The Real Deal Chicago

J.B. Pritzker wins governor’s race: What does it mean for Illinois’ real estate industry?

Developers and brokers are waiting to see how the next state chief executive tackles property taxes, rent control and more
By Alex Nitkin | November 06, 2018 08:03PM

J.B. Pritzker (Credit: Getty Images)

J.B. Pritzker sent a shudder through the real estate industry earlier this year when he publicly supported a measure to overturn Illinois’ statewide ban on rent control.

Come January, Pritzker will be sitting in the governor’s mansion. And property owners, builders and brokers are holding their breath to see whether the billionaire — backed by heavy Democratic majorities in both houses of the General Assembly — will be a friend or foe to their industry.

With just 72 percent of precincts reporting, Pritzker had a 55 percent to 38 percent lead over Gov. Bruce Rauner, according to The Associated Press. But it took less than an hour after polls closed for the incumbent to concede the election to Pritzker.

Real estate higher-ups have long decried the state’s political gridlock, high property taxes and underfunded public university system for making it harder to run their businesses in the state, and many saw Rauner as a possible antidote to the state’s woes.

And the industry is nearly unified in its opposition to rent control, a prospect advocates say has become one of the foremost threats on its radar. The grassroots Lift the Ban coalition has been gathering momentum for more than a year to legalize rent control, and Democratic lawmakers have already proposed two bills to do so: one that would simply reverse the 1997 law that makes rent regulation illegal — which Pritzker expressed support for — and another that goes a step further by imposing controls at the same time.

Brian Bernardoni, a lobbyist for the Chicago Association of Realtors, has compared the policy to “throwing a hand grenade on your lawn to get rid of dandelions,” according to the Tribune.

Voters in three more Chicago wards voted weighed in on rent control Tuesday, and early results showed the measures winning overwhelming support.

Most Illinois real estate developers have kept their views of the governors’ race to themselves, but a fair chunk have been open in their enduring support for Rauner and his low-tax, anti-regulation agenda.

In September, the Society of Industrial and Office Realtors and Colliers International hosted Rauner for a question-and-answer with David Kahnweiler, a contributor to the governor’s 2014 campaign. Rauner warned the room full of real estate executives in the room that “corrupt self-dealing” would run rampant in a Pritzker administration, and that the state’s economy would be “growing three times as fast” if Rauner got to implement his choice reforms.

A month later, a panel of Chicago-area industrial developers expressed unease over the higher taxes that might accompany a Democratic-controlled state capitol. Don Schoenheider, senior vice president of Hillwood Investment Properties, called Rauner a “bright, intuitive guy” trying to “turn around the Titanic.”

Other developers hope they can play ball with a Democratic administration, especially one led by a longtime private equity investor with a center-left economic agenda.

“He’s clearly a very sharp businessman, which to me means he knows what real estate and other businesses need to succeed,” said Steve Fifield, who runs Fifield Companies alongside his wife, Randy.

One of the city’s most outspoken developers on public policy, Fifield lobbied against recent changes to the city’s affordable housing rules and then offered a tweak that made it into the city code. He’s hopeful state lawmakers will support policies that offer tax incentives in exchange for building more affordable homes, he said.

Developers “respect J.B.’s intelligence and experience, and we hope he gives a thoughtful approach to people in the city like ourselves who want to find ways of keeping housing costs down,” Fifield said.

Industry pros will also be watching closely to see whether Pritzker and his counterparts in the General Assembly take steps to curb property taxes, a burden chafing landowners all over the state. Cook County assessor Joe Berrios lost in a primary election earlier this year to Fritz Kaegi, who claimed victory Tuesday night, after multiple investigations from the Tribune found that Berrios’ office skewed assessments in favor of wealthy homeowners.

A steady stream of embarrassing reports on Pritzker’s own use of his personal fortune have also raised doubts over whether he would lean into crackdowns on property owners.

The Sun-Times reported last year that Pritzker intentionally left his Gold Coast mansion in disrepair to score a paltry property tax assessment from outgoing assessor Joe Berrios, saving him an estimated $230,000 in taxes, followed by a similar report this year. Pritzker paid the county $330,000 last month in an effort to bury the scandal.

Opponents have pointed to his close association with state speaker Mike Madigan, a longtime property tax attorney whom the Tribune has called a “walking conflict of interest,” to downplay expectations that he could make the tax system fairer.

Pritzker has largely built his platform around amending the state constitution to allow the implementation of a graduated income tax, which he’s suggested could take pressure off property taxes. But even that policy, some brokers worry, could run high-end homebuyers out of the state.