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EDITORIAL: High rents are a problem. Rent control is not the answer

A Lift the Ban Coalition rally in support of rent control took place outside the Chicago Association of Realtors office. | Sun-Times/Alex Arriaga

A Lift the Ban Coalition rally in support of rent control took place outside the Chicago Association of Realtors office. | Sun-Times/Alex Arriaga

Legislation has been introduced in Springfield that would rescind a statewide ban on rent control.

We understand the good intentions behind the bills, HB 255 and HB 2192. We get why the Lift the Ban Coalition, a group of community organizations, has ramped up an effort to build public support for scrapping the 22-year-old ban.

Without a doubt, Chicago has a very real problem with a lack of affordable housing, as this editorial page has stressed. Rents have grown particularly burdensome in trendy neighborhoods such as Logan Square and the South Loop, but also in working-class communities such as East Garfield Park, where a two-bedroom apartment can go for $1,400 a month or more.

Rent control would seem to be the easy fix. Just cap what landlords can charge.

But it’s a superficial and ultimately counterproductive fix, as the experiences of other cities have shown. And there are better ways to address the problem of too little affordable housing in Chicago.

EDITORIAL

There is ample evidence that rent control can make a city’s affordable housing shortage worse. It’s great for tenants in rent-controlled apartments, but not so good for tenants elsewhere who often see their rents rise to make up the difference for landlords, as a New York Times analysis noted.

In San Francisco, where rents now average $3,500 a month, a 2018 Stanford University study found that landlords who were subject to rent control “reduced rental housing supply by 15 percent, causing a 5.1 percent citywide rent increase.” Often, apartments were simply converted to condominiums.

In other words, that two-bedroom apartment in East Garfield Park that goes for $1,400 a month? As an unintended consequence of rent control, the monthly rent could go up by $70. Or maybe the building just goes condo. Either way, a working-class family is out of luck.

And what about folks who scrape together enough money to buy a two-flat and then live in one apartment and rent out the other? That’s a classic Chicago way for people of relatively modest means to gain financial security.

“In the African-American community, people will use homeownership of two- and three flats as a tool for investment, to build wealth over time and pass it on,” Sarah Ware, a real estate broker from South Shore, told us. “They hear ‘rent control,’ and they get nervous. They don’t trust it to make that [homeownership] investment.”

Among economists, there is a general consensus against rent control on the right and left. Consider what Paul Krugman, the Nobel Prize-winning liberal economist, had to say about it in his New York Times column in 2000:

“Sky-high rents on uncontrolled apartments, because desperate renters have nowhere to go — and the absence of new apartment construction, despite those high rents, because landlords fear that controls will be extended? Predictable.”

Krugman wrote about San Francisco. “Bitter relations between tenants and landlords, with an arms race between ever-more ingenious strategies to force tenants out … and constantly proliferating regulations designed to block those strategies? Predictable.”

Gov. J.B. Pritzker said during his campaign that he supports lifting the ban on rent control, and mayoral candidate Toni Preckwinkle favors rent control. Preckwinkle’s opponent in the April 2 runoff election, Lori Lightfoot, has not taken a position.

Chicago does not need to wade into the quicksand here. Given the uncertain ramifications of rent control, our city and state could move forward, right now, on better ways to make rents more affordable.

We favor a proposal to set aside $1 billion for affordable housing in the much-needed capital budget the governor and lawmakers are working on.

The Legislature also should look at giving property tax relief to apartment owners who agree to build or rehab housing and keep rents affordable. This idea is called for in HB 2168, sponsored by state Rep. Sara Feigenholtz, D-Chicago.

Another worthy idea would be to lift city zoning restrictions so as to allow apartment building owners to convert garden-level spaces into affordable apartments. Or perhaps — and this is just an idea to be explored — the city could relax the building code to allow for more lower-priced prefab construction and materials.

All these alternatives to rent control are endorsed by the Chicagoland Apartment Association.

If Chicago and the state are willing to get creative, there’s also the LIVE (for Lower Income Voucher Equity) Denver approach. The pilot program, a public-private partnership, matches working families with vacant apartments and pays the gap between a reasonable market rent and what families can pay.

Rent control is an overly blunt tool. It could do more damage than good.

But about this there is no debate: Chicago needs more affordable housing.

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