Landlords for Rent Control? You Heard That Right


Landlords for Rent Control? You Heard That Right

2018-10-08T10:19:29+00:00October 8th, 2018|Advocacy, Local Updates|

“Last week several hundred people packed a state senate hearing room and spilled out into the overflow seating for the latest chapter in the local fight for rent regulation. The hearing, chaired by state senator Mattie Hunter of Chicago, was one of a series soliciting responses to a bill that would not only repeal Illinois’s Rent Control Preemption Act but actually establish rent control within the state for the first time since the early 1970s.

Hunter introduced Senate Bill 3512 last February as a companion measure to state rep Will Guzzardi’s House Bill 2430. Guzzardi’s bill merely proposes to repeal the 1997 Rent Control Preemption Act—a prohibition on any kind of rent regulation, anywhere in the state, that was crafted by real estate interests and jammed through many U.S. statehouses beginning in the 1980s, with the help of the ultraconservative American Legislative Exchange Council. But Hunter’s bill goes much further.

The latest version of the bill seeks to eliminate no-cause eviction—which would prevent landlords from evicting tenants simply because they want to increase the rent—and to establish six elected “rent control boards” spread around the state, each composed of landlords, tenants, and tenant advocates. The seven members of each board would implement and monitor local rent regulation.

While the bill doesn’t cap rents or set baseline rents, it pegs annual rent increases to inflation and allows the regional rent control boards to establish the median rent for their areas.  Landlords wouldn’t be allowed to increase rents for a unit more than the rate of inflation regardless of whether a new tenant moves in or a new landlord takes over ownership. All landlords would be charged an annual fee set by their regional rent control board to cover the cost of administration and to create a “repair fund” from which smaller landlords could get grants and no- or low-interest loans to cover capital improvements. (“Smaller landlords” are defined by the bill as owners of 12 or fewer rental units in one of the six regions who also live in one of their units and who set their rents at or below the area median.) Finally, the bill creates a 3 percent tax credit just for smaller landlords and another tax credit worth up to 25 percent of their total property tax liability for any landlord who makes qualifying capital improvements or repairs .

These tax benefits and access to repair funds are a major reason why a small cadre of mom-and-pop landlords in Little Village have mobilized in support of Hunter’s bill.

“Rising property taxes can be a burden on small property owners,” says Simone Alexander, 37, who also testified at the hearing. “This bill would create property tax relief if you’re a small owner renting at affordable rates.” Alexander has owned a two-unit building in Little Village since 2010, and rents out one of the apartments to her disabled sister. She needs the financial support because raising her rent beyond what her sister can afford is out of the question.

Alexander is one of about a dozen small landlords in Little Village who’ve joined the Lift the Ban Coalition to mobilize support for repealing the Rent Control Preemption Act and establishing rent regulation in Chicago. She says many of the landlords she knows in the community are, like her, owner-occupants who may have a unit or two they rent to family or friends. While there are ways for landlords like Alexander to secure financial assistance for lead or mold abatement, she says that there isn’t enough government support for emergency repairs or renovations and that, as a result, costs end up getting passed on to renters or repairs, even serious ones, just go unmade.

Alexander says she and her neighbors want to see the lower-income tenants they rent to stay in their community, because to them renters aren’t just a source of income. “While it’s a business transaction to a certain extent, it’s also a relationship,” she says, adding that she spent her childhood moving around as her family was priced out of various north-side neighborhoods. “I come at this from the perspective of knowing what it means to lose community,” she says. “It’s heart-wrenching to see everyone you know leave, to be forced to leave as well.” Alexander says that Hunter’s bill will allow tenants, especially those with families who depend on local schools, to stay in communities longer while supporting property owners’ needs.

Alex Velazquez, 30, another Little Village homeowner and president of the Little Village Community Development Committee, says that many of his relatives are landlords in the community, and that he sees a stark contrast between their approach to the market and those of investors from outside the neighborhood. He’s worried about both tenants and landlords with deep roots in Little Village getting pushed out by gentrifiers moving west from Pilsen. “The reason we support lifting the ban is because there are very specific measures in that bill that would benefit land owners, and we see it as part of fair housing policy,” he says. “We understand the connection between development and the displacement of people.”

To be sure, most of the landlords—big and small—who testified at last week’s hearing didn’t share Alexander’s and Velazquez’s perspectives. Many seemed not to think that the bill’s financial carve-outs for small landlords were sufficient and expressed concern about not being able to cover their expenses. Some small landlords and investors expressed some sympathy for tenants facing spiking rents, but real estate industry representatives from powerful groups like Illinois Realtors and the Chicagoland Apartment Association chafed at the idea that landlords should have to compromise their property rights to prioritize a longtime tenant when they could get higher rent from someone else interested in their unit.

Greg St. Aubin, chief Springfield lobbyist for Illinois Realtors, who worked to pass the Rent Control Preemption Act in the mid-90s, says the current consideration of rent control measures is precisely the situation the realtors and their allies wanted to preempt. He appreciated the hearing and Hunter’s consideration of a wide range of viewpoints, but said that now as then he doesn’t know any landlords in support of rent control—or anyone who considers it sound policy. “I represent thousands of landlords, and I’ve never heard a single one of them say that this bill or rent control in general would be anything but disastrous for rental property owners,” he says. “If people can’t afford to go buy groceries you don’t tell grocers they can only charge 75 cents for a gallon of milk.”

But St. Aubin’s perspective on the issue seems to exist on a different logical and philosophical plane than the Lift the Ban Coalition’s. While he’s worried about what might happen to his constituents if Hunter’s proposed legislation is enacted, the coalition is worried about what has already happened to theirs. On one hand, St. Aubin and others who oppose rent control tend to speak theoretically (about price controls being bad for free markets), or philosophically (about the fundamental value of private property rights to our society), naturalistically (chalking up tenants’ support of rent control to the basic human tendency to want a good deal), or comparatively (erroneously blaming rent control on the rapacious speculation in the real estate markets of New York and San Francisco). On the other, Alexander and her allies talk about hyperlocal conditions in the specific circumstances of neighborhoods like Little Village.

Whose perspective aligns with the widest swath of Illinois’s population is still hard to say. Most renters in Chicago and the state are considered “burdened,” meaning they spend more than a third of their income on rent. In Cook County, more than three quarters of the poorest households spend more than half of their income on rent. It’s perhaps no surprise that a nonbinding referendum last March showed that 75 percent of the 16,000 voters who saw the question on their ballot said they were in favor of lifting the ban on rent control. (The wording of the question was far from neutral, but little seems to be when it comes to landlord-tenant relations.)”

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