Airbnb, the popular online home-rental marketplace, will appear in court in New York's capital Albany on Tuesday against New York Attorney General Eric Schneiderman, whose office said two-thirds of its New York City listings could be illegal.
New York state law forbids subletting apartments for fewer than 30 days if residents are not present, yet 64 percent of Airbnb listings offer entire apartments and nearly all have minimum stays of less than a month, Schneiderman's office said in a court filing on Monday.
Schneiderman opened an investigation last year into Airbnb, a Silicon Valley venture capital-backed website that lets people put up spare rooms or couches for rent. It lists more than 19,500 New York City residences.
"Airbnb is simply looking out for its bottom line at the expense of a law that protects quality of life for building residents and safety for tourists," Attorney General spokesman Matt Mittenthal said.
Airbnb has become one of Silicon Valley's most successful start-ups in the five years since its was founded. A group led by private equity firm TPG Capital Management LP agreed on Friday to invest $450 million in the company, valuing it at $10 billion — more than either Hyatt Hotels Corp. or Wyndham Worldwide Corp.
Schneiderman's office first demanded in August that the company turn over records of all Airbnb hosts in New York state. Prosecutors issued a subpoena in October after failing to obtain the records, despite several rounds of negotiations with Airbnb lawyers. Airbnb then went to court to block the subpoena.
"If the Attorney General was really interested in going after a few individuals, he'd do a real investigation," Airbnb spokesman Nick Papas said. "Instead, he's targeting thousands of regular New Yorkers.
"The New York Attorney General continues to say one thing and do another," he said.
Airbnb has also called on New York to change a law it said was preventing it from collecting $21 million in taxes each year from its hosts.
The tax law, which says only hotels can collect and remit occupancy taxes, excludes Airbnb because the state does not consider it a hotel service. The San Francisco-based company wants New York to allow Airbnb to classify itself as a hotel so it can collect the taxes.
"New York will lose millions of dollars because current tax law prevents Airbnb from collecting and remitting occupancy related taxes," wrote the company's head of public policy, David Hantman, in a blog post last week. "Our community want to pay its fair share, and we want to help."