Throughout Chicago’s battle with neighborhood economics, we’ve seen that issues arise when the government intervenes in the Free Market. So we must ask, will Chicago citizens be better off having a system in place that restricts building owners’ freedom to adjust to local socio-political changes?
In August 1997, former Illinois Gov. Jim Edgar’s administration passed a law to ensure there would be no rent control in the State of Illinois. But in early February of this year, House bill 825.5 was introduced to reverse the law to begin the process of implementing rent control.
On its nose, it seems like the proper way forward. Many tenants are finding that the rising rents don’t keep up with their stagnant wages. And on top of the financial strain, the question of gentrification continues to color Chicago’s evolution as a next-era city.
While many rent-control supporters feel it would protect long-time residents, it could hurt real estate development and stunt growth in Chicago’s neighborhoods. As residents all across the city vie for fresh development, a fall in rent prices for a neighborhood can send the opposite message to interested developers, signaling that their neighborhoods either do not need new development or that it is undesirable.
Further, rent-control will limit the ability of property owners to provide quality housing. Not only do profits immediately decline, but it puts a major squeeze on owners ability to comfortably maintain and upgrade rental units. In other words, it restricts the potential social growth of each community by preventing quality housing and block upgrades.
But, this doesn’t necessarily mean that we should be hands off when it comes to allow the potentially destructive nature of gentrification to take over. Luckily, there are alternative methods to rent control that will allow communities to maintain affordable housing while promoting growth and inclusivity for all current community members. What do some of those options look like?
Increase lending. Currently, many tenants in the rental market can afford a home. However, due to tightening lending requirements, would-be home-owners are resorting to renting. Banks have become far too conservative with their lending practices and it is making it incredibly difficult for even the most credit-worthy buyer to own a home.
Increase housing supply. Rent-control makes the margins of maintenance and upgrades nearly impossible. Foregoing rent-control and raising the housing supply would relieve financial pressure on owners and operators to provide better for less.
Invest in Education: While a repeal for rent-control is in the works, residents all over the city are suffering a decline in quality schooling. After an incredible divestment of funding in CPS, parents who can afford to send their kids to schools outside of the neighborhood and soon leave to be closer to those better schools. Maintaining quality schools in Chicago’s neighborhoods means keeping and attracting market-rate buyers and renters.
Incentivize Community Investment. Creating financial incentives for owner/operators to invest in the growth of their tenant’s neighborhoods. Beautification, cleanup and events keeps communities financially viable for commercial development. Commercial development brings more jobs and higher pay. It isn’t just that rents are going up, wages are remaining stagnant. By finding new and innovative ways to participate in a growing economy, we’ll all be better off for it.
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