Can Chicago truly regulate Airbnb? | Bleader

Can Chicago truly regulate Airbnb?

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Chicago vacation rentals—including ones listed on the popular home-share site—regularly flout city licensing rules. Several aldermen want that to change. - (AIRBNB)
  • (Airbnb)
  • Chicago vacation rentals—including ones listed on the popular home-share site—regularly flout city licensing rules. Several aldermen want that to change.

As city officials call for better enforcement of Chicago's vacation rental ordinance, renting out rooms could get more complicated for hosts. Aldermen Michele Smith (43rd Ward), Brian Hopkins (Second), and Brendan Reilly (42nd) have called  for a crackdown on violations of the city's existing vacation rental ordinance. Though Smith said doing so could bring in an estimated $2 million annually, it's not clear if the city can effectively enforce the ordinance.  

The 2011 law calls for hosts to pay a licensing fee of $500 every two years, subjects them to inspections, and forces them to obtain insurance. Penalties for not adhering to these regulations range up to $3,000 in fines per offense and as many as six months of jail time. But in a letter sent October 2 to Maria Guerra-Lapaceck, commissioner of the Department of Business Affairs and Consumer Protection, the aldermen requested that the agency step up its enforcement of the law. Airbnb, they wrote, lists more than 3,000 units in Chicago, of which fewer than 200 have been licensed.

So why have so few rental homes been licensed in the past four years? Mika Stambaugh, a spokesman for the BACP, said enforcement is primarily a complaint-driven process and that the agency addresses every complaint it receives.

For example, Alderman Smith said residents in her ward complain about guests in vacation rentals "disturbing the peace" and throwing unruly parties in primarily residential areas.

Since 2011, BACP has investigated 199 rental locations, which resulted in 832 citations, Stambaugh said in an e-mail. After the agency cited HomeAway and FlipKey, both rental companies agreed to provide information about Chicago's regulations to prospective hosts.

"It is through these complaints that BACP maximizes its capacity to actively investigate websites positioning themselves as vacation rental sites," Stambaugh said in an e-mail. "We have been successful in ensuring compliance with the ordinance."

BACP also conducts periodic sting operations "to crack down on unlicensed operators," Stambaugh added. "We also regularly work with alderman to identify and address problem units or areas in their wards."

But a primarily complaint-driven system means the agency doesn’t automatically seek out hosts who may fly under the radar or whose guests are better behaved.

That has meant an estimated $8 million over four years left on the table instead of in city coffers. Smith is less worried about hosts who occasionally rent out a spare bedroom than she is about "investors buying three-flats and turning them totally into vacation rentals" and "renting them as illegal hotels," she said in an interview. Smith also believes that some hosts may not know what's expected of them. In certain areas, city's zoning regulations may require hosts to seek special permission to operate rentals in their home, Smith said. But that might not be obvious from Airbnb's site.

"You really have to go into the fine print of Airbnb's website to see that there might be regulations that govern it," she said.

Airbnb does ask its hosts to comply with local regulations, according to the company's public affairs manager, Alison Schumer, and lists Chicago's rules on its Help Center page about the city. But new hosts aren't automatically shown that page when first signing up.

Ron Sattar, who rents out his Portage Park bungalow on Airbnb, said he received a confirmation letter from Airbnb with links directing him to the website for regulation compliance information only after he signed up for the site. He said he was also directed to the website when he contacted the company's legal department for clarification.

"What I got out of it was they were like, 'Go find out if it is legal in your area or not,'" Sattar said.

When asked whether Airbnb presents hosts with information about the city's regulations as they sign up, Schumer wrote only that the company asks hosts to be compliant with local regulations and lists the city’s various ordinances.

Enforcement may also be difficult because some hosts aren't sure how to become compliant until after they are faced with costly citations. Sattar said he was confronted with the city's regulations after a neighbor complained about a guest taking photographs of the neighbor's garden.

Sattar received a letter from the city stating that if he did not stop hosting guests, he'd be subjected to a fine of $200 per day. An inspector also came to his home and informed him of the different updates he was required to make, such as fixing his rear windows and purchasing a fire extinguisher, fire alarm, and smoke detectors.

Bringing his house up to code isn't a problem, Sattar said. However, not being able to generate the income necessary to do so could be an issue, because the money he earns on Airbnb helps him to make ends meet.

"I've been living there for 35 years, and now it’s tough to make money to pay the bills off," Sattar said. "Basically, we're in limbo."

BACP has not said how, whether, or when it might alter or toughen its enforcement strategies in response to the aldermen's request.

Host Ryanne Maldonado said she wouldn't mind complying with the city's regulations as long as the cost of doing so doesn’t increase too much. Hosting guests in her home has allowed her to leave her previous job as an office manager for a large hospitality group and pursue art full-time.

"Five hundred dollars every two years—I wouldn't be opposed to that," Maldonado said. "That doesn't sound awesome. But because this is something that allows me to keep a lifestyle that I wouldn’t be able to do otherwise, I'd jump through whatever hoops were necessary."


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