Regulation of short-term rentals has been a big issue for local governments. Some have adopted zoning regulations for short-term rentals and others have imposed hotel/motel taxes on these uses. Still others have attempted to regulate and even the platform itself (i.e., AirBNB, Home Away, etc.),
Some of these regulations have faced challenges, including the City of Chicago's short term rental ordinance. See our previous report. And now, the Illinois legislature has waded into this area by introducing Senate Bill 1735, called the "Short Term Rental Act."
If passed, the Short Term Rental Act would prohibit local governments from (1) enacting or enforcing an ordinance, regulation, or plan that would have the effect of prohibiting short-term rentals; (2) regulating short-term rentals based on their classification, use, or occupancy (presumably through its zoning ordinance); or (3) regulating the operation of the short-term rental marketplace (for example, the bill would prohibit a government from taxing the platform owner, such as AirBNB or Home Away).
The bill does allow some regulation by local governments. For example, local governments can impose zoning regulations on short-term rentals if the government can demonstrate that the regulation is necessary to protect the public health and safety, such as fire and building codes, traffic control, and waste and pollution control. Local governments can also regulate the selling of drugs, liquor, and pornography in short-term rentals. Finally, local governments can apply sales taxes and hotel/motel taxes on short-term rentals.
The bill includes a home rule preemption, so if this legislation passes, it would apply throughout the state.
Post Authored by Julie Tappendorf