Editor’s Note: CCH is a member of the Chicago For All coalition of housing advocates negotiating for an SRO preservation ordinance.
By Mary Ellen Podmolik, Tribune reporter
Chicago has backed away from a proposal to regulate the redevelopment of single-room-occupancy hotels in the city, and instead will offer more options for building owners and developers while still requiring cash payments for displaced long-term tenants.
Backed by Mayor Rahm Emanuel and introduced last month, the original proposal’s long list of mandates would have barred the city from approving the demolition or conversion of an SRO to market-rate housing unless the owner set aside 20 percent of the units for low-income residents or paid the city $200,000 for each unit that should have been kept affordable.
That key requirement, deemed onerous by building owners who said they might mount a legal challenge, is gone from a revised proposal circulated among housing groups, building owners and developers.
However, the proposed substitute Single-Room Occupancy Preservation Ordinance still offers protections and cash payments that range from $2,000 to $10,600, depending on the circumstances, to displaced tenants who have lived in a building for at least 32 days.
Michael Negron, Emanuel’s policy chief, said set-aside requirements were not needed to accomplish the city’s goal, which is to preserve the stock of affordable housing in gentrifying neighborhoods. “The right-to-purchase section really gets at our concern, buildings that are housing vulnerable populations but are in areas that are growing,” he said. “Now there’s an early warning system.”
Owners who choose to sell a building would have three options. They could negotiate in good faith for at least 180 days with a representative of tenants like a nonprofit group that would keep the entire building affordable. If those talks produce no agreement, the owner could sell to another buyer within the next 90 days with no affordable-unit restrictions. If no sale occurs in those 90 days, the owner would have to again start the process of finding a buyer that would keep the building affordable.
Or, owners could bypass the first two options and sell the building to whomever they choose. In that case, the buyer would have to pay to the city $20,000 per unit in preservation fees. In that scenario, each displaced long-term renter would receive $10,600.
Long-term tenants who are not given the opportunity to return to their building would receive a relocation payment of $2,000 or three months’ rent, whichever is greater.
Shorter-term displaced tenants would get back their security deposits plus interest and any unpaid rent.
The revised proposal could be taken up by the city’s housing and real estate committee next week. In July, the city passed a six-month moratorium on issuing building permits for projects other than normal maintenance while it developed protections for Chicago’s supply of housing for its very-low and low-income residents. In the past three years, more than 2,000 rooms of housing have been converted to market-rate apartments. The city has said it wants to preserve at least 700 SRO units during the next five years.
“We recognized the reality that we needed to compromise,” said Mary Tarullo, a community organizer with ONE Northside, a group working with the city to draft regulations. “We still think we have a strong ordinance. The goal is for these developments to be put into the hands of developers who are going to improve them and also keep them affordable.”
Fees collected under the ordinance would be set aside in a fund from which SRO owners could seek forgivable loans for building rehabs.
Owners say the proposal still needs more tweaks. They say the 180-day sale negotiation period is too long and the potential $10,600 payment is too high and unfairly based on the Keep Chicago Renting ordinance when SROs, by their definition, house only one person in a unit.
“Before, the city said take it or leave it,” said Eric Rubenstein, an owner of three SROs and executive director of the Single Room Housing Assistance Corp., which represents 75 properties. “The city is understanding better that the original version was lopsided and unfair and would drive these properties out of business. We still have a lot of work to do on this.”