License Committee waters down home-sharing ordinance

Chicago’s stalled home-sharing regulations were watered down Wednesday in hopes of surviving a court challenge amid complaints that the changes don’t go nearly far enough.

Attorney Shorge Kenneth Sato, who filed one of two pending lawsuits against the city that has stalled enforcement, said he’s pleased with the License Committee’s decision to strip the ordinance of the onerous requirement that Chicago homeowners who supplement their income by listing their homes or extra bedrooms on Airbnb turn over their guest lists to City Hall on demand.

The amended ordinance would still require hosts to keep guest registration records on file for three years. But no longer would those records have to be made “available for inspection” by City Hall.

The only exceptions would be cases where there is a “proper search warrant, administrative subpoena, judicial subpoena or other lawful procedure to compel the production of records that affords the licensee an opportunity for pre-compliance review by a neutral decision maker.”

But Sato contended the amended ordinance still violates the “sanctity of the home” and constitutional rights to “communicate freely and anonymously on the internet,” use your own property, be guaranteed due process and protected against illegal search and seizure.

“It allows the building commissioner and the Board of Health to have basically on-demand inspections of people’s homes without a warrant,” said Sato, whose Keep Chicago Livable group represents current and former Airbnb hosts.

“Before you send a building inspector or a health inspector into somebody’s home, a subpoena or some sort of pre-compliance review [should be required]. It’s the same constitutional Fourth Amendment issue.”

Sato also took issue with the newly softened requirement that homeowners earning a few extra bucks by sharing rooms or renting out their houses attest to having reviewed a summary of the city regulations and acknowledge that shared housing units in Chicago are subject to those requirements.

“Technically, that may or may not be true. The ordinance is still subject to two constitutional lawsuits,” he said. “So making people sign something that is the city’s position — but is not necessarily an established fact yet — is still treading that First Amendment line of making people subscribe to a government position they may reasonably disagree with,” he said.

Calling Airbnb a “$26 billion gorilla,” Sato portrayed Airbnb hosts as victims when their guests misbehave.

“The problem incidents that we’ve heard typically are when hosts are defrauded by their guests. Guests have fake profiles, use false pretenses or break house rules,” he said.

“Hosts are not trying to create a problem for their community. They’re just trying to share their homes with people from probably the deepest, most vetted pool of guests from all over the world.”

Ald. Michele Smith (43rd), whose Lincoln Park ward is home to more than 500 Airbnb listings, didn’t buy that argument.

Smith said her constituents have zero tolerance for “hosts who allow people to come into completely residential neighborhoods and treat those residential neighborhoods as party areas.”

“They have very much disturbed the residential way of life for a lot of our residents. . . . My concern is the city do nothing that would truly weaken this ordinance,” Smith said.

“The notion of short-term rentals was a dramatic change to Chicago’s zoning practice and living practice. Short-term rentals have been prohibited in Chicago since the Columbian Exposition. The change of this economic model to allow house-sharing really changed the expectations of residential Chicagoans for a 100 years.”

Senior Corporation Counsel Vicki Kraft said the changes made Wednesday are aimed at bolstering the city’s legal argument in two pending court challenges by following guidance established in a U.S. Supreme Court ruling on San Francisco’s home-sharing regulations. A decision on one of two pending Chicago lawsuits is expected on Feb. 28.

The City Council’s 43-to-7 vote to regulate the burgeoning home-sharing industry followed months of contentious debate on how to balance the interests of Airbnb hosts, who are thrilled with the extra-income from booking their spare rooms, with the concerns of neighbors, who are sometimes dismayed by the rowdy antics of some short-term renters.

To appease aldermen whose wards have been overrun by home sharing, the mayor allowed residents of individual voting precincts to ban Airbnb and its competitors from residential neighborhoods using a petition process similar to the one used to block bars and liquor stores.

Prior to the final vote, Emanuel also backed off his threat to hold Airbnb responsible for policing its hosts to avoid the threat of a federal lawsuit.

Instead, the ordinance imposed $60-per-unit fee to generate more than $200,000 a year for enforcement of the regulations. That’s in addition to a 4 percent surcharge on Airbnb and other home-sharing bookings, and a $10,000 annual license for each of the web-based companies.

The ordinance also mandates bi-weekly registration reports to the city, a 24-hour hotline and a requirement that Airbnb develop a plan to address “quality-of-life concerns” that include “removal of problem units” from the company’s home-sharing platform.

The new regulations had the grudging support of Airbnb, the industry-leading home-sharing website that has seen its multibillion-dollar business model threatened by new regulations as cities across the globe have tried to rein in the explosive growth of the home-sharing platforms.