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City Council approves 2 percent home-sharing fee for domestic violence

Alderman Matt O'Shea

Ald. Matt O'Shea (19th) supports the tax, saying domestic violence is a serious problem in the city. | Sun-Times file photo

Chicago’s burgeoning home-sharing industry will take another hit to bankroll a 50 percent increase in shelter capacity and support services for domestic violence victims, under a mayoral plan the City Council approved Wednesday.

Mayor Rahm Emanuel’s plan slaps the industry with an additional 2 percent surcharge, even though some aldermen, like Roberto Maldonado (26th), wanted even more.

“We never have enough beds in this city to support all of the women who are victims of domestic violence,” Emanuel said after the vote.

“We’ve had a 40 percent increase over my tenure. But, it doesn’t keep up with what’s happening. This is an innovative approach to making sure that we can better serve women who are a victim…who need a place to get away from those who are causing harm to them.”

Now that the full City Council has approved the new home sharing fee without a word of debate, the total city tax on the “gross rental or leasing charge of any shared housing unit or vacation rental” will rise to 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.

“Airbnb remains the only short-term rental platform that collects taxes for Chicago — including a 4% surcharge to support homelessness services,” spokesman Ben Breit said in an email after the vote.

“We remain committed to our long-term partnership with the city.”

Citing the tremendous growth of Airbnb and other home-sharing platforms in Chicago, Maldonado argued for an additional three percent. He backed off, only after being told that domestic violence shelters would need time to add capacity 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.

Smith supports the concept of using home-sharing surcharges to support domestic violence victims.

But she has argued that the city is paying more to regulate the home-sharing industry than it’s taking in from license fees and surcharges.

“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 during a committee meeting last week.

Smith has noted that “even today, there are thousands of units on the Airbnb platform alone that have not been officially registered because of the process” because the registration process 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 . . . Our fees, which are designed to match the cost of regulation, are not consistent. We should be appropriately charging the regulated industry for the cost of administering that industry.”

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.

“Domestic violence is a very critical problem in our city. Since WINGS opened their location 2 1/2 years ago, their beds have been filled every single night. 30,000 stays. From the day they opened until today. Every night, they’re filled helping familiies in crisis,” said Ald. Matt O’Shea (19th), a City Council advocate 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. And adding on to home-sharing is a small price to pay.”

Since domestic violence is a popular cause among women, the new surcharge is expected to become part of Emanuel’s appeal to women voters in his uphill battle for a third term.

Last month, Emanuel held a news conference at the WINGS domestic violence shelter in Chicago Lawn built with $500,000 in city land and $1.8 million in disputed back taxes and legal fees paid by a Chicago strip club.

He denied that he was hammering the home-sharing industry by taxing it twice.

“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,” he said.

“I could argue, given who uses Airbnb, we’re actually gonna increase traffic because people are gonna see a city that’s progressive, thinking different, thinking anew and they want to invest in that city,” the mayor said.

“We have a lot to offer. And one of the things we have to offer is a big heart.”