Chicago’s Airbnb home-sharing rules are ‘draconian,’ lawsuit says

A group of homeowners is suing the city of Chicago, alleging the city’s new “draconian and unintelligible restrictions” on Airbnb and other home-sharing platforms are unconstitutional and punish responsible homeowners.

This is the second lawsuit filed this month that takes aim at the city’s new home-sharing rules, which are set to go into effect fully next month. The regulations lay down the law for homeowners renting their living spaces out on Airbnb, the home-sharing platform that has become a thorn in the hotel industry’s side.

The new regulations call for an extra tax on home-sharing hosts, a limit on the number of units in buildings that can be rented out on the platforms and a requirement that hosts maintain records on guests, among other rules.

The ordinance “arbitrarily and irrationally” deprives homeowners of their rights to offer their homes to guests, and violates the Illinois and U.S. constitutions, according to the most recent lawsuit, filed Tuesday morning in the Cook County Circuit Court.

Liberty Justice Center, a Chicago-based nonprofit litigation center representing the plaintiffs in the case, teamed up with a Phoenix-based think tank called the Goldwater Institute on the suit in hopes of blocking the regulations. The four plaintiffs — Leila Mendez, Sheila Sasso, Alonso Zaragoza and Michael Lucci — have rented out their homes on Airbnb.

“We would hope the city would go back to the drawing board and start over,” said Jacob Huebert, senior attorney at Liberty Justice Center.

Maria Guerra Lapacek, commissioner of Chicago’s Department of Business Affairs and Consumer Protection, also was named as a defendant.

“We intend to vigorously defend this suit and the ordinance it challenges, as we believe the plaitiffs’ legal arguments lack merit,” said Bill McCaffrey, a spokesman for the city’s law department.

There are 6,400 Airbnb hosts in Chicago, according to the San Francisco-based company. About 371,000 guests stayed in the city between Nov. 1, 2015, and Nov. 1, 2016.

Airbnb is not involved in the suit. Spokesman Ben Breit said in a statement that the company is “100 percent focused on educating the Chicago Airbnb host community about the new rules and regulations passed as part of the June ordinance.”

The suit takes issue with more than half a dozen aspects of the ordinance, calling them vague, unreasonable and difficult to abide by. It’s not the first lawsuit that attempts to overturn a city home-sharing law, in Chicago or elsewhere.

A trial court judge ruled last month that a Nashville, Tenn., ordinance regulating short-term rental properties was unconstitutionally vague. The Nashville case, like the one filed in Chicago this week, was filed by a think tank acting on behalf of local homeowners. But Airbnb itself has sued other cities, such as San Francisco; Santa Monica, Calif.; and Anaheim, Calif., over ordinances that force the company to remove or refuse certain bookings that violate city laws.

Keep Chicago Livable, a nonprofit comprised of homeowners that oppose Chicago’s regulations, filed a suit earlier this month in the U.S. District Court for the Northern District of Illinois, saying “this new law is designed as a particularly cruel trap for the unwary.”

Benjamin Thomas Wolf, president of Keep Chicago Livable and a plaintiff in that case, quit renting out his Bucktown neighborhood condo in light of the regulations.

“I abide by the rules and my life has been about enforcing the law and now to break the law, I’m just not prepared to do that,” said Wolf, who said he has worked for the FBI. “It’s important for us to challenge this.”

None of the plaintiffs in the Chicago case filed this week was available for comment Tuesday.

Chicago’s law authorizes building commissioners to inspect rentals, and requires hosts to keep guest registration records that city officials can request. These are invasions of privacy, according to the suit filed Tuesday.

Mendez, one of the plaintiffs, stopped renting out her home for periods of 31 days or less to avoid a warrantless search. The suit asked the court to immediately prohibit these types of searches.

The ordinance caps the units per building that can be used as vacation rentals, which restricts the rights of other people in the building to use their homes as they see fit, Huebert said. Additionally, homeowners can only get vacation rental licenses if they are renting out their primary residence, barring a few exceptions, which the suit says discriminates against non-Illinois dwellers. The primary residence restriction applies to people in single-family homes and two- to four-unit buildings.

“It affects people who live out of state,” Huebert said. “They own a residence in Chicago and want to rent it out through Airbnb, and it says they can’t.”

Then there’s the excessive loud noise rule, which the suit alleges is vague and nearly impossible to abide by, and the additional 4 percent tax home-sharing hosts must pay, which the suit says is discriminatory because it doesn’t apply to hotels.

“If the city has specific concerns about the public health or safety and eliminating nuisances it might think are associated with home sharing, it should pass a law that’s actually directed toward those kinds of things,” Huebert said, “as opposed to one that is very long and confusing.”

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