Airbnb faces a critical vote in Jersey City that could eliminate hundreds of listings

Key Points
  • Jersey City residents will vote today on a new measure seeking to restrict companies like Airbnb
  • "Airbnb is spending millions of dollars to say this is a ban, and it is not a ban," said Jersey City Mayor Steven Fulop
  • Airbnb has paid $4.2 million into a political committee responsible for issuing fliers and urging residents to vote down the measure.
Brian Chesky, CEO and Co-founder of Airbnb, speaks to the Economic Club of New York at a luncheon at the New York Stock Exchange (NYSE) in New York, U.S. March 13, 2017.
Mike Segar | Reuters

A battle between Airbnb and policymakers rages on as voters head to the polls in New Jersey's second largest city.

Jersey City residents will vote Tuesday on a new measure seeking to restrict short-term rental properties, impacting companies like Airbnb, HomeAway and VRBO.

A vote in favor of the measure would require strict permits to operate short-term rental properties and implement additional regulations, including:

  • Limitations on what properties/units are eligible for use as short-term rentals
  • A prohibition on using a property as a short-term rental for more than a total of 60 nights per year if the owner/operator is not present
  • A prohibition on using property with rent controlled by government regulations or other limitations
  • Rules for short term rental permits and permit fees of an initial $250 application fee and $200 per year for renewal

Jersey City Mayor Steven Fulop told CNBC's "Squawk Alley" Tuesday that Airbnb has spent millions over the last several months to block the proposed regulatory measure, framing the regulation as an all encompassing "ban".

"There are rules and there are restrictions around it, but it is definitely not a ban," said Fulop.

He also tweeted in September that Airbnb's campaign is full of "lies and misinformation". He said the company's real goal is its campaign to go public.

Airbnb said in a statement to CNBC that the residents of Jersey City have greatly benefited from Airbnb as they've seen a growth in the local tourism economy.

"Thousands of residents may be in serious financial jeopardy, with some even at risk of foreclosure or bankruptcy — all because of the Mayor's short-term rental ban, crafted at the behest of the hotel industry's special interests," said Airbnb spokesperson Liz DeBold Fusco.

DeBold Fusco defended the company's classification of the ordinance as a "ban," citing its effective removal of any property renters, as well as buildings with 4 or more units. She said that would effectively wipe out 70% of Jersey City residents eligible to put their homes on Airbnb.

"Our host community came to us asking if we would help them push back against this ban," said Debold Fusco. "We gladly said yes."

According to The New York Times, Airbnb has paid $4.2 million to a political committee responsible for issuing fliers and urging residents to vote down the measure. On the other side, the hotel industry and workers union have reportedly spent a collective $1 million to pass the regulations.

A sordid history

Fulop previously supported Airbnb's business, legalizing home sharing back in 2015.

He said his opinions of the company flipped once he saw commercial operators turning houses into unregulated hotels and disrupting the housing market.

There are now close to 3,000 listing on the platform in Jersey City, with the top ten hosts in the area accounting for over 500 Jersey City Airbnbs according to Inside Airbnb, an independent website that collects data from Airbnb's platform.

"This administration is fighting to fix the quality of life issues our residents have had to endure over the years as Airbnb abuses their initial agreement with the city," Fulop said.

However, critics of the policy cite the Fulop's personal, fraught relationship with Airbnb.

In late 2016, he approached the company for a financial contribution to his re-election campaign, and was met with a delayed donation in 2017.

Fulop began receiving contributions from the Hotel Trade Council later that year.

He responded to claims that this measure is a type of personal vendetta against the company.

"I didn't draft the rules, it was done by a committee of Jersey City residents," said Fulop. "I didn't sit on the committee or partake in it, which undermines the entire argument."

This is not the first time a major U.S. city has tackled the rapid expansion of short-term rental companies.

In 2015 San Francisco voted on a measure to increase short-term housing restrictions, but it was defeated. Nevada City, California also failed to pass a similar restriction seven month later.

Airbnb has also fallen under further scrutiny after the company officially banned "party houses" in response to a deadly shooting in California.

Jersey City Mayor Steven Fulop on vote to regulate short-term rentals
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