August 2018

ILLINOIS MUNICIPAL LEAGUE REVIEW

Illinois Bicentennial Plaza, Springfield Dedication August 26, 2018

IN THIS ISSUE:

What Does the Sharing Economy Mean for Cities

The Rapid Changes in Ridesharing

Homesharing Illinois Municipal Review | August 2018 ILLINOIS MUNICIPAL LEAGUE REVIEW

PAGE 9 3 From the Editor’s Desk The Rapid Changes in Ridesharing 9 Advocacy Update State Regulation of the Sharing Economy 6 Fun in Illinois! August 2018 Festivals Feature Articles 15 Legal Brief When Ridesharing Comes to Main Street 7 What Does the Sharing Economy 16 Aaw rds & Grants Mean for Cities 18 Municipal Calendar 9 The Rapid Changes in Ridesharing 27 Risk Management Sidewalk Defects 28 Professional Services Directory 13 Sharing the Road with Municipalities in Illinois

19 Homesharing Editor In Chief Managing Editor Brad Cole Rebecca Turner 21 States and Local Governments Win Volume 97, No 8, August 2018. Total number 1,114. Online Sales Tax Case (ssn 0019-2139) The Illinois Municipal Review (USPS 258-180) is published monthly in Springfield, IL, 22 IMRF 2017 Financial Results by the Illinois Municipal League, Editorial and Executive Offices, 500 E. Capitol Ave., Springfield, IL 62701. 25 Understand Phishing and How to Telephone (217) 525-1220 Subscription per year: Domestic $30.00. Reduce Cyber Risk POSTMASTER: Send address changes to: Periodical postage paid at The opinions expressed in our published works are those of Illinois Municipal Review Springfield, IL 62705-5180 the author(s) and do not necessarily reflect the opinions of PO Box 5180, Springfield, IL 62705. and at additional mailing office. the Illinois Municipal League or its Board of Directors.

On the cover: The Illinois Bicentennial Plaza will be dedicated on August 26, 2018 — Constitution Day in Illinois. Bicentennial Plaza is a new pedestrian walkway linking the Lincoln Home Editor’s Note: This month we bring you an overview of the sharing economy. National Historic Site to the east with the Companies contacted to provide Governor’s Mansion to the west along the content for this issue include: Uber, Jackson Street corridor in historic downtown Lyft, Turo and Airbnb. Uber and Turo Springfield. The Plaza is dedicated to Abraham declined the opportunity at this time. Lincoln’s vision for America as a country with opportunity and equality for all. August 2018 | Illinois Municipal Review 1 Self Evaluation Services for Cities, Villages ILLINOIS MUNICIPAL LEAGUE and Towns

If your municipality is a member of the Illinois Municipal League, our staff may be able to assist you with convening a discussion to develop solutions for issues that are impacting the effectiveness of your local elected governing board. For more information, contact us today: (217) 525-1220 or [email protected]

Illinois’ Bicentennial Celebration Update

BORN: Illinois’ well-known sons and daughters born in August: Melvin Van Peebles, actor, playwright, composer, Chicago; Ray Bradbury, author, Waukegan; Preston Sturges, director, Chicago; John Gunther, journalist and author, Chicago BUILT: Monuments and landmarks that tell Illinois’ history: Stephen A. Douglas Tomb, Chicago; Thomas Rees Memorial Carillon, Springfield; Piasa Bird, Alton GROWN: C rab Orchard National Wildlife Refuge, Marion; Eckert’s Orchard, Belleville; Spring Valley, Schaumburg

Have a question or want to contact IML Staff? Phone: 217.525.1220 Brad Cole, Executive Director – [email protected] Allen Boesdorfer, Controller – [email protected] Rachel Caton, Administrative Assistant – [email protected] Kim Cummings, Advocacy Coordinator – [email protected] Craig Elliott, Technology & Facilities Director – [email protected] Amelia Finch, Assistant Counsel – [email protected] Lori Harlan, Public Affairs Manager – [email protected] Patrick Hayes, General Counsel – [email protected] Tera Little, Membership & Accounting – [email protected] Joe McCoy, Legislative Director – [email protected] Nathan Piper, Communications Specialist – [email protected] Rebecca Turner, Publications Coordinator – [email protected] Greg Willis, Assistant Legislative Director – [email protected]

2 Illinois Municipal Review | August 2018 From the Officers of The Editor’s Desk Illinois Municipal League

“Lots of people want to ride with you in the limo, but what you want is someone who will take the bus with you when the limo breaks down.” President Oprah Winfrey (1954-) Mayor Mark W. Eckert, Belleville American media proprietor, talk show host, actress, First Vice President producer and philanthropist Mayor Michael J. Inman, Macomb Second Vice President The Mayors Innovation Project Summer Annual Meeting will be held Mayor Leon Rockingham, Jr., North Chicago August 22-24 in Grand Rapids, MI. The summer meeting is an opportunity Executive Director to see and learn about the great work happening in cities up close while Brad Cole, Former Mayor, Carbondale still digging deep into the most pressing challenges (and solutions) that most cities face. The program includes a chance to learn and hear Vice Presidents firsthand about efforts to encourage equitable economic development, Mayor Richard H. Veenstra, Addison Mayor Richard Irvin, Aurora create healthy urban forests and use smart city technology for the public Mayor Michael Chamberlain, Belvidere good. For more information, please see https://www.mayorsinnovation. Mayor Tyrone Coleman, Cairo org/events/summer-2018-annual-meeting. Mayor John Michael Henry, Carbondale Mayor Rahm Emanuel, Chicago Mount Prospect Mayor Arlene Juracek was inaugurated as the 2018- Village President Charles E. Tokar, Chicago Ridge 2019 Northwest Municipal Conference (NWMC) President on June 20, Mayor Kevin B. Hutchinson, Columbia Mayor Aaron Shepley, Crystal Lake succeeding Deerfield Mayor HarrietR osenthal. The inauguration took Mayor Julie Moore-Wolfe, Decatur place at the NWMC’s 60th Annual Gala. Joining President Juracek as Mayor Teresa Kernc, Diamond NWMC officers areMorton Grove Village President Dan DiMaria as Vice Mayor Liandro Arellano, Jr., Dixon President, Lake BluffV illage President Kathleen O’Hara as Secretary and Mayor Reggie Freeman, East Moline Highland Park City Manager Ghida Neukirch as Treasurer. Their terms will Mayor Emeka Jackson-Hicks, East St. Louis Mayor John Pritchard, Galesburg run through June 2019. Mayor Joe W. Bisch, Grayville Village President Rodney S. Craig, Hanover Park At the Illinois City/County Management Association (ILCMA) Annual Mayor Andy Ezard, Jacksonville Meeting, held in conjunction with ILCMA’s Summer Conference, the election Village President Eugene Williams, Lynwood Mayor Timothy D. Gover, Mattoon results for new officers were announced. Serving ILCMA during 2018-2019 Town President Chris Koos, Normal will be: Mayor Jim Ardis, Peoria  President - Mike Cassady, Village Manager, Mount Prospect Mayor Scott J. Harl, Peru  President-Elect - Ray Rummel, Village Manager, Elk Grove Village Mayor Robert Hausler, Plano Mayor Kyle Moore, Quincy  Vice President - Ken Terrinoni, County Administrator, Boone County Village President Rick Reinbold, Richton Park  Secretary-Treasurer - Drew Irwin, Village Manager, Lake Bluff Village President Catherine Adduci, River Forest  Immedia te Past-President - Barry Burton, County Administrator, Mayor Chet Olson, Rochelle Lake County Mayor Thomas McNamara, Rockford Village President Dale B. Adams, Rockton IML Risk Management Association Board of Directors Mayor Richard H. Hill, Round Lake Beach Mayor Jim Langfelder, Springfield Chairman Mayor Ricky J. Gottman, Vandalia Village President Trevor Clatfelter, Sherman Mayor Gary W. Manier, Washington Mayor Tom Jordan, West Frankfort Vice Chairman Mayor Hal Patton, Edwardsville P ast Presidents Village President Karen Darch, Barrington Board Members Mayor Roger C. Claar, Bolingbrook Mayor Kathy Carroll-Duda, Geneseo Mayor Gerald E. Daugherty, Mascoutah Mayor Steve Frattini, Herrin Mayor Gerald R. Bennett, Palos Hills Village President Sean Widener, Mahomet Mayor Al Larson, Schaumburg Village President Glenn Ryback, Wadsworth Village President Eileen Phipps, Wayne Managing Director Brad Cole, Former Mayor, Carbondale August 2018 | Illinois Municipal Review 3 SAVE STEAM GO GREEN

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4 Illinois Municipal Review | August 2018 EDUCATe. Advocate. Advc oca y Update EmpoWer. State Regulation of the Sharing Economy

