A building in the 1700 block of Sedgwick Street is the focus of complaints by residents, who showed up to a March 4 public hearing, calling for the city to tighten regulations on short-term rentals. (Photo by Igor Studenkov/for Chronicle Media)

The testimony and recordings by the residents of the 1700 block of Sedgwick Street, in Chicago’s Old Town neighborhood, painted a damning picture.

During the March 4 hearing held by Chicago City Council’s Committee on License & Consumer Protection, local resident and professional filmmaker Rich Christian showed footage of long lines of people coming in and out of the building at 1726 N. Sedgwick St. at all hours of the day and night, people checking something at the door and people wandering around the street. Christian and other neighbors testified that they’ve frequently seen underaged drinking, illegal drug use and public sex.

The culprit? Online house-sharing platforms that allow property owners, landlords and tenants to rent out rooms or entire apartments to guests for short periods of time. While AirBnB is the best-known example, there are several online platforms that work the same way. The way they are set up allows Chicagoans to list units for a day and use them to host parties.

While the officials and attendees acknowledged that 1726 N. Sedgwick case was particularly extreme, it’s not the only instance when short-term rentals were used to host parties, nor is it the only “party house” that had a disruptive effect on the neighborhood.

Rosa Escareno, the Commissioner at Chicago Department of Business Affairs and Consumer Protection, argued that the current Chicago Shared Housing Ordinance, which was passed in 2016, falls short, and suggested changing the ordinance to require house-sharing platforms to respond immediately to issues, as well as to have the host register their units with the city directly, instead of having platforms do it on their behalf, and forbid hosts from listing units until the registration is complete.

But several hosts who attended the hearing worried that the registration process would delay their ability to rent units, which would affect their earnings. Many hosts said they were landlords who decided to get into short-term renting to supplement their income as they struggled to pay increasing property taxes and keep rents affordable. And they suggested changes of their own, saying that hosts should have the power to block locals from booking — which, they argued, would cut down on party houses — and the ability to cancel same-day bookings without penalty.

During the hearing, Ald. Michelle Smith, 43rd Ward, whose ward includes the 1700 N. Sedgwick block, said that, in her experience, the situation over there wasn’t unique.

“I will say while that is a particularly vivid example, we had examples like this across the city and in my ward,” she said. “We have at least 20 problem AirBnBs.”

Under the current Chicago Shared Housing Ordinance, anyone who wants to list their unit on the house-sharing platform must register their unit with the city. Those who put up more than one unit must also obtain a shared housing unit operator license. The units can lose the license and/or registration if the unit violates city zoning regulations, building codes and laws regarding nuisance. But, as noted during the hearing, the hosts do have a right to appeal, and they can continue listing the units until the appeals are exhausted.

Furthermore, the law allows aldermen blanket-ban home-sharing in certain precincts, and building owners, homeowners associations, condominium boards and housing cooperatives can ban home-sharing on their properties by putting the units on the city’s Short-Term Rental Prohibited Buildings List.

However, as Escareno explained during the hearing, in more than three years since the ordinance was passed, the market changed and some issues became apparent. One is that, under the current set-up, the host submits registration information to the platform, which, in turn, submits it to the city — the information that the city gets once every two weeks. The problem is that the information they receive shows the units listed, but not who listed them — which, Escareno said, “make[s] it difficult for us to take an enforcement action, or to prevent multiple listings by the same host.” The only way to obtain personal data is through subpoenas, she said, which takes time. That is why Escareno recommended that the hosts register directly with the city. And while the current ordinance allows hosts to list units even before they are registered, she recommended requiring them to wait until the registration is complete, noting that this is standard for all other types of businesses and services.

The other issue, she said, is that the current ordinance doesn’t require the platforms to provide any immediate response to the problem. While the city has been able to work with two major platforms – AirBnB and HomeAway – she believes that the requirement should be clearly included in the law.

Mark Harmon, Chicago Police Commander Vice and Asset Forfeiture, testified that, when officers respond to complaints, they have no way of knowing whether the unit is being house-shared, let alone who put it up for house-sharing. And while they try to keep an eye on social media to spot parties in house-shared units, keeping an eye on all platforms is a challenge.

“I think there needs to be an immediate response if somebody is having parties like this,” Harmon said. “Because it’s almost like having night clubs all over the city without the attention of the police.”

As noted during the hearing, in cases like the 1726 N. Sedgwick party house, the issue is that the host that gets banned from one platform can simply jump on another. And the sheer number of platforms out there, Harmon said, is akin to playing a game of Whack-a-Mole.

Ulrik Binzer is the head of Host Compliance, a San Francisco-based company that works with municipalities to help them develop and enforce short-term rental regulations. He suggested that having hosts register their units directly worked in other cities. He also suggested making data available to the police, other city departments and aldermen, so that everybody is on the same page — something that, Escareno said later during the hearing, the current ordinance doesn’t allow them to do. And Binzer suggested setting up a complaint system where residents can not only report misbehavior, but submit video recordings and other evidence to support them.

In a statement provided to the Chronicle, AirBnB touted several measures it took to improve safety, including requiring all U.S.-based hosts and guests to undergo identity verification and background checks, setting up a 24/7 hotline that neighbors could call, increasing screenings for “high-risk reservations,” and subjecting hosts who allow large parties to unspecified “consequences.”

When asked why the issues at the 1700 block continued unabated, Escareno deferred to the Chicago Department of Law — which responded that, because the city is currently taking legal action against that landlord, and, as the matter of policies, they don’t comment on ongoing litigation.

Overall, the hosts that testified during the hearing expressed concerns that the city might make the new regulations too draconian — even while expressing willingness to work with the city to address the issue.

Nikkole Palmatier, said she rents out units from a Northwest Side building she owns on both short-term and traditional basis. The income from the former, she said, allowed her to keep rents for the long-term tenants at below-market levels. Palmatier said she was appalled by hosts that allow house parties, but argued that most hosts aren’t like that.

Smith asked whether she would be open to requiring hosts to post owner contact information on the buildings, similar to what’s already required with rental properties,

“I don’t think any responsible host would have any issue with that at all,” Palmatier responded.

Zafar Mawani, of Edgewater, home-shares units in East Garfield Park, Austin, South Shore and Park Manor neighborhoods. He was one of the hosts who argued that the city should work with them and empower them.

“One of the things I’d like to propose is that our hosts are closest on the issue,” Mawani said. “We know the problems more than AirBnB. And it would be useful if we have dialogue in our neighborhoods, the people who have problems in our neighborhoods.”