Mayor Rahm Emanuel proposed a compromise Friday aimed at resolving the high-stakes battle between Airbnb and Chicago’s thriving hotel industry, but aldermen whose wards have been overtaken by home-sharing services were not appeased.
The changes proposed by the mayor after behind-the-scenes negotiations with aldermen and stakeholders fall far short of the amendments demanded by downtown Ald. Brendan Reilly (42nd) and Ald. Michele Smith (43rd). They represent ZIP codes that are No. 2 and 3 in the city for most properties listed on Airbnb.
“It doesn’t feel like a compromise at all to me. It feels like the industry is getting what it wants,” Smith said.
Smith noted that Emanuel is pushing for a committee vote Tuesday and a full Council vote Wednesday.
“I don’t understand why we can’t take a breath to work on this ordinance. I agree there is a place for the vacation rental industry, but but this feels like a rush to judgment,” she said.
“The City Council did that once with the parking meter deal. . . . We shouldn’t do the same thing with regard to our residential streets by giving residential streets to the short-term rental industry.”
Emanuel’s plan to regulate and tax the burgeoning home-sharing industry has set the stage for a sharing ecommerce showdown similar to the one brewing between the taxicab industry and Uber and Lyft over a controversial plan to license ride-hailing drivers.
To provide some measure of relief for high-rise residents who complain that their quality of life has been dramatically reduced by home-sharing invaders, the mayoral compromise includes:
- Dropping the mayor’s plan to require units rented for more than 90-nights-per-year to be licensed as bed-and-breakfast or vacation rental. Instead, the mayor would require units listed with Airbnb and other “intermediaries” to simply register with the city as shared housing units and provide the city with monthly reports on rental activity.
- Require a vacation rental license for “advertising platforms” like HomeAway that collect fees for units listed but do not handle all of the financial transactions. The higher licensing standard is essential to provide the city with the information needed to monitor those transactions.
- A new “shared housing unit operator” license for hosts who rent more than one unit. The license would empower the city to get rid of “bad-apple actors” by suspending or revoking their license to operate any of their registered units.
- A “one-strike-and-you’re-out” rule — with fines of $5,000-a-day — for “egregious” violations such as drug trafficking, prostitution and gang activity. The city would be empowered to suspend or revoke a registration if the offense posed an imminent threat to public safety. Lesser disturbances, such as excessive occupancy and noise, would be subject to a “three-strikes-and-you’re-out” rule.
- A limit of one home-sharing-unit-per-building in two-to-four-flats.
- Allowing owners, condominium boards or homeowners associations in larger multi-unit and high-rise buildings to either prohibit short-term rentals outright or limit the number of rentable units and “affirmatively notify” the city.
- Permitting rooms in single family homes to be listed on Airbnb and other home-sharing services, only when the homeowner is present.
- Maintaining the revised, 4 percent surcharge on the booking of any shared housing units, bed-and-breakfast or vacation rental to generate $2 million to combat chronic homelessness. But “up to 8 percent” of the funds generated would be used for “enforcement and administration.”
Smith emerged from a meeting with top mayoral aides more disgusted than she was going in.
“The way the substitute ordinance is written, it appears that an entire apartment building could be converted to short-term rental and that would be perfectly legal. You are are taking a residential neighborhood and turning it into a hotel district,” Smith said.
“There’s no limit at all on the number of vacation rentals in residential neighborhoods and the No. 1 issue worldwide for Airbnb is proliferation where it takes over entire neighborhoods. And the cap on the number of days is completely gone.”
Smith said her office has been inundated with quality of life complaints about units listed on Airbnb.
“People throwing wild parties, debris, parking, huge number of people in what are residential streets,” she said.
Reilly agreed that the mayor’s latest version is “worse” than the early draft because it “throws all of the zoning protection neighbors rely on out the window” and includes no limit on the number of nights a year individual units can be rented.
“Currently, once you rent out more than six units in one building on a nightly basis, that triggers a requirement to be licensed as a hotel. This proposal erases that requirement and would for an unlimited number of units in a building to be used this way. That is a major quality of life concern,” he said.
“If you have a rental building with 200 units, you could lease out nightly all of those units, effectively operating a hotel without all the extra requirements that come with it. I would suspect that a large number of apartment building owners will convert that housing stock into Airbnb. Building owners can make far more money. Over time, this could have an impact on our affordable housing stock.”
During Friday’s meeting, Reilly said he and Smith were “handed a substitute and told this is what the administration plans to have approved next week.”
“They didn’t say take it or leave it but they made it pretty clear that there will not be any major changes,” he said.
“We’re being given 72 hours to vet and review an ordinance that’s going to have a profound impact on every corner of Chicago. It would be far more prudent to slow it down and take the time to get it right.”
Airbnb spokesman Christopher Nulty said his company wasn’t entirely happy either.
“We appreciate the mayor’s leadership on this issue and effort to create clear rules for home-sharing, however it is impossible to know the ways this proposal would impact middle class families in Chicago without seeing the ordinance’s final language.
“While we are particularly concerned about a confusing, invasive registration process, onerous requirements for hosting platforms and restrictions on regular Chicagoans sharing their entire home while they are gone, we stand with the mayor on many core [tenets] of the proposal.”
Reilly initially wanted to scrap Emanuel’s plan to regulate and tax the burgeoning home-sharing industry in favor of enforcing the 2010 vacation rental ordinance he spent two years negotiating, only to have it largely ignored.
But the alderman retreated from that position earlier this week in favor of a series of changes that go far beyond the mayor’s compromise.
They include a limit of no more than six units-per-building that could be offered for home-sharing, an “opt-in” provision for multi-unit buildings, a swift revocation process and a higher standard and lower ceiling for non-owner occupied units that cause most of the trouble.
Under Reilly’s plan, units not occupied by the owner would have a limit of 15 nights a year. Anything above that would trigger a requirement for a stricter vacation rental license after an inspection.
His plan also called for a 45-to-60-nights-a-year limit for owner-occupied units, down from 90 days under the mayor’s plan.