CCH is a partner in the coalition advocating for the Keep Chicago Renting ordinance.
By Mary Ellen Podmolik
A Chicago City Council committee on Wednesday passed a measure that would give additional protections to renters in foreclosed buildings but the proposed ordinance will be held in committee until June 5.
Under the proposal adopted by the council’s housing and real estate committee, lenders that repossess a foreclosed rental building of any size – whether it’s a detached single-family home or an apartment high-rise – would have to either offer tenants $12,000 per rental unit in relocation expenses or leases with annual rent increases of no more than 2 percent. The proposal would only apply to any entity that acquires a rental building at a court-ordered foreclosure auction, and not to anyone who purchases a foreclosure in a private transaction after the auction.
About 90 percent of foreclosures are repossessed by lenders at the end of the foreclosure process.
“We keep being adversaries with the banks,” said Ald. Richard Mell, 33rd, who sponsored the measure. “I don’t want to be an adversary. I want to be a partner. I didn’t create this problem, where people are passing around funny money. All I want is the banks to come in this city and say ‘let’s work this problem out.'”
Mell said despite holding the proposed ordinance in committee, he does not expect any substantive changes to it. Rather, the additional time will allow lenders to further discuss it with the city. The proposal is supported by Mayor Rahm Emanuel.
While many supporters voiced their support to alderman during the committee hearing, no lender spoke.
Ald. Matthew O’Shea, 19th, backed an earlier version of the ordinance – one that did not specify relocation expenses – but said he could not support the current version because he believed the compliance costs involved would drive down the values of foreclosed properties as well as other homes in a neighborhood.
“I believe we may have missed the mark,” O’Shea said. “This ordinance seems to solve one problem while creating a larger one.”
Brian Bernardoni, senior director of government affairs and public policy at the Chicago Association of Realtors, said the association in not in philosophical disagreement with the proposal’s intent and the association was neutral on earlier drafts of the ordinance.
Neither the Chicago Association of Realtors nor the Illinois Association of Realtors support the current version because, Bernardoni said, it would be bad for the real estate market, bad for the city’s transfer tax collections, will make renting more expensive and may face legal challenges.
“If that’s the lawsuit, we’ll take that one on,” said Rose Kelly, senior counsel in the city’s law department. “We’re pretty sure we’re in compliance.”