On Tuesday, May 7, we held our monthly “Coffee with Your GADs” chat, where members join our Government Affairs Director Brian Bernardoni for an informal discussion about policy and politics impacting the real estate industry. This is an opportunity for members to learn about CAR’s current advocacy initiatives and share any news or trends of interest.
Affordable Housing Solutions from the Home Builders Association
This month, we were joined by special guest Paul Colgan, Government Affairs Director at the Home Builders Association of Great Chicago. Colgan joined us to discuss the importance of affordable housing in all neighborhoods.
Chicago is the number one destination for Midwestern graduates, Colgan said. Why? It’s a hotspot for jobs and companies. From 2010 to 2018, 133,000 new jobs came to downtown Chicago alone. This creates not only a larger talent pool but also a more robust economy.
What’s Wrong with This?
While we want more people in our city, the influx has created a big pressure on housing and has become the main reason why so many high-rises are being built, with enormous pressure on the north side. These pressures lead to greater issues, such as higher rents and gentrification.
Often, multifamily developers get blamed for such problems, when the problems are a result of much larger market trends; multifamily developers are just responding to what the market is doing. For example: deconversions. Condos are being “deconverted” to smaller apartment units due to a need for the units. However, this trend results in a loss of naturally occurring affordable housing.
What Are Other Contributing Factors to Loss of Affordable Housing?
Colgan named issues like a strict Affordable Requirements Ordinance (ARO) and lengthy permit process as contributors to lack of affordable housing development. In a study done by the Home Builders Association, the ARO prevented 2,600-3,200 projects from being built over a 10-year period.
What Are the Solutions?
Current market trends have created significant barriers to affordable housing throughout the City of Chicago. To remedy this and encourage affordable housing development and sustainability, Colgan and the Home Builders Association have made the following recommendations:
- Modify the ARO
- Pass Property Tax Relief legislation
- Increase availability of CHA’s Rental Assistance Vouchers
- Expand rental assistance programs
- Continue with Building Code amendments
- Provide state and/or local tax incentives for workforce housing investment by Chicago employers
- Expand and fund housing rehabilitation programs
- Use innovation ownership structure advantages over cooperatives
- Focus on neighborhood development
- Designate 1,000 city lots to neighborhood development projects
- Zoning reform
- Oppose rent control
Federal Public Policy Issues
This week, GAD Brian Bernardoni and many Chicago REALTORS® are joining REALTORS® from around the country at the National Association of REALTORS® Legislative Meetings in Washington D.C. Here are the federal issues we’ll be addressing:
National Flood Insurance Program: 22,000 cities across the country use flood insurance, but there have been difficulties in getting a long-term reauthorization. As of now, it seems there will be another extension, but only for a one-year term. CAR will be fighting for a longer, reformed plan instead of another short-term extension.
Conforming Loan Limits: CAR has previously failed in its attempt to get the conforming loan limit increased. In D.C., CAR has scheduled time to speak with the Department of Housing and Urban Development to explore ways to strengthen the argument for an increase.
Tax Reform: CAR is focusing on the State and Local Tax (SALT) deduction. There’s a renewed interest in getting rid of SALT. However, CAR believes that in a high-tax state like Illinois, it’s important to keep it.
Opportunity Zones: Chicago’s permitting process is lengthy. For that reason, CAR is advocating for an extension on the Opportunity Zones program. With an extension, local investors have a greater opportunity to get the full yield the program offers.
State Public Policy Issues
Brian expressed his gratitude for all who attended REALTOR® Lobby Day at Capitol Conference in Springfield on April 30th. The REALTOR® voice was heard. The two main issues discussed include:
Rent Control: CAR strongly opposes rent control and strongly advocates for affordable housing solutions. While CAR and opponents of rent control made great strides in the first half of 2019, “Rent control is not dead; it’s dormant.” This remains a hot topic and it’s important that legislators and representatives are acutely aware of our opposition to any form of rent control.