By Illinois Municipal League Legislative Staff

Public policy includes many examples of laws and regulations sits. Younger generations have an affinity for the relatively being adopted to keep up with emerging industries and unregulated goods and services that correlate so well with technologies. From the advent and evolution of the automobile smartphone culture and an emphasis on convenience. These to the use of personal communication devices to privacy issues consumers are more hesitant to approve of policies that would in the social media age, policymakers find themselves creating or hinder the new businesses. Existing companies view the sharing adapting laws to address new issues and previously unforeseen economy as disruptive and presenting an unfair competitive situations. advantage to businesses required to follow existing rules and regulations. Some believe regulations are needed to protect The sharing economy provides the most recent examples consumers, but are uncertain how far these regulations should of new commercial activities with a head start on tax and go. These different perspectives are being voiced and debated regulatory policies. Generally speaking, the sharing economy is within the General Assembly. a shorthand reference to a variety of commercial interactions that permit peer-to-peer sharing of goods and services owned Taxi Companies Response to Uber, Lyft and provided by people, not corporations. Corporations may be involved in the broader business model, but the actual Ridesharing allows a consumer to arrange and pay for shared goods and services are individually owned and offered transportation from another individual who uses his or her own by people affiliated with a corporate entity. Some of the more personal vehicle. In 2014, two companion bills, HB 4075 and familiar names associated with the sharing economy are Airbnb SB 5331 (Rep. Zalewski, D-Riverside/Sen. Munoz, D-Chicago), and HomeAway (housing rentals), Uber and Lyft (ridesharing), included language to impose significant regulations and Turo and Getaround (car rentals), Spinlister (bicycle rentals) and requirements on ridesharing companies like Uber and Lyft. DogVacay (dog boarding). These regulations were sought by the taxi industry out of concern that an upstart and unregulated competitor possessed In recent years, the Illinois General Assembly has considered a competitive advantage within the broader industry. legislation to establish rules and regulations for specific business activities within the sharing economy. In one case, a law was The bills were approved by veto-proof majorities in both the enacted to regulate ridesharing at the behest of the taxi industry. House and Senate, and the regulations appeared on a fast track Similarly, legislation was approved by the General Assembly to to becoming law. Ridesharing companies, most notably Uber, regulate personal car rental arrangements on behalf of existing launched an intensive advocacy campaign to convince then rental car companies. A bill was also introduced by a housing Governor Pat Quinn to veto the bills. Governor Quinn ultimately rental company seeking to establish a preemptive regulatory did veto the bills, citing concerns that the proposed statewide framework protective of its business model. regulatory framework would undermine local control. This was the very argument used against the bills by the Illinois Views on the merits of imposing taxes and regulations onto Municipal League (IML). Rather than move forward with an sharing economy entities vary depending on where one attempt to override the veto after many legislators who had

August 2018 | Illinois Municipal Review 5 Fun in Illinois! formerly supported the bills began to reconsider their positions, alternative legislation was sought. This legislation, SB 2774 (Sen. Munoz, D-Chicago/Rep. Zalewski, D-Riverside), was enacted into law as P.A. 98-1173 in January 2015 and presented a scaled back alternative to the more substantive regulations proposed within HB 4075 and SB 5331. It also protected local decision making.

Home Sharing Company Takes Preemptive Action Home sharing arrangements allow a consumer to rent a home, apartment or single room through a website or digital app. August 2018 Festivals In 2017, the home rental company HomeAway introduced legislation to establish a basic regulatory framework that included a preemption of local authority to ban home sharing arrangements altogether. The bill, SB 1735 (Sen. Munoz, Homecoming Und AugustFest D-Chicago), did not advance further than the Senate Local Aug 3-5 – Mascoutah Government Committee in the face of significant opposition http://www.mascoutahhomecoming.org from IML and individual municipalities intent on preserving their authority to prohibit home sharing arrangements within their jurisdictions. New legislation did not advance in 2018, but IML Decatur Celebration anticipates a bill will be introduced again in 2019 and will remain Aug 3-5– Decatur vigilant in protecting against any erosion of local control. http://decaturcelebration.com/ Car Rental Companies Push Regulatory Framework Community Days Car rental arrangements permit a consumer to rent another Aug 4-5 – North Chicago individual’s car via a website or digital app. In 2018, legislation https://www.60064.org/ was introduced on behalf of existing car rental companies concerned about competition from sharing economy car rental arrangements. SB 2641 (Sen. Munoz, D-Chicago/Rep. Turner, Cruise Night D-Chicago) would tax and regulate peer-to-peer car rentals, Aug 7, 14, 21, 28 – Tinley Park with taxes being equivalent to taxes owed by major car rental http://www.tinleypark.org/visitors/downtown_ companies like Enterprise, National and Budget. The bill was tinley.php opposed by the car sharing company Turo, and ultimately passed by both the House and Senate. At the time of this National Night Out writing, it remains uncertain if Governor Rauner will sign or veto Aug 7 – Tinley Park the bill. http://www.tinleypark.org/visitors/downtown_ tinley.php The General Assembly is expected to continue debating legislation intended to establish a regulatory framework for Taste of Bellwood the sharing economy. Many municipal officials support the Aug 10-12 – Bellwood consumer benefits and employment opportunities the sharing www.vil.bellwood.il.us economy offers within their communities. IML will remain an advocate for local decision making and oppose preemption during these policy discussions. 16th Annual Antique Days Aug 25 – Aledo www.aledomainstreet.com If you have questions regarding legislation, please contact [email protected] or Joe McCoy, IML Legislative Director, at [email protected] or (217) 525-1220.

6 Illinois Municipal Review | August 2018 What Does the Sharing Economy Mean for Cities?

By Ben Brown, Advocacy Communication Associate, North Carolina League of Municipalities

Brooks Rainwater remembers the first time he became “It’s definitely something that has infused with the broader conscious of what we now know as the “sharing economy.” culture of America,” said Rainwater, director of the Center It was years ago, in San Francisco, where Rainwater was for City Solutions at the National League of Cities (NLC). visiting on business. Someone handed him a token for a ride – not for a taxi, but for a random driver affiliated But local governments across the nation are still wondering with some new company, offering his own vehicle for an what they need to do about it, if anything, and what the affordable fare, in peer-to-peer fashion. It was during effects might be from any action, particularly in lower- a tough time to hail taxis in San Francisco, anyway – population towns that haven’t experienced the sharing Rainwater had rotten luck finding one the previous day – economy for long. If one thing’s for sure, it’s a major change so he figured, “Sure, why not?” from the traditional corporate structure that consumers and governments have been used to. You know that business model today, represented by Uber, Lyft and competitors in the enormous ridesharing “Local governments are faced with a ‘tsunami’ of sharing market, as part of the sharing economy, which also blankets economy activities,” declared a report from a Canada- homesharing, most familiar as Airbnb. based nonprofit called One Earth. “Many are overwhelmed, with little time or opportunity to develop an effective

August 2018 | Illinois Municipal Review 7 as local transit systems in the case of ridesharing. Some city departments have even formed info groups with sharing economy companies to leverage their data, such as to gauge popular transit destinations and routes that may help cities plan. While 62% of municipal officials described their local government as supportive of the growth of the sharing economy, 22% did not. NLC found that the most commonly perceived benefits from local officials regarding ridesharing were response. This has led to pushback there’s a regular inspection series . . . improved transportation efficiencies, over concerns such as business that makes sure everything stays up accessibility of service, and competitiveness, jobs, health, to snuff,” Rainwater noted. constituent acceptance and praise. safety and other risks and, in some For homesharing, the benefits were instances, environmental impacts.” But the homesharing economy, for increased entrepreneurial activity, instance, can be so nuanced that it’s increased taxable revenues, and Recently, NLC released its latest complicated to adequately address in constituent acceptance and praise. report addressing the topic, titled, terms of policy language. Scenarios “Cities and the Innovation Economy: could include someone sharing a “Leaders recognize the value that Perceptions of Local Leaders.” It single room in their house, or someone (these companies) bring to cities surveyed municipal officials across sharing their entire house while and their residents, and so I think the U.S. and documented a lot of they’re away, or someone sharing the success of these technology- mixed feelings. their secondary residence for steady driven endeavors signals a new era occupancy. “There’s just so many in which on-demand services and While 62% of municipal officials pieces to that puzzle in particular collaborative consumption have described their local government that creates different dynamics become mainstream,” said Rainwater. as supportive of the growth of and challenges,” said Rainwater. He “And ultimately what that means is the sharing economy, 22% did suggests community participation residents have new options, because not. (Other stances, like cities processes to help shape regulations that’s what people want . . .” supporting only ridesharing but on the kind of business that one might not homesharing, account for the assume could operate anywhere, or at No city is the same, and local factors difference.) least in any neighborhood. should dictate what, if anything, a city decides to do about sharing economy Of local officials surveyed, 53% When asked if their city had entered companies in their jurisdiction, NLC reported that their local government into any type of partnership with emphasizes in its reporting. imposed no regulation on the a sharing economy company, 16% sharing economy with 31% indicating said yes. Of the 84% not in formal “Technology can improve lives and their city had imposed some light partnerships with these companies, solve problems, but decision making regulation or a partial ban on the 79% indicated they were open to must be intentional — local leaders sharing economy. Just 1% of cities forming one. ensure every day that our cities had placed all-out bans on sharing are cities for all — and the sharing economy companies. Partnership arrangements economy and broader innovation between cities and sharing economy is now a core component of Public safety ranks as the most economy companies could include our future,” the report concludes. common reason for regulating the arrangements to collect tax revenue, Reprinted courtesy of the North Carolina sharing economy. “When you stay share data, and supplement or serve League of Municipalities. in a hotel or you stay in a bed and Ben Brown is an advocacy communication associate with the North Carolina breakfast, there’s sprinkler systems, League of Municipalities. Contact Ben at [email protected] or (919) 715-2913. there’s fire suppression systems,

