Lawsuit challenges Chicago’s unconstitutional Airbnb ordinance

Jacob Huebert

Senior Attorney at Liberty Justice Center, author of Libertarianism Today.

Jacob Huebert
November 16, 2016

Lawsuit challenges Chicago’s unconstitutional Airbnb ordinance

Airbnb has reported that about 4,800 Chicagoans are Airbnb hosts, and they earn an average of $5,300 per year renting out their homes through the service.

As the Chicago Cubs fought for their first World Series win since 1908, Chicagoans who rented out their homes made at least $2.6 million on home-sharing rentals.

Fans were happy. Homeowners were happy. Chicago, a city that could always use more economic activity, saw a boom in visitors flowing in to spend money in town.

But it’s not just during a Cubs World Series run that Chicago benefits from home-sharing services like Airbnb.

Airbnb has reported that about 4,800 Chicagoans are Airbnb hosts, and they earn an average of $5,300 per year renting out their homes through the service. On the South Side alone, Airbnb hosts made a total of $2.6 million in 2015. Many of those people rely on that income to pay their mortgages and property tax bills.

But in June 2016, Mayor Rahm Emanuel signed a city ordinance severely restricting homesharing in Chicago — for no good reason.

Chicago’s home-sharing ordinance is 58 pages long. It’s full of legal jargon so confusing that few attorneys, let alone ordinary homeowners, could understand it. Yet, homeowners who don’t comply with these confusing new regulations can be shut down, fined or even imprisoned.

On Nov. 15, the Liberty Justice Center – together with the Goldwater Institute, a public-interest law firm based in Phoenix, Ariz. – filed a lawsuit on behalf of Chicago homeowners challenging Chicago’s home-sharing ordinance for violating the Illinois Constitution and the U.S. Constitution.

Chicago’s home-sharing ordinance is unconstitutional in numerous ways.

For example, if you rent out your home using Airbnb, the ordinance says the city can search your home at any time, for any reason, without a warrant. This violates the constitutional right to be free from unreasonable searches.

The ordinance also says Airbnb hosts in Chicago have to keep records of their guests’ personal information – their names, addresses, signatures and the dates they stayed – and it authorizes city officials to inspect those records at any time, for any reason, without a warrant. This violates the constitutional right to privacy.

The ordinance says someone who owns a single-family home or a unit in a building with four or fewer units can’t rent it out through a home-sharing platform unless the home is the owner’s personal primary residence. But the ordinance also says city officials can make exceptions to that rule whenever a city official decides it’s appropriate.

The ordinance also limits the number of units in a building that can be registered with a home-sharing platform like Airbnb. In a building with two-to-four units, only one can be registered. In a building with more than four units, the number of units that can be licensed or registered for homesharing is limited to 25 percent or six units, whichever is fewer.

These rules restricting who can rent out a home on Airbnb or a similar service make no sense. They aren’t designed to protect the public’s health or safety. Their only purpose appears to be to protect the hotel industry from competition.

The ordinance also singles out homesharers for unfair treatment in other ways. For example, homesharers have to pay a special 4 percent tax that doesn’t apply to hotels, motels or bed-and-breakfasts. And homesharers can completely lose the right to rent out their homes if city officials think guests are making noises “louder than the average conversational level.” That rule has no objective criteria, and, taken literally, is impossible to follow. A baby crying for even a second makes a sound louder than the average conversational level. Someone cheering while watching a sporting event on television makes a sound louder than the average conversational level. And the rule is especially unfair because it doesn’t apply to operators of hotels or bed-and-breakfasts.

In the lawsuit, the Goldwater Institute and the Liberty Justice Center ask the Cook County Circuit Court to strike down all of the aforementioned provisions in Chicago’s homesharing ordinance. And, the groups filed a motion for preliminary injunction asking the court to immediately block the city from conducting warrantless searches of homesharers’ property and warrantless inspections of guest records.

These rules do nothing to protect people against any danger homesharing might arguably create. There are already laws on the books with rules to limit noise, enforce parking restrictions and deal with other nuisances. There’s no need for additional, special rules specifically restricting homesharers and their guests – let alone the kind of extreme and arbitrary rules Chicago has imposed.

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