This September will mark the 40th anniversary of the passage of Chicago’s Residential Landlord and Tenant Ordinance (RLTO). This history is personal to me as my mother was one of the founders of the Tenant’s Organization of Evanston, the organization that passed the Evanston RLTO in 1975 on which the Chicago ordinance was based.
The Chicago RLTO was passed after a long fight by tenants organizations that had been struggling with rising rents, lead abatement and little recourse when landlords didn’t fix things. For the first time, there were ground rules for landlords and tenants to follow, which helped level the playing field.
Fast-forward 40 years, and tenants still struggle with similar issues, but now have additional problems brought on by an increasing number of units owned by large corporate landlords. These property owners charge exorbitant move-in fees, are slow to fix things and hide behind limited liability companies to avoid accountability. It’s time for an update to address today’s landscape.
Two opposing ordinances have been introduced in the Chicago City Council. One of them, Protecting Renters Ordinance (PRO), would greatly expand tenant protections including banning junk fees, creating a registry of landlords, providing eviction defense, creating a city bureau to enforce tenants rights and requiring landlords to give a reason when they don’t renew a lease (often called just cause) and pay for relocation assistance for tenants whose leases aren’t renewed through no fault of their own. The opposing one, the Fair and Accountable Illinois Rental (FAIR) Ordinance, removes almost all of those provisions and instead rolls back tenants rights by exempting a large swath of landlords from existing law and tweaking other language that gives the original ordinance less teeth.
The provision that has stirred up the most concern from the real estate industry is the just cause protections with relocation assistance (three to five months’ rent in most cases). Just cause tenant protections are designed to ensure that tenants are allowed to choose to continue their tenancy in a rental unit each year unless the landlord has a legitimate, specified reason to refuse to renew the lease, such as a family member moving in or substantial rehabilitation. They are based on an understanding that moving is a costly, destabilizing process for tenants that can lead to housing instability or homelessness and that good tenants should have a presumptive lease renewal. The real estate lobby in Chicago is asserting that this will kill new apartment development and that the costs will drive large rent increases.
The Institute for the Public Good looked to see if that was empirically true. Over the past 10 years, 12 cities in California, Washington and Oregon have adopted similar policies and we analyzed the data to see if those cities saw higher rent increases and less development than comparable cities without the policies. The data showed they did not.
Key findings of the study include:
• Cities with just cause protections and relocation assistance saw slower rent growth (2.2% average yearly growth) than comparison cities (3.6% average yearly growth).
• Cities with larger amounts of relocation assistance showed no pattern of greater increases than cities with lesser amounts, disputing the contention that costs get passed directly to tenants.
• The tenant protection policies did not stifle development — cities with the policies had a higher average multifamily permitting rate (63 permits per 1,000 units of housing) during the years of the study than comparison cities (43 permits).
• The presence of rent control in the cities with the tenant protections did not artificially constrain rents during the years of the study as the increases in the vast majority of years never hit the rent ceiling and the data examined was for rent for new listings that are not subject to rent control.
• Cities that track relocation assistance payments demonstrate that fewer than two per 1,000 units had to pay this cost, indicating that this is a rare occurrence, not an everyday cost of doing business.
The bottom line is that a home is a critical foundation — essential to job stability, health and access to community support. Minimizing the instances when tenants need to move is good policy, and paying for their costs when they do when they are not the cause keeps families stable. The research shows there is no evidence supporting the claim that just cause and relocation assistance will raise rents or kill development.
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We can both build more and prioritize tenant stability. So let’s follow the lead of cities that have done that and pass the PRO ordinance with these important provisions intact.
Julie Dworkin is co-executive director of the Institute for the Public Good in Chicago.
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