Antionette Wonsey Antionette Wonsey, of Chicago’s Englewood neighborhood, has rented spaces on Airbnb for the last few years, But the city ordinance regulating short-term rentals is complicated, she said. “It’s just too much; it’s like you’re signing up for a credit card with all this fine print.” (Terrence Antonio James / Chicago Tribune)
Rosalind and Eric Bowden received a surprising letter from the city right around Christmas, notifying them that because they didn’t delete an unauthorized listing on Airbnb, they were believed to be in violation of a Chicago law regulating short-term rentals.
But the Bowdens had disabled bookings for a first-floor room in their South Side home to comply with an earlier notice from the city asking them to “remove” the listing. It no longer showed up in search results, the couple said, and only could be accessed with a direct link.
Still, not actually deleting the listing could prove to be an expensive error. They face potential fines of between $1,500 and $5,000 per day for the 37 days city officials allege they violated the law — a sum “many times over anything I ever made on Airbnb,” Rosalind Bowden said.
The short-term rental ordinance, which was approved by the City Council nearly two years ago and went into full effect last spring, requires home-sharing websites like Airbnb and HomeAway to obtain licenses from the city. Hosts also have to register. All of this would allow the city to track and limit the number of units rented on a short-term basis. Supporters said the law was a needed safeguard against commercial renters trying to list multiple units in residential buildings, effectively turning them into hotels, to the detriment of their neighbors.
Since ordinance was approved, it has been plagued by legal challenges, delays and uneven enforcement. Only one short-term rental platform — Airbnb — has obtained the license required to operate in the city, but other platforms, such as HomeAway, VRBO and Booking.com, have continued operating in apparent violation of the law, likely costing the city millions of dollars in potential licensing and tax revenue.
Hosts looking to list their properties on Airbnb also have faced challenges, including unexplained errors and denials when applying for registration numbers and threats of six-figure fines, according to interviews and public records.
“There’s just so much in that ordinance,” said Antionette Wonsey, who lives in Englewood and has rented spaces on Airbnb for the last few years. “It’s just too much; it’s like you’re signing up for a credit card with all this fine print.”
Eric Bowden said many of the arguments given by supporters of the ordinance don’t apply to his family’s situation.
“We’re not investors. We literally have one Airbnb, and we do it just for fun,” he said. “We’ve never really made money off of the thing. … We definitely don’t have a $100,000 just sitting around to pay a fine for this. It’s just crazy.”
The city’s Department of Business Affairs and Consumer Protection is charged with enforcing the ordinance. Spokeswoman Lilia Chacon acknowledged that the law can be confusing.
“This is a complex and groundbreaking piece of legislation, and evidence that Chicago is leading the way when it comes to regulating new and emerging business models,” Chacon said in an email, adding that hosts who have questions about the ordinance should call the department for help.
However, Chacon did not respond to multiple requests for comment on potential penalties for short-term rental platforms that have continued operating without licenses or for hosts who use those platforms.
Ald. Brendan Reilly, 42nd, a co-sponsor of the ordinance, offered more blunt criticism earlier this year in an interview with WFLD-Ch. 32.
Reilly, who could not be reached for comment, told Fox 32 that constituents in his ward, which includes the Loop, River North and part of the Gold Coast, have continued to complain about property damage and safety concerns, among other issues.
“The current law isn’t working, and if it isn’t working, it’s our job as legislators to fix it,” Reilly said in February.
Since July, the city has issued a few dozen citations for violations of the law, generating $100,000 in revenue from fines, according to the business affairs department. Roughly 5,700 Airbnb hosts have successfully applied for a registration number. Close to 1,230 applications were denied, and 1,770 decisions are pending.
The registration process has been difficult for some hosts, who say they were wrongly denied registration numbers. The appeal process also is time-consuming and complicated, they say.
One Lakeview man’s registration application was denied because the city’s Department of Business Affairs and Consumer Protection said he was not the primary resident of an Airbnb unit in a building with four or fewer dwelling units. But according to city Buildings Department records, he is the primary resident, and he holds a certificate of occupancy for seven legal units in the building, which he owns. In buildings with four or fewer apartments, potential hosts can only register a unit that is their primary residence. But because his building has more than four units, that section of the law doesn’t appear to apply to him.
