Pandemic prompts officials to relax rules on home businesses

It took 16 years, a local election and a global pandemic for Jonathan Holtfreter to secure his right to teach tuba in peace.

The retired music teacher had for decades supplemented his public school salary by teaching private lessons. But since 2005 — when a neighbor complained that the home and the parked cars they invited violated city code in Ann Arbor, Mich. — Holtfreter has tiptoed around his business, booking fewer lessons in his soundproofed basement and exhorting students not to park where the neighbors might see them.

He had little hope of changing the rules: The side hustles of middle-aged music teachers weren't a matter of much political urgency — at least not until COVID-19 forced millions of Americans to turn to home-based work.

More than a year into the pandemic-induced downturn, Ann Arbor relaxed its city ordinance to allow in-home enterprises to welcome more clients. In recent months, cities and states across the country have taken similar steps. Their goal is to change zoning codes, food-safety rules and other regulations to allow a new class of micro-entrepreneurs to launch and operate businesses.

"People were just trying to hustle during the pandemic," said Ann Arbor City Council member Linh Song, a Democrat.

"We had people teaching yoga classes from home, doing metal-working from home, baking— we have a lady who makes pies and a bunch of ladies making cupcakes," she said. "We're hoping it'll help folks feel more supported because it's going to be another difficult year."

The issue has galvanized politicians and advocates across the political spectrum, uniting progressives such as Song with pro-business conservatives and free-market libertarians. Since the start of 2020, at least a dozen cities and counties, including Seattle and Chicago, have considered bills designed to ease zoning and permitting rules for home businesses.

Bill supporters argue that many of these regulations are outdated or burdensome, and that they fall hardest on women and people of color, who head a large portion of what are known as nonemployer firms. Federal statistics show that small, sole-proprietor operations are more likely to be helmed by women or people of color — the populations that have faced the worst economic fallout from COVID-19.

But while that argument has gained traction in many parts of the country, moves to further deregulate home businesses also have drawn the ire of some neighboring homeowners, existing companies and even public health professionals, who have voiced particular concern over increasingly permissive food safety laws.

"There are threats to it, there are issues here," said Doug Farquhar, the director of government affairs at the National Environmental Health Association, a professional organization whose membership includes food safety inspectors.

Zoning codes can specify the types of businesses allowed in homes or ban them all together, aid Joshua Windham, a staff attorney at the libertarian Institute for Justice. Many of these regulations date back decades, Windham said, and are enforced only after a neighbor complains. But that threat can be enough to intimidate small-business owners.

Debates have flared across the country. In Fairfax County, Va., for instance, which in March voted to overhaul its county zoning ordinance, community groups opposed a change to make it easier for home businesses to get permitted. An increase in home businesses, critics argued unsuccessfully, would increase light pollution, noise and traffic.

In Illinois, a legislative effort to allow small producers to sell their wares online also encountered criticism from county health departments.

After lawmakers amended the bill to address those concerns, however, it passed both chambers of the Illinois Legislature in a rare unanimous vote. State Sen. David Koehler, a Democrat and one of the bill's sponsors, said the bill earned the support of both pro-business, anti-regulation Republicans and Democrats who saw the measure as a means of bolstering the local food movement. It also helped that farmers markets closed for much of the 2020 season, highlighting the need for online sales.