Chicago, IL: Aldermen seek crackdown on Airbnb scofflaws

A group of Chicago aldermen is calling on the city to crack down on people who rent their homes out through Airbnb without a license.

Airbnb, the fast-growing vacation-home rental agency, advertises more than 3,000 vacation rental houses, condominiums and rooms in Chicago, but the city has issued fewer than 200 vacation rental licenses, according to a letter that Ald. Michele Smith (43rd), Brendan Reilly (42nd) and Brian Hopkins (2nd) sent to Maria Guerra-Lapacek, commissioner of the Department of Business Affairs and Consumer Protection.

A license requires people who rent their homes out for short periods to pay a fee to the city, obtain insurance and meet certain health and safety standards.

Related: Here's how big Airbnb has gotten in Chicago

“It's a quality of life issue and a revenue issue,” Smith said. “In residential areas, people intend to live among neighbors, not next to a hotel. Entire three-flats have been converted to vacation rentals, and those have been used for frat parties or bachelorette parties, not really appropriate for the area.”

At a budget hearing today in City Hall, Smith and Reilly pressed Guerra-Lapacek to step up enforcement of vacation-rental regulations. The hotel industry also has asked the department to crack down on unlicensed Airbnb renters, saying that they have an unfair advantage over hotels, which must pay taxes and comply with a long list of regulations.

"As with any new industry we are looking to implement a license and regulation structure to ensure safety for all residents and visitors to the City," Mika Stambaugh, a spokeswoman for the Department of Business Affairs and Consumer Protection, said in an email.

An Airbnb spokesman did not provide a comment.

San Francisco-based Airbnb recently started collecting city hotel taxes from its hosts, but it doesn't collect state taxes. Like Uber, the company has disrupted an established industry by opening the door to new competitors—average people who have a car or extra bedroom—while sparking a debate about fairness and safety.

The city enacted licensing on short-term vacation rentals in January 2011, before the Airbnb boom took off. Alderman Smith said the license calls for a $500 fee, renewed every two years, and some basic standards for operation including regulations on cleanliness, serving of alcohol, and number of guests allowed per room.

“These are very, very limited compared to a hotel, no a hassle at all. But you have to do it,” she said. “And Airbnb, they're just not complying.”