Emanuel administration threatens to cut off talks with Airbnb
Chicago Sun Times | Fran Spielman
June 2, 2016

A top mayoral aide threatened Thursday to cut off negotiations with Airbnb and push through a stricter version of the home-sharing ordinance proposed by a pair of aldermen after a trade group bankrolled by internet companies launched a “seven-figure” advertising campaign on radio and television.

The Internet Association’s huge, multi-week media buy on black radio and TV infuriated the Emanuel administration, which has proposed a seemingly endless parade of amendments aimed at appeasing both sides of the hotly contested home-sharing controversy.

“We have had weeks of working groups to try to find common ground that’s good for the tech industry, but also good for our neighbors and our aldermen. For them to abandon the process and attack the aldermen . . . is not productive and not a sign of good faith,” said a top mayoral aide, who asked to remain anonymous.

“If they want to go on the attack, we may not have any other choice but to run an ordinance suggested by Aldermen [Brendan] Reilly and [Michele] Smith with the four percent surcharge and heavy regulation — everything the aldermen wanted from the first round,” the aide said. “Why waste our time with these political games and work with everyone in good faith for a compromise that’s best for the city and its residents when we have more pressing issues like solving education funding in Springfield and making sure our schools open on time?”

Smith welcomed the hard line.

“Companies that want to be in our residential neighborhoods should respect the neighborhood. A company that is using advertising without providing data is attempting to mislead the people of Chicago,” Smith said.

“I certainly welcome embracing limits on proliferation of these kind of units in neighborhoods and think that’s the direction we need to be going,” Smith said. “The key to our city’s future is keeping families and residents living in our neighborhoods. When they’ve invested in their homes, they expect to be living in a residential neighborhood — not next to a hotel.”

Smith noted that there are at least 500 Airbnb listings in Lincoln Park alone. They generate a steady stream of complaints that range from “constant partying to not knowing who your neighbors are anymore and having no ability to find out who’s in the apartment next door to you,” the alderman said.

In an email to the Chicago Sun-Times, Reilly called the ad campaign “further proof” that Airbnb has not been negotiating in good faith and that it’s “their way or the highway.”

“I find it ironic that a multibillion-dollar company claims to be a champion for the working man, just as they execute a seven-figure advertising buy aimed at bullying Chicago policymakers,” Reilly said.

“Airbnb is embarking on a multimillion-dollar media campaign to fight against reasonable regulations and consumer protections,” he said. “That makes it pretty clear this fight isn’t about helping struggling families, it’s about Airbnb protecting their massive $25.5 billion valuation.”

Airbnb spokesman Chris Nulty responded to the Emanuel administration’s threat by insisting that the company has spent months negotiating “in good faith” — to the point where it firmly believed that a “compromise approach” had been reached.

“Which is why we agreed to pay a higher tax than the hotel industry — only to have the powers that be pull a bait and switch when the substitute ordinance was introduced two weeks ago in the middle of the hearing,” Nulty said in an emailed statement.

Nulty accused the Emanuel administration of allowing a “handful of aldermen” and “a few well-placed special interests” to hold hostage thousands of middle-class Chicagoans who “depend on sharing their homes to make ends meet.”

“If this ordinance passes — let there be no mistake — there will be Chicagoans forced from their homes, which is an incredibly serious issue. So we have no choice but to stand up against the downtown special interests who are trying to bully Chicago hosts and make clear to the mayor and the aldermen this proposal is the difference between people being able to stay in their homes or being on the street,” Nulty said.

Reilly and Smith represent ZIP codes that rank first and second in the city for the largest number of units posted on Airbnb, HomeAway and FlipKey and other home-sharing services. Their ordinance goes a whole lot further in regulating home-sharing than Emanuel has been willing to go.

They have called for:

  • A 45 to 60 nights a year limit for an owner-occupied unit, down from 90 days under the mayor’s original plan before Emanuel dropped the limit entirely.
  • A limit of no more than six units per building that could be offered for home-sharing at a given time.
  • An “opt-in” provision that would allow homeowners and condominium associations in multi-unit buildings with 20 or more units to have final say on whether or not to allow home-sharing in their buildings.
  • A swift revocation process if people who rent units through Airbnb end up doing damage, creating excessive noise or otherwise wreaking havoc in the building.
  • A higher standard and lower ceiling for non-owner occupied units, which cause most of the trouble. Units not occupied by the owner would have a 15 nights a year limit. Anything above that would trigger a requirement for a stricter vacation rental license after an inspection. That’s the same cutoff that the Internal Revenue Service uses to identify commercial properties for tax purposes.

The ad campaign that touched a nerve at City Hall features two Chicago residents who rely on home-sharing: A woman identified as Carrie is a host, small business owner and single mother of four living in Lincoln Square. A man identified as Chester is a musician and substitute teacher from Hyde Park.

“Do you think wealthy special interests downtown deserve another sweetheart deal from the city? They are pushing the mayor’s office to pass a special law at the expense of people in our neighborhoods. Those downtown special interests want to make it really hard for people in our neighborhoods to rent out their homes for short periods of time,” the script for one of the 30-second radio commercials reads.

“Our families depend on homesharing to make ends meet. Tell your alderman and the mayor not to put the special interests downtown ahead of our neighborhoods.”

The script for a 60-second TV spot features Chester talking about using home-sharing to ease a financial squeeze caused by rising rent and a stagnant salary in a Hyde Park neighborhood with “limited hotel space.”

“Home sharing is a non-issue for my neighbors. I’ve got great neighbors. If he’s the mayor he should be the mayor on every street corner all over this city. I would say to Mayor Emanuel, `Leave the little guy alone,’ ” Chester is quoted as saying.

Earlier this month, Emanuel’s plan to regulate and tax Airbnb was approved by a joint City Council committee, but it was held there for further changes aimed at appeasing both sides.

That gave Airbnb more time to do battle.

The company has threatened to file a federal lawsuit on grounds that federal law prohibits the city from regulating internet platforms in a way that holds the company responsible and liable for the behavior of home-sharing hosts.

Airbnb has accepted the mayor’s proposed, 4 percent surcharge to combat chronic homelessness. But the company has said it cannot go along with the mayor’s plan to allow rooms in single-family homes to be listed on Airbnb and other home-sharing services only when the homeowner is present.

The company also has taken issue with Emanuel’s plan to establish a limit of one home-sharing unit per building in two- to four-flats and allow owners, condominium boards or homeowners associations in larger multi-unit and high-rise buildings to either prohibit short-term rentals outright or limit the number of rentable units and “affirmatively notify” the city and require the company to “de-list” problem hosts and be held liable for those problem short-term renters.