UPTOWN — On the 4700 block of north Kenmore Avenue, in the heart of Uptown, sat a collection of cars all owned by “Michael O.” — the city’s most successful auto lender on the car-sharing platform Turo.
Michael O., who is actually Michael Anthony Oates, according to city paperwork, owns as many as 40 vehicles that he leases out for short-term stints using Turo, a Silicon Valley-based startup that promotes itself as the future of the car rental industry, just as Airbnb has disrupted the hotel and motel industry.
Though many of Oates’ cars appear to be mid-range sedans, Turo has gained popularity in part by offering flashy cars for rent for as little as $100 a day. Luxury car brands available via Turo in Chicago include Mercedes Benz, BMW, Maserati, Porsche, Land Rover, Tesla and Jaguar.
But Oates’ fleet of mid-line vehicles he rents out on Turo caused major parking headaches in Uptown, where he once parked a portion of his 40 vehicles on a street just two blocks away from the Aragon Ballroom and the Riviera Theatre, and where many residents struggled to find parking.
Ald. James Cappleman (46th), who also lives on Kenmore, found out about Oates’ cars a little more than a year ago, when residents began to complain that lock boxes containing keys to the cars began showing up on fences outside of apartment buildings on the street.
Eventually, the city’s Department of Business Affairs and Consumer Protection sent a cease and desist letter to Oates last December at Cappleman’s request, but Cappleman said that in response, Oates just moved the lockboxes down the block. Now, the lock boxes are stored in the vehicles’ wheel wells.
A representative of Turo said that was inaccurate.
“These parking issues were addressed months ago and there are no cars associated with Turo parked on that street,” said Turo Government Relations Vice President Michelle Peacock. “However, several cars identified were parked with no parking zone sticker or the wrong sticker. The Alderman can simply solve this problem by enforcing existing parking regulations with a single call to have these cars ticketed and towed.”
Cappleman told The Daily Line that his office has received complaint after complaint about Oates’ cars, and said parking has become the No. 1 issue in his ward.
“This person ranks far and above having more cars than anyone,” Cappleman said. “Every good thing that surfaces, someone comes up and takes it to the extreme. [Oates] took it to the extreme in the 46th Ward and the residents are furious. So am I.”
Cappleman faces a tough fight to win re-election in February, with four challengers already announced, including Chicago teacher Erika Wozniak Francis, who has the backing of U.S. Rep.-elect Jesus “Chuy” Garcia (D-Chicago).
But Cappleman’s attempts to resolve the issue by enforcing city law ground to halt, after Chicago’s Law Department told the aldermen that lawmakers in Springfield would first have to pass a bill regulating the car-sharing industry before they could take action against Oates.
Now Cappleman is counting on lawmakers to override an amendatory veto from Gov. Bruce Rauner on just such a bill, SB 2641, which was heavily negotiated and passed in the waning days of Spring legislative session in May.
Rauner’s late August veto of the bill came as a surprise to chief sponsor State Rep. Art Turner (D-Chicago), who told The Daily Line he wasn’t aware the governor’s office had any issues with the bill.
“I never had a formal conversation,” Turner said. “I read the governor’s veto message and figured out the strategy from there.”
Rauner’s official veto message objected to the “sweeping” nature of the legislation, and contained dozens of specific recommendations for change in order to let car-sharing businesses like Turo thrive in Illinois.
“Oversight of this new industry is important to protect consumers; however, we should be careful not to unintentionally smother its growth before it has a chance to get off the ground,” Rauner’s veto message said.
But Turner and his co-sponsors, including State Rep. Grant Wherli (R-Naperville), aren’t paying any mind to any of the governor’s suggestions, and on Tuesday will hold a news conference about the bill and vow put it on the House floor at some point this week.
“I think there’s support for the bill,” Turner said. “Every day without regulation in this industry could be safety concern for citizens of Illinois.”
Some of those safety concerns include peer-to-peer car sharing’s lack of oversight when it comes to the onus of replacing recalled vehicle parts. According to the National Transportation Safety Board, 25 percent of cars on the road have an unfixed recall notice.
“We have the opportunity in Illinois to set the standard for safety,” sponsor State Sen. Antonio Muñoz (D-Chicago) said in a statement late last month. “Millions of vehicles across the nation are currently operating with unsolved safety recalls. Renting these vehicles out to customers creates hazards for everyone on the road.”
Muñoz’s colleague and co-sponsor, State Sen. Sue Rezin (R-Morris) said in that same statement that she will not bend to Rauner’s amendatory veto.
“I voted in favor of this legislation last spring because I believe it will protect consumers and includes important safety measures,” Rezin said. “My position has not changed.”
The legislation would also regulate insurance and liability concerns for peer-to-peer car sharing, much like traditional car rental companies are regulated. Giants in this area like Enterprise and Hertz have spent millions of dollars and many hours over the last few years lobbying states to regulate these sorts of startup companies that have turned into competition.
Turner also said he had heard about Oates’ 40-car fleet, and said his bill could help deal with “nuisance situations” like that of Oates’ Turo business.
“As it stands right now, there’s nothing the city or police or local law enforcement can do to even address the situation,” Turner said.
Cappleman said he hopes that if Turo begins to be regulated more like a traditional car rental company, including having to pay taxes on the transactions, one consequence of the new law would be Oates winnowing his fleet.
If the legislature overrides the bill, Cappleman also said that he would introduce an ordinance in City Council that would limit the number of street parking permits one person could buy.
Cappleman emphasized that he isn’t trying to shut down Turo or similar companies, saying it’s “a great idea, but it’s been horribly abused.”
In late October, lobbyists pushing for the override of Rauner’s amendatory veto on SB 2641 put out a statement describing the bill as “common sense legislation,” and pointed out that local governments could also stand to gain from regulation of car-sharing companies.
“Municipalities have watched their funds be depleted in recent years, which is why it is imperative that the state not prevent them from collecting this revenue, particularly since it falls in line with industries already being taxed,” Illinois Municipal League Executive Director Brad Cole said.