Dangerous Amendment to CRLTO Afoot

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Last week a group of aldermen proposed an amendment to the mighty Chicago Residential Landlord-Tenant Ordinance (CRLTO) with the intent of enforcing Chicago's current efforts to serve as a sanctuary city. Leading the charge are Deb Mell and Carlos Ramirez-Rosa, of the 33rd and 35th ward respectively. These changes attempt to protect immigrant renters from being raided and deported within their rental residences. We think this is a fabulous idea. However, knowing how the CRLTO is used in real life we have some concerns about how this amendment will affect the rental community as a whole once put into practice.

The full text of the proposed amendment is included below for your review.

2017-09-06 proposed CRLTO amendment

The CRLTO does not cover every apartment within the city limits. Many undocumented immigrants live in small buildings owned by on-site landlords - these units would not be protected by the proposed amendment. Beyond this issue, we've got some specific concerns with each proposed change.

Change #1: Citizens vs Residents.

This one is pretty mundane. The word "citizens" is replaced with "residents, regardless of immigration status" in the opening clause of the ordinance in reference to the intended targets of the law. To us it's a little jarring to suddenly launch into immigration issues in the middle of a document that otherwise deals entirely with landlords and tenants, especially when other protected classes get no such mention. If you're going to say "regardless of immigration status" you might as well also throw in "disability, race, advanced age, source of income," etc.

We understand that they're trying to create a welcoming atmosphere, but invoking immigration in this setting reminds us of the notorious vegans who insert their dietary choices into every conversation.

Will it make Immigrants safer? Nope.
Will it make life better for most Chicago renters? Not really.
Predicted lawsuits: None.
Predicted impact: Minimal.
Rating: A for Effort, C for implementation.

Change #2: No Warrant, No Cry.

The CRLTO dictates the acceptable reasons a landlord could use to enter an occupied apartment, along with things like advanced notice and acceptable hours of entry. The amendment would bar landlords from allowing law enforcement to enter an occupied apartment with them unless they have a search warrant. If the landlord isn't around to grant access, law enforcement officers (LEOs) still would not be able enter an occupied apartment without a search warrant.

Some readers will think that this simply reinforces the fourth amendment to the US Constitution, which protects individuals from search and seizure of property without a warrant. Alderman Rosa has stated that this clause responds to modern Immigration and Customs Enforcement (ICE) tactics of entering a building's lobby and forcing their way into every apartment to check residents' immigration status, deeming a lack of "papers" to be sufficient probable cause for literally unwarranted searches. The aldermen have good intentions. These sorts of roundups are wholly despicable.

However, many times when cops are called to an apartment building it has nothing to do with immigration. They may be following up on noise complaints or performing wellness checks. This change does not allow for such emergencies, or "exigent circumstances." We have seen the chilling effect that "crime free housing" policies have had on low income renters in the suburbs. They have caused abuse victims to refrain from calling for help out of fear of getting evicted. Tinkering with law enforcement's ability to provide help when needed, especially among the most vulnerable parts of the population, will not end well.

Additionally, we must remember that apartment buildings are not only residences but places of business. There are superintendents, maintenance workers and doormen who both work and live at these buildings, many of whom are undocumented immigrants themselves. Are they protected as well? How about the many mixed use buildings with retail establishments on the ground floor? Will business owners in these buildings be responsible for demanding to see a warrant from any LEOs that enter their shops and restaurants just because they share walls with apartments? Will these business owners be protected from ICE raids on their employees and customers within their shops?

Inversely, we must also remember that LEOs including ICE agents must live somewhere as well, and they must be allowed to view apartments before renting like everyone else.

Will it make Immigrants safer? Probably.
Will it make life better for most Chicago renters? Not really.
Predicted lawsuits: Landlord shows an occupied apartment to an off-duty police officer who's looking for a place to live. Current occupant sues landlord for allowing LEO access without a warrant. Neighbor hears a woman screaming and calls the cops. The cops enter and find she is being beaten by her husband. The husband later sues the landlord for allowing the cops to enter without a warrant.
Predicted impact: Enormous.
Rating: D. Ham-fisted attempt without consideration for edge cases.

Change #3: Bolt the Revolving Doors!

The third change within the amendment would require landlords to install auto-locking deadbolts on all front and rear street entrances in buildings with multiple apartments. These bolts would require key access from the outside and latch access from the inside. The intent is to allow residents to bar ICE agents from just wandering into the building and rounding up residents.

