Rent Control is Not Just an Economic Issue; It’s a Moral Necessity

Brian Bernardoni, Senior Director of Government Affairs and Public Policy for Chicago Association of Realtors, recently appeared on a segment of Chicago Tonight about rent control, arguing against the repeal of the 1997 act that preemptively outlawed the practice entirely in Illinois. Bernardoni said that the stories of displaced tenants are “compelling” but that “rent control is not the solution.”

“This is a much more complex solution,” Bernardoni continued:

“If we’re going to talk about actually performing at the highest level to put people into homes we need to start talking about building affordable housing, reforming a building code that’s too expensive for developers to build. We need to get neighbors and communities to start getting engaged in real discussions about zoning densities and increasing those capacities, so we can expand opportunities for folks to get into affordable housing.”

Bernadoni’s talking points on the program embody the line of attack that IL Realtors have been putting out since state representative Will Guzzardi first announced his repeal bill last March, attempting to mask their opposition as level-headed foresight of unavoidable market reaction to public policy.

They contend that the solution to gentrification and displacement could never be as simple as rent control. What the state should really do is enact policy that lets developers skewer safety regulations, so they can afford to build smaller and lower quality units, as if rent in Chicago is skyrocketing because the countless 100+ year-old residential brick buildings that so many are being displaced from are just too high maintenance to be affordable for the same tenants who lived there for years.

Of course, the real reason that rent is going up is that property values are going up, and with them the potential for more profit to be had by landlords and developers. And just as Bernardoni advised they do, neighbors and communities are getting engaged, and have come together to form the Lift the Ban coalition, of which Chicago DSA is affiliated.

Bernardoni was also quoted in a story on the debate in the Tribune:

“The disincentive to add new units ultimately increases rent, so rent control is very much a response that benefits people who have been in a community for a long time at the expense of the overall community — at the expense of particularly young people who are trying to move out and form their own households, so it really very much is prioritizing one community over another.”

Bernardoni is correct in his analysis that rent control prioritizes one community over another. Rent control prioritizes the existing community over a new class of higher-income renters who would displace them. While there is certainly no shortage of over-priced high-rise condominiums in the city, affordable housing has become more and more scarce. Rent control is one way to ensure that affordable housing stays affordable for current tenants.

As momentum builds in the state, not only to lift the ban on rent control but to enact it, it’s likely we’ll see groups like IL Realtors continue to push these lines of attack. Before they have a chance to do so, let’s take a moment to dispel some of the common myths surrounding rent control they’ve been perpetuating so far.

Myth #1: Rent control disincentivizes landlords to make building repairs and maintenance

I reject this premise completely. First, the evidence used to support this claim tends to be empirically dubious, as highlighted in this 1988 study. Further, the prospect of increased profit is not the primary catalyst for repair and maintenance. The prospect of losing tenants and decreased property values is, as repair and maintenance are measures taken to preserve current value.

To increase rent as a way to cover the cost of maintenance is to just shift a naturally recurring cost onto renters, as if it were another utility that costs extra. If tenants were pushing for a landlord to remodel, renovate, or otherwise make additions to the building, say with the construction of a communal swimming pool, then shifting the cost onto them through increased rent would perhaps make sense.

Myth #2: Developers can’t build affordable housing because of a strict building code and other regulatory measures that are too costly

Sure, developers could in theory build housing for a lot less if there weren’t as many regulations in place that make construction more costly, just as abolishing the minimum wage could in theory solve unemployment. But building codes, like the minimum wage, are regulations put in place first and foremost to protect people, be it from hazard or from exploitation.

Just as with employment, if a landlord really can’t afford to build affordable housing (they can), then they can’t afford to build housing altogether. The problem isn’t that building codes cost so much that there’s no net positive return on investment for developers, but that it’s enough to chip off a piece of their profit margins. It’s not that there’s too little money to build affordable housing, it’s that there’s not enough profit to be made to incentivize developers to do so.

