A joint meeting of Housing and Zoning Committees approved a rework of Mayor Rahm Emanuel’s proposal to regulate Airbnb rentals in Chicago after provisions were added to provide more community control over where those units could be located in neighborhoods made up predominately of single-family homes.

Attendance: Chairman Danny Solis (25), Chairman Joe Moore (49), Pat Dowell (3), Sophia King (4), Leslie Hairston (5), Greg Mitchell (7), Michelle Harris (8), Anthony Beale (9), Sue Sadlowski Garza (10), Patrick Daley Thompson (11), George Cardenas (12), Marty Quinn (13), Raymond Lopez (15), Toni Foulkes (16), David Moore (17), Matt O’Shea (19), Mike Zalewski (23), Roberto Maldonado (26), Walter Burnett (27), Jason Ervin (28), Ariel Reboyras (30), Scott Waguespack (32), Carrie Austin (34), Emma Mitts (37), Marge Laurino (39), Brendan Reilly (42),  Michele Smith (43), Tom Tunney (44), John Arena (45), James Cappleman (46), Harry Osterman (48)

The item considered yesterday was a direct introduction to the joint committee on Housing and Zoning Committees. The previous plan that advanced out of a joint License and Housing Committees meeting last month, but was held in committee, will not advance for a full vote. Confusingly, yesterday’s item had the same ordinance number. An aide for Ald. Joe Moore (49) says it will be assigned a new ordinance number.

The item up for a full City Council vote today makes it possible for residents living in R1, R2 and R3 zoned districts to organize and block Airbnb rentals from locating in their neighborhood through a process similar to the one the city uses to create moratoriums on liquor licenses. Those districts are zoned specifically for single-family homes.

But R4, the zone for multiflat units, was left out of the compromise ordinance, an issue that didn’t sit well with Ald. Michele Smith (43), who due to the committee switch couldn’t vote on the plan yesterday. Smith testified that those buildings make up a majority Lincoln Park, and even presented a large map of her ward at the meeting, expressing worry that corporate investors would buy up those properties and put all the units on the Airbnb platform.

Under the community approval process, residents within a specific precinct would be able to the petition their aldermen to institute a moratorium on Airbnb rentals. Depending on the number of signatures gathered and the amount of public opposition, the local alderman, in turn, could introduce an ordinance blocking new rentals from going on the platform. But the number of signatures needed is lower than those for liquor moratoriums, which requires a majority of registered voters in a precinct. 

But as is the case with the liquor moratoriums, existing rentals that are properly licensed for vacation rentals would be grandfathered in.

As was the case with the last hearing on Airbnb, several aldermen raised doubts the city has the resources to effectively track rental units and crack down on bad actors. According to Business Affairs and Consumer Protection Commissioner Maria Guerra Lapacek, a list of buildings that prohibit Airbnb rentals will be place on the city website for public view.

If a renter sees that their apartment or home is on that ineligibility list, they’ll have up to ten days to contest it. The city would then have up to 60 days after the hearing date to make a final determination on whether that person can rent out their home. On average, the process should take about a month, said Commissioner Lapacek.

“It seems like we are loosening regulations in higher density areas and we are over-regulating, like Mabel, who is renting out a room because she has to feed her kids,” Ald. Sue Sadlowski Garza (10) said of the new changes. It was a claim that directly contradicts the recent flood of Airbnb commercials that argue the city is siding with the Gold Coast and the “one percent” in the ordinance.

As for the 4% surcharge that would be added on all Airbnb rentals to fund homeless initiatives, Airbnb would be responsible for collecting those fees and remitting them to the city. A small percentage of those fees collected would cover the city’s cost of regulating Airbnb rentals.

The issue of how future assessments could be impacted by Airbnb rentals was also a point of contention. Ald. Smith asked if three-, four-, and five-flat homes owned by LLCs solely for the purpose of renting out the units on Airbnb would be taxed at the same rate as bed and breakfasts. Under the Cook County property tax code, bed and breakfast establishments are taxed as commercial buildings, which is twice the rate as residential. No one from the city or Airbnb had an answer to that question.

And in an interesting twist, Airbnb retained Mike Kasper, a well known lobbyist closely connected to Speaker Mike Madigan and who argued Mayor Rahm Emanuel’s residency, as their counsel. He appeared before the committee yesterday to say Airbnb believes the ordinance is “okay” but could be improved.

Airbnb is opposed to the limit of rentals in high-rise buildings, argued Kasper, because it creates a system of “winners and losers.” For example, he said, a 100-unit high-rise building where only 6 units would be allowed to go on the Airbnb platform is unfair, because those six units would be more valuable than the remaining 94. He also anticipated a mad rush for licenses, given the limits on units. He said Airbnb would have prefered if the limit was imposed on the number of units at any given time, and not the number of units that can operate on the platform.

But Airbnb doesn’t plan to sue the city over the regulations, said Chris Nulty, Public Relations Director for the company. He told Ald. Brendan Reilly (42), who has repeatedly argued Airbnb purposely doesn’t follow laws it doesn’t like, that the city wouldn’t get slapped with a lawsuit after the regulations become law.