Ordinance Stalls That Would Keep Renters in Foreclosed Buildings

By Ted Cox on February 15, 2013 6:31am 

 Ald. Roberto Maldonado (26th) says a relocation fee is necessary for the Keep Chicago Renting Ordinance to compel banks to keep foreclosed properties occupied.
Ald. Roberto Maldonado (26th) says a relocation fee is necessary for the Keep Chicago Renting Ordinance to compel banks to keep foreclosed properties occupied.
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DNAinfo/Ted Cox

CITY HALL — Despite the support of an overwhelming majority of the City Council, an ordinance to "Keep Chicago Renting" in foreclosed properties has stalled in committee.

"We deserve a hearing," Ald. Proco "Joe" Moreno (1st) said this week.

"Our patience is coming to an end," he said. "Action needs to happen now."

The ordinance, which basically would allow renters to remain in foreclosed properties until the properties are sold by a bank to a new owner, is sponsored by Ald. Richard Mell (33rd).

"The banks should understand they're the one that caused the problem," Mell said.

"Banks, where are your conscience?" he added. "Step up and do the right thing."

Courtney Eccles, policy director at the Woodstock Institute, said Chicago foreclosures rose 53 percent from 2011 to last year, when there were 9,632 property auctions in the city, 2,279 involving multifamily buildings. She said 91.5 percent of those auctioned properties wind up back in the hands of banks, which tend to remove renters and leave the properties vacant.

Patricia Fron, of the Lawyers' Committee for Better Housing, said 3,500 apartment units had been involved in foreclosures since Mell first proposed the ordinance seven months ago. The greatest concentrations of foreclosures, she said, were in the Englewood, West Englewood and Austin neighborhoods.

Diane Limas, of the Albany Park Neighborhood Council, said there was a "direct correlation" between vacant properties and "the violence that is plaguing our city," calling empty buildings "hot spots for crime."

Charles W. Brown, a 48-year Englewood resident and member of the Action Now community organization, said vacant properties have had a damaging effect on his neighborhood.

"I was there in the good times, and now since 2006 it has gone to the dogs," Brown said. "Vacant properties lead to crime, gang violence, murder, deterioration of the community and property-value depreciation."

 Ald. Ray Suarez (31st), chairman of the Housing Committee, is concerned about relocation fees adding up in multiunit foreclosures.
Ald. Ray Suarez (31st), chairman of the Housing Committee, is concerned about relocation fees adding up in multiunit foreclosures.
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DNAinfo/Ted Cox

That's why 44 aldermen support the ordinance.

"I have seen more foreclosures in my ward in the last four months than I have seen in the last 3½ years," said Ald. Roberto Maldonado (26th).

Yet the legislation has stalled in the Housing Committee. Ald. Ray Suarez (31st), committee chairman, insisted it was not being blocked, but that fine details were being worked out, with the main sticking point being a "relocation fee" charged to the holder of the foreclosed property, which he said can reach "up to $14,000" a tenant.

"I think it's a lot of money," Suarez said, especially for multiunit buildings, where it can add up quickly.

"We want to make sure everybody's happy, and we want to work it out," he added, saying aldermen were out to prevent any potential lawsuits challenging the ordinance if it's enacted.

Maldonado insisted the relocation fee "has a purpose," to encourage banks to keep renters in buildings and not move them before the property is sold to another owner.

Fron said foreclosure vacancies produce a "cycle of disinvestment" that is "felt citywide," and the ordinance was needed to "stabilize property."

"Any increased number of long-term vacancies in these communities will make recovery that much more difficult and hurt remaining homeowners," Eccles said. "The Woodstock Institute supports the efforts to keep tenants in their homes whenever possible."

Mayor Rahm Emanuel reaffirmed his general support for the ordinance Wednesday, but said it was too complicated an issue to discuss it off the cuff and that he'd be looking into it.

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