March 29, 2024

Bucks Blog: A $2,400 Fine for an Airbnb Host

Nigel Warren faced steep fines for violations from renting his apartment on Airbnb.Todd Heisler/The New York Times Nigel Warren faced steep fines for violations from renting his apartment on Airbnb.

Back in December, I wrote a column about Nigel Warren, who was facing the prospect of thousands of dollars in fines from New York City for renting his room in a two-bedroom apartment out on Airbnb. A city inspector believed he was breaking the law, but the city ended up dismissing the charges right before the column appeared.

From there, however, the tale took an odd turn. The city revived the charges and set a hearing date for late January. Mr. Warren, appearing on behalf of his landlord, showed up only to find, to his great surprise, that an Airbnb team was there too, including outside counsel it had retained. The company intended to intervene on his behalf, but it hadn’t let him know that it would appear at the hearing.

Because of some confusion at that hearing, the city scheduled a new one, which finally took place on May 9. There, both Mr. Warren and Airbnb argued that certain language in New York’s administrative code allowed lawful boarders, roomers and lodgers to stay in an apartment like Mr. Warren’s for less than 30 days.

An administrative law judge, Clive Morrick, disagreed with their interpretation in a decision he issued on Monday, noting that the Airbnb renters did not have access to all parts of the apartment, specifically the room of Mr. Warren’s roommate, who was still living there while Mr. Warren was away and renting out his room. Mr. Morrick also questioned whether complete strangers staying for a few nights could ever fall under the code language in question.

Airbnb cannot file an appeal, since it was only a “discretionary intervenor” in the case, somewhat akin to a party filing an amicus brief. Mr. Warren, who has told his landlord that he will cover the $2,400 in fines, says that he’s willing to consider appealing if it doesn’t cost him any more money in legal fees and if Airbnb is willing to help him refine and advance his arguments.

But the bigger question here is the same one I asked in my column in December and Airbnb would not answer at the time: Given that Airbnb is well aware that many of its listings in large cities are probably violating local laws, shouldn’t it warn its hosts, with some sort of aggressive pop-up or similar disclosure, when they first post a new listing that they are potentially putting themselves in legal jeopardy?

On Tuesday, Airbnb sent me a statement saying that it plans to start doing just that. Here’s what the warning will say:

“Congratulations! You’re almost done listing your new space and it’s looking pretty sharp! As you’re deciding whether to become an Airbnb host, it’s important for you to understand how the laws work in your city.

Some cities have laws that restrict your ability to host paying guests for short periods. These laws are often part of a city’s zoning or administrative codes. In many cities, you must register, get a permit, or obtain a license before you list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Local governments vary greatly in how they enforce these laws. Penalties may include fines or other enforcement. These rules can be confusing. Often, even city administrators find it tough to explain their local laws.

We are working with governments around the world to clarify these rules so that everyone has a clear understanding of what the laws are. In the meantime, please review your local laws before listing your space on Airbnb. By accepting our Terms of Service and activating a listing, you certify that you will follow your local laws and regulations.

Many of us at Airbnb are hosts ourselves and we’re passionate about making it as easy as possible to host around the world.

Onwards and Upwards!”

I also asked the company about the possibility of blocking listings from addresses of buildings where residents or the management company have told Airbnb that listings are not legal or welcome. The company had not yet answered this question by the time we published this post.

The company’s approach will probably influence many people in cities like San Francisco and New York, where it has a large number of listings and its hosts have clear legal exposure. The travel news site Skift estimated in January that half of Airbnb’s listings in New York City are illegal. The company did not comment on this estimate.

If you’re already a host in New York, keep in mind that the city still seems only to be conducting inspections at apartments where neighbors have complained about the comings and goings of all the random strangers. But landlords are on to this too, as Fast Company’s Chris Dannen noted last year after his landlord served him with a cease-and-desist order. Most leases prevent the sort of subletting that goes on via Airbnb every day.

Airbnb and other companies hope to clarify or change some of the laws that restrict these sorts of short-term rentals. Here’s what Airbnb said in a statement about that effort and a 2010 law in question:

“This decision makes it even more critical that New York law be clarified to make sure regular New Yorkers can occasionally rent out their own homes. There is universal agreement that occasional hosts like Nigel Warren were not the target of the 2010 law, but that agreement provides little comfort to the handful of people, like Nigel, who find themselves aimed at by overzealous enforcement officials. It is time to fix this law and protect hosts who occasionally rent out their own homes. 87 percent of Airbnb hosts in New York list just a home they live in — they are average New Yorkers trying to make ends meet, not illegal hotels that should be subject to the 2010 law.”

