Dan Flanigan, PolsinelliThe titanic trio of Amazon, Uber, and Airbnb are the vanguard of a legion of disruptors now scrambling like frenzied ants over our economic and social landscape. These disruptors have been widely praised for their merchandising-cum-technological innovations that have brought a combination of extraordinary convenience, lower prices, or expanded optionality to the industries they have taken on. Any negative effects are likely not to be fully understood for a long time and not until it is too late. Are they causing justified and welcome dislocation to some outmoded forms of existing economic enterprise while enhancing the lives of the great masses of consumers? Or are they dangerous interlopers, invasive species like zebra mussels, Asian carp, and snakehead fish?
Airbnb has been especially controversial lately as legislators all over the country, including the New York City Council, strive to fashion a wise public policy in the face of an intense lobbying campaign by what has become, thanks to massive infusions of venture capital, a very rich and very militant entity. “There oughta be a law,” some say. Well, in New York there already is. Sort of. A state law prevents an owner or tenant of a dwelling unit (other than a single or two-family dwelling, a significant exception) from renting the unit for less than 30 days unless the host is present. The problem is that the law is not enforced and many think it cannot be or should not be, that we might as well try to keep the tide from coming in as to resist Airbnb’s inevitable triumph.
Yet there are reasons to resist, or at least slow down, channel, and regulate that incoming tide. Many reasons have been offered including concern for the safety of Airbnb users who may not fully understand the dangers that may confront them as they transact in this huge and rapidly growing but essentially unregulated sector—from fire hazards to home invasions, to say nothing of the “host” that turns out to be Count Dracula.
Another negative to the disruption of the lodging industry is the loss of both new jobs and existing jobs in that sector, jobs lost to employee-free mini-hoteliers who, rubbing salt into the wound, evade hotel taxes to boot.
A powerful criticism, suggested by various studies including a report issued by attorney general Eric Schneiderman’s office, is that the great majority of Airbnb “hosts” are not, as portrayed in the Airbnb PR campaigns, beleaguered individual homeowners (“middle class families who are trying to make ends meet,”) but operators of multiple dwelling units. The lure of the much higher revenues that short-stay tourist lodging can produce vs. normal longer term rentals is said to reduce housing stock by taking rental properties off the market and driving up prices of for-sale units, making the city less affordable. This may not be true, or its effect may be exaggerated and not material, but we just do not know and we should do everything we can to find out before we casually open the dykes.
Of special concern ought to be the basic human value of neighborliness and the possible negative impact of the proliferation of short-stay lodging units on the neighborhoods that provide the special environment and experience that Airbnb users are seeking out. I know someone with a second home apartment in a very popular tourist destination who is hardly ever able to enjoy it himself but refuses to go the Airbnb route. “It wouldn’t be fair to my neighbors” he says.
There is a sometimes written, but even when unwritten clearly understood, compact among the residents in a single family neighborhood or an apartment building that we have come there to live among fellow semi-permanent residents, not transients coming and going every few days. Surely that compact is a more fundamental right and value than the right of an owner to make a few extra bucks by taking advantage of inefficient legislation or lax enforcement to foist a stream of guests (and the inevitable related increase in the cost of building services) on their neighbors?
New Orleans is struggling with this very issue right now as Airbnb has moved into historic neighborhoods once inhabited only by permanent residents. As one resident complained to the LA Times, they “vomit on our cars, pee on our cars, throw up in our yard, throw trash in our yard, rip out our flowers.” New Yorkers may recall the recent publicity on the “Bronx party house,” hosting parties for as many as 300 guests as reported by The New York Post. Thus the Airbnb invasion may erode the very quality of the neighborhoods that attracted travelers in the first place.
So there is reason to go slow and enforce existing laws. Easy to say, hard to do. We surely will not dispatch an invasion force into the neighborhoods and apartment buildings to nab the illegal “hosts” and root out their unwelcome “guests.” Instead, the wise legislator and law enforcer will find a way to deal with the problem at its source, Airbnb itself.
Airbnb may, like so many other flood tides out there, inevitably swamp us, but, if we keep it at least partly dammed up for awhile as we study its actual and possible effects, we might be able to eliminate some of the more unpleasant species, the zebra mussels and snakehead fish, that might be riding in on its surging tide.
Dan Flanigan is chair of the real estate & financial services department and managing partner of Polsinelli, New York, N.Y.
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