Chicago wants rent control. State officials? Not so much.

Rent control is banned statewide, but proponents say it will limit rising rents, while landlords say it will hit them in the wallet and prevent them from making necessary repairs

Mattie Hunter and Will Guzzardi

In March, an advisory referendum appeared on the ballot in 77 precincts across Chicago, asking if the 20-year-old statewide ban on rent control should be lifted. About three quarters of the 16,000 people in those precincts voted in favor of lifting the ban, in a city that now averages about $1,650 for a 760-square-foot apartment, according to RentCafe.

Despite the support for the measure, legislation to formally lift the ban — which by one estimate could affect up to half the renters in the city — has stalled in the General Assembly with only a couple of weeks until lawmakers are scheduled to adjourn for the summer.

State Sen. Mattie Hunter, a Democrat from the South Side, is one of several lawmakers who introduced bills aiming to lift the ban on rent control, which would allow the local municipalities to more tightly control how much landlords can increase rents annually. Hunter’s version would establish elected rent control boards in every county that would adjust rents every year.

The bill would limit increases to 1 percent above the Consumer Price Index for renters making up to 60 percent of the county’s median income. It would be capped at an annual increase of 5 percent.

For renters making up to 120 percent of the median county income, it would limit increases to 2 percent above the Consumer Price Index, for a maximum increase of 6 percent.

Opponents of the measure, including real estate and and landlord trade groups, say it will hit landlords in the wallet by preventing them from charging market-rate rents. They’ll have less to spend on upkeep of the buildings, causing them to deteriorate, critics of the measure to end the ban said.

And if the owners give up and sell — or decide not to buy an investment property in the first place — property values will take a hit, causing a burden for all taxpayers, opponents said.

“We think it would be bad public policy,” said Michael Mini, executive vice president of the Chicagoland Apartment Association.

Mini said 37 states have some form of rent control preemption laws on the books, though there has been an effort in some areas to lift them, including in California.

In New York City, where rent control is well established, the Rent Guidelines Board last year approved a 1 percent increase on rent-stabilized leases after a two-year freeze.

Chicago median rents only rose 0.8 percent year over year in March, according to Apartment List data, but figures from Zillow show median rents have risen more than 10 percent since bottoming out in late 2011.

“Rent control is a fake panacea. It’s a fake promise,” said Brian Bernardoni, lobbyist for the Illinois Association of Realtors and Chicago Association of Realtors, which is against rent control. “Because a few neighborhoods are doing well shouldn’t dictate the whole state policy.”

Indeed, many of the neighborhoods where the initiative appeared on the ballot have undergone gentrification in recent years, and some of the referendum language posed lifting the ban on rent control as a way “to address rising rents, unjust evictions, and gentrifican in our community.”

Bernardoni said current discussions could apply the law to any non-owner-occupied property, which he said could affect up to 50 percent of renters.

State Rep. Will Guzzardi, a North Side Democrat who also sponsored a bill to repeal the ban on rent control, said the problem is “a small subset of landlords” who take advantage of tenants and raise rents “strictly to kick out lower-income folks and replacing them with higher-income folks,” he said.

“Unfortunately we see this all the time in my neighborhoods,” including cases where rents are raised anywhere from 50 percent to 200 percent. “It’s very destabilizing for a neighborhood.”

Mini and Bernardoni were among speakers on both sides of the issue at a recent legislative hearing on Hunter’s bill. Hunter said by the end of the hearing the two sides agreed to meet in search of a compromise, though there’s been no movement yet.

“Nothing’s going to happen until they have that meeting,” she said. “The longer they take the longer it’s going to take to get anything done.”

Bernardoni, though, said the associations will fight any effort to implement rent control. He said there are better ways to ensure affordable housing than rent control, from lifting regulations to encourage more housing development to providing more direct financial assistance to residents who need it.

“We’ve made it abundantly clear that rent control is a last option on affordability,” Bernardoni said.

Though prospects appear dim for the issue this spring, Guzzardi said he and other supporters are looking at the effort long-term, especially if pro-business Gov. Bruce Rauner loses in November to Democrat J.B. Pritzker, who’s come out in favor of lifting the rent control ban.

“That will change the dynamic,” he said.

Tags: Commercial Real Estate, rent control

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Tags: Commercial Real Estate, rent control