This is the one that's getting most of the attention so far because it will cost landlords money. Also because for many buildings it may well not be possible. This clause would only arise from the minds of authors with very static, uniform mental images of apartment communities. We have established in a previous article that there are very few renters on the city council. Mell and Rosa both work and live in areas that are dominated by vintage walkup properties, and the deadbolt scenario works for them. But they forget about high rises, individual rented condos within condominium complexes, motel-style properties without central lobbies, coach houses and all those converted vintage hotels in Uptown.

We're of the opinion that no renter should choose a building without deadbolts on the exterior doors but we know that this is not a realistic expectation. There's big buildings with revolving doors. There are fire escapes and mail foyers. There are parking garages. There are buildings with thousands of tenants, each of whom would have to get a copy of the new deadbolt key. There are apartment locator services that keep keys for agent use. We also take issue with the specific phrasing, "from the inside it must be opened by turn knob or handle only." What about intercom systems? Buzzers? Doormen? Are we looking at a situation where Chicago renters will have to go down to the lobby every time they have to let a guest into the building?

Not to mention that deadbolts (and walls for that matter) only serve as barriers until one resident on the inside decides to open them. It only takes one person to open that door or leave it slightly ajar and your deadbolt is rendered totally useless. As soon as the first tenant locks themselves out there will be tape plastered over every bolt and latch.

Will it make Immigrants safer? Nope. In fact it may increase danger by creating a false sense of security.
Will it make life better for most Chicago residents? Possibly if it's actually enforced, but we don't see it happening and suspect that this clause will be struck before the amendment passes.
Predicted lawsuits: The number of renters who will use the absence of deadbolts on exterior doors as a reason to break their lease will be off the charts. They may also sue because the installation of deadbolts prevented them from receiving mail for a prolonged period of time. Someone will sue because the bolts prevented them from escaping during a fire. Someone will sue because they get trapped outside a roof deck during a storm.
Predicted impact: Mind-bogglingly huge.
Rating: C. We like the idea but implementation will be a nightmare, and landlord resistance to this one clause could scuttle the entire amendment.

Change #4: No Credit, Big Problem!

Landlords will no longer be able to ask renters about their immigration status. Supposedly this clause does not (and cannot) preempt state or federal laws, nor does it prevent landlords from asking for financial documentation necessary for screening tenants. Except it does.

Most landlords require credit checks, and for a credit check you usually need to have a social security number. The argument can be made that social security numbers were never intended to be used as a kind of unique identifying serial number for human beings. Following the recent Equifax breach all data reliant on social security numbers as unique IDs have become unreliable. This doesn't change the fact that SSNs currently are used in this manner in the application process for many apartments. Landlords can bend over backwards to avoid asking about the "Big I," but if you don't have a social security number it's pretty obvious that you're not from these parts.

Chicago has already implemented this sort of "don't ask, don't tell" restriction on immigration status for its own employees. Several states already have similar protections in place for renters, and property managers in those states have learned alternate means of checking credit that don't depend on the social security number. But local landlords will have no clue what to do if they can't ask for an SSN. It is possible to run a credit check without one, but it's definitely a challenge and you usually don't get back any useful information. Renters will need to be prepared to bring 12 months of bank statements with them on their apartment hunts.

We anticipate that landlords will respond to this one in the same way they responded to HUD's announcement from last year that criminal background checks might qualify as fair housing law violations. They will ignore it and continue with business as usual. The background checking companies have done a very good job of cultivating a phobia of bad tenants within landlord circles and presenting credit reports as magic armor of protection. In Chicago eviction costs are too high and they take far too long for a landlord to run their business without some sort of screening process.

Will it make Immigrants safer? Yes.
Will it make life better for most Chicago renters? If anything it will make things more complicated.
Predicted lawsuits: Rental applicant on a student visa will sue for being denied housing based on their lack of a social security number. This has already happened in several states where this law already exists.
Predicted impact: Minimal.
Rating: B. Overall a good change, but the whole background check thing will be a headache.

Change #5: Blunting the Sword of Damocles.

The final change expands the definition of "landlord retaliation" to include threatening tenants with deportation or disclosure of their immigration status. Tenants are protected from retaliation by their landlords when they report problems with their building to the government, court, support organizations or the media, when they join tenant unions, and when they request repairs.

