Landlords Beware: Revised Rent Control Act Still Alive
The battle between tenant advocacy groups and Chicago apartment landlords is far from over with a proposed—and recently amended—statewide Rent Control Act still alive in the Illinois Legislature.
Under the newly amended House Bill 116, Illinois would be transformed from a state in which no local unit of government is permitted to enact rent control, into a state which would allow any municipality’s voters to call a referendum to remove the ban on rent control.
HB-116 was introduced by State Rep. Will Guzzardi (D-39th) early in 2021. It was amended on April 19, 2021, and referred to the House Rules Committee. If passed by the Illinois Legislature in 2022, Rep. Guzzardi’s bill would repeal the state’s 1997 Rent Control Preemption Act, a law, which prohibits local governments from enacting rent-control ordinances.
If a municipality’s voters pass a Rent Control referendum, it could limit the amount a landlord can raise rent at the end of tenant’s lease, regardless of the owner’s excessive expenses or financial hardship.
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.
“While passage of the highly controversial HB-116 is far from certain, it should serve as a wake-up call to property owners,” said landlord advocate Mike Glasser, president of the Rogers Park Builders Group.
The upcoming floor vote likely will be a referendum on whether Illinois Legislators choose to support working-class renters or the wealthy corporate real estate lobby, with “Ma-and-Pa” landlords caught in the middle, apartment experts say.
The first rent-control laws in the U.S. were adopted at the local level in the 1920s. They gained popularity in the 1930s as the economy recovered from the Great Depression, and cities saw an influx of workers during World War II. As the cost of housing soared after the war, with no new apartments being built, New York and other cities enacted price ceilings and rent freezes.
A recent survey by the Neighborhood Building Owners Alliance (NBOA), which represents small to medium-sized apartment owners, revealed that due to the pandemic one-third of Ma-and-Pa landlords have expenses exceeding their revenues and many no longer have the funds for basic building repairs.
One North Side landlord, who manages a family portfolio of about 20 apartments in four small buildings, recently had four furnaces go out.
The good-hearted landlord rushed to provide portable electric heaters because his furnace servicer said repair parts were on back order as a result of the pandemic.
Earlier in the fall, the same landlord had to make $3,000 in roof, gutter, hall and stairway repairs caused by last winter’s ice storms and gutter failures.
Because of the city’s rat epidemic, the landlord also has added more rodent boxes at all of his properties, and more frequent pest service at a cost of several hundred dollars. He even had to make an emergency call to his pest-control company to battle a swarm of wasps that invaded one building. Wasp control cost was $275.
The beleaguered landlord was hit with 2021 reassessment increases ranging from 38% to 63% on the four buildings in Old Town, Logan Square, and North Lincoln Square.
“We are expecting huge real estate tax increases on these properties when the second installment of the 2021 tax bill comes due in summer of 2022,” he said. “Rent increases are going to be mandatory, just to pay our mortgages.”
NBOA says Illinois Legislators should be focused on “the real housing crisis.” Property owners can no longer maintain their buildings, while so many tenants are unable or unwilling to pay rent during the pandemic.
Nationwide, just six states—California, Maryland, Minnesota, New Jersey, New York, plus Washington, D.C. have localities with some form of rent control today.
Last month, voters in Minneapolis and St. Paul approved ballot initiatives to enable the Twin Cities to cap rent increases at 3%. Santa Ana, Calif., capped rent increases in October. Michelle Wu, Boston’s newly elected Mayor, campaigned this year on restoring rent control, and 59% of voters polled support it.
Regardless of the proposed Illinois’ proposed rent-control legislation, apartment owners and managers argue that Chicago’s 2021 reassessment and Mayor Lori Lightfoot’s aggressive property tax hikes, combined with sharply higher water and sewer charges, and higher garbage fees are forcing landlords to raise rents to maintain thin profit margins or just to break even.
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.