Mayor Rahm Emanuel’s plan to tax Chicago’s burgeoning home-sharing industry yet again to bankroll a 50 percent increase in shelter capacity and support services for domestic violence victims breezed through a City Council committee Wednesday amid calls to hit Airbnb and others even harder.
Emanuel wants to slap the industry with an additional 2 percent surcharge. Ald. Roberto Maldonado (26th) raised the possibility of upping the ante — to 3 percent.
“That industry in the city of Chicago has grown. So they are not hurting. I foresee that this is going to keep going up,” Maldonado said.
“We need more funding for domestic violence victims in the city of Chicago. And it would be a shame if we cannot capitalize on at least an additional percentage. I want to propose it as a motion on the floor.”
Maldonado subsequently withdrew his motion, only after being told that domestic violence shelters would need time to add the capacity that would be supported by additional funding.
Ald. Michele Smith (43rd), whose Lincoln Park ward is home to more than 500 Airbnb listings, led the charge against the 2016 ordinance that regulated the home-sharing industry.
On Wednesday, Smith said she supports the concept of using home-sharing surcharges to support domestic violence victims. But she argued that the city is paying more to regulate the home-sharing industry than it’s taking in from license fees and surcharges.
Those expenses include: $1.2 million to build a database; $240,000 for administration by the Department of Business Affairs and Consumer Protection; and $570,000 for attorney and other staffers.
“The city had to take on the regulation of a whole new business that was really operating completely illegally in the city. … We have taken on an industry that, just to get a computer program up to regulate them, has been over $1 million,” Smith said.
Under questioning from Smith, city attorneys disclosed that the city collected $320,000 in registration fees from Airbnb last year and $385,000 so far this year, thanks to 1,150 additional units.
That includes a $10,000 licensing fee for Airbnb to act as an intermediary and a $60-per-unit fee on top of that.
Smith noted that “even today, there are thousands of units on the Airbnb platform alone that have not been officially registered because of the process” that takes so long.
“Airbnb is probably, frankly, delighted at the P.R. of doing this because they’re not paying. They’re passing this along to their consumers,” she said.
“My concern is that the company itself is depriving our city budget of funds for these services while not paying appropriate fees to regulate their own industry, which is something that the inspector general brought up in his latest audit. That our fees, which are designed to match the cost of regulation, are not consistent. It seems to me that we should be appropriately charging the regulated industry for the cost of administering that industry so that our city budget isn’t subsidizing that regulation.”
If the full City Council approves the new home sharing fee advanced by the License Committee, the total city tax on the “gross rental or leasing charge of any shared housing unit or vacation rental” would be 6 percent.
An existing 4 percent fee earmarked for homeless services generated $3 million during the first year and another $2.7 million during the ten-month period ending in April of this year.
The new surcharge is expected to raise $1.3 million a year dedicated exclusively toward adding shelter beds to the city’s existing inventory of 140, creating transitional housing and bolstering support services for victims of domestic violence.
Since the WINGS domestic violence shelter opened two and a half years ago, “their beds have been filled every single night. 30,000 stays. Every night, they’re filled helping families in crisis,” said Ald. Matt O’Shea (19th), City Council champion for domestic violence victims.
“We need to do whatever we can to increase space. I would hope that we can find more locations to help families across the city. Adding on to home-sharing is a small price to pay.”
Last month, Emanuel unveiled and defended the 2 percent surcharge during a news conference at the WINGS shelter in Chicago Lawn, built using $500,000 in city land and $1.8 million in disputed back taxes and legal fees paid by a Chicago strip club.
“We’re not picking on anybody. We’re actually picking on a problem — and it’s gonna solve it. That’s how I look at it,” the mayor said on that day.
Emanuel argued that, “given who uses Airbnb,” the additional tax may increase traffic.
“We have a lot to offer. And one of the things we have to offer is a big heart.”