Chicago sets rules on ride-hailing and short-term rental apps
After many weeks of debate, the Chicago City Council has approved what it calls “compromise measures” which place restrictions on sharing economy services such as Uber, Lyft and Airbnb. The new regulations require ride-hail drivers to take an online course to get a professional driving licence. With regards to short-term rentals, such as on Airbnb, the new regulations require companies to regularly share data on rental listings with the city so it can check if they comply with the law. It also imposes new licensing fees to fund the enforcement of the rules, as well as services for the homeless. Unsurprisingly, there was opposition to both measures, from the taxi industry who claim ride-hail platforms will still be operating at an advantage, and from home-sharing opponents who feel the new rules still fall short of protecting homeowners who say Airbnb has altered the character of their neighbourhoods.

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An Uber sticker is displayed on the front windshield of a parked car on Irving Park Road in Chicago on Wednesday, June 22, 2016. (Chris Sweda / Chicago Tribune)

Chicago aldermen on Wednesday easily passed Mayor Rahm Emanuel's plans to regulate two major parts of the online sharing economy, but the new rules for home rental platforms and ride-hailing sites aren't likely to calm the roiling controversy over what role city government should play in directing the behavior of companies like Airbnb and Uber.

Strong feelings on how to handle the fast-evolving, person-to-person businesses erupted during a lengthy City Council meeting, which briefly descended into chaos as Emanuel threatened to adjourn the proceedings when aldermen tried to block a vote on the Uber ordinance.

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The issues have been hot-button ones for Emanuel, aldermen and the public not only because the city is trying to get its arms around quickly growing businesses but because the ordinances touch on the sensitive topics of race, class and segregation in Chicago.

And like similar fights taking place elsewhere, the debate has played out with the well-funded companies threatening to leave Chicago and fighting for less regulation by hiring high-powered lobbyists and launching advertising campaigns calling on residents to tell elected officials not to put in place heavy controls.

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Emanuel tried to cast the council's approval as evidence City Hall can negotiate to get things done, drawing a contrast to the gridlock that's gripped Springfield.

"Now, not everything is picture-perfect, but compromise, consensus, common ground has worked for Chicago today. And I would call on Springfield, after 385 days without a budget, where the basic culture is one of demonization rather than dialogue, that this is an example of where we're working together," he said.

But opponents saw in the way Emanuel dealt with the issues echoes of the worst tendencies of his predecessor, Mayor Richard M. Daley, particularly on the ride-hailing rules.

Ald. Leslie Hairston, 5th, compared the fact council members were expected to vote on an ordinance that was still getting amended Wednesday morning to the much reviled 2008 parking meter lease, which aldermen had little time to read before Daley called it for a vote.

Ald. Scott Waguespack, 32nd, said, "The council should not operate this way," and briefly tried to use a procedural move to block a vote, which usually means an ordinance doesn't get voted on until next month's council meeting.

But the mayor and 14th Ward Ald. Edward Burke countered by saying they would bring back the ride-hailing measure for a vote at a special meeting Friday afternoon, and Emanuel announced he was taking the highly unusual step of ending Wednesday's session with many agenda items yet to be addressed. Waguespack then dropped his objection rather than wear the jacket for dragging the entire council back to City Hall on the cusp of a summer weekend.

Emanuel has tried to make the case that ride-hailing companies are a boon in minority neighborhoods where residents can make money driving part time and people who have long dealt with a shortage of cabs can more easily get rides. And he has defended Airbnb as a way for visitors to find places to sleep and spend money in less flashy neighborhoods outside the downtown hotel zone.

Nonetheless, the companies pushed back hard against what they say is an overreach, arguing the past several months that various parts of the proposed rules would make it difficult for them to operate here. Both hired high-powered lobbyist Michael Kasper, who defended Emanuel in his 2010 residency fight to stay on the mayoral ballot, to represent their interests at City Hall. Kasper spoke on behalf of Airbnb at a hearing this week and worked the room behind City Council chambers Wednesday prior to the votes on the ordinances.

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Arrayed on the other side of the legislative fight was a coalition of deep-pocketed legacy businesses like the cab and hotel industries, their aldermanic allies and residents who worry the laissez-faire attitude exhibited by City Hall toward the online economy is giving the hugely profitable companies too much say.

