Downtown alderman floats Airbnb compromise as showdown looms

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Ald. Brendan Reilly says Chicago police consider drunk patrons on party buses to be a drain on their resources. | Brian Jackson/Sun-Times file photo

With a showdown vote looming next week, downtown Ald. Brendan Reilly (42nd) floated a compromise Wednesday aimed at resolving the high-stakes battle between home-sharing giant Airbnb and Chicago’s hotel industry.

Reilly initially wanted to scrap Mayor Rahm 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 Wednesday in favor of a series of changes to the mayor’s ordinance. They include:

  • A higher standard and lower ceiling for non-owner occupied units that cause most of the trouble. Units not occupied by the owner would have a 15-nights-a-year limit. Anything above that would trigger a requirement for a stricter vacation rental license after an inspection. That’s the same cut-off that the Internal Revenue Service uses to identify commercial properties for tax purposes, Reilly said.
  • A 45-to-60-nights-a-year limit for owner-occupied unit, down from 90 days under the mayor’s plan. Reilly said he and Ald. Michele Smith (43rd) are “flexible” about the standard, but remain adamant that 90-nights-a-year is too many nights.
  • A limit of no more than six units-per-building that could be offered on Airbnb or other websites. That’s the same benchmark written into the hotel code, Reilly said.
  • An “opt-in” provision that would allow homeowners and condominium associations in multiunit buildings with 20 or more units to have final say on whether or not to allow home-sharing in their buildings.
  • A swift revocation process — possibly in the form of “two-or-three-strikes-and-you’re out” — if short-term renters end up doing damage or otherwise wreaking havoc. Reilly said he’s not about to rely on a “deleterious impact” ordinance already on the books because the due process provisions “take too long.”

The compromise was offered Wednesday as Emanuel prepares to push for a vote next week on his newly revised plan to slap a 4 percent surcharge on the booking of any shared housing unit, bed-and-breakfast or vacation rental to generate $2 million a year to fight chronic homelessness.

Airbnb balked at the Reilly proposal on Wednesday.

“What Alderman Reilly is proposing is not a compromise, it is just the latest example of his willingness to do the hotel industry’s bidding,” Airbnb spokesman Christopher Nulty wrote in an email.

“Airbnb will continue to engage the alderman, the mayor’s office and other stakeholders to identify ways we can work together to strengthen neighborhoods, protect consumers, and ensure that middle class families can continue sharing their homes to make ends meet.

“We support tougher tools to curb nuisances and providing neighbors with the resources to report potential bad actors to Airbnb so that we can take action.”

Reilly said what’s wrong with the mayor’s version is that it’s “focused too much on revenue and not enough on preserving quality of life and protecting neighbors.”

“A lot of folks who rent out these units show total disregard for the neighbors. They can take over common areas, especially pool decks on weekends. If you have a bachelor party that comes to town, and they rent out two or three units in a condo building, they monopolize the common areas and don’t treat them as well as they would if they lived there,” Reilly said.

“We have issues with frankly, people trashing hallways or getting sick in elevators, swearing at doormen and threatening neighbors. Those are the kinds of problems that landed this issue on my radar.”

Reilly said he met with top mayoral aides last week in an attempt to forge a compromise and they were “non-committal” about the changes he’s seeking. They said they would “think about it” and likely share a “substitute ordinance” with him “in the next few days.” He still hasn’t seen it.

“But one thing that was made clear is they plan to proceed with a committee vote on Tuesday and a Council vote on Wednesday. So, we’re only going to have a handful of hours to even digest what changes they make. It begs the question, `What’s the rush?’ This is an ordinance that will have a profound impact on homeowners and the Airbnb industry. We should take the appropriate time to get this right the first time,” he said.

The Emanuel administration had no comment on Reilly’s proposal.

Earlier this week, a hospitality industry group released a stinging report, shot down by Airbnb, that contends the “home-sharing” website is running an unregulated hotel marketplace that dodges local taxes, endangers neighbors and dries up the already tight rental market.

The stakes are high, just as they are in the battle between the taxicab industry and Uber and Lyft over a controversial plan to license ride-hailing drivers.

Reilly sees a parallel between the home-sharing and ride-sharing battles: 20-and-30-somethings around Emanuel who are enamored with the sharing economy.

“Because they’re closer to the millennial age group, this tech stuff is gee-whiz to them. And if it’s an app-based product, the general inclination by young people is to embrace it and want it to expand and do well,” he said.

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