Illinois REALTORS® testified at a packed meeting on rent control held on Thursday to gather information on the controversial policy.
The testimony in Chicago was part of the Senate Special Committee on Housing chaired by state Sen. Mattie Hunter.
Backers of several pieces of legislation have suggested that setting limits on how much landlords could charge for rent would help alleviate a shortage of affordable housing.
Illinois REALTORS® Senior Vice President for Government Affairs Greg St. Aubin and Illinois REALTORS® Local Government Affairs Director Brian Bernardoni told the panel that the policy would be catastrophic for Illinois and in particular for the Chicago area.
Hunter asked St. Aubin, who was sitting in the audience, to testify even though he was not on the witness list.
“The challenges are many (in addressing housing affordability),” St. Aubin said. “There should be more funding, but obviously there isn’t an endless supply of money.”
In response to a question about what can be done to address the shortage of affordable housing, St. Aubin listed a number of public policy shifts that could make a difference.
Among changes St. Aubin suggested:
- Exclusionary zoning ordinances which severely restrict higher-density developments could be adjusted.
- Building code requirements which mandate expensive construction techniques and materials could be changed, too.
The hearing drew a wide cross-section of those interested in the issue. At one point during St. Aubin’s testimony Hunter had to warn those in the audience to be quiet or she would have people escorted out.
Rent control seen as creating unintended consequences
Later in the hearing, Bernardoni noted the folly that a policy such as rent control would result in.
“Rent Control is not a solution, but rather a path with numerous unintended consequences,” Bernardoni told the panel.
Data show 1.4 million people in Chicago who live in an estimated 590,000 units would be affected by rent control if the legislation becomes law.
- Many rental units in the state are owned by small investors, rather than large companies. These property owners could see their investments wiped out as a result of the policy.
- Larger real estate investment firms would also face consequences under the policy. Investors would see their return on investment plummet and would shy away from real estate investments in areas under rent control.
More critical is the potential impact on property taxes in a state where property owners are particularly sensitive to any increase. Property valuations could dramatically drop, and municipalities would be forced to raise taxes and fees to close budget gaps.
Proponents have put forward a package of three Senate bills. SB 2310 and SB 3542 would repeal the Rent Control Pre-emption Act, and SB 3512 which repeals the act but takes the additional step of establishing a rent control program.
Illinois REALTORS® has historically opposed rent control policies because of the impact the effort would have on private property rights. The rent control-focused bills were introduced in the 2018 General Assembly, and are expected to re-emerge as an issue in the 2019 session.
As Bernardoni noted in his conclusion: “While rent control is for many good politics, it remains poor public policy.”