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Aldermen want to scrap Airbnb ordinance, use existing rules on vacation rentals

Mayor Rahm Emanuel wants to regulate Airbnb and other home-share services, but Ald. Brendan Reilly prefers simply stepping up enforcement of an existing ordinance regulating vacation rentals. | Screenshot

Two aldermen demanded Thursday that Mayor Rahm Emanuel scrap his plan to regulate and tax the burgeoning home-sharing industry in favor of enforcing the stricter vacation rental ordinance they spent two years negotiating, only to have it largely ignored.

Six years after the ordinance took effect, City Hall has licensed only 200 vacation rental units. Airbnb, VRBO and other companies that facilitate home rentals are currently marketing more than 4,000 units.

“We have a perfectly good law on the books. The city should focus more effort and attention on enforcing that law before revising it to essentially unleash Airbnb to potentially wreak havoc on the quality of life in neighborhoods across Chicago,” said downtown Ald. Brendan Reilly (42nd).

“The [mayor’s] proposal would only require nightly vacation rental licenses for those units that are rented out fewer than 90 nights a year. The vast majority of Airbnb units are rented out on weekends. That’s about 52 nights a year. . . . The benchmark of 90 nights a year is far too high. You’ll see a lot of nightly vacation rental unit owners leasing out their spaces 89 nights a year to avoid becoming licensed and regulated. That’s a major flaw.”

The mayor’s office had no comment.

Ald. Brendan Reilly (42nd) worked to get a vacation-rental ordinance passed, but it has gone largely unenforced. | File photo

Reilly said he doesn’t mind “tweaks” to the vacation rental ordinance to “address the Airbnb platform business model.” But he’s concerned that Emanuel’s ordinance would “remove a lot of the key quality-of-life protections” the City Council painstakingly put in place.

He pointed to a flood of constituent complaints generated by unlicensed vacation rentals on Cedar Street in the Gold Coast.

“The transiency, the keg parties, the loud noise, destruction of property, total disregard for the neighbors. Whether you live in a high-rise condominium or on a residential street, you want to be able to enjoy a quality of life that involves being able to sleep at night and enjoying some peace and quiet from time to time,” he said.

As for Emanuel’s plan to slap a 2 percent surcharge on Airbnb and other home-sharing services, Reilly said he could take it or leave it.

“The surcharge is negotiable. But that’s not my primary purpose. The majority of my colleagues care more about the quality-of-life impacts than they do about the revenue component,” the alderman said.

Ald. Michele Smith (43rd) agreed with Reilly that Chicago has a “perfectly good vacation rental ordinance on the books that’s not being enforced.”

“People operate properties essentially as illegal hotels, disrupting residential areas. I’ve had to spend a lot of time having to shut down a house operating as a boutique hotel. Apartments rented to 15 people at a time for frat parties, concert parties on very nice residential streets disrupting the privacy of neighborhoods every weekend,” Smith said.

“My constituents are very concerned about that. The mayor’s ordinance does nothing to address this issue. You could easily buy a three-flat, turn it into three apartments and rent it out virtually year-round. There’s a lot we need to look at in this proposal, including the length of stay and safety issues.”

Smith said she’s all for attempting to “directly regulate platforms on which these listings are placed to get behind the wall of anonymity these listing services provide.”

But she said: “They should be responsible for making sure that all of their properties are licensed properly. We’re going to look at all of those things and get back as much as we can to what’s in the vacation rental ordinance. It’s perfectly good ordinance. We should enforce it.”

The 2010 vacation rental ordinance was approved after nearly two years of debate and 30 legislative rewrites.

Reilly pushed the ordinance over the goal line after appeasing colleagues concerned that foreclosed residential buildings could be turned into vacation rentals. He agreed to prohibit new vacation rentals in residential districts that include single-family homes and two- and three-flats.

Existing vacation rentals in those districts were allowed to remain open if they could prove they had been operating for more than a year before the delayed effective date of Jan. 1, 2011.

Vacation rentals in all other zoning districts were required to start from scratch. The ordinance allowed condos to be turned into hotel suites if owners got approval from the condo association. They also must carry at least $1 million in liability insurance and obtain a two-year “vacation rental license” for a $500 fee.

License holders were subject to rigorous inspection, safety and operating standards normally reserved for hotels.

The ordinance has gone largely unenforced — even though it’s been amended to give the city more tools.

“It allows simple online Google searches to determine whether or not a unit is being leased out. If there is not a permit displayed on that advertisement, that’s a violation. Why isn’t that being prosecuted?” Reilly said, accusing the city of leaving millions of dollars in license fees and fines on the table.