Folksy ‘house sharing’ threatens to become unneighborly mess

Turning homes and apartments into vacation rentals is wildly popular. But, despite a folksy label of “house sharing,” short-term rentals (STRs) are a $25 billion global industry.

From Barcelona to Amsterdam, from San Francisco to New Orleans, there was initial giddiness over a perceived “win” for everyone. Property owners earn extra income; tourists get a neighborhood experience; and cities collect new revenue. What could go wrong? Plenty. Cities world over are racing to stop the unintended consequences of STRs.

Chicago should heed the international warnings:

This month, Berlin acted to prevent unrestricted STRs from exhausting the supply of traditional rentals for Berliners. London has a three-month limit on homeowners renting out their own units and prohibits year-round vacation rentals. Paris requires short-term rental owners to keep an equivalent long-term rental property available. Austin, Texas, has a moratorium on new, non-owner vacation rentals until 2017, and is fazing them out by 2022.

What began as modest “room sharing” to help renters cover their monthly bills has morphed into big business dominated by non-owner-occupied “investment properties.” It’s more lucrative to rent a few days at a time, like a hotel, than offer a yearlong lease. Today, 40 percent of Airbnb’s income comes from absentee investors, dubbed “Superhosts,” who may own as many as 20 or 30 other properties. In our wards, over 70 percent of Airbnbs are not owner occupied. Meanwhile, most units masquerade as residential real estate, depriving the city of commercial property taxes far in excess of the small sums of revenue the city hopes to collect here.

We represent wards that encompass Chicago’s diverse housing market — single-family homes, row houses, two-flats and three-flats, soaring high-rise condominiums and rentals, as well as our venerable hotels. All will be negatively impacted without controls on STRs that have spiked 100 percent every year in Chicago since 2009 and now total over 5,000 — yet fewer than 300 are licensed.

The City Council may soon vote on a new ordinance “regulating” STRs that leaves huge oversight gaps. There is no limit on the number of STRs in a ward, on a street or even on a block. De facto commercial districts could quickly supplant neighborhoods, as has happened worldwide. Few of us who own or rent ever expect to live alongside non-stop partygoers. But in our wards, residents are doing just that, fighting to close illegal hotels on their blocks.

Property values are on the line. Realtors are discussing whether a nearby STR should go on seller disclosure forms to alert buyers of a property “stigma.”

Safety is a concern, for guests and for neighbors. “Vacationers” often check-in with a lockbox instead of hotel staff. Families worry if sex offenders will opt for temporary lodging to avoid registering their address. A Barcelona historic district lost 18 percent of its residents due to STRs. What happens to neighborhood security when you lose your neighbors?

Superhosts are the big winners and the city is the big loser under the proposed rules. Absentee investors could operate without limit in any neighborhood, all the while concealing the commercial nature of the property from the assessor. Neighbors who invested in their homes would be forced to live next to transients in a residential neighborhood and would be powerless to shut down bad operators.

We can do better for visitors, homeowners, renters, and our cash-strapped city.

The City Council must limit STRs and strengthen enforcement and transparency before voting on a Short-Term Rental Ordinance. A world-class city should pay attention to what is happening around the world.

Brian Hopkins is alderman of Chicago’s 2nd Ward, Brendan Reilly of the 42nd Ward, Michele Smith of the 43rd Ward, and Tom Tunney of the 44th.

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