The ability to "speak to a manager" about customer service concerns is something citizens take for granted. Undocumented immigrants may be afraid to speak up about problems with their living conditions. As far as we're concerned any edge cases that might arise with this new bit of law are too extreme to merit discarding the change itself. It takes many voices to force improvement of a bad situation. It should be much easier for immigrants to sing in the chorus of complaints about a bad housing situation.

Will it make Immigrants safer? Yes.
Will it make life better for most Chicago renters? Yes.
Predicted lawsuits: Any that might arise would be very extreme cases.
Predicted impact: Medium.
Rating: A. We totally support this part of the amendment.


While we respect the intentions of the aldermen who have drafted this proposed amendment to the CRLTO, we suggest that they all go spend a few days sitting in eviction court and observing - or spend a few years renting - before they commit anything to law.

RentConfident is a Chicago startup that provides renters with the in-depth information they need to choose safe apartments. Help us reach more renters! Like, Share and Retweet us!

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Kay Cleaves

The Unmentioned Cause Behind Chicago’s Vanishing Two Flats

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This week the venerable Institute for Housing Studies at DePaul University released its 2017 edition of their equally venerable "State of Rental Housing in Cook County." In addition they posted a call to action on their blog stating that "The Beloved Chicago Two-Flat Is In Distress." This article joins a veritable anthology of articles about the dwindling number of two-flats, including WBEZ CuriousCity's analysis from 2014, Whet Moser's take on it from last month's Chicago Magazine and Dennis Rodkin's 2015 discussion of the problem from Crain's Chicago Business.

IHS, WBEZ and Chicago Mag all agree that the disappearance of two-flats is having a negative impact on the amount of affordable housing, although the Crain's article takes a more benign view on the matter. About 6000 of these buildings disappeared each year from 2012-2015. Some were torn down and replaced with single family homes, others were converted to single family homes. In most cases the loss of these buildings meant an overall loss in housing density - it's rare to see a two-flat replaced with a larger building.

Most of these articles trot out the same main causes for the downfall of the two flat. They're old buildings that require a lot of upkeep that costs too much for their working class owners. They saw a lot of foreclosures during the subprime mortgage crisis. Zoning laws in the city favor the construction of single family properties rather than multi-unit buildings. NIMBY residents protest the construction of high density rental. All of these reasons are certainly contributing factors. However, one additional factor is not really mentioned, and I think it has a pretty substantial impact on the disappearance of the two-flat. Perhaps this is because none of the authors spent time as a rental-focused Realtor in a modern Chicago brokerage.

Go Big or Go Home

The Chicago real estate industry can be broken down into two groups: the residential Realtors and the commercial agents. There are very few companies in this city that handle both types of transactions. A few companies have a commercial department as a subsidiary of a mostly residential business plan, but for the most part a real estate company will focus on either commercial or residential exclusively. Traditionally the 2-4 unit buildings have been handled by the residential side, while buildings with 5 or more units are the domain of the commercial side.

Commercial agents work in the "STEM" side of real estate, handling offices, industrial, retail and large scale multifamily housing. They work with buyers and sellers who view real estate as an investment commodity. They are not required to be Realtors. They generally do not interact with the MLS. They are trained in things like ROI, valuation and dividends. They work in huge teams. I would only recommend working in commercial brokerage if you have a masters degree in finance or real estate, not to mention several industry-specific certifications such as CCIM.

In contrast, residential agents work the "liberal arts" side of the industry, handling houses, condos, townhomes and small apartment buildings. They are for the most part required to join the Realtor Association so that they can post their listings on the MLS. They are trained in buyer psychology, home staging and fair housing. They know when to call a building a "house" and when to call it a "home." Most work alone, although small teams have been on the rise in some residential brokerages. Pretty much any extrovert with a high school diploma and a drivers license can do reasonably well in residential real estate.

While there are some very capable residential agents who have very strong commercial transaction skills, your average residential Realtor is not interested in working with investors. They aren't trained in how to pitch a property in a way that attracts investors. If they were capable of doing the mental math required to deal with investors they would be either doing commercial real estate outright or working in a more stable industry. An agent that's very successful in working with home buyers and home sellers will not necessarily have the all-business demeanor necessary to work with investors. At most they will work with developers to purchase homes pre-conversion and then resell the result after work is completed.