Property Tax Assessments: Cook County Assessor Fritz Kaegei initially said he opposed rent control but has since increased assessments up to 200 percent in some neighborhoods. CAR believes this indicates that property taxes will increase and, in turn, increase rent. These changes and marketplace uncertainties could make it harder for REALTORS® to get financing done and close deals. CAR is supportive of transparency in reporting in assessments but is calling for the assessor to slow down and analyze the market before making such decisions.
Other State Issues:
Affordable Housing Tax Reform Package: We need greater incentives for development, like so many other cities have done. CAR is working closely with the Chicago Home Builders Association to find solutions and we plan to give some good news about their progress this summer.
Real Estate License Act: CAR is working to get it passed by the May 31st deadline. At this time, no changes have been made to the Act.
Fire Life Safety and State Fire Marshall: It’s official – this month, legislation passed that will allow the City of Chicago to be in charge of its own Fire Life Safety requirements. Updates on the implementation of this change will be coming soon.
Local Public Policy Issues
The City of Chicago gets a new administration this month. This means that all issues will be reintroduced, beginning this month, at the first City Council meeting. CAR’s immediate focus will be on:
RLTO: CAR supports amending the RLTO so that it protects landlords and property owners just as it protects tenants. CAR will continue to call for amendments to the RLTO to allow greater judicial discretion and the elimination of mandatory sentencing for minor offenses.
Transfer Tax: CAR successfully stopped five attempts to increase the real estate transfer tax to address the issues of homelessness, lead pipes and police pensions. CAR is steadfast in our belief that an increase in the transfer tax would not generate the revenue needed to address these concerns, and it’d only be a burden to home buyers and sellers.
Building Code: CAR sits on the committee for Building Code reform. Recently, the committee was successful in writing the first update to the building code in 70 years! In addition to ensuring the proper education and implementation of the new Building Code ordinance, CAR will continue to push for Building Code reform that further spurs affordable housing developments and supports property owners and their tenants.
Alienage: There’s a proposal to have alienage, the discrimination on the basis of immigration status, added as a protected class. To prevent third parties from suing retroactively, the Illinois REALTORS® and the Chicagoland Apartment Association took a neutral stance and negotiated a deal. While the issue of alienage has been stalled, it’ll likely come back this session.
Aldermanic Prerogative: Mayor-elect Lori Lightfoot wants to end aldermanic prerogative. As CAR suspected, aldermen are not supportive of this idea, and there’s a possibility this will become a big area of discussion at the beginning of Lightfoot’s term.
Chairpersons: One of the biggest and most important changes to come is who the mayor will appoint as committee chairpersons. CAR is particularly focused on the following chairs:
- Finance Committee: The position seems to be between Scott Waguespack, 32nd ward Alderman, and Tom Tunney, 44th ward Alderman.
- Rules Committee: There’s speculation that the Chair will be Alderman Brendan Reilly of the 42nd ward.
New Local Issues:
Criminal Background Checks: There’s a new proposal in support of people with non-violent criminal backgrounds who are having trouble finding housing. It would limit what property owners and landlords could ask potential tenants and buyers. CAR believes the language in the proposal is too subjective and could increase Fair Housing violations. CAR provided testimony and solicited questions about the proposal and successfully got a six-month extension on the ordinance before it passes. In this time, the Humans Relations Committee will be drafting a set of rules about the ordinance that will then need to be reviewed and approved by the County Board.
In the coming months, there will likely be a call for action from CAR to members, as member support is needed to get the rules drafted and approved.
- Get all the details you need to know about the new administration and how it’ll impact our industry at our event, “New Council, New Mayor, New Chicago?” on May 21st.
- Get more updates at the next Coffee with Your GAD event on June 12th. Register today, as space fills up quickly.
- Get involved! Did you know you can have a greater impact on our lobby efforts by joining one of our Public Policy Forums? We’re accepting application now through June 30th. Apply today!