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Monday, March 20, 2017

Court Denies Preliminary Injunction in Case Challenging Chicago's Short Term Rental Ordinance

Late last year, we reported on a lawsuit challenging the City of Chicago's short-term rental ordinance. Chicago had adopted Ordinance O2016-5011 to regulate "shared housing units" by requiring hosts to register with the City and pay a 4% surcharge on the leasing charge for all rentals. The ordinance also required the hosting companies (i.e., AirBnb, Home Away, etc.) to pay a licensing fee (from $10,000 and up) and obtain a license from the City.  The lawsuit claims that the ordinance is unlawful for a variety of reasons, including that the required inspections constitute warrantless searches, the noise restrictions are unreasonable, and the 4% surcharge is a discriminatory tax.

Recently, the plaintiffs in the case filed a motion asking the judge to issue a preliminary injunction against the City of Chicago to prohibit the City from implementing and enforcing the new ordinance. Last week, U.S. District Court Judge Sara Ellis denied plaintiffs' motion for an injunction.

According to the written order, Judge Ellis expressed her doubts concerning the ability of the plaintiffs to show how the ordinance violates their constitutional rights or how they would suffer irreparable harm if the new rules take effect. Specifically, the Judge held that plaintiffs were not likely to establish that the City's shared housing ordinance targets expressive conduct or speech to trigger First Amendment protections. She also questioned plaintiffs' ability to succeed on its due process claims that the ordinance is vague. Finally, she noted that the City had a legitimate interest in adopting rules for the home sharing industry to address issues such as ensuring safety, protecting the residential character of neighborhoods, among others.

Post Authored by Julie Tappendorf


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