September 22, 2020
By Jacob Huebert

Chicago homeowners are standing up for their right to use their property as they see fit: A group of homeowners represented by the Goldwater Institute is challenging the city of Chicago’s new ordinance that bans homeowners from renting out their properties for single nights on Airbnb and other home-sharing platforms.

The city passed the ban on single-night rentals, along with other new restrictions on home-sharing, earlier this month. The homeowners seek to challenge to the ban as part of their long-running lawsuit against Chicago’s original anti-home-sharing ordinance, enacted in 2016.

The new ordinance bans all single-night home rentals in Chicago—unless and until the Superintendent of Police and the Commissioner of the Department of Business Affairs and Consumer Protection choose to adopt new regulations to make them legal again. The plaintiffs in the lawsuit argue that this is unconstitutional because it gives the Commissioner and the Superintendent the power to decide whether single-night rentals will be legal in the future—a power that should belong to the City Council alone, if anyone.

The court now must rule on whether plaintiffs may challenge the ban on single-night rentals as part of their ongoing lawsuit or must do so in a new separate lawsuit.

Mayor Lori Lightfoot has said that the ban on single-night rentals is necessary to stop homes from being used as “party houses.” But the Goldwater Institute reviewed the home-sharing-related complaints Chicago has received and found that party houses aren’t a significant problem. In fact, since the city enacted its original home-sharing ordinance four years ago, only six properties used for home-sharing created nuisances that the city deemed worthy of enforcement action.

The plaintiffs filed their lawsuit challenging the original ordinance shortly after the city enacted it in 2016. In August 2020, the Cook County Circuit Court heard arguments on whether the City’s 6% surcharge that home-sharing guests pay, in addition to the 4.5% hotel tax that both they and hotel guests pay, violates the Illinois Constitution’s Uniformity Clause, which generally requires that similar things be taxed alike. The court could rule on that issue as soon as tomorrow, when attorneys for the plaintiffs and the city are scheduled to appear before Judge Sanjay Tailor. 

The court earlier dismissed the plaintiffs’ other constitutional challenges to the ordinance, including a challenge to its noise rules, a provision authorizing the city to search home-sharers’ property without a warrant, limits on the number of units in a building that may be used for home-sharing, and a rule forbidding property owners from renting out a home on Airbnb or similar platforms if is not the owner’s primary residence. The plaintiffs plan to appeal the dismissal of those claims after the Circuit Court issues its decisions on the tax issue and the ban on single-night rentals.

Jacob Huebert is a Senior Attorney at the Goldwater Institute.

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