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Rent control preemption bill praised, criticized

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Illinois

* From Lift the Ban…

The Lift the Ban Coalition applauds members of the Illinois House of Representatives’ Housing Committee for voting to pass HB116 (Chief Sponsor Rep. Will Guzzardi, D-39) out of the committee during a hearing on March 24.

HB116 would lift the 1997 Rent Control Pre-Emption Act, allowing Illinois’ municipalities to choose to enact rent control, a policy that limits the amount a landlord can raise rent at the end of a tenant’s lease and has been proven to stabilize communities by keeping families in their homes. The upcoming floor vote will be a referendum on whether Illinois’ Democrats choose to support working-class renters of color or the wealthy corporate real estate lobby.

Since 1997, the ban has prevented any Illinois city from stabilizing rents through rent control. Half of all renter households in Cook County are “rent burdened,” paying more than 30% of their income on rent [source]. There is no legal protection against a landlord raising a tenant’s rent by any amount.

“In these trying times, our state legislators should give local municipalities every tool that’s possible to stabilize and protect Illinois residents,” said Rod Wilson, executive director of the Lugenia Burns Hope Center. “Protecting renters should take precedence over protecting the real estate lobby and their price gouging of renters.”

The Coalition looks forward to continued collaboration with legislative allies including State Senator Robert Peters (D-13) to pass this legislation, and will continue the fight to bring rent control to Chicago and communities across the state.

* Neighborhood Building Owners Alliance…

Declining rent collections and rising rent arrearages are threatening the stability of neighborhood housing, and instead of finding ways to support this crucial industry, state legislators today advanced a measure that will further threaten housing.

Throughout the entire pandemic housing providers have exhausted their resources to operate and keep their buildings open despite many tenants unable or unwilling to pay rent. Instead of focusing on this problem, the Illinois House of Representatives Housing Committee passed legislation allowing for rent control throughout the State. In cities across the world, every major study has shown that rent control has actually harmed renters by reducing the supply of affordable housing and boosting rents for first-time renters. Rent control encourages housing providers and their bankers to exit markets where these measures are in place. In short, rent control makes housing more scarce and more expensive.

A recent survey conducted by the Neighborhood Building Owners Alliance (NBOA), which represents smaller to medium sized housing providers, revealed that due to the pandemic one-third of smaller housing providers have expenses exceeding their revenues. In other words, these neighborhood housing providers, who provide the bulk of housing in region, no longer have the funding for basic building repairs. The following can be attributed to the NBOA:

“Legislators should be focused on the real housing crisis right in front of us which is property owners can no longer maintain their buildings as so many of their tenants are unable or unwilling to pay rent. Policy makers at the state and local level should focus on how the pandemic has forever changed housing before they enact new policies.”

Discuss.

posted by Rich Miller
Wednesday, Mar 24, 21 @ 3:10 pm

Comments

Good politics, and good policy. Pritzker campaigned on lifting the ban on rent control, and he should throw his support behind this bill. Let the landlords plead their hardship case to municipalities.

Comment by Quibbler Wednesday, Mar 24, 21 @ 3:20 pm
I like government regulations. But I only like regulations that work. My past research on the issue indicates that rent control does not work. Here is one overview https://www.localhousingsolutions.org/act/housing-policy-library/rent-regulation-overview/rent-regulation/

Comment by City Guy Wednesday, Mar 24, 21 @ 3:27 pm
Does the “lift the ban” coalition support capping increases in property taxes to their proposed caps on rent increases? If not, I can’t take them seriously. I can’t imagine JB running on statewide rent control in 2022. Time to see how “progressive” this Governor truly is.

Comment by 1st Ward Wednesday, Mar 24, 21 @ 3:36 pm
Good luck with increasing the supply of apartments if rent control passes. Just look at NYC.

Comment by Veteran Up North Wednesday, Mar 24, 21 @ 3:39 pm
It would be my preference for Illinois to pass a law akin to New York’s law. But removing the local preemption from the books is a start. The argument that there will be a housing shortage if this law passes is pure Econ 101 garbage. There already exists a housing shortage in affordable homes if over half of Cook County renters are rent burdened. If the market was so great at providing housing, why has this failure persisted for decades?

If the market won’t provide affordable homes we the people should do it for ourselves. Ask the Vienna, Austria government for pointers. They have beautiful luxurious social housing at affordable rates.