This exemplifies the limits of the supply-side economics behind such thinking. There is, of course, a high demand for affordable housing in cities like Chicago, but ultimately a low supply because capital is underwhelmed by its profit potential. And when building code regulations are cast aside for increased affordability, as IL Realtors posits as one possible solution, the results can be disastrous, as we saw all too clearly with the Grenfell Tower fire last year in the UK.

Myth #3: Rent control is “essentially a vote for a property tax”

This claim can be best dispelled by a contradiction found in IL Realtors own messaging on the issue. In a release from last year, IL Realtors argues first that “out of control property taxes and regulations are a big factor in the upward pressure on rents,” while in their very next point stating that the city “stands to lose untold millions in property tax revenue, as rental property values will certainly drop if their potential earnings are capped.”

How exactly can rent control cause property taxes to increase while simultaneously causing property values to drop? If anything, the stabilization of property value under rent control would mean a stabilization in property tax, as the two are directly tied together.

Myth #4: Rent Control Will Lead to Divestment and a Return to Urban Blight

One must ask why our fair city should be lobbying for the economic investment of outside capital when the return on that investment rarely finds it ways back to residents? While gentrification may bring in new business to areas, if it’s at the expense of current residents, who exactly stands to benefit? That is, aside from developers and the politicians who enable them?

It also can’t be understated that the abstract threat of a return to “urban blight” is a racially-charged dog-whistle. In his 2003 paper on “The Public Menace of Blight” published in the Yale Law and Policy Review, property law expert Wendell E. Pritchett writes that:

“Blight was a facially neutral term infused with racial and ethnic prejudice. While it purportedly assessed the state of urban infrastructure, blight was often used to describe the negative impact of certain residents on city neighborhoods. This ‘scientific’ method of understanding urban decline was used to justify the removal of blacks and other minorities from certain parts of the city. By selecting racially changing neighborhoods as blighted areas and designating them for redevelopment, the urban renewal program enabled institutional and political elites to relocate minority populations and entrench racial segregation.”

Being that those displaced by gentrification in Chicago and elsewhere are primarily low-income people of color, the threat of blight implies a direct correlation between their removal and continued urban revitalization. Of course, urban blight as we know it is historically correlated with white flight post-integration, and the resulting urban divestment that came along with the decrease in tax revenue. In that sense, blight is not caused by the neglect of existing tenants, as hinted at by the dog-whistle, but by systematic devaluing of communities of color by capital.

Reframing the Narrative

Beyond these myths, the larger debate of rent control is really one about private property, and whether or not renters have any sort of legal right to the homes and communities they inhabit. As a socialist, I would argue that they absolutely do. For one, tenants are the ones who compose the thriving communities that have caused property values to rise, not landlords. While they may have no existing legal claim to properties, they most certainly have this symbolic claim.

Of course, arguing a symbolic claim would likely be laughed off in any court. No financial transaction means no contract which means no deal. But one should remember that Americans’ claim to the large chunk of land that makes up our United States is also largely symbolic.

The only financial transactions that legitimize our land holdings as a country were from one colonizer to another. Rather, the primary claim to American soil has been, historically, the spilling of indigenous blood. In that sense, gentrification is very much a continuation of colonial processes. This is illustrated quite explicitly by the trend of predominantly non-white renters being forced out of their homes so that a new wave of “urban pioneers” may move in.

But these are not the discussions that groups like IL Realtors would like to have. They’d much rather make vague economic critiques and frame the issue, and their opposition, in that sense. The truth of the matter is that the opposition of realtors, developers, and landlords to rent control is that such a policy, while perhaps curbing displacement and keeping rent affordable, would mean a decrease in their profits. Unfortunately for them, profit over people is not a very popular stance to take, and so they sidestep and mask the debate as being a technocratic rather than a moral one.

With a non-binding resolution to lift the ban on rent control in 78 different precincts in the coming March 20 election, the question of rent control is bound to become more pervasive as the year continues, and so too will the flak. To counter this, fair housing advocates must reject entirely the framing of “good politics, bad economics” put forth by the opposition. We must instead retort that the continuation of displacement in our city is in fact a moral choice, and those looking to preserve that status quo must be forced to defend it as such.

For those of us arguing for the rights of tenants, making the moral case for rent control will not be so hard a challenge.