If you’re an Airbnb host who is probably violating local laws, do you intend to keep on renting your room or home out anyway until the legal dust settles, just as Airbnb’s employees seem to be doing?

Article source: http://bucks.blogs.nytimes.com/2013/05/21/a-2400-fine-for-an-airbnb-host/?partner=rss&emc=rss

Economix Blog: More on How Stock Options Are Valued

Several readers wrote with additional questions about the tax treatment of stock options. Given the complexity of the issue, it’s not surprising that there might be confusion. So here is a more detailed explanation, using the example cited in the article, involving Sirius XM radio:

Mel Karmazin, the chief executive of Sirius XM Radio, was granted options to buy 120 million shares at 43 cents each. If he could have exercised them at the grant date, at that price, the shares would have been worth $51 million. He would have paid that amount and had no profit.

But options cannot be exercised until they are vested and some are never exercised at all  —  sometimes people leave the company before the options vest or the stock price drops and doesn’t recover before the options expire. So companies use various models (like Black-Scholes) to estimate the fair market value of the options that they report as an expense on their financial statements.

In this case, Sirius XM calculated a fair market value of $35 million and took that as an expense on its financial books. But on its tax return, the company is not entitled to deduct anything for options until they are actually exercised. And when the company does deduct the cost of those exercised options, the amount of the deduction is the appreciation in the value of the stock.

If the 120 million options were to be exercised at the current stock price of about $1.80 a share, they would generate $216 million in stock. Mr. Karmazin would realize a gain of $165 million (the $216 million value of the stock minus the $51 million he would spend to exercise the options) which would be taxed as ordinary income, presumably at the top rate of 35 percent. Sirius XM would be eligible to take “a mirror deduction” of $165 million. At the top corporate rate of 35 percent, that would provide Sirius XM a $57 million reduction in taxes.

The fact that the individual who exercises the option is taxed on income equal to the “mirror deduction” taken by the company also led some readers to write that the policy is revenue neutral and therefore not a tax break at all. But the bipartisan Joint Committee on Taxation has estimated that limiting companies’ deduction to the amount they declare as an expense would increase federal revenue by $25 billion over the next decade.

Article source: http://feeds.nytimes.com/click.phdo?i=7afb739864bb1907e97e13d8213e21ee

Bits Blog: Hewlett-Packard to Keep Its PC Business

Barely a month into Meg Whitman’s tenure as chief, Hewlett-Packard announced on Thursday that it would not sell the company’s dominant personal computer business — closing off a strategic path offered by her predecessor.

In the announcement, Ms. Whitman was quoted as saying that after a review, the company had decided that keeping the division would be “right for customers and partners, right for shareholders and right for employees.”

“The outcome of this exercise reaffirms H.P.’s model,” the company said.

Ms. Whitman’s predecessor, Léo Apotheker, announced in August that H.P. was exploring “strategic alternatives” and might sell or spin off its dominant personal computer business; that it was scrapping the TouchPad tablet computer; and that it would acquire a British software concern, Autonomy, for $11.7 billion.

The actions touched off a storm of confusion and sent H.P.’s stock plummeting. Within a month, Mr. Apotheker was dismissed after less than a year on the job, and succeeded by Ms. Whitman, the former chief of eBay.

Article source: http://feeds.nytimes.com/click.phdo?i=55b24f025e3b8252567ba7bed79f8772

Your Money: Explaining New Federal Student Loan Rules

But if the questions sent to our Bucks blog from indebted people are any indication, any change in Student Loan Land almost inevitably leads to enormous confusion. Many questions had to do with whether private loans, the kind that come from banks and often have higher and variable interest rates, are part of these changes. Nothing is changing with those loans.

This is crucial, since many of the people in the worst sort of trouble — the ones you’ve read about with six-figure balances — often have both private loans and federal loans.

Instead, only those with different kinds of federal loans — an estimated 5.8 million borrowers — will be able to consolidate them into one loan under the new plan and also save themselves a bit of money.

Borrowers also remain befuddled about the confusing eligibility requirements of a two-year-old program that limits the monthly payment for certain federal student loan borrowers based on their income and then forgives any remaining debt after 25 years.

Starting sometime next year, the limit will be cut by a third for certain borrowers, and that will lower payments. Also, loan forgiveness will happen after 20 years. (The income-related changes were already scheduled to happen in 2014, but they will occur sooner now.)

