City begins long-awaited registration of Airbnb hosts

Attention Chicago Airbnb scofflaws: The city is finally ready to stop you from flouting its home-sharing rules.

After a prolonged delay, the city’s Department of Business Affairs & Consumer Protection is officially rolling out its registration system for hosts on the short-term housing rental website.

Beginning today, thousands of Airbnb hosts with pending registration applications will be notified that they have been approved to host guests. At the same time, the city is starting a process to alert hundreds of other hosts that their applications have been denied under the home-sharing ordinance the city passed last year.

The system’s activation offers relief for many Chicago Airbnb hosts who for months have been waiting to get the city’s stamp of approval to rent out their properties.

The city’s ordinance imposing license fees, taxes and registration rules on short-term rental sites like Airbnb went into effect in March. But the system to weed out those that are restricted by the city law has been delayed in its rollout, leaving most local rental listings with a notification that their city registration was pending and homeowners unsure about whether they could legally rent their properties.

As a result, the city has not been able to enforce its ordinance or issue fines for those that violate it, which range from $1,500 to $3,000.

Business Affairs & Consumer Protection Department Commissioner Rosa Escareno said the delay was partly due to the city’s effort to carefully evaluate and process data shared by Airbnb about all of its Chicago listings.

If the new system works as planned, it will be able to catch any hosts that don’t comply with the city’s short-term rental rules based on information Airbnb provides twice a month about its active hosts. The system is designed to flag ineligible properties that don’t have the proper zoning or are located in a building that prohibits short-term rentals, for example.

Sifting through thousands of registration applications sent by Airbnb in recent months and making sure the automated system categorized them properly took time, Escareno said. “We wanted to do it right. We’re counting on the system to work.”

Data from Airdna, a Santa Monica, Calif.-based firm that sells data analytics to Airbnb hosts, show there were nearly 7,000 Airbnb listings in Chicago as of June. That number, while higher than the figures the city is dealing with, is down 10 percent since the city’s ordinance was passed in the fall.

Escareno said the delay was also exacerbated by lawsuits filed late last year against the city over its home-sharing ordinance, which pushed back timing on when it could begin collecting data from Airbnb about its hosts.


THE DENIAL PROCESS

While the approval process is relatively simple, however, the steps to deny home-sharing applicants are cumbersome. The city will begin notifying those hosts individually, beginning with units in buildings where short-term rentals are prohibited.

Those hosts will have 20 days to file an appeal with the city. If they do, the city has 10 days to notify them of a hearing date. If they don’t, they receive notices that they are in final denial status, Escareno said.

“We just need to be very cautious in how we approach these,” she said. “Because of the process we must go through to allow everyone due process, we internally have to make sure we have proper resources for that.”

Complicating matters: The city has a list of hundreds of other units whose information received from Airbnb is incomplete in some way, such as a missing unit number. Escareno said her department will work with Airbnb to contact those hosts and have them update their information.

In the meantime, any host that is not compliant with the ordinance can continue to operate until they hear from the city. That is a major flaw in the registration system, said Ald. Michele Smith, 43rd, who has been a vocal critic of the city’s home-sharing ordinance and was briefed on the new registration system before its debut.

“To me, that’s backwards. It always has been backwards, that somehow you start with the assumption that you can have this short-term rental,” she said. “We are really going to have to hold the city’s feet to the fire to do these enforcement actions.”

Another pending issue for the city is that its registration system incorporates only Airbnb hosts, while listings on other home-sharing sites are not included.

Escareno said the city has sent a letter to a “handful” of companies with local listings that do not have licenses to operate in Chicago as required under the city ordinance.

One such large company is Austin, Texas-based HomeAway, which sued the city in May seeking a court ruling that the city’s home-sharing ordinance is unconstitutional.

That lawsuit is pending, but Escareno said the city has been in conversation with HomeAway officials on setting up a licensing process for hosts listed on its platform. HomeAway did not respond to a request for comment on the matter.