Earlier this month, an Illinois Appellate
Court upheld the dismissal of a challenge to Chicago’s short-term rental (STR)
ordinance. Mendez v. City of Chicago.
The City’s STR ordinance regulates
short-term housing arrangements, like those offered on Airbnb and VRBO. In
2016, two residents filed a lawsuit to challenge the original STR ordinance and
later added several claims to address the City's amended ordinance. The lawsuit
included a variety of claims, including the following:
1. Inspection Requirement
Under the STR ordinance, hosts
with more than one rental unit are subject to an inspection every two years. The
plaintiff-hosts challenged the inspection requirement, arguing it authorized searches without their consent in violation of the Illinois
Constitution. The Appellate Court upheld the dismissal of this
claim, finding that the claim was not “ripe” because the building commissioner had not
yet adopted rules governing these inspections, so no host was actually subject
to a search that might "offend" their constitutional rights.
2. Primary Residence Requirement
Another provision of the STR
ordinance requires short term rentals to be the host’s primary residence, with
certain exceptions. The plaintiffs argued that the building commissioner was
given too much discretion to determine whether a home is exempt from the
primary residence rule, in violation of their due process rights. The Appellate
Court rejected that argument, finding, among other things, that because neither
plaintiff-host had applied for an exemption, they failed to exhaust necessary
administrative remedies before filing a lawsuit.
3. Noise Restrictions
The STR ordinance prohibits
“excessive loud noise” on STR properties between 8:00 PM and 8:00 AM each night,
defined as noise “louder than average conversational level at a distance of 100
feet or more, measured from the property line of the . . . unit.” Plaintiffs
challenged the noise standard as vague, and pointed out that similar regulations
do not exist for hotels, bed-and-breakfasts, or other renting businesses. The Appellate
Court dismissed this challenge, finding that the noise restrictions provided
sufficient notice and clear standards to comply with due process and were not
discriminatory since most hotels are located in commercial rather than
residential districts.
4. Ban on Single Night Rentals
Under the STR ordinance, hosts
are forbidden from renting their properties “for any period less than two
consecutive nights” until City officials adopt future regulations ensuring that single-night rentals can be effectively and safely
conducted. The Appellate Court found the ban to be a fair and reasonable
exercise of the City Council’s legislative power.
5. Taxpayer Standing
Finally, the plaintiff-hosts claimed
they had “taxpayer standing” to argue that enforcement of the STR regulations was
a misuse of taxpayer dollars. The Appellate Court rejected their argument, finding
that the hosts presented no evidence they will be required to pay increased
sales or property taxes to account for the enforcement of the STR regulations
so they could not establish taxpayer standing to challenge the ordinance.
In upholding the ordinance, the
Appellate Court noted that municipal ordinances are entitled to a presumption
of constitutionality that can only be overcome by clear and convincing
evidence, which plaintiff-hosts failed to overcome.
Post Authored by Erin Monforti & Julie Tappendorf, Ancel
Glink