I-Team: Homes as Hotels?

ABC7 I-Team Investigation
CHICAGO (WLS) -- It's a popular way to save a bundle on your next vacation or even make money in your own home, but the ABC7 I-Team uncovered how "short-term" rentals can also be putting you or your neighbors at risk.

Many travelers are checking out when it comes to booking hotels, and instead they're saving money on websites that offer short term rentals, with an estimated 20 million on the popular site Airbnb alone.

The prices are low and the locations are hot, but the I-Team found that people turning apartments into hotels could be flirting with danger.

"It was just more affordable," said Mohamed Nazar.

"It is basically a great way to get a great clean apartment wherever you want in the city for a lower price than a hotel," said Jorge Gamboa.

You can find these "rooms" on dozens of websites like Airbnb, where residents in Chicago are offering their apartments or a room in their apartment to tourists.

Downtown resident Mark Koppenhoefer has his Airbnb guest stay in his extra bedroom. He does not vacate his condo.

"It's my place, I own it. It's my guest bedroom. It would be no different than me having a friend coming to stay who happens to pay me $120 a night and i give a key to," Koppenhoefer said.

There are other Airbnb ads, like an apartment in a River North high rise, where the residents leave units unattended, essentially giving strangers an all access pass to their hallways, gyms and common areas.

"It's a little alarming," resident Rick Harris said.

"It's a little concerning to think they might be staying here or might be here for an extended period of time," resident Erica Weindruch said.

Airbnb declined an on-camera interview but pointed out that guests go through a profile verification process, but not a criminal background check.

"You don't know who is staying in your unit. It could be a convicted felon," said Hugh Rider, CAR president.

Rider, the president of the Chicago Association of Realtors and landlord, says some condo owners are getting caught and facing fines from their boards. And if you're a renter renting out your place for the weekend, Rider says: "We would terminate your lease and then it would go on your credit report for the next 7 years."

Airbnb says hosts are warned to first check their building's policy. Critics also ask, what if a guest starts a fire or gets injured?

"If an insurance company deems it to be a commercial transaction they could decline a claim on your insurance. If you were going to have someone staying in your unit and they fell and broke an arm you could be declined that claim," Rider said.

Airbnb says all of its hosts are given a $1 million dollar insurance policy.

Then there's the city law and people breaking it. The I-Team obtained records from the Business Affairs and Consumer Protection department, revealing 87 citations were issued in 2014 after inspectors investigated complaints. Those violators now face up to $3,000 in fines for running operations which were not properly zoned and licensed.

In Chicago, you need a "vacation rental" license and building management approval to turn your entire apartment into a hotel.

The city law department says you don't need building permission if you're renting out a room like Koppenhoefer, but you must get a "bed and breakfast" license. He says now that he knows, he's getting one.

"I'm the one who's exposing myself to risk. They have a key to my apartment and access to my stuff when I'm coming in and out. I don't think it poses any real risk to my neighbors," Koppenhoefer said.

The city's Department of Business Affairs and Consumer Protection has also issued subpoenas to dozens of online rental sites asking them for their policies, paperwork and operating information so the city can better regulate the industry.

There is also a deal in the works for the city start collecting a hotel tax from these sites. The city of Chicago finance committee this week approved an ordinance which is expected to be approved by council. The city says it will soon capture $1 million in additional revenue.

In New York last month, the attorney general said about 72% of Airbnb listings in the Big Apple are illegal, violating a "multiple dwelling law "or zoning laws.

Remember, you can't get in any trouble for being a customer.

Additional information:
LINK: Check rules of your building and get a license

More city laws:
It is unlawful for vacation rental licensees to:
-Rent or lease by the hour of for less than 24 consecutive hours;
-Rent or lease more than once within any consecutive 24 hour period;
-Advertise an hourly rate;
-Permit any criminal activity to take place in the rental unit;
-Exceed the maximum occupancy limit of no more than one person per 125 feet of floor area;
-Serve or provide alcohol to any guest.

