Chicago’s Anti-Gentrification Rule Ceases in Some Districts

Chicago’s controversial anti-gentrification ordinance got a little smaller after pushback from two aldermen who say it’s hurting the very communities it’s meant to protect.

City council voted Wednesday to remove parts of the 31st and 36th wards from the Northwest Side Preservation Ordinance, which passed last year to slow displacement in gentrifying neighborhoods like Logan Square and Avondale, Crain’s reported.

The change, proposed by Aldermen Felix Cardona Jr. and Gilbert Villegas, removes nearly 5 percent of the ordinance’s roughly 6-square-mile coverage area.

Tenant advocates have praised the law, particularly its “right of first refusal” provision, which gives renters the chance to organize and buy a building before it’s sold. But some longtime owners say it’s choking their ability to sell.

“It’s not working,” Cardona told the outlet a month ago, noting the ordinance had created delays around property sales. At least four Avondale property owners have complained that the tenant-first rules slow their ability to retire or cash out of their appreciated properties, and that the ordinance is “putting red tape on,” he said. “You’re messing with their retirement.”

Property owners in Cardona’s ward, many of whom are mom-and-pop landlords who’ve held multifamily buildings for decades, are running into delays and financial uncertainty when trying to sell. The ordinance imposes mandatory waiting periods and extra legal steps for sellers to give tenants time to arrange financing, a process few are actually prepared for, Cardona said.

The city didn’t do enough to educate renters on how to pursue ownership and failed to consult real estate professionals or attorneys before rollout, he said. Villegas raised concerns about legal ambiguities and snags in getting mortgages or title insurance, saying the measure “did not get enough attention.”

The ordinance still applies to the vast majority of the 35th ward, represented by Alderman Anthony Quezada, who said he is committed to the effort. Nearly 89 percent of his ward falls within the zone, compared to just 6.7 percent of Cardona’s.

Chicago’s preservation ordinance was modeled after similar legislation in Washington, D.C., but has drawn criticism from the industry for creating needless friction in dealmaking, particularly in a high-interest-rate environment where small landlords already face shrinking margins.

— Judah Duke