(Above) Reside on Morse, an apartment building on Morse Avenue in Rogers Park.
4-Mar-19 A battle between tenant advocacy groups and Chicago apartment landlords is heating up in the Illinois Legislature surrounding a new proposed statewide Rent Control Act.
While passage of the highly controversial House Bill 2192 is far from certain, it should serve as a wake-up call to property owners who will surely be surprised to learn how radical this proposed rent control legislation is, and the lengths to which proponents of rent control both in Chicago and in Illinois are prepared to go, said landlord advocate Mike Glasser (left), president of Rogers Park Builders Group.
The proposed legislation would repeal the states Rent Control Preemption Act, a law passed by the Illinois Legislature in 1997 that prohibits local governments from enacting rent control ordinances.
HB-2192 was introduced by State Representative Mary Flowers (31st District). A similar bill was introduced in 2018 by State Senator Mattie Hunter (3rd District) as Senate Bill 3512. Flowers and Hunter represent areas predominantly located on the south side of Chicago and in the south and southwest suburbs.
In 2018, State Representative Will Guzzardi (39th District) also urged repeal of the Rent Control Preemption Act. Since there are currently no limitations on landlords demanding excessive or unfair residential and commercial rent increases, Guzzardi said this has led to skyrocketing rents and encroaching gentrification of once stable neighborhoods in Chicago and throughout Illinois.
In 2017, Chicagos high-tech job boom has attracted more than 39,000 luxury apartment dwellers who earn $150,000 or more per year, according to a new report from RentCafé. That is more than triple the number of wealthy renters the Windy City had in 2007.
Highlights of HB-2192...
Rent increases would be strictly regulated by six regional Rent Control Boards covering all 102 counties in Illinois.
The Rent Control Boards would consist of seven members. Five of these members would be tenants or individuals who work for tenants rights organizations. Only two members would be landlords or property owners.
Thats 71 percent of the voting rights to tenants and their supporters, and 29 percent to property owners, noted Glasser. That would all but insure that tenants groups would have full control over these Rent Control Boards in perpetuity.
Rent increases would be allowed to occur no more than once every 12 months and would be limited to no more than the consumer benchmark for the same 12-month period as set forth by the Rent Control Board for that region. The once-every-12-month rule would apply whether a unit vacates or not.
Rent could only be increased by the amount of the consumer benchmark over the previous years rent. While the Rent Control Board will set which benchmark to be used, it is fair to assume that this benchmark will approximate the rate of inflation.
The proposed Rent Control Act also includes the following stipulations...
A landlord must give 90 days notice of any rent increase and the percentage hike can be no greater than the rent stabilization rate currently in effect.
(Right) Oakwood Shores Apartments at 3859 South Vincennes Avenue.
The current rental rate would remain in effect regardless of whether a tenant moves out or is displaced from the dwelling unit. The rent would remain the same for a new tenant who moves into the apartment, or ownership or management of the unit has changed.
If a landlord has not increased the rent within 12 months before a tenant moves into the unit, the landlord may only increase the rent to the extent allowed by the rent stabilization rate currently in effect.
Uncertain times ahead for apartment owners, developers, and renters
Regardless of the proposed rent control legislation, apartment owners and managers argue that Mayor Rahm Emanuels aggressive property tax hikes combined with sharply higher water and sewer charges, plus new garbage fees, are forcing landlords to raise rents to maintain thin profit margins.
Faced with a 28 percent real estate tax increase and substantially higher city utility fees in 2017, one Lincoln Park four-flat owner was forced to raise rents 4 to 5.5 percent, or about $100 a month. Recently, the same landlord was hit with a 92 percent assessment increase that could lead to a skyrocketing 2018 tax bill, pushing rents even higher in 2019.
According to a new rental forecast by Integra Realty Resources, Chicago apartment developers and owners are bracing for a period of great uncertainty.
Integras senior managing director, Ron DeVries (left), predicted that expected real estate tax increases, potential changes to affordable housing requirements, and the specter of rent control could push down the profitability of existing apartment buildings and new development.
That could lead to a slowdown in apartment construction and likely push rents higher for downtown residents, DeVries predicted.
Meanwhile, some owners of apartment buildings in the citys lakefront neighborhoods are scratching their heads and wondering if they soon will be required to go into the rent subsidy business like Uncle Sam.