If you operate without a license:
h) Operating without a license. Any person who operates the business of vacation rental without first having obtained the required license for such business shall be subject to a fine of not less than $1,500.00 nor more than $3,000.00 for each offense. Each day that a violation continues shall constitute a separate and distinct offense. Failure to comply with any requirement set forth in subsection (f)(4) of this section shall create a rebuttable presumption that the business of vacation rental is being operated without a license.
(i) Penalty.
(1) In addition to any other penalty provided by law, any person who violates any provision of this section or any rule or regulation promulgated thereunder shall be subject to a fine of not less than $1,500.00 nor more than $3,000.00 for each offense, or incarceration for a period not to exceed six months, or both. Each day that such violation exists shall constitute a separate and distinct offense.
(2) If any building contains more than 6 licensed vacation rentals, all vacation rental licenses for dwelling units located within such building are subject to revocation.
(3) In addition to any fine or penalty imposed by this section, the corporation counsel may seek an injunction or other equitable relief in a court of competent jurisdiction to stop any violation of this section.

FROM BACP:
What's the city's stance on these options for consumers which are competing with hotels?
The City is supportive of the emerging sharing economy and is working with the industry to ensure that we provide consumer protection and meet demand while still promoting innovation. In the 2015 budget, the City closed a loophole allowing facilitators such as VRBO and Airbnb to get out of paying the hotel tax required on all booked rooms. The City will now capture $1 million in additional revenue from these taxes.
The City currently regulates vacation rental units, and BACP investigators actively monitor both vacation rental units in Chicago and vacation rental websites that offer rental units in the City of Chicago. BACP responds to complaints in regard to unlicensed vacation rentals and issues tickets to owners, encouraging them to come into compliance.
On background: in Chicago, the hotel accommodations tax is imposed on the tenant; it applies to vacation rentals but not B&B's. Both types of rentals are sometimes listed on Airbnb. The City ordinance as currently written does not require Airbnb to collect hotel taxes. This is a situation in which the technology has evolved more quickly than the law.
Are owners and renters technically allowed to place their apartments on these sites to generate extra money?
Any resident or organization that wants to rent out their property must be compliant with City Municipal Code (MCC 4-6-300). This is enforced to ensure the safety of our Chicago's residents and visitors.
Background:
The City is working with a number of "hostels" that are licensed as Vacation Rentals as well unlicensed hostels to address instances where there have been complaints based on serious life safety concerns. In addition, the Law Department is also working with various sharing economy companies to collect taxes on the unlicensed dwelling units advertised on various vacation rental websites (including AirBnB) that are due to the City. Subpoenas have been issued to several websites to obtain specific information about units posted on those websites. Some, including Airbnb have responded, others did not.

FROM AIRBNB:
Below are some of the key features we have to promote safety:
-Verified ID which allows guests and hosts to verify their identification by connecting their social networks and scanning their official ID or confirming personal details. There is no place for anonymity on Airbnb or in the future of the sharing economy.
-Detailed profiles and messaging platforms that hosts and guests can use to get to know each other before they book.
-Authentic reviews created only by people who have actually stayed at a listing or hosted a guest.
-Secure payment structure that handles all financial transactions, not releasing a guest's payment to the host until at least 24 hours after they check in
-24/7 customer support available in multiple languages, all over the world.
- $1 Million Host Guarantee to give hosts peace of mind when renting their homes on Airbnb (www.airbnb.com/guarantee).

-We hold ourselves and our community to a high standard: we want our hosts' homes to be among the safest in any neighborhood. In winter 2014 we launched our Home Safety initiative, distributing emergency safety cards, first aid kits, and smoke and CO detectors to our hosts across the U.S.
-The overwhelming majority of Airbnb hosts are regular people who occasionally rent out the home they live in. We know our hosts and guests have a substantial, positive economic impact in cities around the world. The rules regarding hotel taxes are incredibly complicated and vary in the 34,000 cities where we have listings. We've had good conversations with officials in cities all over the world about taxes, and even though this is a complicated challenge, we want to ensure that tax rules for home sharing are clear, fair, and easy to follow.
--When hosts register on Airbnb, they must certify that they will comply with local rules before they list their space. Everyone who lists their space sees a "notice about your local laws" before they post their space on our platform. We also have a hosting responsibilities page that reminds hosts to check their local laws and leases and includes additional resources, including Chicago-specific information.

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