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Hotels Propose Compromise On Rahm's Airbnb Reforms

By Ted Cox | April 4, 2016 5:32pm
 A Wrigleyville Airbnb location
A Wrigleyville Airbnb location
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Screenshot/Airbnb

CITY HALL — The hotel industry is offering an olive branch to vacation-rental firms like Airbnb on reforms proposed by Mayor Rahm Emanuel.

The Emanuel administration submitted an ordinance amendment in January that would have set a 90-day limit on rentals per year. Those renting their places more than 90 days would be required to get a business license, at a cost of $500 every two years. Yet those under would only have to register with the city, which would then monitor compliance and consumer complaints.

Marc Gordon, however, president of the Illinois Hotel & Lodging Association, thinks he has a better idea.

Reporter Ted Cox talks about City Hall reforms on Airbnb-style rentals.

"We feel that there's an opportunity to compromise," Gordon said Monday as his group was preparing to meet with the Emanuel administration.

"We're OK with Airbnb in terms of competition," Gordon said, especially when it's someone's "primary residence" in the true spirit of what's been called "vacation rentals."

"We don't see that as a business," he added.

Instead, the hotel industry would like to target what Gordon labeled "a growing number of what's called illegal hotels" — entire buildings where the units are rented out on a strictly for-profit basis.

Gordon called the 90-day limit "ridiculous," in that there would be a year delay before residences that registered posted that they were being rented out more than 90 days, and then need a license. It would also be policed by firms like Airbnb and Vacation Rentals By Owner themselves, with Gordon saying that Airbnb claims "very few" of its clients would pass that 90-day threshold.

Gordon suggested a very simple distinction where a "primary residence" would not need a license, but a rental where the owner was not living there the majority of the time would be labeled a business and would need the $500 license.

In any case, the rental would agree to impose the 16.4 percent hotel tax — 4.5 percent going to the city — as well as a 2 percent surcharge to bring in an estimated $1 million to go to affordable housing, especially for homeless families with children.

The Emanuel administration was receptive, but noncommittal in response.

"We continue to listen to feedback from stakeholders and residents on the ordinance," said mayoral spokesman Grant Klinzman. "Our goal is a framework that strikes the right balance between consumer protection and safety while allowing for more choice for visitors."

Airbnb echoed that.

"We continue to work with the Mayor's Office and members of the City Council to develop clear, simple rules around home sharing that ensure middle-class families can continue sharing their space in order to make ends meet," said spokesman Christopher Nulty.

Both Gordon and Downtown aldermen have insisted reform is necessary, because no one is abiding by the current city statute.

Ald. Brendan Reilly (42nd) complained during last fall's budget hearings that only about 200 of the approximately 3,000 Chicago locations posted on Airbnb were licensed, as currently required. "There is literally money sitting on the table," he said, with only the city's will to enforce the law needed to bring in what he estimated to be an extra $2 million a year.

"Ald. Reilly would say forget about compromise, just enforce the law that is already on the books," Gordon said.

Reilly is actually the alderman who put forth the current Vacation Rental Ordinance, which took effect five years ago.

"It hasn't been really enforced at all," Gordon said. "Airbnb came in and started growing, and they pretty much didn't observe the law, didn't get their host units licensed. So that's been a big problem in our eyes."

Gordon endorsed the mayor's proposed reforms as a bare minimum, saying, "It would give us at least more than we have now, which is nothing." Yet he maintained his compromise, creating a distinction over what constitutes a "primary residence," was simple, straightforward and easily enforced.

Gordon also took issue with a new Cook County hotel tax, adding 1 percent to the 16.4 percent currently collected by the Illinois Department of Revenue, which then distributes it to various taxing bodies. Cook County wants its 1 percent paid directly to county coffers, which Gordon said would create an additional hassle for hoteliers — and open vacation rentals to the same sort of enforcement problems the city is already seeing on its Vacation Rental Ordinance.

"It's an imbalanced playing field," Gordon said, but he said it could be easily addressed through the proper legislation — while leaving genuine vacation rentals by homeowners for the most part unmolested.

The issue is most likely set for the May City Council meeting.

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