8 Illinois Municipal Review | August 2018 The Rapid Changes in Ridesharing

By Joseph Schwieterman and Mallory Livingston, The Chaddick Institute at DePaul University

If you ask most municipal leaders about ridesharing, you’ll which has been informed by our review of some of the likely evoke a colorful response. Some will champion the municipal strategies being used around the country. mobility benefits provided by Lyft and Uber, while others will highlight a litany of concerns. What’s New in Ridesharing?

Divergent responses are understandable considering that A remarkable aspect of app-based ridesharing is that it even basic questions about ridesharing are difficult to was largely nonexistent prior to 2009, when Uber launched answer. For example, do ridesharing companies share a its now-popular UberX service. UberX takes passengers “level playing field” with taxicabs? Is the growing popularity to their destinations in conventional automobiles without of ridesharing cutting into local transit use? Are there other stops, in a manner similar to taxicabs but using an significant safety risks? app-based reservation system. Lyft launched a similar service in 2012 and, like its rival, soon offered it in most Regardless, it should be clear to all that the rapid growth major cities in the United States. A variety of other of Lyft and Uber has left many planners on edge. Local companies also entered the fray, but Uber and Lyft remain leaders and planners increasingly feel a need to expand the big players in Illinois at this time. their knowledge of these transportation network companies (TNCs). In this article, we seek to provide some perspective, August 2018 | Illinois Municipal Review 9 Starting in 2014, ridesharing shifted throughout most of metropolitan Although you can’t yet summon a into a bold new direction: Lyft and Chicago, but sizeable gaps remain. Lyft Line or UberPool service in most Uber introduced services allowing UberPool operates in all four of Illinois cities outside the Chicago several parties to share one vehicle Chicago’s “satellite cities” — Aurora, metropolitan area, we expect this at the same time, even when Joliet, Elgin and Waukegan — while will change in the next two years. traveling between different origins Lyft Line serves only Waukegan. Both Lyft and Uber seem determined and destinations. After beta-testing “UberPool” in California, Uber expanded this offering to most large Figure 1: metropolitan regions, including Prevalence of Ridesharing Services in Illinois Cities Outside of Chicago Chicago. Lyft began a similar service, Lyft Line, in 2014.

Users of shared-ride services like UberPool typically have slightly longer journeys due to time spent picking up and dropping off other travelers. However, users can expect to save between 20 – 40% compared to private services like UberX. Many young travelers instinctively use these “pool” options due to their desire to save.

Earlier this year, Uber took this idea one step further by introducing Uber Express Pool, which provides even greater discounts for those willing to walk a few blocks at the beginning or end of their trip. This boosts efficiency by making the trips less circuitous and allowing drivers to serve several customers at the same stop. For those who have trouble navigating the app on their smartphone, however, using this service can be a challenging experience.

Nevertheless, the mobility revolution has not yet spread to many areas. Among the 17 largest cities outside the Chicago metropolitan area, Quincy and Danville still lack Uber, while Peoria lacks Lyft services, and Galesburg lacks both Uber and Lyft (Figure 1).

Similarly, UberPool – including the newly introduced Uber Express Pool – and Lyft Line are available

10 Illinois Municipal Review | August 2018 to expand as quickly as possible to ridership losses in many situations, can mix ridesharing and transit on increase brand awareness, even if such as when riding buses or the same trip. We also call for transit such expansion is unprofitable in the trains is cumbersome, arduous operators to encourage ridesharing short term. We expect Bloomington- or seemingly unsafe. Ridesharing trips to public transit stations at Normal, Champaign-Urbana and seems especially attractive on times when bus service is limited, Peoria (all of which have large trips during late-night hours, for such as late at night. student populations), and Springfield shopping and during inclement with its governmental presence, to weather. Moreover, many people To build our case, we point to get these shared-ride services first. have difficulty (or an aversion to) innovative partnerships around walking, or like to avoid crowds; for the country. Does Ridesharing them, ridesharing may be well worth Affect Transit? the higher cost. Transit is also at Summit, New Jersey (population risk when its service is poor, which, 21,000) has partnered with Lyft to Public transit is having a difficult time unfortunately, is quite common, avoid the cost of building a new around the country as of late. Many particularly in lower-density areas. In parking lot at its commuter rail transit systems in Illinois have seen addition, when traveling in a group, station. To achieve this, the city is a decline in passenger trips of more the economics of ridesharing greatly subsidizing ridesharing trips on than 10% since 2015. Our analysis improve. weekdays to and from the transit suggests that rising car ownership, work-from-home lifestyles, and — until recently — low fuel costs are largely to blame. However, ridesharing’s effect on transit use is less understood, so we decided to study the issues.

We conducted an experiment that involved comparing prices and travel times for ridesharing and transit on randomized routes between three and 11 miles long throughout A remarkable aspect of app-based ridesharing is that it was largely Chicago. Our results, showcased non-existent prior to 2009 . . . A variety of other companies also in Uber Economics: Evaluating the entered the fray, but Uber and Lyft remain the big players in Illinois Monetary and Nonmonetary Tradeoffs at this time. of TNC and Transit Service in Chicago, IL, show that ridesharing services, while attractive to many, are quite expensive for commuters. Yes, the station for all residents with a TNC services save time, but expect to The Benefits of parking permit. This program, initially spend 50 cents or more per minute Working Together launched with Uber in 2016, has saved compared to riding a Chicago allowed the suburb to save millions in Transit Authority service bus or train. The tendency for ridesharing and capital expenditures. Furthermore, if you are traveling to transit to serve different mobility downtown Chicago, you’ll pay closer roles creates room for municipal Altamonte Springs, Florida to $1 per minute saved versus the officials and TNCs to work together. (population 41,000) could not afford “L”. According to accepted academic We believe the time is right for to expand transit, so it joined forces estimates, most commuters — collaboration, which can begin by with its four neighboring locales. ourselves included — will pay only integrating both transit services and With this pilot program, each of the about a fraction of these amounts to ride-sharing into online search tools. five participating cities subsidizes save time on our way to work. Such integration can give travelers 20% of the intercity Uber fares that That said, transit is vulnerable to a better understanding of how they end within its respective limits.

August 2018 | Illinois Municipal Review 11 Some larger urban areas are discounts for shared rides to or The first step is to stay up to date exploring even more ambitious from 20 different transit centers. on the rapid changes taking place opportunities as well: in ridesharing services so that you • Massachusetts Bay know your options. In the last few • Pinellas Suncoast Transit Transportation Authority years, Lyft and Uber have morphed Authority (PSTA), which serves (MBTA), serving greater Boston, from glorified taxicab providers the St. Petersburg, Florida area, is running a pilot program to diversified entities, and they has a “Direct Connect” program with Uber and Lyft to provide are now actively exploring a wide that provides Uber discounts on-demand service to its range of other services, including to or from select bus stops, as paratransit riders. Customers bikesharing, long-distance travel well as on rides within a specific with disabilities unable to use and home delivery couriers (such geographic zone. The transit MBTA service receive a limited as Uber Eats, which delivers meals agency pays half the cost of the number of subsidized TNC from restaurants). As a result of these TNC ride (up to $3). rides per month, which enables changing services, TNCs’ interactions them to request pick-up much with local governments will invariably • Southeastern Pennsylvania faster than the MBTA’s existing grow, and new regulatory challenges Transportation Authority paratransit service. Riders pay will come to the fore. The City of (SEPTA), which serves the only $2 (and any amount over Chicago, for example, has imposed Philadelphia area, has partnered a $42 maximum) when using a a $.67 fee on ridesharing trips to with Uber to provide discounted ridesharing service. support congestion-relief efforts as rides (up to 40% off) to or from well as a $.67 fee imposed on trips 11 suburban rail stations. This These programs aren’t right for every from McCormick Place, Navy Pier and encourages car-free commutes community or transit authority, and O’Hare International Airport. from the suburbs. the interests of all stakeholders need to be kept in mind. Yet it is important Whether or not the phrase “Let’s • San Diego Metropolitan Transit for municipal leaders to recognize Uber It” is common in your System has programmed with that more outside-the-box thinking community, be ready. The next 12 Uber to improve travel to appears inevitable. months will be fascinating to watch. major events such as Comic Con International and select sporting Joseph Schwieterman and Mallory Livingston are researchers at the Chaddick Institute for Metropolitan Development at DePaul University. Schwieterman, events. Users director of the Institute, is also managing editor of the Illinois Municipal Policy receive one-time $5 Journal. Contact Joe at [email protected] or (312) 362-5732.