I attended a continuing education elective class on multifamily valuation for investors a few years ago as part of my license renewal process. There were very few students. Half of them were commercial agents. The other half were investors. I was the only residential agent present. In my former real estate office, out of roughly 40 agents there were only three who included small apartment buildings in their business model. Two of them were on the verge of retirement. By contrast we had a huge number of agents with the softer "specialties" such as senior housing, foreclosures, green construction and relocation.

While I was working at the old office I was brought in as a location consultant on some land value analysis for a suburban commercial broker. He had a client that was looking to purchase a block of two-flats to tear down and replace with a strip mall. My boss felt I was the only agent in the office who could "speak commercial." The project required such a complete shift in mindset that I could only work on it for a few dedicated hours per week at the end of the day.

The Perfect Storm

If you only know how to use a hammer, you will use that hammer even when a screwdriver might be the more useful tool. Likewise, if you're a residential Realtor focusing on residential clients you will see every property as a possible single family home.

When foreclosures and low property values started hitting 2-4 unit buildings in 2010, they entered an inventory pool used by residential Realtors. Those Realtors worked with buyers who were looking for low-cost housing in a buyers market with very few other good types of housing to choose from. Many condo associations were troubled at the time. Single family owners were holding on to their underwater homes until the market recovered. We were emerging from the condo conversion era when everything from warehouses to hospitals to churches were repurposed for residential use. If those agents wanted to sell something to their clients they had to get "creative" with 2-4 flat buildings.

Meanwhile, the landlords who would normally buy 2-4 flat buildings in Chicago were avoiding it in droves. Those who could get financing to buy multifamily were working with commercial brokers. Residential agents had no incentive to pursue investors who might have preserved the two-flats as rentals. In fact, there was nothing in the residential industry - no broker training, no company incentives, and no hiring focus - to encourage Realtors to see 2-4 flat listings as anything other than potential fodder for their residential clients.

Instead of doing the extra training and business development needed to market these buildings to landlords, they went for the low hanging fruit. The strengthened already existing bonds with contractors and architects, encouraging the conversion of two-flats to single family homes to suit the needs of their existing clients. The result? 24,457 two-flats lost in four years, many of them in low-income neighborhoods where this sort of rental housing is desperately needed.

Turning it Around

The large scale changes to Chicago's zoning practices that would be needed to save the two-flat are unlikely to occur in time to have an effect. Equally unlikely is a shift in attitudes that would make it taboo to convert low-income multifamily buildings to single family homes, at least as long as HGTV continues to pump dreams of central AC and crown moldings into the heads of the nation's buyers. But three possible shifts within the real estate industry could prevent Realtors from making the problem worse.

The first option would be to train Realtors on how to work with investors. Residential agents have been beating the drum that it's good for everyone to buy a home for years now. This die-hard dedication to the impossible ideal of the American Dream had a huge effect on our nation's recovery from the housing bubble. Imagine the effect that an equivalent campaign encouraging small private landlords to invest in Chicago would have. It can't happen with the current system of training residential agents. It can't happen as long as huge brokerages based outside of Chicago are dominating the city, given its peculiar landlord-tenant laws. But it could happen. Given the age of the few agents in my old office who focused on 2-4 flats and the age of the investors who still own them, there is evidence that such a focus did exist, albeit several decades ago.

However, given the stained history of Chicago Realtors vis-a-vis rentals, this may not be the best idea.

Another option would be to take 2-4 unit buildings away from residential agents and give them to the commercial brokerages instead. This would require for the most part a simple removal of these properties from the MLS. Those few residential agents who actually treat 2-4 unit buildings as investment properties could move over to the commercial side and all would be well. However, the current focus of commercial brokerage is on corporate clients, not the small private landlords who have traditionally used Chicago's two-flats as both a home and an income source. I doubt that commercial brokers would be interested in expanding into a less lucrative area of the market.

The two-flat in Chicago lives in limbo. It's exempted from the CRLTO as long as the landlord lives on site. It's a triple purpose property, existing at the same time as a rental, a home and a business. The multi-use buildings with storefronts below and apartments above that line our arterial streets may approach the versatility of the two-flat but even they don't have the same same level of architectural chameleonic schizophrenia. A uniquely Chicago building set apart by law and usage requires a uniquely Chicago industry to handle its sale.

