Mayor’s Office of Criminal Justice
New York City Council
Committee on Housing and Buildings
June 17, 2020

Good morning, Chairperson Cornegy, and members of the Committee on Housing and Buildings. My name is Christian Klossner and I am the Executive Director of the Office of Special Enforcement (OSE), which is overseen by the Mayor’s Office of Criminal Justice. Thank you for the opportunity to testify today.

OSE’s mandate, originating from a Mayoral Executive Order in 2006, is to coordinate efforts across City agencies to problem-solve around emerging issues adversely affecting neighborhood cohesion, livability, and safety. OSE has served this function in numerous issue areas, ranging from longstanding involvement in illegal massage parlors and dangerous clubs to newer work streams required by the pandemic, in particular safeguarding restaurants from exorbitant fees charged by third party delivery apps and ensuring businesses and residents are in compliance with health guidelines put in place to prevent the spread of COVID-19. Nonetheless, the vast majority of OSE’s work since 2015 has related to addressing illegal short-term rentals occurring in the city’s permanent residential housing stock.

By working to stop the proliferation of these illegal short-term rentals, OSE’s enforcement efforts advance key goals of this administration: to help preserve affordability and community livability; to prevent harassment and displacement of permanent residents; and to increase access to permanent housing. Our enforcement efforts protect residents and visitors to New York City from dangerous violations of the City’s building and fire safety standards, while striving to ensure that New Yorkers are not disturbed by illegal commercial activity in their residential neighborhoods and buildings.

The problem of illegal short-term rentals in New York City adds to the variety of longstanding affordability issues that this administration is committed to addressing. The illegal short-term rental problem is not homogenous, but rather looks different across neighborhoods. In one neighborhood, this can mean an entire rent-stabilized building is converted to an illegal hotel. In another, a two-family house might be converted to an illegal hostel with 21 rooms and 62 beds. Effective enforcement requires tactics calibrated for these citywide differences. But it has become increasingly clear that a critical component across all enforcement has been the ability to gain access to data about the listings and hosts that only the companies that facilitate short term rental transactions have possession of.

When OSE last appeared before this body, it was in support of a law that required these online services to provide this critical data to the City. That law passed, becoming Local Law 146 of 2018. It required that such booking services provide monthly reports to the City of all short-term rental transactions with the exception of those occurring in buildings authorized by the Department of Buildings to house transient use.

That law faced a legal challenge from two booking services that would have been subject to the requirements, namely Airbnb and HomeAway. A preliminary injunction was issued in that matter.

Now OSE appears before this body again, this time in support of updated legislation, the passage of which will result in Airbnb dismissing its suit while still providing a powerful tool to further the City’s efforts to address short-term rentals. Attached to the submitted written version of this testimony is the actual settlement agreement by which the City and Airbnb agreed to conclude the dispute over Local Law 146 through the enactment of the preconsidered legislation that is the subject of this hearing.

Under this updated local law, short-term rental platforms would share information with the City on a quarterly basis instead of monthly. Instead of all transactions for all listings, the report would include all transactions for listings that generate five or more nights of bookings per quarter, so long as the listing offers or appears to offer an entire housing unit or allows three or more guests to stay at one time.

For all eligible listings, reports provided to the City would be required to include:

• Physical address of the listing;
• Host information (name, physical address, phone number, and e-mail address);
• The name, number and URL of the listing;
• Whether the short-term rental is for an entire unit or part of a unit;
• The total number of days booked;
• The amount received by the host for each transaction, as well as the account name and anonymized account identifier relating to those payments

The data this amended law will provide will significantly enhance OSE’s ability to enforce short-term rental restrictions and deter unlawful rentals.

It is critical to note that this amended law does not in any way change what is or is not legal in NYC. Indeed the legal framework for short-term rentals is reflected in the legislation’s terms. The current laws in New York City restrict rentals for fewer than 30 days to only those situations where up to two guests are maintaining a common household with the permanent occupant of the housing unit, whether in a multiple dwelling or in a one- or two-family building. In addition, where the unit being listed is in a multiple dwelling, the listing itself may run afoul of the law prohibiting illegal advertisements.

The fact that certain transactions for certain listings will not be reported does not mean that those transactions or listings are therefore legal. While listings offering only a part of a unit with two or fewer guests allowed may be legal, OSE has repeatedly encountered, and will remain vigilant to, those hosts who attempt to evade scrutiny by dividing whole apartments or buildings into a series of private listings. These kinds of arrangements not only can result in the removal of one or more units of housing, they can create egregious safety conditions for the occupants. OSE will apply traditional methods of enforcement to address this subsection of the illegal short-term rental market.

In addition, the “little guy” exception for listings that are rented for fewer than five nights per quarter is does not mean those users will never receive an inspection or a violation. Instead this “little guy” exception to reporting means that the City is keeping to its stated intention not to proactively focus its efforts on those who infrequently rent out the unit of housing they live in. If the low level use results in disruptions to the community sufficient to prompt a complaint, OSE will still respond and take appropriate action.

In conclusion, this revision to Local Law 146 will still provide the City with the majority of the data needed to effectively address illegal short-term rentals, while at the same time also resolving several of the concerns raised during the litigation and in the preliminary injunction decision. OSE commends the Council for its swift action to realize the terms of the settlement by introducing the legislation that will end Airbnb’s lawsuit against the City, and urges its rapid passage.