Today, at least 450,000 people participate in the federal income-based repayment program that started about two years ago, though there are probably many more borrowers who are eligible but don’t know about it or haven’t figured out how to sign up.

I’ve answered as many of the reader queries as I can below, and will answer more on the Bucks blog in the coming weeks.

Q. Who is eligible?

A. People with at least one federal loan that they borrowed directly from the federal government and at least one that originated with a bank or other lender. If you have a bunch of bank-issued federal loans but no loan directly from the government, you can consolidate them under an older federal program, but it won’t save you as much money.

The PLUS loans that some graduate students have taken out in recent years are eligible. Perkins Loans and many federal loans for people entering health professions are not eligible. And again, private student loans are not part of the mix here either.

Also, if you’re in default on the loans, you won’t be eligible.

Q. How do I know what kind of loan I have?

A. Don’t be embarrassed to ask, since many people have forgotten or never knew in the first place. Call your lenders now and ask them. The Education Department plans to inform all eligible borrowers in January as well. If you haven’t heard from them by the end of that month, call them at 1-800-4FEDAID (1-800-433-3243) and ask.

Q. Is there a limit to the number of federal loans I can consolidate?

A. No.

Q. What will I save if I consolidate under the new program?

A. It depends, and the formula for calculating your new interest rate is complex.

First, you’ll subtract 25 basis points (a quarter of a percentage point) from the interest rate of your federal loan that a bank or other lender originated. You can also subtract another 25 basis points for both those bank loans and any loans that came from the federal government directly if you agree, once the loans are consolidated, to let the federal government (which will be the new lender of record) pull the payment automatically from your bank account each month.

The new rate will then be a weighted average of the two (newly discounted) rates from the two different types of loans, based on the balances of each loan.

Q. When can I sign up, and for how long?

A. Enrollment should begin in January and is scheduled to end on June 30, 2012.

Q. Can this help me make more of my federal loans eligible for forgiveness if I work in certain public service jobs?

A. Yes. The only federal loans that are eligible for that forgiveness plan are ones in the federal direct program, which is where you end up when you consolidate your federal student loans in this fashion. By consolidating, older federal loans that banks originated for you would then become eligible.

Q. What if I recently consolidated? Can I unconsolidate to take advantage of this new discount?

A. No.

Q. Who is eligible for these income-based repayment plans in the first place?

A. Eligibility is based on something known as “discretionary” income, which the federal government defines as anything above 150 percent of the poverty level. The poverty level depends on your state and the size of your family. The big idea here is to only allow people to qualify whose income makes it hard to afford their full federal student loan payments. (Private loans do not factor into income-based repayment.)

All of this is outlined in plain English on IBRinfo.org, a Web site maintained by a nonprofit group called the Project on Student Debt. Your lender or the company servicing your loan will decide whether you’re eligible.

Q. What is changing with these programs as a result of Wednesday’s announcement?

A. Currently, people who qualify pay no more than 15 percent of their discretionary income toward federal student loan payments each month. You only have to make payments for 25 years, even if there’s still a balance left.

The new plan will lower the cap to 10 percent of discretionary income and waive any balances after 20 years of repayment. (Again, better deals are available for people who are working in certain public service jobs.)

Q. Any other catches?

A. Yes. This new income-based plan is not available to people who graduated in 2011 or earlier and have no plans to take out any new federal loans. Instead, you must have at least one federal loan from no earlier than 2008 and also take out one more in 2012 or later to qualify.

Graduate students are eligible, too, but you have to have taken your first loan out no earlier than 2008 to qualify, in addition to taking out at least one more in 2012 or later. So if you’re a sixth-year doctoral student, this might not work for you. That said, you might be eligible for the older, less generous plan.

Also, here too, your loans can’t be in default. This was disappointing to Robert Applebaum, the founder of forgivestudentloandebt.com. His two-year-old movement along with the petition he started on the White House’s Web site helped inspire the adjustments to the federal loan programs.

“Income-based repayment is fantastic if all you have are federal loans and are current on your repayments,” said Mr. Applebaum, 37, who lives on Staten Island and is current on his own student loans. “But people are drowning in debt and penalties, and the government has made it so that first you have to get your head above water. Another step could have been to eliminate that requirement, and they didn’t.”

Q. What if I still have questions?

A. The financial aid ace Mark Kantrowitz of finaid.org has posted his take on the announcement on the Choice blog. Otherwise, call the Education Department and keep an eye on studentaid.ed.gov and the Project on Student Debt’s Web site for more details as they become available.