12 Illinois Municipal Review | August 2018 Sharing the Road with Municipalities in Illinois

by Prashanthi Rao Raman, Director of Public Policy, Lyft

Although the sharing economy is still in its infancy, Lyft is Our largest footprint, however, is in Chicago, and our playing an increasingly important role in municipalities across operations there serve as a case study on how we believe the country. This is due to our service’s positive economic the sharing economy can benefit municipalities around the impact and ability to bring communities closer together. state and the country.

Founded in 2012, Lyft is a friendly, responsible and With tens of thousands of drivers in the Windy City, Lyft is affordable transportation option that fills empty seats in not only helping Chicagoans make ends meet, but is also passenger vehicles that are already on the road by matching providing much needed revenue to the city. drivers and riders via a smartphone application. In fact, from our own studies and calculations, we know that: Also known as “ridesharing,” Lyft now matches over 11 million • 51% of ridesharing earnings cover mandatory costs like rides per month across 195+ cities in the United States. rent, food, utilities and medical expenses

In Illinois, Lyft is already operating in a number of • Ridesharing drivers keep the majority of their fares, municipalities including: Bloomington, Champaign, not the company. The same applies during the limited Decatur, Evanston, Kankakee, Naperville, Normal, times that surge pricing is in effect due to higher than Rockford and Springfield. normal demand

August 2018 | Illinois Municipal Review 13 • Ridesharing provides over $60 events that matter most to them. Lyft is also helping people get home million in revenue for the city and This increased flexibility is, perhaps, safely after a night out, as 87% of is estimated to bring in over $90 the greatest attribute of the passengers are more likely to avoid million next year sharing economy, and it reaches driving under the influence because far beyond distinct populations of ridesharing. We’re also proud to know that our or neighborhoods. drivers are as diverse as the city they The suburb of Riverside can attest serve. For example: In fact, Lyft provides transportation to this fact as well, as their police • 66% of our drivers identify with a solutions for all of Chicago’s 50 department stated that they minority group wards, and 23% of all rideshares experienced a 31% drop in DUI begin and/or end in traditionally arrests in the first six months of 2017 • 26% of our drivers are female underserved areas. because of ridesharing companies • 16% of our drivers are small like Lyft. business owners A clear signal that Lyft is providing • Over 6% of our drivers are access to neighborhoods that have Collectively, these statistics veterans previously been isolated from represent the strengths of the transportation alternatives, this sharing economy and demonstrate What this shows is that Chicagoans increased mobility is also making it how companies like Lyft can benefit of all backgrounds and economic easier for residents to explore new municipalities across Illinois. levels are using Lyft to be their own areas of the city. boss and make ends meet. In fact, Although this new economy is still when speaking with our drivers, it’s As a result, Lyft is helping local growing, and municipalities are not uncommon to hear stories of a businesses grow and restaurants working to adapt to changes in the transportation landscape, Lyft believes that continued growth and shared prosperity will only occur if a unique approach is found for each municipality we serve.

In other words, outside of the economic and community benefits Lyft provides, being a good partner is equally important to the company. With Chicago serving as an example, this means we are committed to Lyft now matches over 11 million rides per month across 195+ cities working with local governments in the United States. and neighborhood groups to identify solutions that best fit their economic, community and transportation needs. parent using Lyft to earn extra money fill, as nearly 40% of passengers at convenient times or a retiree spend more money at local We look forward to having these looking for supplemental income. businesses and nearly 70% of conversations and sharing the road passengers go out — and stay out with you. Put another way, the sharing longer — because of ridesharing. economy is empowering people by giving them the opportunity to make Prashanthi Rao Raman is Director of Public Policy at Lyft, the ridesharing company. Contact Prashanthi at [email protected]. a living while still participating in the

14 Illinois Municipal Review | August 2018 EDUCATe. Advocate. Legal Brief EmpoWer. When Ridesharing Comes to Main Street

By Dave Baron, Deck & Baron

Illinois and its municipalities have taken various approaches Some municipalities also enacted their own ordinances that to regulating the popular and rapidly evolving mode of license ridesharing in a manner similar to taxis and liveries — passenger transportation. Here’s a look at state and local albeit with varying, and often lighter, regulatory burdens on ridesharing regulation. TNCs. This discrepancy has led to legal challenges against the ridesharing regulations, allowing judges to offer their own views Although ridesharing first arrived in Illinois less than six on this emerging form of transit. years ago, its impact has been swift and dramatic. By using smartphone applications, or apps, to connect people seeking In an ever-changing industry, it may seem futile to try to a ride with drivers of private vehicles, ridesharing companies keep pace with the new technologies and products — much like Uber and Lyft disrupted a decades-old passenger less regulate them effectively. But with even more changes transportation system based primarily on licensed taxicabs. approaching, including the seismic shift heralded by Since gaining a foothold in Chicago, ridesharing has expanded autonomous cars, authorities will need to make more to the suburbs and several downstate cities, and there is ample decisions about how to ensure convenient transportation reason to expect some form of ridesharing eventually to find a options, protect public safety and encourage innovation. It serviceable market in smaller communities and rural areas. would benefit municipal attorneys, officials and lawmakers (as well as anyone with a ridesharing app downloaded on The range of ridesharing services also continues to grow. Uber their phone) to take stock of the current trends of ridesharing now offers an on-demand food delivery service, and Lyft has regulation in Illinois. unveiled a shuttle service that operates on pre-determined but constantly adjusting routes that maximize rider efficiency. Minimum ridesharing standards Most notably, these companies are planning for the impending set by Illinois statute arrival of autonomous cars. Indeed, one can already use an app to summon one of these computerized vehicles in Pittsburgh, After a negotiated legislative process that included an executive where they are being tested. Given that a new Illinois law veto of stricter rules, the Transportation Network Providers effective June 1, 2018 preempts municipalities from banning Act (625 ILCS 57/1 et seq.), became law in July 2015. The automated driving systems, Illinois’ roadways are unlikely to be Act established basic standards that ridesharing companies far behind.1 and drivers must satisfy, and it preempts municipalities from regulating them less restrictively.2 Though not a complete list of The state and its municipalities have responded to the requirements, the following generally summarizes the Act. ridesharing phenomenon in different ways. In 2015, the Illinois General Assembly created a regulatory class for The Act defines “TNC Services” as the “transportation of ridesharing known as transportation network companies a passenger between points chosen by the passenger and (TNCs), establishing statewide minimum requirements for prearranged with a TNC driver through the use of a TNC digital insurance, driver qualifications, fare disclosure and more. network or software application.”3 Thus, TNCs are precluded

August 2018 | Illinois Municipal Review 15 Aarw ds & Grants from the paradigmatic province of taxis — accepting street hails from waving customers. The Act also distinguishes TNCs and TNC drivers, stating that “[a] TNC is not deemed to own, control, operate or manage the vehicles used by TNC drivers.”4

