Mayor Brandon Johnson and his allies on the City Council are preparing later this month to introduce an expansive ordinance that they believe will help those who rent homes in Chicago, a challenging proposition these days. The proposal isn’t final yet, but the disturbing preliminary summary we’ve seen would exacerbate the very dynamics (notably, a housing shortage) that are putting upward pressure on rents.
The worst of the Johnson administration’s ideas therein is to compel landlords to pay thousands to tenants when their leases aren’t renewed or are forced to move due to an “unconscionable” rent increase.
“Unconscionable,” as far as we know, isn’t a legal term. A draft version of the ordinance that we saw described the amount as what “a reasonable person would find to be unconscionable.”
Needless to say, there are plenty of reasonable people who would differ quite a bit on how much of a rent hike would fall into that category. Some would define any increase at all as “unconscionable.”
The vagueness, though, is the point. The obvious intent is to make landlords fearful enough of being taken to court that they keep their rent increases lower than they might otherwise — backdoor rent control in a city in which explicit rent control isn’t allowed.
Other provisions would force landlords to pay tenants whose leases aren’t renewed, even for good cause, making it far harder for property owners to be rid of problem tenants. And, yes, for all the complaints about landlords that everyone hears, we can testify personally that problem tenants aren’t uncommon in Chicago.
Want to be trapped in a building with a neighbor who plays loud music at ungodly hours or otherwise creates a consistent nuisance? Johnson and his aldermanic allies would make that prospect far more likely.
The numerous other problematic provisions include a ban on move-in fees, which have supplanted the security deposits landlords used to demand from new tenants. Tenants don’t like move-in fees because they’re non-refundable, but they cover landlords’ costs of repairing and cleaning units between tenants. Without them, rents likely would rise further to cover those costs.
Speaking of costs, the city would charge multi-unit property owners new annual fees — as high as $20 per unit for smaller buildings — to raise an estimated $20 million to hire lawyers and inspectors to enforce the new restrictions in the ordinance.
Here’s the thing about higher costs. Landlords understandably seek to pass as much of those expenditures as possible to tenants. And in a supply-constrained market, making those rent hikes stick isn’t usually a problem. The more costs the city imposes on landlords, the more pressure the city puts on rents.
So is it “unconscionable” for a building owner to seek to recover their costs? The mayor’s proposal begs that question.
We met with leaders of the Neighborhood Building Owners Alliance, which represents owners of small- and mid-sized apartment buildings. Naturally, they oppose these measures, but their broader point resonated with us.
The mayor is treating them as an adversary. Most local building owners — and obviously, as in any walk of life, there are bad apples — care about and value their long-term tenants. They play an indispensable role in making Chicago work.
“We’re not here to be an enemy,” South Side landlord and NBOA board member Stephen Rich Jr. told us. “We’re here to provide housing.”
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“A lot of our housing providers are not big corporate landlords,” he added. “These are people who have day jobs and they’re looking to build some generational wealth. They have a few units or 10 units or something like that, so to make it harder for a housing provider to operate, that’s going to trickle through the ecosystem. It’s just going to make it tougher for the residents you’re trying to help and in essence for the city.”
Rich and NBOA President Michael Glasser emphasized that the city hasn’t consulted them at all about this initiative, which is a fundamental mistake the Johnson administration makes time and again. It relies almost exclusively on progressive advocates to tailor its proposals. Profit-making enterprises are viewed with suspicion.
So those who manage the everyday headaches of operating apartment buildings in Chicago, those who can provide a real-world perspective, are left out of the mix. That’s a recipe for bad, self-defeating policy.
We haven’t even addressed the city’s proposal for a registry requiring the disclosure of the identities of all investors in apartment buildings. Supporters say that will stop investors in poorly run apartments from hiding from public view. But it also surely will be a disincentive for more badly needed investment in new rental housing. How would you like all of your investments to be subject to a city registry listing your name and address?
There may well be reasonable steps the city can take to help tenants push back against bad landlords, such as helping with legal representation or further making sure that those landlords fulfill all their obligations. But only a fool would make it impossible for landlords to make ends meet at a time of housing scarcity. Talk about counterproductive.
Instead of this punitive plan, Chicago should focus on the urgent need for more residential construction in order to alleviate the supply-and-demand imbalance that is helping to raise rents for the roughly 54% of city households that don’t own the roof over their heads.
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