"Stop letting corporations write our laws to benefit them at the detriment of our communities that are suffering," said Ald. John Arena, 45th. "We are letting them self-regulate themselves, and we continue to see what that does to our economy. It drives us further toward the Wal-Mart economy. Everything's cheaper, but you're not safer and the service is not better."

The fact both ordinances came before aldermen Wednesday was somewhat happenstance.

Emanuel backed a plan to regulate Airbnb and other online rental platforms early this year, then announced last month that the ordinance would require the company to pay a 4 percent surcharge on each rental. The $2 million a year the city estimated would be raised would go toward services for homeless people, allowing Emanuel to try to position the package as a way to get a wealthy corporation to kick in for the social good.

But the mayor then watched as a handful of aldermen began complaining loudly that their hip North Side neighborhoods were getting transformed into ad hoc hotel zones for partying tourists thanks to investors renting out condos through online agencies year-round.

Lincoln Park Ald. Michele Smith, 43rd, said the Emanuel plan was "throwing aside decades of zoning rules in order to turn over the keys to our neighborhoods to this $25 billion multinational company."

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Downtown Ald. Brendan Reilly, who had been one of the staunchest backers of a tougher Airbnb ordinance, voted in favor Wednesday, but predicted the council would need to come back and tighten the rules in a few months when the company started flouting them.

During negotiations, Airbnb threatened a lawsuit over language in the plan company officials said illegally made them responsible for the behavior of hosts who used the platform. And a lobbying group for the online rental industry aired TV ads, playing up the most sympathy-inducing type of online renting, featuring regular Chicagoans in different neighborhoods saying they use the extra money from hosting visitors in their homes to make ends meet.

But after Wednesday's approval, Airbnb senior adviser Will Burns, who resigned as 4th Ward alderman this year to work for the company, released a statement saying, "The City of Big Shoulders is giving a big welcome to home sharing."

City officials tried to balance the competing positions, leading to a dizzying number of proposed ordinances. It got so confusing that last month aldermen balked at voting on Emanuel's plan, with several saying they couldn't keep track of the specifics.

The version that eventually passed includes a new clause to give residents in parts of the city zoned for single-family homes the ability to pass petitions to restrict the home rentals in those areas. But it gives no such possible local control in denser neighborhoods with larger rental buildings and condominium complexes.

The mayor's efforts to placate various interest groups resulted in incredibly complicated rules. Even the petition clause comes with a trap door: Residents unhappy with precinct-level restrictions can get signatures on their own petition to overturn it.

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In some ways, the ride-hailing ordinance was even more vexing to the mayor. Emanuel has been steadfastly arguing ride sharing is beneficial to Chicagoans, saying it increases competition and gives riders more choices, especially in minority neighborhoods where cabs have long been scarce.

The mayor would rather there be no additional local regulations on Uber — whose investors include his brother, Hollywood super agent Ari Emanuel — and other such companies, like Lyft.

The push to regulate ride-hailing companies, which compete with traditional taxi companies by allowing people to use phone apps to call for rides in drivers' personal cars, originated with Far South Side Ald. Anthony Beale. The 9th Ward alderman said he's acting on behalf of cabbies, trying to even the regulatory playing field between the two industries.

Last week, Beale succeeded in getting a tough version of his proposed Uber rules through council committee, including fingerprint background checks and requirements that the companies provide handicapped-accessible vehicles.

It was unclear whether he had 26 votes to pass the full council over Emanuel's wishes, however. And this week Beale reached agreement with the mayor on a watered-down version. The city now only has to conduct a study on the need for fingerprinting and gives the ride-hailing companies a year to implement plans to accommodate disabled riders.

Uber spokeswoman Brooke Anderson released a statement saying the ride-hailing regulations showed the wishes of "hundreds of thousands of Chicagoans" were honored "thanks to Mayor Rahm Emanuel's leadership and good-faith efforts by many aldermen."

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Beale and Emanuel slapped hands on the dais at the front of council chambers after the ordinance passed, and the mayor later characterized the new rules in both industries as examples of Chicago leading the way.

"In both of these cases, Chicago now has new regulation, things totally different that have not been done in other cities, from licensing to revenue for homelessness, setting a new template where other cities will look to and mimic what Chicago has done," he said. "And for the first time, have new regulations on an emerging industry, which I think will stand the test of time for Chicago."

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