In terms of insurance, the Act requires TNCs to maintain coverage (at least $50,000 for death and personal injury per person, $100,000 for death and personal injury per incident, and $25,000 for property damage) for the time that a driver is logged into the TNC platform waiting to accept a ride request.5 This coverage must be contingent and apply if a driver’s policy fails to meet these limits.6 For the time between a driver’s acceptance and completion of Award Winners a ride, coverage must be primary in an amount no less than $1 million for death, personal injury and property damage, ILCMA Presents Annual Awards as well as $50,000 for uninsured motorist coverage — all of At its 2018 annual conference, the Illinois City/County Management which may be satisfied by a TNC’s policy, the driver’s policy Association (ILCMA) presented the Robert B. Morris Lifetime 7 Achievement Award to Mark Peterson, who retired as manager or some combination. for the Town of Normal in March 2018, having served since 1988. The Robert B. Morris Lifetime Achievement Award is presented Before operating as a TNC driver, individuals must turn to a retired individual who has had an exemplary career in local over certain personal information to the TNC, which government management and has served no less than 20 years in must conduct, or have a third-party conduct, a criminal local government, at least eight of those in Illinois. background check and obtain a driver history report.8 No Brian Murphy, Village Administrator of Plainfield, received the driver can have three or more moving violations or one special award for Service to the Community. major violation (e.g., police evasion, reckless driving, driving Mike Baker, Deputy Village Manager of Downers Grove, received on a suspended/revoked license, etc.) during the past three the special award for Service to the Association. years.9 Further, no driver can be a registered sex offender or have been convicted in the past seven years of offenses Mayor’s Climate Protection Awards that include DUI, fraud, sexual offenses, theft, and acts of Stephen H. Hagerty, Mayor of the City of Evanston, received violence or terror.10 Drivers cannot be under 19 years old, Honorable Mention in the large city population category (over and they must possess a valid driver’s license and proof of 100,000) of the U.S. Conference of Mayors (USCM) Mayor’s Climate registration and insurance in the vehicle to be used.11 The Protection Awards. The awards were presented in Boston during vehicle must also comply with Illinois’ safety and emission USCM’s 2018 annual conference. This award program, which is in 12 its 12th year, recognizes and honors mayors for their outstanding requirements. and innovative practices that increase energy efficiency, expand renewable energy and/or reduce carbon emissions. All TNCs must adopt a zero tolerance policy forbidding drivers’ use of drugs or alcohol while being logged into Award Opportunities a TNC platform.13 Upon receipt of a complaint alleging a All- merica City Award violation of the policy, the TNC must suspend the driver’s 14 Plan now to enter your municipality in the National Civic League’s platform access until an investigation is completed. (NCL) 2019 All-America City Awards (AACA). AACA recognizes TNCs must also adopt a policy precluding discrimination communities that leverage civic engagement, collaboration, on the basis of a rider’s destination and other protected inclusiveness and innovation to successfully address local issues. characteristics.15 Finally, rather than mandating a particular Letters of intent to apply are due in November. Check out NCL’s rate, the Act requires TNCs to disclose on their apps the website for information on the 2019 event as well as past year’s method of fare calculation and an option for users to receive winners and program content for inspiration. https://www. an estimated fare in advance.16 nationalcivicleague.org/america-city-award/. Perhaps anticipating that changes to the industry could soon Grants render these basic rules obsolete, the General Assembly Grants.gov passed a sunset provision repealing the Act as of June 1, A variety of grants available for municipal governments are listed 2020.17 Unless the legislature extends this date or enacts and updated regularly at www.grants.gov. The list is sortable and a new statute, municipalities will be free then to regulate searchable. There are currently 45 grants listed with close dates ridesharing on their own accord. in August. 16 Illinois Municipal Review | August 2018 Local ridesharing violation of the zero tolerance drug and Operations ordinances alcohol policy. Evanston and Chicago preclude ridesharing vehicles from operating 33 Although an app can arrange Driver qualifications at designated taxi stands. Drivers in for ridesharing transportation in Certain ordinances supplement Illinois’ Rockford may not provide TNC services Aurora, Joliet, Naperville, Decatur, list of criteria for TNC drivers. For more than 10 hours on any calendar Champaign, Urbana and Kankakee, instance, Chicago, Bloomington and day — and in Chicago, 10 hours within 34 these municipalities and others have Normal increase the minimum age to any 24-hour period. Further, Rockford opted not to impose rules beyond 21.23 Peoria and Rockford generally and Peoria permit authorities to what the state requires. Nonetheless, prohibit drivers with three or more suspend a driver for not maintaining a several municipalities, including moving violations within the past two reasonable level of personal hygiene, 35 Chicago, Evanston, Bloomington, years (rather than three years).24 Peoria appearance or conduct. In Maywood, Normal, Springfield, Peoria, Rockford also forbids drivers with DUI offenses where police received reports of and Maywood, have enacted their own during the past five years (not seven) ridesharing being used for drug ridesharing ordinances. As summarized and drivers with certain convictions trafficking, lawmakers have sought below, certain provisions expand upon related to drugs, prostitution, child to curb the problem by barring TNC state protections, and others address pornography and hate crimes from drivers from accepting packages for separate concerns. any time in the past unless a driver can transport unless a rider accompanies show sufficient rehabilitation.25 Chicago them.36 Licensing and fees forbids drivers from operating until any Several jurisdictions license TNCs and outstanding municipal debts are paid.26 Pricing require them to pay annual fees — a Peoria and Chicago require TNC drivers A defining characteristic of most $1,500 license fee in Springfield, a to obtain their own form of license, TNCs is their practice of raising fares $2,500 application fee in Rockford, which Chicago conditions on passage during periods of high demand — a $3,000 license fee in Peoria, and of an online or in-person known as “Surge” pricing with Uber a $100 application fee and $3,000 training course.27 license fee in Bloomington and The Illinois Municipal League provides a variety of Normal.18 (These last two cities Vehicles sample ordinances and code provisions from home have signed an intergovernmental Chicago, Bloomington and rule and non-home rule municipalities on its website. agreement to administer TNC licensure Normal require annual You can find the ordinances mentioned in this article, 19 jointly.) As of October 2017, Chicago vehicle inspections, and others, at iml.org/legal, under the section titled specifying multi-point imposes a $10,000 annual fee and Ordinances, Code Provisions and Model Policies. You standards that the vehicles the following per-ride fees: $0.02 are welcome to contact IML’s legal department with any administrative fee, $0.10 accessibility must satisfy.28 In Chicago, questions at [email protected] or (217) 525-1220. fee, and $0.40 ground transportation vehicles six years or older fee that increases by $5 for all rides to must be inspected on a or from the city’s airports, Navy Pier or semi-annual basis, and McCormick Place.20 Bloomington and Normal prohibit using and “Prime Time” with Lyft. Peoria’s any vehicles older than 10 years.29 ordinance states that in cases of Investigations municipal emergency, the mayor and Bloomington and Normal require Advertising city manager may limit this dynamic 37 TNCs to submit a plan detailing the Evanston bans the display of pricing. Interestingly, a similar background checks to be conducted on advertising signs on ridesharing restriction was proposed at the last each potential driver by an approved vehicles that create risk of injury to session of the Illinois General Assembly, third-party vendor.21 Additionally, drivers, passengers or pedestrians.30 but the session ended without a vote 38 TNCs must remove a driver from Chicago prohibits all commercial on the bill. the platform if notified by municipal advertising on the exterior and interior authorities that he or she was involved of a vehicle.31 Notably, in ongoing P aSSENGER privacy in illegal activity and until the charge litigation, a federal judge in August Springfield prohibits TNCs from has been adjudicated and the driver 2017 denied a motion to dismiss a claim disclosing a passenger’s personally re-qualified.22 This differs from the that Chicago’s restriction constitutes identifiable information to a third party state rule mandating suspension and an unconstitutional infringement of without consent or unless disclosure investigation solely for a reported commercial speech.32 is required by legal obligation or to

August 2018 | Illinois Municipal Review 17 defend the TNC’s terms of use.39 Relatedly, Peoria requires Municipal Calendar

