Chicago Realty Roundtable Aimed at Sustainable Economic Development

Chicago Realty Roundtable Aimed at Sustainable Economic Development

Last night I had the incredible opportunity to attend a wonderful panel discussion at the Union League Club of Chicago about the future of two incredibly important real estate ordinances featuring four of the most influential voices in the future of real estate development in Chicago. The discussion was moderated by David Kohn, the Executive Director of Public Affairs for the Union League Club of Chicago, and entitled, "Examining Chicago's Affordable requirements Ordinance and the Residential Landlord and Tenant Ordinance." The panelists included Brian Bernardoni the Director of Governmental Affairs for the Chicago Association of REALTORS, Chicago City Councilman Alderman Ameya Pawar of the 47th Ward, Adam Gross of Business and Professional People for the Public Interest, and Paul Colgan the government relations consultant representing the Home Builders Association of Greater Chicago.

Up for discussion were proposed changes to the Affordable Requirements Ordinance - Chicago Municipal Code 2-45-110 and Chicago Residential Landlord Tenant Ordinance - Chicago Municipal Code 5-12. Briefly, the Affordable Requirements Ordinance requires that all residential developments of 10 or more units that receive city assistance, funding, or zoning changes that allow for increased density must provide at least 10% of their units at affordable prices or donate $100,000 per required units to the City's Affordable Housing Opportunity Fund. For-sale housing must be affordable to units earning 100% of the area's median income (AMI) as defined by HUD, the US Department of Housing and Urban Development. Rental units must be affordable to those earning 60% of the AMI. The Chicago Residential Landlord Tenant Ordinance, or RLTO, regulates residential leasing agreements between landlords and tenants in the city of Chicago. The RLTO is widely considered one of the most tenant-friendly ordinances in the nation and features extremely high penalties against landlords for even the most minor of violations and allows tenants the right  to recover attorneys' fees and court costs with every successful lawsuit. For example if a landlord shorts his tenant on the accrued interest of the security deposit, even by a single cent, Chicago's RLTO dictates the the tenant shall be entitled to punitive damages of all forgone monies plus two times the full security deposit along with all attorneys' fees and court costs (yes, you read that right, you are entitled to interest on your security deposit and if you didn't get it you should lawyer up)!

Brian Bernardoni began his remarks by explaining how critical Chicago realty is not only to his constituency of over 13,000 REALTORS but also to the city's economic vitality as a whole. If ordinances are tweaked to make the cost of building in Chicago even more cost-prohibitive than his realtors have nothing to sell. If there is nothing to sell then the city's tradesmen and contractors have nothing to build. Moreover he called for a one word change to the RLTO, from "shall" to "may" which would give judges more discretion to dish out different punitive penalties depending on the egregiousness of the offense. He said that the only ones benefiting from the current situation are tenant attorneys who have made an exorbitant sum from this draconian law. Moreover he said that his organization would now be recommending that tenants only seek a non-refundable "move in fee" of up to half of one months rent in lieu of a security deposit in the future.

Alderman Ameya Pawar had an incredibly unique perspective to add to the whole debate. As a young man in his 30s, Pawar and his wife, both saddled with an incredible amount of student debt from graduate school, are still forced to rent in the district he represents in the city council because he can not afford to buy in his own district. Pawar explained how for many developers on the Northside, particularly in Gold Coast and River North, paying the $100,000 per unit fine to the Fund is preferable to giving up 10% of inventory. Moreover, he decried the complete lack of development on the city's South and West sides and said that for some developers the penalties simply made development unaffordable. His solution sought to end a one-size fits all city-wide band-aid solution in favor of a more targeted, area-specific "raising the ceiling and a lowering of the floor." By finding more equitable solutions the government could be in the business of "balancing" the real estate markets and preventing a loss of the socio-economic diversity which makes neighborhood living so great.

Adam Gross spoke about making "the city that works, work for working people." He gave an impassioned defense about the need for the city's clerks and support staff to be able to afford to live near where their jobs are. His focus is centered more on building more affordable units rather than simply building up the fund's war chest. Paul Colgan, on the other hand, said that tweaks to the municipal code that make building in Chicago more expensive for developers could force $900 million in already planned real estate development to simply halt overnight.

Despite the fact these men represent varying interests the repeated throughout the night the mantra that "the solution is in the room." In a city that is often plagued by disfunction caused by warring parties it was extremely refreshing to see that amicable and productive high level discussions were already being engaged in. Bernardoni felt confident that he could get Alderman Pawar and a few other city councilmen to sponsor a resolution calling for a simple up and down vote on the one word change to the RLTO. Colgan and Gross agreed with Pawar that the codes must be altered to allow for a greater inventory of affordable housing, which would be good for the vast majority of Chicagoans.

 
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