October 21, 2019

October 18, 2019

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Landscape of Proposed Chicago “Airbnb” Ordinance Still Changing, Days from City Council Vote

In early May, Chicago Mayor Rahm Emanuel proposed a highly controversial ordinance to regulate Airbnb and other home-sharing service providers. In its initial form, the ordinance required units rented out for more than 90 days a year through a home-sharing website, such as Airbnb or HomeAway, be regulated as a commercial property and provided for a 4% surcharge on the booking of any shared housing units. The additional revenue from this ordinance is intended to be primarily dedicated to fighting chronic homelessness in Chicago. 

Prior to the City Council’s panel hearing on May 17, the initial version of the ordinance went through a series of significant last minute changes, including limiting the number of units that can be rented through online agencies in large Chicago buildings, and allowing hosts to appeal for relief from the ordinance with “alderman support and just cause.” After listening to more than five hours of testimony with hundreds of Chicago residents in attendance during the panel hearing, the City Council Committees on Housing and License and Consumer Protection approved the latest version of the ordinance on May 18, but tabled the full City Council vote until Wednesday, June 22, in order to allow more time for review and revisions. 

Despite approval by City Council Committees in May, the text of the proposed ordinance has continued to change. Over the past week, Emanuel unveiled several rounds of revisions to the proposed ordinance. These revisions include: a $60-per-unit fee, in addition to a 4% surcharge on Airbnb and other home-sharing bookings, and a $10,000 annual license for each of the web-based home-sharing service providers; establishing a hotline for neighborhood residents to report problems; a provision allowing certain buildings and voting districts to elect to be on a list of “prohibited areas” kept by the city; language placing the burden of enforcement (enforcing the prohibited areas list, responding to complaints from neighbors) on the city of Chicago instead of home-sharing service providers; and an anti-discrimination clause. Aldermen have already voiced concerns and some are rejecting these latest revisions, which will likely result in another proposal (possibly more), prior to Wednesday’s scheduled vote. 

The landscape surrounding the “Airbnb” ordinance in Chicago is unstable, at best. It is clear that whether the ordinance passes or not, the ordinance and the issues raised by it will have significant implications for both residential and commercial property owners and managers. If the ordinance passes, property owners and managers will be forced to navigate the complexities of the new home-sharing restrictions, and if it doesn’t, the many issues surrounding the increased popularity of home-sharing services including disputes between home-share users and neighborhood residents will continue without resolution. 

© 2019 Neal, Gerber & Eisenberg LLP.

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About this Author

Tricia M. Brauer, Neal Gerber, commercial real estate acquisitions lawyer, dispositions attorney
Associated Counsel

Tricia M. Brauer is a member of Neal Gerber Eisenberg’s Real Estate practice group and focuses her practice on a wide range of real estate matters, including commercial real estate acquisitions and dispositions, financing, and leasing. Her prior experience includes drafting and negotiating real estate and technology-related agreements as an in-house attorney for a telecommunications company in Chicago. 

Tricia has been involved in a number of charitable causes and pro bono efforts, including Wills for Heroes, Serving Our Seniors and Deborah’s...

(312) 269-5287
Darrin S. Forbes, Neal Gerber, developments financing lawyer, large scale projects attorney
Partner

Darrin S. Forbes concentrates his practice in the area of general commercial real estate law including acquisitions, dispositions, financing and large scale development projects. Darrin has extensive experience representing public and private real estate development companies, real estate investment trusts, equity funds, entrepreneurs and high net worth individuals in connection with complex transactions throughout the United States. Darrin has handled transactions involving various assets including multi-family apartment developments, shopping centers, office buildings, manufacturing and warehousing facilities, large scale mixed-use projects, self storage properties and multi-state portfolio transactions.

Darrin also represents pro bono the Chicago Low-Income Housing Trust Fund, which provides rental subsidies and financing to landlords and developers to provide affordable housing for low-income families in Chicago. These matters involve the use of state and federal low income housing tax credits and several levels of financing provided by various lenders and governmental bodies.

(312) 269-5213