that if a third party requests TNC records from the city AUGUST JULY SEPTEMBER SUN MON TUE WED THU FRI SAT — under FOIA, for example — the city must assert any SUN MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT 1 2 3 4 5 6 7 1 2 3 4 1 applicable confidentiality protections and notify the TNC 8 9 10 11 12 13 14 5 6 7 8 9 10 11 2 3 4 5 6 7 8 40 15 16 17 18 19 20 21 12 13 14 15 16 17 18 9 10 11 12 13 14 15 of the request. 22 23 24 25 26 27 28 16 17 18 19 20 21 22 19 20 21 22 23 24 25 29 30 31 23 24 25 26 27 28 29 26 27 28 29 30 31 30 Reprinted in part with permission of the Illinois Bar Journal, Vol. 105 #12, December 2017. Copyright by the Illinois State Bar Association. www.isba.org August 2018 1. S ee Pub. Act 100-0352 (amending 625 ILCS 5/11-208). The General Assembly is also looking ahead by considering bills that would impose certain requirements and assign liabilities related to the testing of automated driving systems in Illinois. See H.B. 2747; H.B. 1432. NOTE: For purposes of this calendar, it is assumed the fiscal year 2. 625 ILCS 57/32. begins May 1, as it does in most municipalities. Some municipalities, 3. Id. at § 57/5. however, may have adopted a date different from May 1 for the 4. Id. 5. Id. at § 57/10(b). beginning of their fiscal year. (65 ILCS 5/1-1-2(5).) If so, this calendar 6. Id. must be adjusted to reflect that specific fiscal year. 7. Id. at § 57/10(c). 8. Id. at § 57/15(a). 9. Id. at § 57/15(b)(1). Between August 1 and September 15, nominations for the board 10. Id. at § 57/15(b)(2)-(3). of trustees of the Illinois Municipal Retirement Fund are to be 11. Id. at § 57/15(b)(4)-(7) made. (40 ILCS 5/7-175(a).) NOTE: Cities and villages with a 12. Id. at § 57/25(d). 13. Id. at § 57/25(a). population over 5,000 are automatically subject to the Act. 14. Id. at § 57/25(c). However, participation is not mandatory for any municipality 15. Id. at § 57/20(a)-(d). that attains a population of over 5,000 after having provided 16. Id. at § 57/30(a)-(b). 17. Id. at § 57/34. social security coverage for its employees. Each participating 18. Code of the City of Bloomington, Illinois, 1960, § 40-1204(a); City of municipality may nominate and vote for the four executive Springfield, Illinois, 1988 City Code, § 110.903; Code ofO rdinances of the trustees who are part of the eight-member board. (40 ILCS 5/7- City of Rockford, Illinois, § 29-206(c); Code of the City of Peoria, Illinois, § 30-72(b). 174(b)(1).) 19. C ode of the City of Bloomington, Illinois, 1960, § 40-1201(b). 20. Municipal Code of Chicago, §§ 3-46-030(b-1), 9-115-040(a), (e), 9-115-140(e). In counties having a population of less than 1 million, the collector 21. Code of the City of Bloomington, Illinois, 1960, § 40-1206(h). 22. Id. at § 40-1208(b)(1). of the municipality shall, at any time after August 15 in each 23. M unicipal Code of Chicago, § 9-115-150(b)(1)(ii); Code of the City of year, publish an advertisement that a return will be made to the Bloomington, Illinois, 1960, § 40-1209(b)(7). general officer of the county having authority to receive state and 24. C ode of the City of Peoria, Illinois, § 30-103(a)(5); Code of Ordinances of the City of Rockford, Illinois, § 29-208(b)(9). county taxes of all unpaid special assessments and installments. 25. Code of the City of Peoria, Illinois, §§ 30-103(a)(6)-(7). (65 ILCS 5/9-2-84.) Publication of the advertisement must be 26. Municipal Code of Chicago, § 9-115-150(h). made not more than 30 days or less than 15 days in advance 27. Code of the City of Peoria, Illinois, § 30-101; Municipal Code of Chicago, §§ 9-115-150(a), (b)(1)(iv). of the date for judgment. Id. Return of delinquent special 28. Municipal Code of Chicago, § 9-115-110(d); Code of the City of Bloomington, assessments shall be made five days prior to the date fixed for Illinois, 1960, § 40-1214(a). application for judgment. (65 ILCS 5/9-2-85.) 29. M unicipal Code of Chicago, §§ 9-115-110(a)-(b); Code of the City of Bloomington, Illinois, 1960, § 40-1214(b). 30. Evanston City Code, § 3-17-14. Any municipality with a population of less than 500,000 that 31. Municipal Code of Chicago, § 9-115-130. attempts to impose, amend or repeal the Simplified Municipal 32. Vugo, Inc. v. City of Chicago, 2017 WL 3421568, *2-7 (N.D. Ill. Aug. 9, 2017) (holding that the city must demonstrate through discovery that the Telecommunications Tax must file a certified copy of such restriction can withstand intermediate scrutiny). ordinance with the Illinois Department of Revenue prior to 33. E vanston City Code, § 3-17-7; Municipal Code of Chicago, § 9-115-180(b)(2). September 20. Ordinances received prior to September 20 will be 34. Municipal Code of Chicago, § 9-115-190(c); Code of Ordinances of the City of Rockford, Illinois, § 29-208(f). collected on or after the following January 1. (35 ILCS 636/5-20.) 35. Code of Ordinances of the City of Rockford, Illinois, § 29-213(f); Code of the City of Peoria, Illinois, § 30-109(7). On or before the first day of October, home rule and non- 36. Maywood Village Code, § 126.03. 37. Code of the City of Peoria, Illinois, § 30-31(e). home rule municipalities imposing or discontinuing a retailer’s 38. H.B. 4027 (2015). occupation tax or effecting a change in the rate thereof must file 39. City of Springfield, Illinois, 1988 City Code, § 110-917. a certified copy of any ordinance or resolution (and referendum 40. Code of the City of Peoria, Illinois, § 30-49(d). if appropriate) with the Department of Revenue. Ordinances received by October 1 will be collected January 1. (65 ILCS 5/8-11- Dave Baron focuses on municipal law at Deck & 1, and 65 ILCS 8-11-1.1.) Baron in Kankakee and is a former constitutional litigator in the City of Chicago Law Department. iml.org/calendar Contact Dave at [email protected] or (815) 939-7373.

18 Illinois Municipal Review | August 2018 Homesharing

By Allison Schraub, Public Policy Manager, Airbnb

August 21, 2017, on what otherwise would have been The Airbnb home sharing platform — which connects considered an average Monday afternoon, turned into guests to homeowners sharing an additional room or even a tourism extravaganza, as tens of thousands of visitors their full house — created expanded lodging capacity flooded into our state to experience the historic during the eclipse, allowing well over 800 additional solar eclipse. eclipse-goers to spend the night in southern Illinois and authentically experience the region. Those guests infused While Chicago is typically the top tourism hub for Illinois, a meaningful economic impact, with residents in Illinois the eclipse flipped that trend on its end, with the eyes of cities like Carbondale, Marion, Murphysboro, Belleville and the country instead turning to Southern Illinois. Specifically, others in the path of totality earning a combined $131,000 Carbondale was anticipated to experience the eclipse for in supplemental income just on the night of August 21 alone. longer than any other American city. The presence of those extra guests generated a trickle down effect for the local merchant community, with an estimated Predictably, the region’s limited supply of hotel rooms $85,000 in guest spending towards local restaurants, shops quickly sold out. Southern Illinois still took full economic and other small businesses that day as well. advantage of this once in a generation event through pre- existing resources — people’s homes.

August 2018 | Illinois Municipal Review 19 The eclipse represented a For this reason, Airbnb has seismic event for the state, “Over 7,000 Illinoisans now partnered with hundreds of but even routine events share their homes via Airbnb . . .” governments throughout the can cause hotels to reach world to collect and remit taxes, peak occupancy in smaller making the process seamless 4% increase in hotel revenue, while to mid-sized cities, and this is where and easy for hosts to pay their fair a late 2017 report from Marcus & Airbnb hosts can add significant share while contributing new revenue Millichap concludes that Illinois hotels value. We saw this most recently for local governments. are demonstrating strong growth in May and June during college Illinois was one of the first local in overall occupancy. This suggests commencement seasons, where governments to partner with that Airbnb is opening up the state college families turned to the Airbnb Airbnb, via an agreement in late to a new slice of prospective tourists platform to stay within the corporate 2015 authorizing the home sharing by catering to travelers less able to limits of cities like Champaign, platform to collect and remit the afford hotels, those who desire to Springfield and Peoria once hotels Illinois Hotel Operators Occupation stay in neighborhoods or cities that sold out. And while cities like Tax on all Airbnb bookings lack hotels, and families who prefer Chicago generate the most attention throughout the state. Through that to be together under one roof. tax agreement, Airbnb delivered $9.3 million in tax revenue to the State of Illinois on behalf of its local hosts in 2017.

