You are here

Chicago Home-Sharing Rules a Loss for Residents

Chicago’s Mayor Rahm Emanuel negotiated an armistice with the sharing economy last week. Uber, Lyft, and Airbnb have promised comply with the new rules, which are less onerous than the ordinance that chased Uber and Lyft from Austin and punitive fines threatening home sharing in New York.

But even so, Chicago’s home sharing ordinance in particular is a loss for the residents of Chicago, who now have less control of their own homes and livelihoods.

The ordinance imposes a complicated minefield of new restrictions. It adds a special 4% surtax on home sharing, on top of Chicago’s unusually high combined 17.4% hotel tax. Chicagoans may now only list their primary residence for sharing, which makes rentals of entire houses or apartments difficult. The city will also receive a biweekly report of law-abiding residents who share their rooms, and platforms must advertise license numbers, potentially a boon to burglars.

Fundamentally, Chicago does not trust landlords and condo associations to make reasonable quality-of-life decisions about their own property. The ordinance imposes arbitrary caps on the number of units that can be listed in multi-unit buildings: no more than 25%, with a hard limit of 6 units in any building, no matter how large. It’s unclear how the city (and Airbnb) will deal with “excess” residents who want to share their homes.

The most demeaning provision of the ordinance allows a minority of voters in a residential precinct to outright ban home sharing. As background, Chicago precincts consist of about 600-800 voters, which may cover only a few blocks in denser parts of the city. Supporters of the provision likened it to Chicago’s anachronistic ordinance permitting precincts to “vote themselves dry” and ban local liquor sales, but the measure is much worse. A majority vote is not required; signatures of only 25% can strip a majority of their neighbors of their property rights.

If certain aldermen had their way, even fewer signatures would be needed: one. Alds. Pat O’Connor, Michele Smith and Brendan Reilly each complained about the alleged burden of collecting signatures because they, the aldermen, would happily ban home sharing within each of their little fiefdoms. Chicago’s aldermen are accustomed to exercising executive powers within their respective wards, which allows aldermen to persecute small business for petty reasons.

Even if it were not for the undemocratic 25% threshold, the provision is ripe for mischief from hotel and labor interests. In 2008, union organizers successfully blocked construction of a non-union hotel in Chicago by voting the area dry. Union members canvassed the precinct, and disingenuously peddled the initiative as a way to negotiate for a more attractive development. Instead, the union achieved its true objective and permanently derailed the project.

The city of Chicago has gifted hotels and unions a more direct method to eliminate competition.