Similarly, a Norwood Park couple had their registration application denied in January after officials said they weren’t the primary residents of the house they were trying to list on Airbnb, city records show. But the couple says they have lived there for years, and after the initial denial they produced a deed, mortgage statement, tax bill, driver’s licenses and an insurance bill to support their appeal.
A Near North woman says her 2017 registration application was denied because city officials said her condominium building was on a list of buildings that have prohibited short-term rentals. When she and her husband examined their condo bylaws, they found nothing limited or restricted short-term rentals there. When they filed a Freedom of Information request asking the city for documents showing their building belonged on the list, the city told them in a May 2017 response it was unable to locate any such records.
Four employees are tasked with enforcing this ordinance, prompting questions from some hosts about the possibility for a backlog in processing applications. These concerns are somewhat grounded in history: After the law went into full effect last spring, many hosts who tried to register their properties didn’t receive registration numbers for months.
Extra staff can assist the enforcement team when needed, Chacon said.
But it’s the law that needs to change, critics contend, not the number of staffers assigned to enforce it.
“It’s an old model of regulation that’s being applied to this new and burgeoning platform,” said Shorge Sato, a lawyer who represents Airbnb hosts. Sato, on behalf of the nonprofit homeowners organization Keep Chicago Livable, filed a federal lawsuit challenging the ordinance in November 2016, prompting changes to the original policy. Sato later filed an amended complaint, again challenging the ordinance. A ruling on the matter that has been postponed for over a year, court documents show.
Last week, Sato asked the U.S. 7th Circuit Court of Appeals to either rule on the case or send it back to the lower court for a ruling.
If the 7th Circuit makes a decision on this case, Sato said, it could be the first time a federal appeals court addresses whether homeowners have a right to list their homes on home-sharing websites.
Prospective hosts are not alone in challenging the city’s short-term rental ordinance.
HomeAway, an Austin, Texas-based home-sharing site owned by Expedia, filed a federal lawsuit against the city in May 2017, also seeking to delay implementation of the ordinance or have it declared unconstitutional. It was the first such lawsuit filed by one of the platforms regulated under the ordinance.
In early April, the city filed a motion to dismiss the HomeAway suit. The court has yet to rule on that request.
“There has been an ongoing dialogue with HomeAway on this matter, and we look forward to a positive resolution,” Chacon said.
Expedia spokesman Philip Minardi said in an email that HomeAway is continuing “to work collaboratively with the city towards a solution that obviates the need for litigation.”
Airbnb, which worked with the city to develop the ordinance, is the largest short-term rental service in the city, with more than 5,000 licensed hosts. That’s down from about 6,500 active hosts a year ago, before the ordinance took effect.
The company paid close to $320,000 in fees for its city license. It also passed on more $6 million in taxes to Chicago in 2017. Close to $3 million of of that money went toward addressing homelessness in the city, a component of the law.
That money is intended for housing and services for homeless families with school-age children, said Mary Tarullo of the Chicago Coalition for the Homeless, which partners with the city. Part of the funds from the home-sharing tax helped provide housing support for 100 families; another portion supported services for the chronically homeless, Tarullo said.
“Airbnb is proud to be the only home-sharing platform delivering tax revenue to Chicago and licensed to operate in city,” company spokesman Ben Breit said. “We are committed to serving the communities our hosts call home and look forward to building on the nearly $5 million in tax revenue our community has contributed (last year and this year) to the city’s efforts to fight homelessness.”
For some Airbnb hosts, however, fear of violating the new rules has prompted them to consider giving it up altogether.
The Bowdens still are contesting their proposed fine in court. Though they are barred from listing one of the rooms on their first floor, they continue to rent out the rest of that apartment. They love sharing their space with visitors to the city, and all of the nearly 60 reviewers who’ve posted comments on the couple’s Airbnb account have left five-star ratings, something the Airbnb-designated “superhosts” take pride in. But after their experience, they are hesitant to continue renting out their space.
“There’s so many little things that you can trip on,” Eric Bowden said. “We’re really thinking about just saying, ‘Never mind.’ It’s just too dangerous for us. We could have our lives ruined. So we’re thinking about just not hosting at all anymore.”