Comment by Homer Simpson's Brain Wednesday, Mar 24, 21 @ 3:44 pm
Quoting from City Guy’s link “They show that while rent regulations clearly help low-income tenants who are able to find regulated apartments, they worsen the affordability crisis in the long-term, as landlords are incentivized to pull their properties off the rental market, shrinking the overall supply of rental housing.”

The Economist: After a year, Berlin’s experiment with rent control is a failure - Rents may be down, but so is the supply of homes https://www.economist.com/europe/2021/03/09/after-a-year-berlins-experiment-with-rent-control-is-a-failure

Comment by Blake Wednesday, Mar 24, 21 @ 3:45 pm
This law was part and parcel with the attitude of the state knows what is best for each and every community and that is to be pro-business Pate Philips crew era. Happy to see it go. Let each community decide what it wants. There are arguments on both sides, well let’s hear the arguments at a local level where it can be concrete.

Comment by cermak_rd Wednesday, Mar 24, 21 @ 3:46 pm
== If the market won’t provide affordable homes we the people should do it for ourselves. Ask the Vienna, Austria government for pointers. They have beautiful luxurious social housing at affordable rates==

And who can forget the beautiful, luxurious social housing that was promised along South State street years ago. Lovely area that experiment created.

But sure, let’s do our best to recreate the bastions of affordable housing and zero gentrification that are New York City and San Francisco. /s

Comment by fs Wednesday, Mar 24, 21 @ 3:49 pm
“My past research on the issue indicates that rent control does not work.”

Interesting study from Stanford Graduate Students on rent controls effects in San Francisco. It helped aging boomers while screwing everyone else over (specifically stereotypical renters

Comment by 1st Ward Wednesday, Mar 24, 21 @ 3:50 pm
Homer Simpson’s Brain, zoning rules are not allowing housing supply to match demand. Zoom out at https://dkhertz.carto.com/viz/b69edcea-8351-11e4-b9e8-0e9d821ea90d/public_map and see how most of Chicago only allows single family detached housing in most of the city. The suburbs are even more restrictive of how much housing per acre, making the housing market function as musical chairs, not enough housing to go around in in-demand areas. The issue is a housing shortage, the most effective affordable housing measure would be allow housing construction in sufficient quantity of what & where is in demand for there to be enough to go around.

Comment by Blake Wednesday, Mar 24, 21 @ 3:50 pm
“If the market was so great at providing housing, why has this failure persisted for decades”

Show me the place where government has met the demands of affordable housing? The question you need to ask is will and how will lifting the ban alleviate existing housing shortages. There is plenty of data to show it doesn’t i.e. San Fran, NYC, etc. Comparatively speaking Chicago is one of the most affordable major metro cities in the country for renters.

Comment by 1st Ward Wednesday, Mar 24, 21 @ 3:54 pm
“making the housing market function as musical chairs, not enough housing to go around in in-demand areas.”

And those areas are in-demand because of green space available (thus limiting housing), lower density (thus providing better parking), neighbors of a high enough social class to enjoy local businesses that provide boutiquey goods and services (thus providing grounds for the formation of such businesses), etc.

Basically if you open the flood gates and massively expand housing in those “in-demand” areas you might find that people don’t actually want to live there anymore.

Comment by cermak_rd Wednesday, Mar 24, 21 @ 4:02 pm
1st Ward, I would like to point you to the nation of Singapore. Their social housing policy has been so successful that over 80 percent of the people live in social housing. This was accomplished by a conservative political party that has not lost power in decades.

Comment by Homer Simpson's Brain Wednesday, Mar 24, 21 @ 4:12 pm
Blake, I get it. You are correct about zoning. So should we pass a law ala Minnesota’s that liberalizes zoning across the state?

Comment by Homer Simpson's Brain Wednesday, Mar 24, 21 @ 4:16 pm
Homer Simpson’s Brain, liberalizing zoning across the state could be good, not just for affordability in Chicagoland, but around the state for things like reducing carbon footprints, reducing traffic crashes (shrinking how far/often people have to drive), reducing infrastructure costs by not forcing people to be more spread out than people would if not restricted by density caps.

Comment by Blake Wednesday, Mar 24, 21 @ 4:23 pm
“I would like to point you to the nation of Singapore”

We live in the US not Singapore. Show me where it worked in the US under US laws in the US political, bureaucratic, economic and financial system. If you look at NYCHA they have been under a federal consent decree for years from HUD having lead paint, rats, broken pipes, mold, and awful living conditions.

https://www.nytimes.com/2019/01/31/nyregion/hud-nycha-deal.html

Comment by 1st Ward Wednesday, Mar 24, 21 @ 4:27 pm
The housing problems in Chicago are made worse by the crime problem that is concentrated in some neighborhoods. There are great neighborhoods that are being abandoned because if you can afford to move you do.

