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Aldermen approve massive re-write of Chicago’s home business ordinance

One month after postponing the vote at the request of the Department of Business Affairs and Consumer Protection, Ald. Gilbert Villegas pushed a substitute ordinance through the Committee on Economic and Capital Development.

Chicago City Hall, with the Board of Trade building in the background.
Chicago City Hall, with the Board of Trade building in the background.
Sun-Times file

Chicago has “north of 30,000” home businesses after an explosion-by-necessity during the stay-at-home shutdown triggered by the coronavirus.

Only 4,000 of those home businesses are licensed by the city — partly because Chicago’s home-business ordinance is more restrictive than any other major city.

On Tuesday, Chicago aldermen agreed to give home businesses the wiggle room they need to survive, thrive — and maybe even come out of the shadows.

A month after postponing the vote at the request of the Department of Business Affairs and Consumer Protection, Ald. Gilbert Villegas (36th) pushed a substitute ordinance through the Committee on Economic and Capital Development, which he chairs.

“It’s vital because it helps move Chicago forward towards a more robust and accessible economic recovery by giving all Chicagoans the wiggle room they need to make ends meet — even when that room is at home,” Villegas said.

Business Affairs and Consumer Protection Commissioner Rosa Escareno pointed with pride to the extra space provided to home businesses. If the full Council approves, it’ll increase from 10% of the home to either 25% or 300 square feet — whichever is greater.

“For many entrepreneurs, this will be more than double their available business space, making it easier than ever to start a business out of their home ... at this critical time,” Escareno said.

“The ordinance will also provide other benefits by expanding options for home sales and clarifying restrictions on storage within accessory structures.”

Escareno said the revised ordinance “strikes the right balance” by protecting consumers and prioritizing safety.

“We want to encourage entrepreneurship. But we don’t want the residential areas turning into commercial districts or our homes to turn into dangerous work environments,” she said.

“This ordinance keeps in place all of those limitations on certain business activities that could lead to safety or fraud concerns. It also limits activity that would be allowed in garages and other accessory units that may be unsafe for business.”

The COVID-19 pandemic forced offices to close and thousands of Chicagoans to work from home. The trend is likely to endure — at least in hybrid form — long after downtown employees return to their offices.

With that in mind, Villegas proposed the most fundamental rewrite in the decades-long history of Chicago’s home-business ordinance.

The new rules would: let home businesses expand to “accessory structures” as well as dwelling units; dramatically increase the square footage allowed inside the home; lift the ban on construction or landscaping businesses and allow them to store goods and materials on site; and expand the hours during which home businesses can accept shipments or deliveries.

The ordinance approved Tuesday includes most of those provisions, with a few notable exceptions made to accommodate the Lightfoot administration’s demand for consumer protections:

• Instead of 35% of floor area, Villegas and the mayor’s office settled on “300 square feet or 25 percent of the total floor area” of the home.

• Use of a garage for incidental storage by a home business “shall not displace any off-street parking required” by the city’s zoning ordinance.

• Home businesses would be prohibited from obstructing the public way or engaging in the “direct sale of any product on display shelves or racks.”

• The term “home occupation” would not apply to “any cottage food operation or home kitchen properly registered by a state or county agency or the city.”

• An unlimited number of bulk deliveries would be allowed from 9 a.m. to 6 p.m., instead of being limited to one per day from 8 a.m. to 5 p.m. But those bulk deliveries would have to adhere to all other city requirements “including ordinances relating to fire prevention and governing special types of vehicles on city streets.” Obstructing the public way would be prohibited.

Beth Kregor, director of the Institute for Justice Clinic on Entrepreneurship at the University of Chicago Law School, said the ordinance restricting home-based businesses to a “tiny slice of their homes” desperately needed a re-write.

“There are lots of creative and resilient Chicagoans who are ... developing new products to sell online. They’re finding a way to make a living to support themselves and their families. They build on the skills and talents they have in the space that they have,” Kregor said.

“If they’re low-income entrepreneurs, it is often impossible to locate in commercial space from Day One. That’s what brings us here today. Chicago needs to honor and welcome these creative entrepreneurs who are hard at work at dining room tables all over the city.”