'Policy, active governance and developers': A trifecta of need for B-N's rental crisis
Bloomington-Normal Tenant Union co-founder Zach Carlson knows that, via the power of getting people organized with the same goal, an organization like his "can do a lot" — but it can't do everything to mitigate the area's ongoing housing crisis.
"It comes down to policy and active governance and developers to create housing," he said, acknowledging that, while those things are crucial, the issue includes more "holistic" measures as well, including higher wages.
There are multiple barriers to people seeking housing in the Twin Cities, including prohibitive rental rates and a limited number of available units. Regarding rental rates, a statewide ban on rent control prohibits local governments from regulating how landlords and property managers price their assets.
A Chicago-based organization founded in 2017 called Lift the Ban wants to change that with new legislation. Ultimately, the main goal is to repeal the Rent Control Preemption Act of 1997 that barred municipalities across Illinois from setting any local controls on rental rates.
The crisis that renters face now, organizer Rod Wilson said, is a direct result of an inability to regulate.
"You've got 4.5 million households and 1.5 million (or so) are renters. The majority of renters make $50,000 or less and 70% are spending over a third of their income toward rent," he said. "That means their rent is unaffordable. Forty percent of renters are spending over half their monthly income toward rent. The reason we're this this predicament is that there is no regulating how much a landlord could raise rent from year-to-year, lease- to-lease. We're saying that's what needs to change."
Wilson said the fight to get that law repealed has been an uphill battle, with near-success set back by a lack of Democratic support in the state legislature last year.
"We had a bill last year in the House ... that allowed for local municipalities to have a referendum on rent control, to opt into the ban or opt out," Wilson said. "What's more democratic than that — let the people decide what they want from the local government? We couldn't get enough support to get it done. Not even Republican — none was over there. We couldn't get enough Democrats to just allow people to make a choice."
Wilson said an active bout of lobbying against the bill was not unexpected, especially by the real estate industry. But it hasn't stopped the push for change. A new Senate bill is now being pushed with the same goal of repealing that act, but with additional provisions: Creating a registry of landlords across the state and their rent charges, providing people with legal counsel by default in eviction court, and putting specific parameters on rental costs.
"We even set up something for landlords — small landlords with 12 units or less," said Wilson. "They can apply to get money to do repairs or add capital improvements to their homes. Grants, not even loans. We're not trying to hurt landlords, especially small ones; we're trying to make sure it's regulated for everyone's benefit."
Without violating current state law, the City of Bloomington, the Town of Normal and municipalities across the state are virtually powerless to set limits on what a landlord can charge for a given unit.
Development not matching growth
Development in the Twin Cities, whether for apartment buildings, multifamily homes or single-family homes, has not exactly been booming for some time and, in recent years, has not matched and may not match projected population growth, according to the housing study published by the Bloomington-Normal Economic Development Council earlier this year.
The study notes there have been "around 225" building permits issued on average each year since 2018; the majority of those permits have been for single-family homes and not multifamily developments.
Whether local governments should intervene and speed up the development of new housing — especially multifamily housing — to mitigate the crisis depends on who is answering the question. Property mangers who spoke with WGLT were unilaterally not in favor of government intervention.
"If the government subsidized a building, of course developers would jump all over it in the end — if it made sense for them," said Class Act Realty's Mustaali Carbaidwala. "But it's creating an artificial situation where, now the government money — which I think we can all agree comes from all of us — would basically reduce the cost of the building which would, in turn, allow lower rents and make it easier to support in this market. Do I think that's a good thing? Not really."
Young America president Andy Netzer's position is similar as it relates to "new residential developments."
"There may be certain areas of town, or certain existing buildings that need to be demolished or re-developed that just cannot make financial sense without a municipality offering some tax relief to the developer," he said, citing the CII East building in downtown Bloomington as an example.
Until the city stepped in, he said, several developers had looked at the property with redevelopment in mind before abandoning the idea.
"Ultimately, the city offered a moderate tax abatement package to the development group, and it is expected to now move ahead," he said, adding he is involved in that project. "But I don’t see this as a tool that should be broadly used to solve the housing shortage in our community."
It's not up to landlords or property managers to ultimately decide that, however, and Bloomington's government is in the process of deciding what role it will take in mitigating the housing crisis, Mayor Mboka Mwilambwe said Thursday.
"We're asking the staff to come up with some specific steps to help us address the housing issue. Some of that could include looking at incentives for various entities and developers who are looking to develop housing, but also looking at zoning changes, possibly, to allow more housing to be built in one place," he said.
Mwilambwe said he would like a strategy developed "in short order, because we have to move fairly quickly on some of these things."
"From there, the staff — we'll take a look and those priorities and determine within each, the steps that need to happen," he said. "We're getting close to the second part of September, so I would hope that we have something — not to put too much pressure — but something by December."
Conversely, the Town of Normal does not have plans to develop a residential incentive program, said town planner Mercy Davison, although that doesn't mean that's a permanent situation.
"We have no policy in place right now to incentivize housing development," she said. "If we were to recommend something to the council, we'd probably look at what other communities do and then make a recommendation to the council."
In Bloomington-Normal, more available units would help people who simply can't find an open place. But Lift The Ban's Wilson said, in general, the financial aspect of the rental crisis goes beyond having more available units.
"What they may say is that rents are rising and we need more money from the state to build affordable housing. So, then they end up winning both ways: They get the state to subsidize building affordable housing and they don't spend their money. All they have to do is build it and reap the rewards of it," he said.
"We can't build our way out of this. We have to regulate what we do have."