While the state tax agreement was Airbnb’s first in Illinois, the platform has since partnered with local governments to collect and remit local occupancy taxes on behalf of hosts in Chicago, Cook County, Schaumburg, Oak Park, Rockford, “. . . while cities like Chicago generate the most attention as it Evanston and — most recently — relates to Airbnb, it is the most rural areas of the state where we Naperville. We’re currently engaged are seeing the strongest growth, as Airbnb guests indicate an in positive conversations with a increasing desire to get off the beaten path.” handful of other Illinois municipalities on tax agreements, and we aim to help as many of our Illinois host communities as possible easily pay The economic impact of home as it relates to Airbnb, it is the most their fair share in taxes. sharing for Illinois communities rural areas of the state where we can be catalyzed by increased tax are seeing the strongest growth, as We’re committed to continuing revenue. Generally speaking, the Airbnb guests indicate an increasing to facilitate partnerships between same taxes that apply for hotels desire to get off the beaten path. local host communities and the also apply for short-term rentals. cities in which they live. Through However, collecting and remitting Over 7,000 Illinoisans now share their this, the home sharing community hotel taxes can be incredibly homes via Airbnb, with the typical can help elevate Illinois’ brand as a complicated. The rules were designed host earning about $4,800 annually hub for family-friendly tourism — for traditional hospitality providers in supplemental income. But what’s from Waukegan to Carbondale, and and large hotel corporations with encouraging is that statewide data everywhere in between. teams of lawyers and accountants. indicates that these hosts appear to be complementing — rather than Allison Schraub is a public policy manager for Airbnb, based out of the competing with — the Illinois hotel company’s Chicago office. Contact Allison at [email protected]. industry. The latest report from the Illinois Office of Tourism shows a

20 Illinois Municipal Review | August 2018 States and Local Governments Win Online Sales Tax Case By Lisa Soronen, Executive Director, State & Local Legal Center

In South Dakota v. Wayfair, the Supreme Court ruled that states and interpretation of the requirement that a state tax must be ‘applied local governments can require vendors with no physical presence to an activity with a substantial nexus with the taxing State.’ in the state to collect sales tax in some circumstances. In a 5-4 Second, Quill creates rather than resolves market distortions. And decision, the Court concluded that Wayfair’s “economic and virtual third, Quill imposes the sort of arbitrary, formalistic distinction that contacts” with South Dakota are enough to create a “substantial the Court’s modern Commerce Clause precedents disavow.” nexus” with the state allowing it to require collection. While the dissenting Justices, in an opinion written by Chief Justice As the Court pointed out in its majority opinion, it is estimated Roberts, would have left it to Congress to act, Justice Kennedy states and local governments lose between $8-$33 billion annually opined the Court should be “vigilant” in correcting its error. “Courts because they haven’t been able to collect sales tax owed on have acted as the front line of review in this limited sphere; and purchases from out-of-state sellers. hence it is important that their principles be accurate and logical, whether or not Congress can or will act in response.” As a result of this decision, state legislatures are likely to pass laws like South Dakota’s, if they haven’t already. Although Wayfair overturned precedent, it is not without limitations. In 1977 in Complete Auto Transit v. Brady, the Supreme Court held In the 1967 case National Bellas Hess v. Department of Revenue that interstate taxes may only apply to an activity with a “substantial of Illinois, the Supreme Court held that per its Commerce Clause nexus” with the taxing State. Quill’s physical presence test was seen jurisprudence, states and local governments cannot require as an addition to the “substantial nexus” requirement. Post-Quill, the businesses to collect sales tax unless the business has a physical “substantial nexus” requirement remains. presence in the state. The Court found a “substantial nexus” in this case based on the Twenty-five years later inQuill v. North Dakota (1992), the Supreme “economic and virtual contacts” Wayfair has with South Dakota. Court reaffirmed the physical presence requirement but admitted A business could not do $100,000 worth of sales or 200 separate that “contemporary Commerce Clause jurisprudence might not transactions in South Dakota “unless the seller availed itself of dictate the same result” as the Court had reached in Bellas Hess. the substantial privilege of carrying on business in South Dakota.” “And [Wayfair, etc.] are large, national companies that undoubtedly Customers buying from remote sellers still owe sales tax, but they maintain an extensive virtual presence.” rarely pay it when the remote seller does not collect it. Congress had the authority to create a solution that would overrule Bellas Finally, the Court acknowledged that questions remain whether Hess and Quill but never did so. “some other principle in the Court’s Commerce Clause doctrine might invalidate” South Dakota’s law. The Court could have In March 2015, Justice Kennedy wrote a concurring opinion stating said (but didn’t) that South Dakota’s law (including its small that the “legal system should find an appropriate case for this seller exception of $100,000 worth of business or 200 separate Court to reexamine Quill.” Justice Kennedy criticized Quill in Direct transactions) is constitutional in every respect, and that if every Marketing Association v. Brohl for many of the same reasons the state passes a law exactly like South Dakota’s, they will be in the State and Local Legal Center (SLLC) stated in its amicus brief in clear. Instead, the Court cited to three features of South Dakota’s that case. Specifically, Internet sales have risen astronomically since tax system that “appear designed to prevent discrimination against 1992, and states and local governments had been unable to collect or undue burdens upon interstate commerce. First, the Act applies most taxes due on sales from out-of-state vendors. a safe harbor to those who transact only limited business in South Following the 2015 Kennedy opinion, a number of state legislatures Dakota. Second, the Act ensures that no obligation to remit the passed laws requiring remote vendors to collect sales tax in order sales tax may be applied retroactively. Third, South Dakota is one to challenge Quill. South Dakota’s law was the first ready for of more than 20 states that have adopted the Streamlined Sales Supreme Court review. It requires out-of-state retailers to collect and Use Tax Agreement.” sales tax if they annually conduct $100,000 worth of business or 200 separate transactions in South Dakota. Lisa Soronen is Executive Director of the State & Local In an opinion written by Justice Kennedy, the Court offered three Legal Center. Contact Lisa at [email protected] or reasons for why it was overruling Quill and abandoning the physical (202) 434-4845. presence rule. “First, the physical presence rule is not a necessary

August 2018 | Illinois Municipal Review 21 2017 Financial Results and Statements of Fiduciary Net Position

The Illinois Municipal Retirement Fund (IMRF) is the administrator of an agent multiple-employer public employee retirement system. The Illinois State Legislature established IMRF to provide employees of local governments and school districts a sound and efficient retirement system. Members, employers and annuitants elect eight trustees who govern IMRF. Four Executive Trustees are elected by employers, three Employee Trustees are elected by members, and one Annuitant Trustee is elected by annuitants. State law authorizes the Board to make investments, pay benefits, set employer contribution rates, hire staff and consultants, and perform all necessary functions to carry out the provisions of the Illinois Pension Code. Benefit and contribution provisions are established by state law and may be amended only by the Illinois General Assembly. IMRF is administered in accordance with Illinois statutes.

Number of Active Regular Plan Members

22 Illinois Municipal Review | August 2018 For questions about IMRF, contact an IMRF representative at 1-800-ASK-IMRF (1-800-275-4673), or visit their website at imrf.org.

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24 Illinois Municipal Review | August 2018 Understanding Phishing and How to Reduce Cyber Risk

By Chris Hill, Chief Information Security Officer, Illinois Department of Innovation & Technology (Do IT)

Organizations today must continually be on guard for cyber or phone calls to either obtain a person’s personal information attacks. IT departments establish cybersecurity protocols to or to install malicious software on their device. These messages protect against a breach of data or services. But what if a serve as a digital Trojan horse that conceals the threat in hopes hacker could convince someone on the inside to “open the that they will be allowed access by the user. The scams can vary door” to their network? While it may seem unlikely, that is one from targeted actions against a specific individual to a general of the most common cyber threats we face today. phishing expedition on a multitude of users.

Consider this scenario Goal of Phishing Attacks Let’s say you are going through your email inbox. You know to Some cyber criminals seek the personal information itself. avoid the spam that has managed to seep through the filter and They might spoof a website or create a phony request for begin answering valid work correspondences. One email is from information that will collect the information you input to steal an important client who emailed a purchasing request for one your account, identity or finances. This personal information of your services, attached to this email is an invoice. What you can include user names and passwords, social security numbers, might not realize is that although it appears familiar, this email bank accounts, credit card information and tax records. has been spoofed. It was created by a hacker across the world Other criminals might be targeting access to your computer through observing the interactions between you and your client. or network and will attach harmful software to the email. If The hacker created the fake email and attached a malicious file the software runs, the criminal could cause damage to your that would enable him to obtain access to your computer. organization’s data and network.

