Editor’s Note: CCH is a partner in the Chicago For All coalition that is advocating with the city for an SRO preservation ordinance being introduced in the Chicago City Council on Sept. 10.
By Mark Brown, columnist
Owners of Chicago’s endangered single-room occupancy buildings and residential hotels went on the offensive Monday, arguing a city preservation effort is more likely to put them out of business.
In a pre-emptive strike, Eric Rubenstein, co-president of the Single Room Operators Association, said an Emanuel Administration-backed ordinance to be introduced at the City Council on Wednesday “would force the SROs to start shutting their doors.”
“It’s not going to do anybody any good,” said Rubenstein, whose group has argued the city should offer financial incentives to SRO owners to stay in operation instead of punishing them if they try to redevelop or demolish their properties.
Are they crying wolf?
Good question, and I’m not going to pretend to know the answer.
What’s really eating at the SRO owners, though, is that they believe the city ordinance reduces the value of their properties by limiting their resale market.
The ordinance makes SROs a less attractive acquisition target for developers by imposing punitive city fees if they reduce the number of affordable housing units in a building. The owners say this is an unconstitutional “taking” of their property.
As you know, I’ve been trying to help call attention to the problem of the vanishing SROs for more than a year now.
Some 2,200 SRO units have been eliminated in the city in just the last three years, mostly on the North Side, and there’s only about 6,000 remaining in 75 buildings. The tiny rooms aren’t pretty and some of the buildings are in bad shape, but they’re cheap and they allow a lot of low-income people to keep a roof over their heads.
For that reason, I want to be supportive of the community groups that have been pushing for an ordinance to stem the tide. That doesn’t mean I can ignore the opponents.
The ordinance being crafted in conjunction with Emanuel’s staff very much has the support of the community groups, who tout its protections for SRO tenants faced with relocation. They believe the owners are overreacting.
“Of course, they’re going to be upset,” said Norman Kaeseberg, who has been working the SRO issue with ONE Northside, the group leading the Chicago for All coalition.
Kaeseberg said city lawyers drafting the ordinance have anticipated the blowback from owners and say they are confident in their legal position.
Mary Tarullo, a senior organizer for ONE Northside, said the coalition groups are “excited that the mayor’s administration has partnered with us to address the SRO crisis in Chicago. We must do as other cities have done across the country and pass legislation that will preserve this needed housing and protect the vulnerable tenants who call this housing home.”
An even tougher SRO-protection law in Los Angeles has done nothing to hurt the SRO market in that city, she said.
“Whether it’s constitutional or not, it still stinks,” said Robert Berry, the other co-president of the association that represents SRO owners. Berry has been in the SRO business since 1977, following in the footsteps of his father.
Berry predicts a court challenge if the ordinance is approved as written.
City negotiators have stressed they will continue to revise the ordinance in consultation with building owners and others but are unwilling to support a “purely voluntary, incentives-based approach” as the owners have sought.
The owners suggested a menu of 15 possible incentives to make SRO ownership more financially attractive, including everything from free garbage service to a full rebate of city property taxes and an exemption from the city minimum wage ordinance.
The owners argue what nobody seems to understand is that reducing their property values has an immediate impact on their ability to stay in business by making it more difficult for them to borrow operating capital and possibly causing banks to call in their loans.
“The city is saying we want to change the rules in the middle of the game,” complained Rubenstein, who started in the SRO business in 1984 and owns three. He also runs the Single Room Housing Assistance Corp., which receives city and federal funding to house homeless individuals.
Rubenstein will tell you that what he likes about the SRO business is that it gives him the satisfaction of helping people, many of whom would otherwise be on the streets.
But, he acknowledges, “It IS a business.”
The trick is to keep him in business.