Foregoing the Cleaver for the Scalpel: How New York Can Add Some Nuance to Its Short-Term Rental Laws

Author:J.T. Minor
Position:J.D. Candidate, The University of Iowa College of Law, 2018; B.A., Belmont University, 2013
Pages:817-839
SUMMARY

In 2010, New York passed a law that made it illegal for residents living in areas zoned as class A multiple dwelling to rent their homes on a short-term basis using services like Airbnb. Just six years later, New York went even further and prohibited the advertisement of these short-term rentals. This Note will argue that New York's short-term rental laws go too far in banning short-term rentals... (see full summary)

 
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Foregoing the Cleaver for the Scalpel:
How New York Can Add Some Nuance to
Its Short-Term Rental Laws
J.T. Minor*
ABSTRACT: In 2010, New York passed a law that made it illegal for
residents living in areas zoned as class A multiple dwelling to rent their homes
on a short-term basis using services like Airbnb. Just six years later, New York
went even further and prohibited the advertisement of these short-term rentals.
This Note will argue that New York’s short-term rental laws go too far in
banning short-term rentals outright. In addition, this Note will discuss
solutions for how New York can provide greater nuance to these laws by
simultaneously addressing the legislature’s primary concerns with short-term
rentals and allowing New York to reap the tax and tourism benefits that these
rentals provide. These solutions include (1) imposing at least the standard
hotel tax on short-term renters and allowing services like Airbnb to facilitate
the collection of that tax; (2) distinguishing between commercial and non-
commercial short-term renters (allowing the latter and outlawing the former);
and (3) enabling individual neighborhoods to opt out of allowing non-
commercial short-term rentals via a petition and subsequent hearing.
I.INTRODUCTION ............................................................................. 818
II.BACKGROUND ............................................................................... 820
A.THE LOOPHOLE THAT LED TO LAW ......................................... 821
B.NEW YORK CITYS APPROACH COMPARED TO SAN
FRANCISCO AND CHICAGO ........................................................ 824
III. WHY NEW YORKS SHORT-TERM RENTAL LAWS ARE
PROBLEMATIC ............................................................................... 826
A.LOSS OF TAX REVENUE ............................................................ 827
*
J.D. Candidate, The University of Iowa College of Law, 2018; B.A., Belmont University,
2013. I would like to thank my wife Meredith for all of her love and support while writing this
Note and throughout law school. I would also like to thank my parents for a lifetime’s worth of
love and encouragement.
818 IOWA LAW REVIEW [Vol. 103:817
B.LOSS OF INCOME STREAM FOR RENTERS .................................... 828
C.LOSS OF REVENUE FROM TOURISM ............................................ 830
IV. THE SOLUTION: REVENUE, NUANCE, AND OPT-OUTS .................. 832
A.CHARGE SHORT-TERM RENTERS (AT LEAST) THE HOTEL
TAX RATE ............................................................................... 833
B.REGISTRATION AND THE ACQUISITION OF A SHORT-TERM
RENTAL LICENSE AS A MEANS OF DISTINGUISHING
BETWEEN COMMERCIAL AND NON-COMMERCIAL
SHORT-TERM RENTERS ............................................................ 835
C.HEARINGS AND PETITIONS FOR INDIVIDUAL
NEIGHBORHOODS: THE CHANCE TO OPT OUT OF
SHORT-TERM RENTALS ........................................................... 836
V.CONCLUSION ................................................................................ 838
I. INTRODUCTION
In 2010 and 2016, the New York State Legislature passed two short-term
rental laws that make it illegal for New York residents living in areas zoned as
class A multiple dwelling to rent out their homes using services like Airbnb.1
These short-term rental laws are problematic in a number of ways. First, these
laws prevent New York from reaping the benefits of a significant amount of
tax revenue that could go not only to ensuring the proper use of short-term
rentals but also to other important social programs like homeless services and
low-income housing.2 Second, these laws take away an income stream upon
1. S.B. 6873, 2009 Leg., 234th Sess. (N.Y. 2010) (deleting “as a rule” from New York State
Multiple Dwelling Law § 4); Assemb. B. 8704, 2015 Leg., 238th Sess. (N.Y. 2016) (amending New York
State Multiple Dwelling Law § 4 to make advertisement of short-term rentals illegal). New York
Governor Andrew Cuomo signed the latter bill into law only very recently, and Airbnb has now filed a
suit against the state of New York. Katie Benner, Airbnb Sues over New Law Regulating New York Rentals,
N.Y. TIMES (Oct. 21, 2016), http://www.nytimes.com/2016/10/22/technology/new-york-passes-law-
airbnb.html. There is evidence that New York has recognized a distinction between commercial and
non-commercial hosts since at least 2014, but the legislature did not attempt to use any such distinction
in the bill enacted in 2016. See Henry Grabar, Everyone Is Wrong in the Battle Between New York City and
Airbnb, SLATE: MONEYBOX (Oct. 24, 2016, 6:31 PM), http://www.slate.com/blogs/moneybox/2016/
10/24/some_new_york_airbnb_hosts_may_be_fined_under_a_new_law.html. This bill has further
incited protests by many Airbnb hosts. Anisa Purbasari, Airbnb Hosts Protest New Rental Law Outside New
York Governor’s Office, VERGE (Oct. 26, 2016, 4:32 PM), http://www.theverge.com/2016/10/26/
13421874/airbnb-rally-law-home-sharing-new-york-governor-cuomo.
2. The estimation for this lost revenue ranges from $20 to $60 million. Compare Airbnb to Start
Charging Hotel Taxes in a Handful of Cities, IOWA PUB. RADIO (Apr. 18, 2014, 6:13 PM) [hereinafter Airbnb
Charging Taxes], http://iowapublicradio.org/post/airbnb-start-charging-hotel-taxes-handful-cities#
stream/0 (estimating a loss of $20 million), with Reuters, New York Bill Would Ban Airbnb Listings for Some
Short-Term Rentals, NBC NEWS (June 21, 2016, 7:00 AM), http://www.nbcnews.com/t ech/tech-
news/new-york-bill-would-ban-airbnb-listings-some-short-term-n596111 (estimating that the company
paid $60 million in taxes before the short-term rental laws were passed). As this Note will address, these

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