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Aldermen have it both ways in protecting renters

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Chicago aldermen had it both ways Wednesday: They passed an ordinance protecting and compensating renters displaced by foreclosures, but held it in committee for further changes.

If the Chicago Association of Realtors has its way, there will be plenty of changes to the ordinance backed by Mayor Rahm Emanuel and approved by the City Council's Housing Committee.

Spokesman Brian Bernardoni says the proposal to pay displaced tenants $12,000 in relocation expenses or offer them rent-controlled leases until foreclosed rental buildings are sold is flat-out unconstitutional.

"The city of Chicago cannot impose rent control. The city of Chicago cannot regulate or change the order of mortgage liens. Mortgage lien goes back to common law prior to the state being founded. It says the mortgage comes first. The lease comes second," Bernardoni said.

"You can't pre-empt that. That would analogous to the city of Chicago coming up with new requirements for adoption. That's not a city concern. That's an issue of state concern."

Bernardoni further argued that the new regulations would have "unintended consequences" by reversing a hot resale market for multi-family buildings.

"At $12,000-per-[tenant], the costs exceed the value of the property. Banks will then have to make business decisions, which could include not foreclosing. If they don't foreclose and walk away, they won't be paying property taxes," Bernardoni said, suggesting an ordinance that gives renters advanced warning of a foreclosure, but no $12,000 payment.

Housing Committee Chairman Ray Suarez (31st) said he agreed to pass the ordinance Wednesday, but hold it in committee until June 5 to give "the opposition" an opportunity to suggest changes.

"The banks want to talk, so let's give `em a chance. Let's see where they want to see this amended. If it makes sense, we'll work with them," Suarez said.

Ald. Richard Mell (33rd), chief sponsor of the "Keep Chicago Renting" ordinance, said he'd be surprised if the delay resulted in substantive changes.

"I would hope that it will reduce abandoned properties in Chicago. It will make the banks maybe more receptive to selling the property and taking a little bit of a haircut on it and getting it out of their portfolio, rather than tossing people out and having a vacant property, which costs us even more in the long-run," Mell said.

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