New Proposed Illinois Rent Control Act Riles Chicago Landlords

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, president of the Rogers Park Builders Group.

Under the proposed legislation, Illinois would be transformed from a state in which no local unit of government is permitted to enact rent control, into a state in which no unit of local government would not subject to enforcement of rent control, Glasser said.

HB-2192 was introduced by State Rep. Mary E. Flowers (D-31st). A similar bill was introduced in 2018 by State Sen. Mattie Hunter (D-3rd) as Senate Bill 3512. Rep. Flowers and Sen. Hunter represent areas predominantly located on the South Side of Chicago and in the South and Southwest suburbs.

In 2018, State Rep. Will Guzzardi (D-39th) also urged repeal of the state’s Rent Control Preemption Act, a law passed by the Illinois Legislature in 1997 which prohibits local governments from enacting rent-control ordinances.

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, Chicago’s 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 RentCafe. That is more than triple the number of wealthy renters the Windy City had in 2007. Some of the highlights of HB-2192 follow:

• 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 comprised of tenants, or individuals who work for tenants’ rights organizations. Only two members would be landlords or property owners.

“That’s 71% of the voting rights to tenants and their supporters, and 29% 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.” Rent increases 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 year’s 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.

• 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 dwelling unit has changed.

• If a landlord has not increased the rent within 12 months before a tenant moves into the dwelling unit, the landlord may only increase the rent to the extent allowed by the rent stabilization rate currently in effect.

Regardless of the proposed rent-control legislation, apartment owners and managers argue that Mayor Rahm Emanuel’s 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 4-flat owner was forced to raise rents 4% to 5.5%, or about $100 a month. Recently, the same landlord was hit with a 92% 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.

Ron DeVries, senior managing director of Integra Realty Resources, 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 city’s lakefront neighborhoods are scratching their heads and wondering if they soon will be required to go into the rent subsidy business like Uncle Sam.

For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.