Emanuel’s plan to tax and regulate Airbnb stalls in committee

Mayor Rahm Emanuel’s plan to regulate Airbnb and slap a 4 percent surcharge on company bookings stalled Tuesday amid persistent opposition from aldermen whose wards have been overtaken by home-sharing and the bachelor-party atmosphere that sometimes comes with it.

The City Council Committees on Housing and License and Consumer Protection will meet again Wednesday before the full City Council meeting.

If enough mayoral allies show up and vote, the ordinance could be approved. But the vote may be close. And at least two aldermen are expected to use a parliamentary maneuver to block a vote on the Council floor until next month. Further complicating the issue is Airbnb’s new threat to file a federal lawsuit to overturn the mayor’s plan.

Emanuel’s plan has set the stage for a sharing economy showdown similar to the one brewing between the taxicab industry and Uber and Lyft over a controversial plan to license ride-hailing drivers.

As a result, the mayor was still tweaking the ordinance up to the minute that Tuesday’s joint committee meeting got underway before a standing-room-only crowd.

Interest in the hot-button issue was so intense, the meeting had to be delayed and moved from a smaller committee room to the City Council chambers.

Most of the last-minute changes were aimed at providing some measure of relief for residents who complain that their quality of life has been dramatically reduced by home-sharing invaders. But at least one of the tweaks would benefit homeowners seeking to supplement their income by sharing their homes.

The changes include:

• Limiting the number of home-sharing units in a high-rise buildings to six units or 25 percent of the total, whichever is less.

• A limit of one home-sharing unit per building in two- to four-flats, but only if that unit is the owner’s primary residence.

• A requirement that people who rent out more than one building get an operator’s license and have the units inspected by the city.

• An administrative review process similar to the one in place for public places of amusement (PPA) licenses that would allow homeowners to escape some of the more rigid restrictions.

The administrative out clause infuriated Ald. Michele Smith (43rd), who represents the ZIP code that’s No. 3 in the city for most properties listed on Airbnb.

She was already furious about Emanuel’s plan to drop an earlier requirement that units rented for more than 90 nights a year be licensed as bed-and-breakfast or vacation rental.

“So, in a residential neighborhood, which for a hundred years has not had businesses on every street, the burden would be on my community or any of our communities and the aldermen to make sure that we fight every single one of these,” Smith said.

“In zoning, we run into this issue all the time. There’s special uses. We have big battles,” she said. “But in business licensing, people have a right to equal treatment under the law. So, I’m very concerned how this could possibly be administered in a way that would not inevitably result in every limitation . . . being overcome. I just don’t know how to do it. We haven’t been able to do it with PPA’s. We haven’t been able to do it with liquor licenses. And we’re a pretty involved ward. We pretty much show up.”

Smith said she has “600 of these [properties] right now and we are trying to stop the proliferation. . . . It’s leading to a housing shortage” in Lincoln Park.

She presented the chairmen with a letter signed by 11 community groups representing over 140,000 North Side residents demanding more regulation.

Reading from an Airbnb listing on Geneva Terrace, she said, “This one owner advertised that in his two four-bedroom apartments, you can sleep 20 guests to go to a party at Wrigley and three apartments in a building only a short distance away, you can sleep 28. Forty-eight new people on block that can come and stay in our neighborhood. And under the administrative adjustment that was just proposed, they could be approved. Plus, there are at least 61 other listings within a six-block area.”

“This is why the issue of proliferation has become the issue of the day,” Smith said.

Ald. John Arena (45th) also voiced concern about the administrative review provision in an ordinance he called “half-baked.”

“It feels a little bit like we’re building the car while we’re driving it,” Arena said.

Perhaps to give Emanuel political cover and make it appear that he has crafted a balanced compromise, Airbnb has declared its opposition to key elements of the mayor’s plan.

“We oppose the substitute ordinance as currently drafted because it creates new barriers for Chicagoans to share their homes and will make it harder for similarly situated families to supplement their incomes and stay in their homes,” Jill Irvin, director of public policy for Airbnb told aldermen.

“Don’t misunderstand. Airbnb does want to be regulated,” she said. “But we cannot support excessive regulations that will cost middle-class Chicagoans millions in extra income.”

During Tuesday’s meeting, downtown Ald. Brendan Reilly (42nd) tried to hold Irvin’s feet to the fire.

He pointed to the fact that his 2010 vacation rental ordinance has been widely ignored by the home-sharing industry.

“You’re marketing over 5,000 [properties] in Chicago, hardly any of them with a license or regulation. That suggests to me that, if you don’t like the next ordinance this Council passes, you’ll choose to ignore that one as well. Assuming we pass a law that you don’t love, can we count on you to obey that one because you haven’t obeyed the one that’s on the books today?” Reilly said.

With the chambers filled with Chicagoans who have used Airbnb to supplement their incomes, some of whom testified Tuesday, Irvin replied, “You can tell by the sense of the room what your answer is.”

In an emailed statement, Airbnb spokesman Christopher Nulty said, “Our opposition to the mayor’s ordinance is very real. We are not providing any political cover. We are doing what we think is best for our hosts and our business.”

The law in question prohibits states from imposing legal liability on internet platforms based on content posted by their users, including preventing states from compelling internet platforms to remove user-generated content.