It's my opinion that we need to see 2-4 flats given their own division of the industry with its own lobbyists and PR. Bundling multi-use property with them might solve our empty storefront problem, too. We need real estate companies that focus on these hybrid buildings. It would take a combination of expertise in investing, renovation and rental. It would require a staff with an activist approach to real estate. But it could happen, and I think it needs to happen if the two-flat is to be saved.

RentConfident is a Chicago startup that provides renters with the in-depth information they need to choose safe apartments. Help us reach more renters! Like, Share and Retweet us!

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Kay Cleaves

The Cost of Revenge: Deductions, Reductions and Lawsuits

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Last week I spent one bullet point in a list of ten talking about when a bad apartment situation is severe enough to ask for a rent reduction from your landlord. A couple of sentences is really not enough column space to devote to such an important topic. When things get damaged in your apartment through no fault of your own, it's natural to want someone to pay for the loss, be it your insurance company, your landlord or their insurance company. But no matter how much you might want to take revenge by hitting them in the wallet there are certain hard financial thresholds that must be exceeded before it's worth the effort.

Of course you can always choose to move out of an apartment in the wake of a big disaster, but this doesn't help you to replace lost items or recover any costs you may have incurred repairing your apartment on your own. There are three different ways to recoup your losses from major apartment damage that don't involve moving to a new apartment. We'll be reviewing all three of them today, in order of the amount of conflict they create and the ease of using them to attain your goal. Continue reading The Cost of Revenge: Deductions, Reductions and Lawsuits

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Kay Cleaves

Dear RentConfident: Waiting for Affordable Housing

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Every once in a while we get questions from our readers about the finer details of renting. Some are from tenants, others from landlords, and still others from parents, attorneys and agents. Today we're back with another question from the mailbag! This one required such an in-depth answer that we're spending the entire article on it.

If you have a question you’d like us to answer in a future installment of Dear RentConfident, leave it in a comment below, or send us a message through our contact form.

Dear RentConfident: I was hoping to get your insight on where the affordable housing is in Chicago. I searched your site and didn't find a specific blog article about this so I thought I'd reach out about the City's Affordable Requirements Ordinance. Based on my understanding of the ordinance, developments that receive city financial assistance or involve city-owned land must provide 10 percent of their units (if the building is more than 10 units) at affordable prices. The problem I'm having is that the City's Affordable Rental Housing Resource List doesn't seem right. For instance, it only lists one development in the loop, but it seems to me that new apartment buildings are popping up in the loop every week. I'm interested in finding out how low-income individuals can find these building online.

I have two brothers who work full-time but are still considered working poor. They make about $27K and $31K respectively and have not been able to find an affordable apartment in Chicago. The issue they keep running into is the property manager saying that don't make enough money annually. One of my brothers went to [address redacted], which is on the City' ARO list, as well to several landlord owned properties on the south side but was told just that. Another brother went to [address redacted] but was told the waiting list for affordable apartment was two years. Combining their income is not an option because they've tried living together in the past, and they get along much better when live a part. They both would like to live close to downtown since it's a considered an opportunity area with more access to resources.

I'd love to hear your thoughts on this or any suggestions on what direction to point them in. Thank you so much. - Out of Options, South Loop Continue reading Dear RentConfident: Waiting for Affordable Housing

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Kay Cleaves

Here’s Why Chicago Renters Keep Getting Shafted

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The US Census Bureau keeps data from several other national statistical surveys besides the actual census itself. Included in its vast trove of data are the results from the American Housing Survey (AHS), conducted by the US Department of Housing and Urban Development in odd-numbered years. The data from the 2015 survey is just starting to become available now, but the data from 2013 is available in full. When browsing through the AHS 2013 data I came across a unique set of information regarding community involvement for the Chicago area. The survey asked respondents about not only their own involvement in their local community, but also their opinions of their neighbor's involvement in the community, making this a rare opinion poll buried within the normal counting of noses and bathtubs.

The original tallies can be found found here, broken down by owners and renters among other segments. However, there were definitely more owners who replied than renters, making it difficult to get a real comparison of owners vs renters community involvement without converting all the data to percentages. I've done so and embedded the results below. (If the embedded version doesn't show up right for you, here's the full screen version.) Continue reading Here’s Why Chicago Renters Keep Getting Shafted

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Kay Cleaves