The second issue, perhaps related in part to crime, is the housing stock is not being maintained. It is sad to see the empty lots from houses that were torn down.

Comment by City Guy Wednesday, Mar 24, 21 @ 4:46 pm
I think the issues with US social housing has been that it’s inevitably underfunded, and intentionally or at least knowingly designed to be undesireable to live in.

US political rhetoric often assumes poor folks deserve what they get - any attempts to make “nice” social housing are depicted as an unacceptable handout to undeserving people, at the expense of the deserving taxpayers. Social housing is generally built in areas that are already impoverished, because wealthy areas fight tooth and nail to keep it out of their backyards and usually have the political influence to succeed. And, like impoverished areas in general, housing projects have high crime. This creates a vicious cycle that justifies taking funding away from future projects or not doing them at all.

And there’s a logic to that fighting the placement of social housing in your neighborhood, because the stigma attached to social housing leads to tanking property values, and the stigma is not helped by making housing projects ugly, unliveable, and poorly constructed. Again, this feeds the cycle. The failure of social housing isn’t an inevitability, and social housing could be done right.

Of course, its a big political ask that I don’t see happening in IL for the immediate future, so in the meantime I think combination of zoning changes and allowing municipalities to craft their own rent stabilization policies is needed.

Comment by Actual Red Wednesday, Mar 24, 21 @ 4:51 pm
If HUD recognizes the need to increase rent on subsidized properties to allow owners to earn money to maintain their property and incentivizing them to run them well then rent control doesn’t make sense to me. How do you limit the income let yet the expenses increase to where the property can’t be maintained.

Comment by BugLou Wednesday, Mar 24, 21 @ 5:00 pm
Rent control is a horrible failed concept. it is only necessary in limited situations where you have run out of developable land (think Hawaii or San Francisco).

Forget tent control, instead loom at the obvious opportunity of creating more development, more affordable housing, and more good union jobs, by expanding fast and efficient public transportation. high speed metro, expanded higher speed el, to all adjacent communities from sea this problem

Comment by Merica Wednesday, Mar 24, 21 @ 5:14 pm
Another part of the problem is the structure of financial assistance to build affordable housing in the U.S. It is accomplished in large part as tax credit programs. That keeps the “expenditures” on affordable housing low and more under the radar. The problem is rather than having a direct low/no interest loan program, there is a complex program that requires layering multiple sources of funding. That requires bond lawyers and syndicators who are making good money. It also results in competition for funds that increases the cost of the housing. If you want to build nice simple housing, you will never be awarded tax credits because you won’t score high enough during the allocation process. But throw in some expensive bells and whistles and you win the credits.

Comment by City Guy Wednesday, Mar 24, 21 @ 5:32 pm
I don’t support rent control but it should be up to municipalities to decide what’s best for them, lift the ban.

Comment by Linden Dem Wednesday, Mar 24, 21 @ 6:29 pm
Rent control is like the eviction moratorium–fine as an emergency measure, but not good as a permanent solution. (For the record, I am against the former and in favor of the latter, for the time being.) Housing affordability is a chronic problem, not an acute one, and needs different solutions than rent control.

We have a shortage of affordable housing all over this state, and state and local governments have many tools at their disposal to encourage both market rate and affordable housing development. But rent control is far from the best one.

If the governor was determined to push this through the GA, the best compromise would be to pair any attempt at rent control with a requirement for a rent controlling-municipality to grow their housing supply steadily. If they can’t–or won’t–then they would lose the ability to limit rents. But, again, the best solution would be to avoid rent control entirely.

Comment by Benjamin Wednesday, Mar 24, 21 @ 7:03 pm
Where do the small landlords have enough political influence to overcome the “something for nothing” crowd? Taxes will go up (and UP), expenses will continue to go up and landlords won’t be allowed to increase rents. Time for the small residential landlords to salvage what they can and leave.

Comment by Looking down the Road Wednesday, Mar 24, 21 @ 7:12 pm
Karl Marx would love this one.

Comment by South Side Sam Thursday, Mar 25, 21 @ 6:56 am
Are they exempting property taxes from the rent cap?

Comment by Just Me 2 Thursday, Mar 25, 21 @ 8:17 am