What is the rent control referendum and why is it necessary?
Economic well-being in Chicago should be accessible to all. This results from high-performing jobs, quality schools and, most essential, affordable housing.
The referendum on the March 20th ballot will “Lift the Ban,” which has been in place statewide in Illinois since 1997, prohibiting local communities from implementing rent control as a policy option to sustain affordable housing.
This grassroots effort was initiated by several dozen community organizations in neighborhoods most affected by rising rents and declining availability of affordable housing – especially on the south, southwest, west, and northwest sides.
Rapidly rising rents are a problem throughout the country, and control movements are being discussed in several other cities where rent burdened families are struggling.
What is rent burden and why is it a problem in Chicago?
Rent burden is when a household spends more than 30% of its income on rent; extreme rent burden is when more than 50% of income is spent on rent.
A rent burdened household is unlikely to have enough income for other essentials such as food and medicine.
Chicago is seeing an increase in rent-burdened households because wage increases have not kept up with rent increases. Citywide, between 2000 and 2009, income fell 8.1% while the percent of rent burdened renters increased 10.1% to 54.6%. From 2000 to 2009, incomes fell nearly 20% in Humboldt Park and Garfield Park, while the percent of cost-burdened households jumped 41% to 69% of households. In Albany Park and Irving Park, incomes fell nearly 19% while the percent of cost-burdened households rose to 52 from 2000 to 2009.
How can rent control change the equation?
Tenants can stay in their neighborhood with affordable housing options, contributing to local economies, schools and community preservation, and Chicago’s overall economic well-being.
Landlords are to obtain an annual rent increase and earn a reasonable rate of return, while retaining long-term tenants who help maintain neighborhood stability and preserve the integrity of communities. Landlords may also include capital improvements in rent increases.
Modern rent regulations can mitigate the effects of speculative housing markets and skyrocketing rents, which contribute to the displacement and overall loss of low-income and working families from Chicago.
Will approval of the referendum make rent control mandatory?
The referendum is designed to express meaningful sentiment about how local communities would like to address the lack of affordable housing. Implementation of rent control would require legislation at the state level.
Passage of the referendum and legislation provides flexibility and is another tool that can be used to increase supply of affordable housing – which will help retain population – together, essential ingredients to improving Chicago’s economic well-being.
Affordability gap: About 1/3 of Chicago households cannot find affordable housing
Affordability gap is the difference between number of renter households that demand affordable housing and available supply of affordable rental housing (Less than 30% of income earmarked for rent defines affordable housing. Above that is rent burdened. Above 50% is extreme rent burdened. DePaul Housing Institute)
- Share demand of housing unmet:
- Irving Park/Albany Park – 28%
- Bronzeville/Hyde Park – 31%
- Englewood/Greater Grand Crossing – 31%
- West Town/Near West Side – 35%
- Logan Square/Avondale – 37%
Currently, about 51% or 531,000 households in Chicago are cost burdened.
Wage increases have not kept up with rent increases:
- Citywide, between 2000 and 2009, income fell 8.1% while the percent of cost burdened renters increased 10.1% to 54.6%. (Chicago Rehab Network– CRN)
- From 2000 to 2009, incomes fell nearly 20% in Humboldt Park and Garfield Park, while the percent of cost burdened households jumped 41% to 69% of households. (CRN)
- In Albany Park and Irving Park, incomes fell nearly 19% while the percent of cost burdened households rose to 52 from 2000 to 2009. (CRN)
- From 2013 to 2016, rents on average have increased $500/month in Chicago vs. wages of $125/month (Smart Assets)
National Data trends from Joint Center for Housing Studies of Harvard University
- Recent burdened: 21.3 million in 2014 vs.20.8 million in 2016.
- Extreme burdened: 11.4 million in 2014 vs. 11.0 million in 2016.
- Follow a decade of steep increases
- Share of rent burdened in 2006 – about 44%; in 2016 – about 48%
- Share of extreme rent burdened in 2006 – 46%; in 2016 – about 50%
- More middle income households are rent burdened:
- Earning $30,000 to $45,000
- Cost burdened in 2001 was 37% and 50% in 2016
- Earning $45,000 to $75,000
- Cost burdened in 2001 was 12% and in 2016 was 23%
- Earning $30,000 to $45,000
Displacement of minority households and decline in affordable housing supply:
- Largely because of the cost of housing, 10,0000 Latinos have left Pilsen
- 215,000 African Americans have left Chicago between 2000 and 2015, much of which can be tied to lack of affordable housing (Chicago magazine: http://www.chicagomag.com/Chicago-Magazine/June-2017/Chicagos-Population-Problem/
- Chicago has seen a decline of affordable housing supply due to investors buying properties and raising rents, properties being demolished or becoming uninhabitable.
- Especially true with regard to 2-4 unit buildings, which tend to have more affordably priced rentals (DePaul Housing Institute: Number of 2-4 units buildings in Chicago – 36% in 2007 vs. 31% in 2014.
- Other areas are attracting investors and construction of high end housing, displacing local residents.
- Example: the west side of the 606 trail (lower income part of trail) saw housing prices increase by nearly 60% since 2013 when ground was broken for the 606. (DePaul Housing Institute)
Chicago Fair Market Rent (HUD) is $711(1-BR). Need to earn $13.67/hr. or work 106 hours at minimum wage to stay at 30%.
Chicago Rehab Network housing data using 2000 and 2010 census data:
- Rent burdened: about 55% citywide, an increase of 10% from 2000.
- Median income fell an average of 8.1% $45,734 in 2009; during same time period cost burdened renters rose 10.1% to 54.6%
- Lack of rental apartments most severe at lower end of price range
Albany Park (2000-2010 – Chicago Rehab Network)
- Total population declined 11%
- Median Household Income declined 9%
- Number of renter-occupied units declined 12%
- Median Monthly Gross Rent increased 13%
- Rent burdened households, incomes $25,000 to $49,999 increased by 58%