BUILDING EFFECTIVE RENTAL HOUSING REGULATION IN COOK COUNTY Alan Mallach, Senior Fellow Center for Community Progress October 13, 2015

Increase in rental housing Suburban Cook County Chicago

The market is changing 55,000 more rental units, and 30,000 more single family rental units in suburban Cook County today than in This is an opportunity and a challenge.

Opportunities and challenges Opportunities for families seeking rental housing in suburban communities New and inexperienced absentee landlords with limited skills and capacity Difficulty maintaining scattered site properties Predatory, speculative investors in low-price communities, particularly in South Cook County.

Low prices are a major problem Investor buys a 3 bedroom house for $20,000 and rents it for $900/month (tenant pays utilities) Gross income (with 10% vacancy) over three years = $29,160 – annual return on cash flow alone 15.3% Gross income with voucher (with 5% vacancy) over three three years = $43,947 – gross annual return 39.9% Expenses = ?

The response Effective municipal regulation, coupled with pro- active strategies and incentives, can improve rental housing quality and reduce problems. The most effective strategies are based on licensing and regular property inspection Effective regulation cannot be punitive – must be geared toward building a strong landlord community – ‘raising the bar’.

Raising the bar A rental licensing ordinance based on sound standards and regular inspection A performance-based system oriented toward fostering compliance A landlord support system Incentives for good landlords System must be sensitive to different legal powers of home rule and non-home rule municipalities.

Elements of an effective ordinance – Home rule municipality Findings Definitions License required; application procedure Inspection and re-inspection Issuance of licenses Annual performance evaluation and property classification Performance based standards Fees Violation; penalties

Elements of an effective ordinance – Non-home rule municipality Findings Definitions Landlord obligation to register (informational) Nuisance physical conditions Other nuisances Outcome of chronic nuisance determination; registry Inspection; re-inspection Annual performance evaluation and property classification Effect of annual review Fees Violation; penalties

A proactive approach Find landlords – don’t wait for them to come to you Work with landlord community – it’s in their interest, too. Help build landlord and property management capacity Build local government capacity through inter- governmental and partnerships with private and non-profit entities.

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