Article source: http://feeds.nytimes.com/click.phdo?i=68bf28fb951a358965d1c0cb3920174b

The Haggler: The Nightmare of the Airline Change Fee

The Haggler will spare you the litany, but apparently we need an explicit rule against midflight toenail clipping, because there appears to be some confusion about whether it is appropriate. (It is not, to be clear.) And a rule against loud humming of pre-disco Bee Gees hits — also not appropriate, though that is about the noise, not the Bee Gees.

The column also produced a lot of faintly mocking e-mail, which could be summarized and condensed as follows:

“Dear Dummy:

“You are very, very stupid. When the phone rep at Delta told you, the night before your flight, that all those window and aisle seats you spotted online were reserved for ‘disabled’ passengers, she was downright wrong. Most are reserved for frequent fliers. I ought to know. I am a Delta frequent flier. I took your seat.”

Is this a polite way to speak to the Haggler? No, but point taken. The seat reservation system is apparently a very elaborate game and if you are not enrolled in a frequent-flier program, you’re playing with both hands behind your back. Which, by the way, is a pretty good place for your hands when you’re in the middle seat, which is where you’ll often sit if you don’t enroll in a frequent flier program.

That or fly JetBlue, which does not play the now-you-see-it, now-you-don’t game when it comes to seat selection.

In addition to the aforementioned jeering, the column also produced more than a few interesting complaints about Delta Air Lines. Like this one:

Q. On April 11, I bought two round-trip tickets to Shanghai, for me and my husband. The total price for both was $3,503. About a month later, I checked the fare for the same flight, which is scheduled for July, and discovered that the total price for the same tickets had dropped, to $2,902. So I wrote to Delta and asked if I could be refunded the difference.

Here is what a customer service rep wrote back:

“Anytime we reissue a ticket, an administrative service charge will apply. A nonrefundable Delta travel voucher will be issued for any difference beyond the associated administrative service charge. When your ticket involves international travel, the administrative service charge assessed will be the same amount of the change fee associated with the fare being downgraded.”

I think you would agree that this paragraph is hardly a model of clarity. But the point, it seems, is that Delta would charge me an administrative fee to take advantage of the lower fare, and that fee would be exactly the same sum as the difference between the old and new fares.

Preposterous, I thought. But then I went to the Delta international ticket counter at the Detroit airport for more information. Reps there confirmed the above. In other words, I asked, if the price of the ticket goes down by $1,000 the administrative charge assessed would be $1,000? That is correct, they said.

Does this sound as bogus to you as it does to me?Eva Deck

Trenton, Mich.

A. Every once in a while, the Haggler hears of a corporate policy that is so bold, so outrageous and so gratuitously unfair that the only proper response is some variation of “Hats off.”

This sure sounded like one of those policies.

But it is not, said a Delta spokeswoman, Susan C. Elliott. She said that Ms. Deck was given incorrect information by that employee at the Detroit airport. The customer service e-mail was an attempt to state the carrier’s actual policy, though a rather muddled attempt, Ms. Elliott acknowledged.

In actual fact, she said, Delta’s policy is to charge a $250 fee to change any international ticket and to provide a travel voucher for any leftover amount. Given that there is a roughly $600 difference between the lower fare and the fare Ms. Deck paid, she should have been sent two $50 vouchers. (The math: $600, minus two $250 change fees, leaves $100, which would then be split into two vouchers.)

Last week, a Delta customer service rep wrote to Ms. Deck to apologize and to explain the actual policy. The rep said that after Ms. Deck provides a few more details, she will receive two $50 vouchers sometime soon. In the Haggler’s restitution terms, this is what is known as “the bare minimum.”

But, frankly, Delta customers should be accustomed to the bare minimum. The annual American Customer Service Index, published on Wednesday, found that Delta is ranked second-to-last among United States airlines. The company’s score, based on responses from 1,750 flyers, sank 9 percent in the last year, and has sagged a disheartening 27 percent from 1995, when the survey first appeared.

Only Northwest scored lower. Yet that can’t be much comfort to Delta. The survey was conducted in 2010, the last year that Northwest flew under its own name. The airline has since been subsumed by the carrier that acquired it three years ago: Delta.

•

Finally, a note to the executives of the Automotive Marketing Group, a Las Vegas company that charges a fee to help used-car sellers find buyers. The Haggler has written several times, and waited 40 minutes on hold for someone to answer. Nothing. You don’t call. You don’t write.

This hurts the Haggler’s feelings. Get in touch, fellas. We need to talk about some complaints.

Article source: http://feeds.nytimes.com/click.phdo?i=99789eb6b9285e476b55b386b885848e