CHICAGO (CN) — Renters claim in a federal class action that Chicago's new ordinance regulating the use of home-sharing websites like Airbnb makes it nearly impossible for the city's residents to host paid guests.
The recent growth of the home-sharing phenomenon "has led to a reaction by municipalities, including the City of Chicago, based largely out of fear and misunderstanding, mixed with economic protectionism from the hotel and motel industry," according to the complaint, which was filed Friday in Chicago federal court.
In June, the Chicago City Council passed the shared-housing ordinance, which requires hosts to register with the city and requires the websites they use to report personal and transaction information about each of them.
The contested ordinance goes into effect Dec. 19.
Keep Chicago Livable, a home-sharing host advocate group, and Chicago resident and Airbnb host Benjamin Wolf filed the class-action lawsuit on behalf of a proposed subclass of Chicago hosts who rent their properties on sites like Airbnb, VRBO, TripAdvisor, HomeAway or FlipKey.
The lawsuit also seeks to represent a second subclass of people who have been home-sharing guests in Chicago.
KCL and Wolf claim the new rules violate both the U.S. Constitution and the Stored Communications Act, and place "impossible burdens on hosts."
"With this law, the City of Chicago creates a new power for itself unprecedented in the United States: the power to force its citizens to forfeit their anonymity and register before they participate socially on the internet," the complaint states, adding that obtaining that information without consent or a warrant is against the law.
Not only that, KCL and Wolf say the ordinance involves a slew of confusing regulations that could leave hosts with fines of up to $5,000 per day if they fail to follow the new rules.
"These penalties are buried inside 57 pages of dense and impenetrable legalese that the city knew, or should know, that ordinary citizens would never read or fully understand," the lawsuit says.
Chicago also put a cap on how many units can be listed on home-sharing sites for various types of buildings, according to the complaint, and building owners and managers can add their building to a "prohibited list" without notifying tenants or unit owners, meaning hosts may be violating the ordinance without even knowing it.
Hosts have to review city building and zoning lists to make sure they are allowed to list their units and must agree to all provisions of the ordinance, all without legal advice, the lawsuit states.
A list of restrictions involving sanitation, food handling, evacuation procedures and a ban on serving alcohol make it even harder for an individual person to rent their apartment out for the weekend, according to KCL and Wolf.
And the city is not letting all of this happen for free. Its new ordinance includes a $10,000 annual fee per home-sharing website, a $60 per unit fee and a 4 percent tax on all bookings that Chicago Mayor Rahm Emanuel says will be used to combat homelessness.
KCL and Wolf seek a preliminary injunction to stop the ordinance from taking effect later this year, until its legality is determined. They are represented by Shorge Kenneth Sato of Shoken Legal Ltd. and by Reda & Des Jardins LLC.
Chicago's legal department said in a statement, "We intend to vigorously defend this suit and the ordinance it challenges, as we believe the plaintiffs' legal arguments lack any merit."
Similar lawsuits have been filed by residents of Austin, Texas and Santa Monica, Calif.
Airbnb has sued both San Francisco and New York for passing regulations that hurt its home-sharing business model.
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