large corporations is that they shroud themselves in the veneer of being a kind of grassroots “movement” to preserve housing.

Their supporters tend to be well-meaning millennials and other populations who are finding it increasingly hard to pay their exorbitant rents. The company’s largest operators however are well financed agents who are renting out multiple rent regulated apartments at any given time which violates New York State housing laws. Despite the image the company likes to paint of itself as a multi-racial movement, the truth of Airbnb’s presents leads to the gentrification of entire neighborhoods long called home by people of color. As more business move in to cater to tourists, long time locals find it near impossible to even shop for the bare necessities in their own communities. Here is a closer look at how the company operates and how it is currently being used as a weapon against rent regulated tenants by some of the most notorious landlords who look to clear out their buildings in order to convert them for commercial uses.

A report released by the website Inside Airbnb in March of this year shows that the hotel service is being used to gentrify communities of color which sees only a fraction of the profits which comes from the company’s presence. Using data from 72 primarily black neighborhoods, Murray Cox, the author of the report, showed that Airbnb hosts in these communities are five times more likely to be white. These neighborhoods include Stuyvesant, Crown Heights North, Bedford, Bushwick South, Hamilton Heights and Central Harlem. White residents in these areas only make up 13.9% of the total population. Yet they make up 74% of the hosting community http://insideairbnb.com/face-of-airbnb-nyc/. They have taken $159.7 million dollars while black hosts have taken in $48. million dollars so a population which makes up less than 15% of the faces who call these neighborhoods find themselves on the winning side of a 530% revenue disparity intake. The loss of housing in these areas are equally disproportionate.

According to Cox’s report the loss of affordable housing affects black households 6 times more than their white neighbors due to their majorities in these communities. The areas that were studied for this report were made up of 79.6% residents compared to the 14% mentioned above. The hardest hit community in New York City is Stuyvesant Heights where there is a 1,012% disparity in favor of white hosts who use the Airbnb platform to rent out space compared to their black counterparts. As a result, there is a 857% revenue intake disparity in favor of the white resident as opposed to black residents. The loss of housing or the lowering in the quality of life in this neighborhood affects black tenants 12 times that of the white tenant. Murray Cox also wrote in his report,

“Black neighborhoods with the most Airbnb use are racially gentrifying, and the (often illegal) economic benefits of Airbnb accrue disproportionately to new, white residents and white speculators; while the majority Black residents in those communities suffer the most from the loss of housing, tenant harassment and the disruption of their communities.”

The cruel joke here is that in many of these cases these the Airbnb operations running out of these apartment buildings are illegal, violating New York state housing laws — rent stabilized tenants may be evicted for lease violations and for profiteering — and yet the Hotel Service provider is funding allies up in Albany.

The latest elected to come out with a bill which would threaten New York State housing laws in favor of Airbnb is Democrat Assembly Member from Brooklyn, Joseph Lentol. Lentol’s bill would gut New York State’s multiple dwelling law which separates how commercial and residential buildings may be used.

The proposed legislation would alter tax laws to allow all Airbnb operations to pay state taxes which would legitimize even those who are violating housing regulations. This would make the enforcement efforts of governing bodies all but impossible. City agencies such as the Office of Special Enforcement (OSE) protects residential housing by cracking down on illegal hotel operations would effectively no longer be able to operate.

If this bill passes, it would allow landlords to clear out their buildings in order to convert them for commercial use. Rent regulated units could then easily be bumped up to market rate. Airbnb agents who run operations out of multiple rent regulated apartments would be allowed to skirt the law while bringing in about 30% of the company’s profits. In short, the bill is a poison pill guaranteed to wipe out rent regulated housing altogether and create more fertile ground for gentrification.

The good news here is that, the pro-Airbnb officials are outnumbered in the state Assembly by pro-tenant Democrats and Republicans who have long acted as water-boys for REBNY (Real Estate Board of New York) which is opposed to such legislation. Also since the state is pro-union, the Hotel Trades Council’s objection to the bill will help to ensure that the legislation will be dead on arrival if it gets introduced at all.

Until Next Time…

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