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Mayor Daley agrees to cap relocation expenses of displaced renters

Updated: September 24, 2012 6:25AM

Mayor Daley has agreed to put a cap on relocation expenses that must be paid to displaced renters to salvage reforms that came too late to protect consumers from Chicago’s condominium conversion epidemic.

Instead of requiring developers to pay $1,500 or one month’s rent, whichever is greater, the mandatory relocation cost would be capped at $2,500.

Downtown Ald. Brendan Reilly (42nd) pushed for the ceiling to prevent corporate executives renting $9,000-a-month lakefront penthouses from cashing in on a perk that’s intended for struggling families.

But, Reilly said Tuesday he has other problems with the watered-down ordinance, scheduled to be considered by a joint City Council committee later this week.

Chief among them is the mayor’s plan to more than double — from four months to nine months — the advance notice to tenants before condo conversions.

“That’s a 125 percent increase in the notice period. That’s gonna raise the cost for construction loans. That, in turn, raises the cost of condo units,” Reilly said.

“If our goal here is to keep housing affordable in Chicago, this well-intentioned ordinance is falling short.”

If the mayor’s revised ordinance is not approved by May 16, it will die along with the old City Council. Reilly said that’s fine with him.

“This will have a profound impact on the housing market. More time and negotiation is required. This ordinance has been in the works for three years. We can afford to wait 60 more days to make sure we get it right,” he said.

The $2,500 cap was not enough to appease the Chicago Association of Realtors, either. The group is threatening to file a lawsuit to challenge a relocation fee it views as unconstitutional and ill-advised.

“If you impose a fee when the housing market starts to turn around, it’s a warning sign that Chicago is a tough town to do business. It could stifle residential development, construction jobs, material sales and transfer taxes,” said association spokesman Brian Bernardoni.

Bernardoni noted that the Chicago Association of Realtors pushed hard for the mayor’s proposal to require a standardized disclosure summary and enhanced property report to inform tenants about the physical condition of buildings targeted for conversion and the financial requirements upon occupancy.

“It would be a fundamental shift in how condos are bought and sold. We may end up losing a very strong consumer protection by working against this ordinance, which is frustrating and unfortunate,” he said.

Despite the lingering concerns, retiring Ald. Helen Shiller (46th) said she would push for a final vote at Thursday’s meeting of the Buildings and Housing Committees.

“Their position is we shouldn’t be discouraging condo conversion in a down general economy. My position is, this is the right time to re-set the rules as the economy is re-setting itself so that, when things do pick up, we will have addressed the excesses,” Shiller said.

“Everyone doesn’t always agree on what is and isn’t legal. This is one of those instances. It may end up getting litigated. But, we need to address issues that affected condo owners and renters.”

Three years ago, Daley appointed a condominium task force to address ways to protect consumers from the wave of condo conversions gobbling up rental housing and displacing families.

The panel took so long to study the issue, the condo conversion epidemic has long since passed. The problem now is condo owners who cannot sell their units renting them out in buildings hovering near foreclosure.

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