This email scam is just one example of a phishing attack. Phishing’s effectiveness lies in that the attacks incorporate Phishing (pronounced “fishing”) employs emails, SMS messages a two-pronged strategy. First, they employ malicious

August 2018 | Illinois Municipal Review 25 programming, phony websites, here to claim your cash reward!” never hesitate to verify it with the or another technical method of But also watch for emails like sender through another medium. Call, compromising network security. Some “Your account cannot be verified” text or compose a new email to the of these methods can be blocked or “View your shipment tracking person the email is from and ask if they through different cybersecurity information here.” sent the email and if they attached protocols, but many are disguised to any files to it. Never reply directly to fool the filter into thinking that they are Warning Signs of Phishing the email in case it is malicious. If you legitimate websites or data files. are suspicious and cannot verify the If these scams can be disguised email’s authenticity, delete it. Do not as nearly anything, how can users Next, the threat exploits the human risk compromising your own identity or possibly recognize them? Here are a factor of your organization to grant financials on a suspicious email. few possible warning signs: the criminal access: essentially looking for a person who is willing to let the • Poor spelling or grammar: Though Building a “No drawbridge to the fortress down. They these errors can be overlooked Phishing” Workplace are designed to either convince the in a quick scan of the email, they In our fast-paced world, the best thing target of their authenticity or to elicit can be a prominent red flag. you can do is to stop and think before an emotional response that might blind Few legitimate organizations clicking on something. If in doubt, the user to possible warning signs. or individuals would greenlight an unproofed email. Would you delete. It is impossible to tell someone exactly how to detect or avoid these Type of Phishing Emails expect Google to send a request for “emale varifaction”? scams because tactics and tricks change The specific type of phishing emails every day and look increasingly realistic. can vary, but here are a few tactics that • Look for an icon of a small lock in the URL: If it is not there, you could are commonly used: An efficient and robust cybersecurity be using an unsecured or phony site. • Emails from someone you know: strategy implemented by your We might assume that the email • An email that seems excessively organization’s IT department is your has come from a coworker, friend urgent or contains threats or first line of defense. Learn all you or employee and ignore warning incredible deals. can from IT security professionals signs that might arouse suspicion. • A modified URL: This could be a about possible applications, programs Watch for anything that seems out variation of spelling, a different and technical controls that can filter of character. address entirely that seems possible threats from entering your employees’ inboxes. • Emails from client businesses: legitimate, or a different domain. These follow a similar tactic. Be • Attachments to an email: Ask Phishing threats do not rest solely in cautious if the email asks for yourself if you are expecting a file their technical capabilities, but also in an unusual request, includes a from that person. Do not open files the human factor that they attempt to suspicious link or file, or uses odd from people or businesses you do leverage. Infected emails may still enter language. not know. through secure filters. In addition to the • Email disguised as trusted implementation of network security, websites or organizations: These Wha t to Do if it is also recommended to provide emails can be disguised with Phishing Occurs access to cyber security awareness imitation logos to create the You should report the suspected attack training for your employees so that impression that the email is from to your organization’s IT department. they can learn the warning signs and Netflix, the IRS, PayPal or any They can ensure that other users dangers of phishing attacks. This will other site you can imagine. are watching for similar emails and reduce the impact of threats upon your • Emails that elicit an instinctual prepare to contain any possible breach organization’s infrastructure and will also response: These emails have a that may result. If you have questions help your employees protect data and shock value that creates a sense of concerning the authenticity of an email, information in their own personal lives. urgency. The reader then begins Chris Hill is Chief Information Security Officer at the Department of to act quickly without stopping to Innovation and Technology (DoIT) Contact Chris at [email protected] or evaluate the email. Some emails (217) 524-3648. are obvious to avoid, like “Click

26 Illinois Municipal Review | August 2018 EDUCATe. Advocate. RISKRISK ManageManagemementnt EmpoWer. Sidewalk Defects

A review of current Illinois law and discussion of how thorough record keeping and prompt investigation can help avoid liability.

By Jennifer L. Turiello, Peterson, Johnson & Murray

The defenses and immunities that traditionally have been Finally, in the alleged failure to repair and maintain a municipal available to municipalities to defeat claims of alleged failure to sidewalk context, a number of immunities can come into play, repair and maintain municipal sidewalks have either come under not the least of which is Section 2-201 discretionary immunity. fire and/or their once broad application is being restricted.1 It Section 2-201 of the Tort Immunity Act confers immunity from is imperative, now more than ever, that municipalities develop liability to local government employees for their performance of comprehensive risk management strategies for minimizing discretionary functions.5 Section 2-201 discretionary immunity incidents and liability, and thorough investigation processes extends to public entities by virtue of Section 2-109 of the Tort that can assist in defending against such claims. This article Immunity Act.6 Section 2-201 discretionary immunity applies summarizes current Illinois law with regard to claims of alleged when an employee holds a position that requires that he or failure to repair and maintain municipal sidewalks and makes she employ personal judgment and the tort claim at issue suggestions regarding what municipalities can do in the record implicates a discretionary policy determination made by that keeping, maintenance and investigative realms to bolster employee. Policy determinations are assessments that require immunity contentions and defenses in response to such claims. the municipal employee “to balance competing interests and to make a judgment call as to what course of action will best serve Illinois common law provides that a municipality’s general duty each of those interests.”7 Discretionary acts are those unique is to maintain its property, including sidewalks, in a reasonably to public office and involve the “exercise of personal judgment safe condition. This principle is also codified in Section 3-102(a) and deliberation in deciding whether to perform a certain act or of the Tort Immunity Act.2 Actual or constructive notice of an in what manner the act should be conducted.”8 alleged defect, along with a plaintiff’s status as an intended or permitted user of the property where an alleged defect is A number of steps can be taken by a municipality either before present, are conditions precedent to the imposition of a Section or even shortly after an incident occurs to support assertions 3-102 duty of care on a municipality. In addition to the aforesaid of immunity or defenses. In the pre-accident context, regular defenses, Illinois law does not require that municipalities inspection and repair/maintenance programs should be in maintain sidewalks in pristine condition. Where no aggravating place. In terms of post-incident response, a clear chain of factors exist, a vertical displacement in a sidewalk of less than command should be established relative to the intake of and two inches is de minimis and not actionable.3 Aggravating response to citizen complaints about alleged sidewalk defects. circumstances that can negate the de minimis rule’s application An investigation of the alleged defect should occur within include that a sidewalk defect is located in a busy commercial a reasonable time after complaint intake. That investigation district where a pedestrian could be sufficiently distracted to should include follow up with the complainant regarding the overlook it.4 circumstances of any incident. Areas of inquiry should include the precise mechanism of injury, whether there were any

August 2018 | Illinois Municipal Review 27 witnesses to an occurrence, whether the defect was PROFESSIONAL visible to the complainant, the weather conditions at Services Directory the time of the incident and how deep did the defect appear to the complainant. Additionally, any investigation should include taking pictures and measuring the defect. Architectural Services Notes memorializing dialogue with a complainant should be taken and preserved. Use of a pre-printed inquiry form reflecting the identity of the public employee who received the complaint and any action taken in response to the complaint would be ideal.

A high-ranking municipal official should be designated and authorized to formulate a response to an alleged sidewalk defect in his or her discretion, and even in the absence of a citizen complaint, as part of regular inspection and repair/maintenance efforts. Whenever sidewalk repair work is undertaken, internal work orders reflecting the particular work that was done should be retained. In the event an outside contractor is brought in to complete repair work, paperwork relative to the contractor’s retention and scope of work should likewise be preserved. If repair work is not undertaken, postponed or if repairs are commenced to one portion of sidewalk ® in lieu of another section, the justifications underlying those determinations should be memorialized in some fashion. For instance, in the event the high-ranking official responsible for sidewalk maintenance and repair reported Engineering Services such decisions to a governing body, meeting minutes reflecting such should be preserved. If budgetary, manpower or seasonal concerns factored into a repair Roads/Highways, or maintenance decision, documents corroborating such Water/Wastewater, considerations should be compiled and saved. Simple Stormwater, Technology, steps such as these can potentially solidify immunities or Proactive Planning and Responsive Service. Controls/Automation, & more defenses for a municipality in the event litigation ensues. www.baxterwoodman.com

1 See, e.g., Monson v. City of Danville, 2017 IL App (4th) 160593, a case in which a plaintiff has posited that Section 2-201 discretionary immunity does not apply to any claim implicating Section 3-102 of the Local Governmental and Governmental Employee Tort Immunity Act (“the Tort Immunity Act”). The case is presently under advisement before the Illinois Supreme Court; see also Bartkowiak v. City of Aurora, 2018 IL App (2d) 170406 (question of fact precluded the application of the de minimis rule to a 1.5-inch deep depression located in a 1,600-space commuter parking lot as a matter of law). 2 745 ILCS 10/3-102(a). 3 Arvidson v. City of Elmhurst, (1957), 11 Ill. 2d 601, 604. 4 See, e.g., Putman v. Village of Bensenville, 337 Ill. App. 3d 197, 205 (2d Dist. 2003). 5 745 ILCS 10/2-201. 6 745 ILCS 10/2-109; see also Collins v. Bartlett Park Dist., 2013 IL App (2d) 130006, ¶ 58. 7 Harinek v. 161 North Clark Street Ltd. Partnership, (1998), 181 Ill. 2d 335, 342. 8 Wrobel v. City of Chicago, 318 Ill. App. 3d 390, 394-95 (1st Dist. 2000).

Jennifer L. Turiello is an attorney with the law firm of Peterson Johnson & Murray in Chicago. She concentrates her practice in civil appellate litigation and insurance coverage litigation. Contact Jennifer at [email protected] or (312) 724-8038.

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The Review is a great way to present your product or service to Illinois municipal elected and appointed officials. Call 217.525.1220 to place your ad in the next issue. See the advertising rate sheet at: iml.org/ratesheet August 2018 | Illinois Municipal Review 29 Annual SEPTEMBER 20-22 Conference 2018

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