Uber, food trucks and Airbnb: Chicago’s 3 biggest over-regulation stories from 2016
It’s no secret Chicago aldermen aren’t friendly to outsider businesses and innovative industries. Here’s a look at some of the most egregious examples from 2016.
Chicago City Council devoted much of 2016 to enacting rules limiting how residents can make a living. On June 22, aldermen approved new, burdensome regulations on ridesharing and short-term rentals. In August, Mayor Rahm Emanuel issued an edict calling for a crackdown on food trucks, reverting back to the overly burdensome 2012 law.
Here’s a look at some of the biggest stories of hyper-regulation in 2016.
The attack on ridesharing
Alderman Anthony Beale, 9th ward, had been working behind the scenes for years to obtain stricter regulations for the ridesharing industry to bring them in line with the highly regulated taxicab industry. His original proposal would have required rideshare drivers, who already undergo company-required background checks, to submit to city-overseen fingerprinting and vehicle inspections and to acquire a chauffeur’s license.
After pushback from drivers and rideshare supporters, those rules were tabled in favor of lesser but still burdensome regulations. City Council voted 36-12 to require drivers to acquire a special chauffer’s license, which can be attained through an online course and must be renewed yearly. Additionally, drivers may not use a vehicle more than six years old, unless they submit to semi-annual vehicle testing. Drivers must also display a sign informing passengers they can call 311 to report complaints.
While the new rules removed the drug-testing and physical-exam requirements for rideshare drivers, they didn’t entirely take them off the table. Instead, Beale requested a six-month study of the effectiveness of fingerprinting as part of a background check with the hopes of reviving the element of the law.
Aldermen have been pushing these regulations because they say it’s fair to the taxi industry. But it’s hard to believe aldermen are concerned about “fairness” alone. According to the Illinois State Board of Elections, in 2015, aldermen on the governing committees took in a total of $51,500 from the Illinois Transportation Trade Association Political Action Committee, or ITTA PAC. ITTA PAC gave Beale, the chairman of the Committee on Transportation, $10,000 in calendar years 2015 and 2016.
A level playing field allows businesses to compete fairly, but over-regulation doesn’t create that environment – instead, it tilts the scales. The Institute for Justice represented rideshare drivers before the 7th Circuit U.S. Court of Appeals last month and pointed out the need for reducing regulations on the taxi industry. Unfortunately, Chicago has gone in the other direction.
Taxing Airbnb
Ridesharing regulations were in the works for years, but an ordinance slapping new rules on Airbnb moved rather quickly. The ordinance that passed June 22 includes a $60 fee to help the city enforce wild partying and illegal rentals. This fee is on top of the 4 percent surcharge on short-term rentals and in addition to Chicago’s 17.4 percent hotel tax. Emanuel included a feature where Chicagoans would have the ability to vote to ban Airbnb from their communities.
Just as is the case with ride sharing, the hotel industry shelled out thousands of dollars to aldermen to secure their support. According to the Illinois State Board of Elections, in the past year, aldermen and their ward organizations took in nearly $30,000 from the Illinois Hotel & Motel Pac
If the guiding principle were to protect the community from a danger, a 4 percent tax on top of one of the highest hotel taxes in the country wouldn’t have been necessary. Just as with hotel stays, visitors to Chicago shoulder this entire tax burden. However, Emanuel and the aldermen saw a potential cash cow and didn’t hesitate to throw visitors under the bus to protect the hotel industry. Chicago has one of the highest tax burdens in the country, and with legislation such as this, it continues to get higher.
Cracking down on food trucks
After a long fight, Chicago politicians passed a law in 2012 to allow food trucks to operate in the city, while severely limiting food truck owners’ ability to operate successfully. In 2016, aldermen and the mayor got to work enforcing these arcane rules.
The wording in the law favors brick-and-mortar restaurants and forces food truck operators to comply with burdensome regulations. Under the law, food trucks must not operate within 200 feet of a brick-and-mortar restaurant. This forces food trucks to fight each other for extremely limited operating spaces in the downtown area. If a food truck is fortunate enough to find an operating space, they are only allowed to remain in that location for two hours. The average food truck requires 45 minutes of prep, which includes heating up the cooking elements, and 45 minutes of takedown, most notably, the cooling of the cooking elements. This leaves little time to prepare fresh food and serve hungry customers before having to move to a new location.
After the passage of the 2012 law, two truck owners sued the city arguing that the 200-foot rule and the GPS requirement were unconstitutional. On December 5, a Cook County judge ruled in favor of the City, declaring the law to be sound.
In August, Emanuel ordered a “crack down” on food trucks. Many food trucks have found operating under hyper regulation to be extremely difficult.
“It’s so frustrating,” said David Johnston, who runs Cheesie’s food truck with his brother Chris. “We’re out here making money for the city, but they make it really difficult. We’re a small business, man. Food truck people are people, too. We’re not monsters.”
Ironically, Joe Ferguson, the city’s inspector general, released a report in November showing that restaurants aren’t being inspected at the levels state law mandates. While aldermen like to pass laws in the interest of “fairness,” it’s clear their regulations have created two classes of business. As the old adage goes, follow the money.
Much like with ride-sharing and short-term rentals, Chicago aldermen received a large amount of money from restaurants in 2015. According to the Illinois State Board of Elections, $180,926 was given to aldermen. This figure doesn’t include some restaurant owners or lobbyists who likely donate under other names.
It’s no wonder Emanuel publicly vowed to “crack down” on the city’s food trucks.
How to reverse this trend in 2017
Fixing the problem of over-regulation is simple: If City Council wants to welcome jobs to Chicago, it has to loosen its grip. The sharing economy has provided an opportunity for thousands of individuals to better their financial situations. Food trucks continue to employ hundreds of workers. It’s time city council work on behalf of its constituents to create a more friendly business environment instead of over regulating and taxing them to the point of point of no return.