Condo maximizers sue Chicago

Owners say new restrictions on vacation rentals 'arbitrary and capricious'

10/12/2011 10:00 PM

Contributing Reporter

2 Comments - Add Your Comment

Some owners in a River North high-rise say that the city has gone too far in enforcing its new vacation rental laws.

In late September, a group of condo owners at a 450-unit residential building at 30 E. Huron St. filed a lawsuit calling for a Cook County Circuit Court judge to throw out a set of zoning laws aimed at regulating the vacation rental industry in Chicago.

Vacation rentals are luxury units that are rented to guests, usually tourists and out-of-towners, for short periods of time — not unlike a hotel, except for the fact that permanent residents are often living next door to the suites.

Beginning in April, the city began implementing the new laws, which prohibit owners from renting out units without the consent of the building’s condo board, as well as limit the number of vacation rentals allowed in a building to six units.

According to the complaint, filed on Sept. 30, the city recently served some of the suit’s plaintiffs with “administrative citations” for allegedly operating vacation rental units in the building in violation of the new regulations.

The lawsuit argues that those rules — as well as the pending violations — stand to deal a substantial blow to the owners’ livelihoods.

“As a result [of the ordinance], the plaintiffs will lose valuable property rights, will lose their investment-backed expectations, and will suffer other financial harm such as loss of financial income,” the complaint read.

News of the lawsuit was reported last week by Crain’s Chicago Business.

Jim Griffin, the attorney for the 16 plaintiffs in the suit, said that his clients are right to believe that their vacation rentals should remain lawful.

“The city does not have the authority, nor is there any reasonable basis for the city to terminate that right,” he said.

Regarding the citations, Griffin said that the warnings have yet to take the form of a specific penalty, though he guessed that fines may be in order.

The complaint also asks for the court to award the plaintiffs no less than $1 million in compensatory damages.

The vacation rental regulations — called “capricious” in the complaint — were drafted last year by Ald. Brendan Reilly (42nd), whose ward includes the building at 30 E. Huron.

At the time, the alderman stated that a number of residents had come to him with complaints regarding the operation of vacation rentals in their building — a use that he soon termed as “illegal conversions,” citing that there was “no law on the books that embraces and legitimizes this industry in the city of Chicago.”

Opponents of vacation rentals said that the business breached the privacy of residents living in the buildings, and, as Reilly put it, left doormen and building staff to deal with “strangers streaming in and out, creating serious security concerns.”

But advocates of the industry, which included vacation rental operators, small business owners and commerce groups, argued that the industry was a revenue-builder, redirecting tourism dollars into the city’s mixed-use areas and helping property owners stay afloat in a down real estate market.

When Reilly’s ordinance passed in September of last year, the measure introduced permitting and licensing fees for the units, as well as added language to the code which allows a special-use designation for vacation rental units in residentially-zoned neighborhoods.

Reilly did not respond to calls for comment for this story.

Wayne Heusel, a resident and condo association board member at 30 E. Huron, is an outspoken opponent of the vacation rentals in his building. He said that not much has changed in his building since Reilly’s ordinance went into effect.

“I know the person in the building who manages most of them, and she told me flat out that she is still doing it,” he said.

Heusel said that the constant presence of guests are driving down values for both the permanent and rental owners in the building, and that an agreement to change the condo association’s bylaws to allow for the use may be far off, as the board is made up of both opponents and operators of the vacation rentals.

His only hope was that city would continue to exercise the regulations.

“We have done everything legally … and the city has given them so much time to comply,” he said. “I would like to see this not be an issue.”

Griffin said that no court date has been set for the lawsuit.

2 Comments - Add Your Comment

By Richrd B from Chicago
Posted: 09/12/2012 12:10 PM

Your "understanding" is wrong. The ordinance allows no more than 6 condos in one building to operate as short term rentals. Many units at 30 E. have been operating as short term rentals for years and that is what they are fighting.

By Michael Gina MD from River North
Posted: 10/18/2011 4:24 PM

My understanding is that the City "Grandfathered" all vacation rentals except those at 30 e huron. The owners at 30 e huron were not "granfathered", hence the city was "'arbitrary and capricious" in the way the city applied the law. The bozo that wrote this law should be fired!