I don't have any restrictions on pets with the exception of 2 things: no dogs under the age of 1, and breeds listed on my insurance policy that are not accepted. 

If anything that might restrict building but I don't see them running out of water for existing homes so wouldn't that mean home values going up because supply would be restricted.What kind of climate risk could occur there?

Yes, Chicago has strict regulations for short-term rentals, including mandatory registration and zoning restrictions.

Downside is that there are many restrictions and laws to navigate. 

I'm wondering if the same lenders who financing STR's would consider Padspits.You may want to check this, but I would imagine that renting via Padsplit would be considered as a STR which have been highly restricted in the city of New Orleans, and the only way you can get a permit recently is to also live in the property.

Many hoa's have restrictions / limits to non-owner occupants allowed in a community / building.

They seem complicated, lock up your money and have a lot of restrictions. 

Best practice is to operate as an MTR and backfill with STR guests because if you open up your calendar to STR guests without tight restrictions, you're an STR.  

The worst thing is that states and municipalities are using wildly inflated data that AirDNA and their ilk are pitching to create more and more restrictive zoning laws based on the perception of windfall host profits, further creating challenges to supporting our mortgages in a region with an already long 4-6 month shoulder season.

If that works for you, it works for me fine, but seems odd.