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Does it matter where city workers live? Rethinking the residency rule

To some Chicagoans, the issue is like a ghost from the past.

Should Chicago’s residency rule for city workers, in place since the days of the first Mayor Daley, be repealed?

Of the nation’s largest cities, Chicago’s rules about where municipal employees can live are the most restrictive. They date from a time of real estate block-busting, when people were afraid of rapid racial changes in the neighborhoods, and close-in suburbs still had open fields for new homes. In the Chicago of the 1970s, city schools were thought to be a mess and families had ample excuses to get out.

Housing experts and urban planners credit the residency rule with stabilizing areas on the edges of Chicago. The housing stock of mostly single-family homes was priced in the range for police and firefighters and the more suburban character made the breadwinners comfortable.

Whether it’s Edison Park on the north or Mount Greenwood on the south, some longtime residents say that on some blocks, every other home is occupied by a city employee.

But the world today is different, a point made by mayoral hopeful Gery Chico who, in pursuit of endorsements by public employee unions, said the residency rule might have outlived its usefulness. Opponent Rahm Emanuel also said he’s open to arguments for repealing it.

Some big cities have rolled back residency requirements under pressure of law or labor negotiations. New York City wrote so many exemptions to its residency requirement that it is almost gone. Detroit and Cleveland used to require residency, but now don’t because their state Legislatures have forbidden it.

If the Chicago residency law ended, what would happen to the neighborhoods it has sustained over the years? It’s easy to conjure images of moving vans lined up down the block.

But several experts in housing and urban issues doubt anything that dramatic would happen. They cite reasons that blend economics with sociology.

The depressed housing market, they argue, keeps many people in place. It has blown away the equity many people have in their homes, and made it harder to sell a home.

“Lifting the residency rule in normal times could have an impact, but now the issue is who would buy these homes,” said David Johnson, an attorney at the firm Franczek Radelet PC, who for 25 years was a lead labor negotiator for the city.

Tracy Cross, a consultant who advises home builders, said a relatively small pool of people would benefit from lifting the residency rule. He said that would be city workers who have owned their homes for a long time and consequently have equity to move.

But even those that look into fleeing might reconsider after investigating. Suburban property taxes, for example, usually are higher than Chicago’s because the city can draw revenue from Loop skyscrapers and neighborhood stores and industries. Many suburbs lack a business tax base and the collar counties assess homes’ tax value at a higher rate.

Johnson said that years ago, the Chicago police union tried to bargain for a stipend to offset so-called “higher costs” members face from having to live in the city. “We did an investigation of that and came back with, ‘Hey, you owe us money,’” Johnson said.

Municipal unions, however, contend that the cost of parochial or private school tuition remains a “hidden tax” for a city address, as many neighborhood schools are still deemed substandard. They would like to see the residency rule gone, but, with state law squarely in Chicago’s corner on its right to impose it, haven’t pressed the issue.

“We believe residency should be subject to bargaining. It’s no different from any other term of employment,” said Anders Lindall, spokesman for Council 31 of the American Federation of State, County and Municipal Employees.

Lifting the residency rule also could have little impact because attitudes about city living have changed. Cross said fewer people want the higher gas prices and utility costs associated with moving further from their job. Studies show that the most stable housing markets are those with good commuting access to downtown jobs and attractions.

Chicago’s public schools with selective enrollment post scores that equal or beat the best suburban schools. If a brand new house is the lure, few of those are getting built. The suburbs, meanwhile, are no longer immune from crime, blight and racial tension.

“The city has done an outstanding job building up its neighborhoods and schools, regardless of the residency requirement,” said Steven Elrod, an attorney at Holland & Knight LLP who represents municipalities.

At the same time, local governments have tried to downplay a “Chicago vs. the suburbs” mentality. Regional thinking is in vogue, and the residency rule strikes some as being out of step. Northwestern University law Prof. Dawn Clark Netsch, a former state senator and candidate for governor, confessed she’s argued both sides of the residency question. “It spurs a lot of fraud” by otherwise law-abiding people, she said, but are non-resident city workers “really a part of the community they are seeking to serve?”

The residency rule should go if it carried any cost to the city or limited its ability to attract a qualified work force. But Laurence Msall, president of the tax watchdog the Civic Federation, said he has seen no evidence of either case.

Overall, John McDonald, professor of real estate at Roosevelt University, believes requiring residency remains an important stabilizing force — especially now. “Some neighborhoods need help with all the foreclosures, so why do anything now that could cause more harm?” he said.

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